2014 (7) TMI 492 - HC - VAT and Sales Tax

Unauthorise realization of taxes by the petitioner from the cinema goers - scheme of exemption versus scheme of grant-in-aid - contravention of the scheme in Government Order dated August 11, 2000 - Held that - There was a complete departure in the new scheme provided in the Government Order dated August 11, 2000. The State Government, instead of allowing the cinema owners to charge the entertainment tax from the viewers, and keep it as grant-in-aid for compensating the cost of constructions of the cinema hall, provided an exemption under section 11(2) of the Act, in the new scheme vide Government Order dated August 11, 2000, and in which there is no mention of the word grant-in-aid . The earlier schemes, under the Government Orders dated November 9, 1994 and December 7, 1998, were not for the benefit of the cinema goers; whereas the new scheme was framed for the benefit of the cinema goers, situate in a thinly populated area. The scheme was applicable to those areas, which has less than one lac population in accordance with census of 1991. Only new permanent cinema halls were provided with 100 per cent. exemption from paying entertainment tax for a period of five years. The cinema halls in the areas with population of more than one lac were provided with 100 per cent. exemption for a period of three years and thereafter with 50 per cent. exemption for the next two years. Clause 4 of the Government Order dated August 11, 2000 provided that those cinema halls, who are exempt from paying entertainment tax will not be allowed to realize extra charge for maintenance. There is nothing in the order of the District Magistrate dated September 10, 2001, which can be read or construed to permit the petitioner to charge entertainment tax from the cinema viewers, and keep it with her, after getting exemption under section 11(2) of the Act. The order only provided for exemption with the condition that in form B the collection from the viewers in respect of ticket charge, and the entertainment tax will be shown separately. The condition of showing entertain tax separately is for the statistical purpose, for the assessment of scheme. It cannot be treated to have allowed the petitioner to collect entertainment tax, and keep it by way of incentive. - in pursuance to the order passed by this court dated December 8, 2009, which was not stayed by the Supreme Court, the entertainment tax, which was illegally collected and not deposited in the State Treasury, has been realized from the petitioner - Decided against assessee.

Summary

Issues:
1. Interpretation of Government Orders regarding entertainment tax collection.
2. Validity of District Magistrate's order demanding deposit of entertainment tax.
3. Examination of the scheme of "grant-in-aid" and "exemption" under different Government Orders.
4. Determination of cinema hall owner's obligation to deposit entertainment tax.
5. Analysis of the difference between "grant-in-aid" and "exemption" schemes.
6. Compliance with the Uttar Pradesh Entertainments and Betting Tax Act, 1979.
7. Consideration of the Supreme Court's observations and remand for fresh decision.

Issue 1: The judgment involved the interpretation of various Government Orders related to entertainment tax collection. The court discussed the differences between the schemes provided in the Government Orders dated November 9, 1994, December 7, 1998, and August 11, 2000. It highlighted that the new scheme in the August 11, 2000 order aimed to encourage cinema goers by providing exemptions from entertainment tax, unlike the earlier schemes focused on compensating cinema hall owners through "grant-in-aid."

Issue 2: The validity of the District Magistrate's order demanding the deposit of entertainment tax was challenged in the writ petition. The court dismissed the petition, upholding the order and directing the petitioner to deposit the amount. It emphasized that the petitioner's retention of the tax collected from cinema goers would amount to unjust enrichment, as per Section 3 of the Act, which mandates depositing entertainment tax with the Government.

Issue 3: The judgment extensively analyzed the scheme of "grant-in-aid" and "exemption" under different Government Orders. It compared the provisions of the November 9, 1994, December 7, 1998, and August 11, 2000 orders, noting a significant departure in the latter's scheme, which aimed to benefit cinema goers in thinly populated areas through tax exemptions rather than providing "grant-in-aid" to cinema hall owners.

Issue 4: The court clarified the cinema hall owner's obligation to deposit entertainment tax collected from viewers, emphasizing that the exemption under the August 11, 2000 order did not entitle the petitioner to retain the tax. It rejected the argument that the petitioner was permitted to keep the tax collected, highlighting the statutory requirement to deposit such taxes with the Government.

Issue 5: The judgment distinguished between the concepts of "grant-in-aid" and "exemption," emphasizing that the former was a compensation scheme for construction costs, while the latter, under Section 11(2) of the Act, provided exemptions for public interest. The court underscored that the District Magistrate's order did not authorize the petitioner to retain entertainment tax post-exemption.

Issue 6: The court scrutinized the compliance with the Uttar Pradesh Entertainments and Betting Tax Act, 1979, particularly focusing on Section 11 regarding exemptions. It highlighted the statutory obligation of cinema hall owners to collect and deposit entertainment tax with the Government, irrespective of exemptions granted under specific schemes.

Issue 7: The judgment referenced the Supreme Court's observations, where it remanded the matter for a fresh decision on the core issue without expressing an opinion on the writ petition's merits. The court acknowledged the petitioner's deposit of the entire amount during the appeal but upheld the dismissal of the writ petition, affirming the District Magistrate's order for tax deposit.

In conclusion, the judgment delved into intricate legal interpretations of Government Orders, statutory provisions, and obligations of cinema hall owners regarding entertainment tax collection, ultimately upholding the District Magistrate's order and dismissing the writ petition.