2012 (5) TMI 781 - HC - VAT and Sales Tax

Summary

Issues involved:
The judgment involves the issues of entertainment duty levied on a company organizing exhibitions under the Bombay Entertainments Duty Act, 1923, and the violation of principles of natural justice by the Additional Collector in passing an order without giving the petitioner an opportunity to be heard.

Entertainment Duty Issue:
The Petitioner, a company promoting gem and jewelry exports, organized exhibitions on a business to business basis, excluding general public entry, and paid entertainment duty for past events. Despite seeking an NOC for a 2012 exhibition, the second respondent demanded additional entertainment duty of Rs. 1.32 Crores for the 2011 event without allowing the petitioner a hearing. The petitioner contended that their events did not fall under the Act's definition of "entertainment." The High Court set aside the impugned order due to the lack of a hearing and instructed the Additional Collector to reconsider after giving the petitioner a chance to be heard, emphasizing the need for a reasoned order within a month.

Natural Justice Violation:
The impugned order of 17 March 2012, demanding Rs. 1.32 Crores in entertainment duty, was passed without affording the petitioner an opportunity to present their case. The High Court, noting the breach of natural justice principles, decided not to mandate an appeal process and directed the Additional Collector to reevaluate the matter after granting the petitioner a fair hearing. The court highlighted exceptions to the exhaustion of alternate remedies, particularly in cases of natural justice violations, and emphasized the importance of a speaking order with reasons provided in accordance with the law. The petitioner was instructed to attend a hearing for further directions on 28 May 2012 to facilitate a prompt decision by the Additional Collector.