2019 (9) TMI 641 - HC - VAT and Sales Tax

Notification G.O.Ms.No.604, Revenue (CT.IV) Department, dated 22.04.2008 - Exemption from entertainment tax - exemption to feature films/low budget films produced in the then State of Andhra Pradesh - HELD THAT - As per this G.O., the theatre proprietor not only had to intimate to the concerned Entertainment Tax Officer, in advance and in writing, the particulars of the feature film/low budget film produced in Andhra Pradesh which was being screened but also furnish a certified copy of the certificate of the Film Development Corporation. Logically, the Film Development Corporation would not be in a position to issue such a certificate without knowing the number of prints of the movie that had been released. As noted, a low budget feature film was one where the number of prints was less than 35. This fact could only be ascertained after release of the movie and not prior thereto. In effect, the condition was practically impossible to perform. Significantly, the petitioner company asserted that it was alone being singled out for this discriminatory treatment and other similarly situated theatres were allowed to furnish the certificates from the Film Development Corporation later and not in advance. This assertion by the petitioner company was not rebutted by the third respondent in her counter-affidavit. No explanation is forthcoming even now as to why the petitioner company alone is being picked upon for violation of the condition of furnishing the certificates in advance. The third respondent also does not dispute that the certificates were produced by the petitioner company after release of the movies and there is no shortcoming or lacuna in this regard - The assessment orders, which proceeded only on the premise that such benefit could not be extended to the petitioner company owing to belated production of the certificates, therefore cannot be countenanced. Impugned Order set aside - petition allowed.

Summary

Issues Involved:
1. Validity of assessment orders under the Telangana Entertainment Tax Act, 1939.
2. Compliance with G.O.Ms.No.604 dated 22.04.2008.
3. Delay and laches in filing writ petitions.
4. Doctrine of substantial compliance.
5. Alleged discriminatory treatment by tax authorities.

Detailed Analysis:

1. Validity of Assessment Orders:
The petitioner, M/s. PVR Limited, challenged the assessment orders issued by the Entertainment Tax Officer, Somajiguda Circle, Hyderabad, under the Telangana Entertainment Tax Act, 1939. The orders dated 16.03.2016 and 20.03.2017, along with subsequent notices, demanded payment of entertainment tax for the periods 2011-12 to 2014-15, based on non-compliance with conditions set out in G.O.Ms.No.604 dated 22.04.2008.

2. Compliance with G.O.Ms.No.604:
The petitioner argued that it availed the benefit of the exemption granted under G.O.Ms.No.604, which required submission of certificates from the Andhra Pradesh State Film Development Corporation (APFTTDC) in advance. The petitioner contended that it was impossible to comply with this condition as the certificates could only be issued post-release of the movies. The court examined the conditions of the G.O., particularly Clause (3), which mandated advance submission of such certificates. The court found that this condition was practically impossible to perform, as the low budget status of a film could only be determined after its release.

3. Delay and Laches:
The third respondent argued that the writ petitions were delayed and thus barred by laches, as the petitioner did not challenge the assessment orders until January 2019. However, the court noted that technicalities should not constrain the exercise of its extraordinary jurisdiction under Article 226 of the Constitution, especially when the orders in question were patently illegal. Consequently, the delay did not preclude the petitioner from seeking relief.

4. Doctrine of Substantial Compliance:
The petitioner relied on the principle of substantial compliance, asserting that it had substantially met the requirements of the G.O. by submitting the necessary certificates post-release. The court referred to the Supreme Court's judgment in Commissioner of Central Excise, New Delhi v. Hari Chand Shri Gopal, which allowed for a liberal interpretation of conditions that were directory rather than mandatory. The court held that since the petitioner complied with the essential requirements by eventually submitting the certificates, the assessment orders could not be sustained.

5. Alleged Discriminatory Treatment:
The petitioner claimed discriminatory treatment, asserting that it was singled out for non-compliance while other similarly situated theatres were allowed to submit certificates post-release. The third respondent did not rebut this claim. The court found no justification for the differential treatment and noted that the certificates were eventually produced without any deficiencies. Therefore, the denial of the exemption based on the timing of certificate submission was unjustified.

Conclusion:
The court allowed the writ petitions, setting aside the impugned assessment orders dated 16.03.2016 and 20.03.2017 and all consequential proceedings and notices. The court emphasized that the petitioner had substantially complied with the requirements of G.O.Ms.No.604, and the impossibility of advance certificate submission rendered the strict enforcement of this condition unreasonable. The court also highlighted the lack of justification for the discriminatory treatment of the petitioner compared to other theatres.