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2019 (11) TMI 1087 - HC - GSTLevy of entertainment tax - Maintainability of petition - Petition submitted that, in view of Section 173(2) of the Puducherry Goods and Services Tax Act, 2017, Section 118(1)(b)(ii) of the Puducherry Municipalities Act, 1973, stands annulled - Refund the entertainment tax paid from 01.07.2017 to till date - 25% of entertainment tax being collected by the 5th respondent Municipality - Collection of entertainment tax over and above the GST - Compliance with Sections 118 and 161 of the Puducherry Municipalities Act, 1973 HELD THAT - It is not in dispute that the Puducherry Municipalities Act, 1973, is an enactment, which is still in force and thus, the authorities competent under the above enactment are bound and entitled to act in accordance with the relevant provisions made thereunder - Section 118(1)(b)(ii) of the Puducherry Municipalities Act, 1973, empowers the Municipal Council to impose a tax on entertainment. It is to be noted at this juncture, that this power conferred on the Municipal Council under Section 118 to collect various taxes has not been totally taken away or subsumed under the PGST Act and on the other hand, it is apparent that only the power to collect tax on a particular subject viz., advertisements other than advertisements published in the newspapers alone has been taken away or omitted by way of imposition made under Section 173(1)(a) of the PGST Act A careful perusal of Section 173, Sub-Clause 1 of the PGST Act, would undoubtedly, indicate that the Legislature have consciously retained the power of the Municipal Council to collect tax on all other subjects except the collection of tax on advertisements other than advertisements published in the newspapers. In other words, even after introduction of the PGST Act, in view of the specific provision made under Section 173(1) therein, what was omitted from the purview of the Municipal Council is only a tax on advertisements other than advertisements published in the newspapers and not in respect of other taxes such as property tax, professional tax, duty on certain transfer of immovable property in the form of additional stamp duty and the Tax on Entertainment . Therefore, it is very clear that the powers of the Municipal Council to collect the tax on entertainment, is retained, even after introduction of the PGST Act - in view of Section 173(2) of the PGST Act, power to collect entertainment tax by the Municipality stands annulled. This Court is of the considered view that the general provision made under Section 173(2) of the PGST Act cannot override or include a specific provision made under Section 173(1) of the PGST Act. In other words, it is to be noted that Section 173(1) of the PGST Act is a stand alone provision unaffected by Sub-Section 2 of Section 173 of PGST Act - the collection of the entertainment tax by the 5th respondent Municipality is within their power, competence and with authority of law. This Court is also of the view that introduction of the PGST Act has not taken away the power of the Municipality to collect the entertainment tax. To put it specifically, Section 173(2) of the PGST Act, does not debar the Municipality, in any manner, from collecting the entertainment tax from the petitioner. Maintainability of petition - HELD THAT - The present writ petition filed against the impugned demand is not maintainable not only on the reasons and findings rendered supra, on the merits of the matter and also on the reason that the challenge made is only against a consequential proceedings arising out of the powers vested on the 5th respondent under Sections 118 and 161 of the Puducherry Municipalities Act - the challenge made against the consequential proceedings without challenging the original/main proceedings or relevant provision of law, is not maintainable. Therefore, on this ground also, this Court finds that the present challenge is not maintainable. Refund of tax collection - HELD THAT - In view of the fact that the petitioner has already collected the entertainment tax from the Cinema viewers and thus, it is impossible to return the same to such viewers in the event of order for refund. In any event, the question of considering the consequential prayer does not arise in this case, as this Court found that the impugned challenge of the petitioner against the collection of entertainment tax itself is not maintainable. Petition dismissed.
Issues Involved:
1. Maintainability of the writ petition. 2. Legality of the entertainment tax collection by the Municipality post-GST implementation. 3. Refund of the excess entertainment tax collected. Issue-wise Detailed Analysis: 1. Maintainability of the Writ Petition: The court first addressed whether the writ petition is maintainable. The petitioner challenged the demand for entertainment tax by the Municipality but did not challenge the relevant provisions of the Puducherry Municipalities Act, 1973, which grant the Municipality the authority to impose such taxes. The court emphasized that a challenge against a consequential proceeding without questioning the original statutory provisions is not maintainable. Therefore, the writ petition was found to be not maintainable on this ground. 2. Legality of the Entertainment Tax Collection by the Municipality: The petitioner argued that post-GST implementation, the Municipality had no authority to collect entertainment tax, as it would constitute double taxation. The court examined the relevant legal provisions, including Section 118 of the Puducherry Municipalities Act, 1973, and Section 173 of the Puducherry Goods and Services Tax Act, 2017 (PGST Act). The court noted that Section 118(1)(b)(ii) of the Puducherry Municipalities Act, 1973, empowers the Municipal Council to impose a tax on entertainments. Section 173(1) of the PGST Act specifically omitted only the tax on advertisements other than those published in newspapers from the purview of the Municipal Council, retaining the power to collect entertainment tax. The court held that Section 173(2) of the PGST Act, which the petitioner relied upon, does not annul the Municipality's power to collect entertainment tax but only modifies it to the extent specified in Section 173(1). The court concluded that the collection of entertainment tax by the Municipality is within their power and authority of law. The introduction of the PGST Act did not take away the Municipality's power to collect the entertainment tax, and thus, there was no double taxation as the entertainment tax and GST are levied on different aspects (service and entertainment, respectively). 3. Refund of the Excess Entertainment Tax Collected: The petitioner sought a refund of the entertainment tax collected from 01.07.2017 to date. However, the court found that since the petitioner had already collected the entertainment tax from cinema viewers, it would be impossible to return the same to the viewers if a refund were ordered. Moreover, given that the court upheld the legality of the entertainment tax collection, the question of refund did not arise. Conclusion: The court dismissed the writ petition, holding that the collection of entertainment tax by the Municipality is lawful and within their authority. The petition was not maintainable as it challenged only the consequential demand without questioning the original statutory provisions. Consequently, the request for a refund of the entertainment tax was also denied.
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