2013 (2) TMI 794 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Legality of the entertainment tax demand.
2. Authority of the Prescribed Officer to recall his own order.
3. Requirement of administrative approval for tax assessment orders.
4. Proper procedure for reassessment and revision under the Gujarat Entertainment Tax Act.

Summary:

1. Legality of the Entertainment Tax Demand:
The petitioner challenged the communication dated 22.07.2010 demanding entertainment tax at the rate of Rs. 44,925/- per week for the period between 01.04.2005 and 30.09.2005. The petitioner contended that the tax rate was wrongly applied and the sudden increase from Rs. 8,000/- to Rs. 44,925/- per week was without any basis. The High Court had earlier partially allowed the petition, directing the Competent Authority to provide a detailed calculation of the tax amount.

2. Authority of the Prescribed Officer to Recall His Own Order:
The Prescribed Officer initially assessed the tax at a lower rate ranging between Rs. 11,156/- to Rs. 14,617/- per week, which was acceptable to the petitioner. However, the Officer later unilaterally recalled this order without notice, hearing, or reasons, and reinstated the higher tax rate of Rs. 44,925/- per week. The Court found this procedure completely impermissible in law, as the Prescribed Officer lacked the authority to recall his own quasi-judicial order.

3. Requirement of Administrative Approval for Tax Assessment Orders:
The Court observed that the Prescribed Officer's order of assessment was tampered with by higher authorities by refusing to grant administrative approval, which had no source or authority in law. The Court emphasized that once the tax assessment is completed by the Prescribed Officer, it cannot be varied merely on the ground of lack of administrative approval. The law does not recognize any such requirement for administrative approval of quasi-judicial orders.

4. Proper Procedure for Reassessment and Revision under the Gujarat Entertainment Tax Act:
The Court highlighted that the Gujarat Entertainment Tax Act provides detailed provisions for assessment, reassessment, appeal, and revision of entertainment tax. The Prescribed Officer's order could be subject to appeal or revision, but not to administrative approval. The respondents' belief that reassessment was permissible under Section 9 of the Act was incorrect, as no valid reassessment proceedings were instituted. The proper legal recourse was not followed, making the higher tax demand invalid.

Conclusion:
The Court quashed the impugned order dated 22.07.2010, ruling that the orders under challenge suffered from serious illegality. The demand for higher tax was quashed on the ground that the Prescribed Officer's order was not legally disturbed, without commenting on the merits of the assessment itself. The petition was allowed, and the rule was made absolute.