1970 (4) TMI 169 - SC - Indian Laws

Summary

Issues:
1. Validity of entertainment tax levy.
2. Assessment based on best judgment.
3. Legality of Rule 28(4) under Bihar Entertainment Tax Act.
4. Repugnancy between Rule 28 and Section 9(2) of the Act.
5. Arbitrariness in assessment.

Analysis:

Issue 1: Validity of entertainment tax levy
The appellant, owner of 'Veena Cinema,' challenged the entertainment tax levy of Rs. 67,500 for the period from 1-4-1959 to 30-9-1959. The High Court upheld the tax assessment based on the authorities' findings that the appellant's account-books were unreliable, with duplicate sets of tickets and suppressed ticket sales. The concurrent conclusion by authorities supported the justification for rejecting the appellant's return, leading to the upheld tax levy.

Issue 2: Assessment based on best judgment
The appellant's return was rejected, and the tax was assessed based on best judgment by the Additional Superintendent, Commercial Taxes Patna. The assessment was upheld by the Appellate Assistant Commissioner and Deputy Commissioner of Commercial Taxes. The appellant contested the assessment, arguing against the arbitrary determination of receipts by the assessing authority.

Issue 3: Legality of Rule 28(4) under Bihar Entertainment Tax Act
Rule 28(4) empowers the taxing authorities to assess the tax liability of an assessee based on best judgment. The court rejected the contention that Rule 28(4) exceeded the rule-making power conferred under Section 21 of the Act. The court emphasized that the power to determine tax liability of an assessee falls under the State Government's rule-making authority, as provided in Section 21 of the Act.

Issue 4: Repugnancy between Rule 28 and Section 9(2) of the Act
The court dismissed the argument that Rule 28 was repugnant to Section 9(2) of the Act. Rule 28 deals with assessment, while Section 9(2) pertains to the imposition of penalties. The court clarified that the two provisions cover different aspects and are not inconsistent with each other.

Issue 5: Arbitrariness in assessment
The Assistant Superintendent of Commercial Taxes justified the assessment of Rs. 67,500 by considering relevant factors such as cinema capacity, show attendance variations, and probable receipts. The court found the assessment to be based on cogent and relevant factors, rejecting the claim of arbitrary assessment. The court upheld the assessment and dismissed the appeal with costs.

In conclusion, the Supreme Court upheld the entertainment tax levy on the appellant, emphasizing the validity of the assessment based on best judgment and the legality of Rule 28 under the Bihar Entertainment Tax Act. The court's detailed analysis addressed each issue raised by the appellant, ultimately affirming the tax assessment and dismissing the appeal.