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TMI Blog2007 (9) TMI 395X X X X Extracts X X X X X X X X Extracts X X X X ..... Ms. N. Annapoorani, Advocate, for the respondent. -------------------------------------------------- C.V. RAMULU J. This writ petition is filed by M/s. Hi Tech Theatre, Madhapur, Hyderabad, represented by its Managing Partner, seeking a mandamus to declare Proceedings No. E.Tax/2001-02, dated August 12, 2005 of the respondent revising form IV permit for the assessment year 2001-02 and also revised form IV permit dated August 12, 2005 as arbitrary, illegal and without authority of law, apart from being contrary to the provisions of the Andhra Pradesh Entertainments Tax Act, 1939 (for short, "the Act"). It is the case of the petitioner that for the assessment year 2001-02 under the Act, it opted to pay the tax under the slab system by filing the necessary application in form III as per rule 27 of the Andhra Pradesh Entertainments Tax Rules, 1939 (for short, "the Rules") which was accepted by the respondent and issued form IV permitting it to pay tax under section 5 of the Act applying the multiplier applicable to III grade Municipality Serilingampally Municipality was a III grade Municipality during the assessment year 2001-02. It paid tax regularly and its permit to p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r, which area falls under Serilingampally Municipality in Ranga Reddy District. As per section 5 of the Act, every exhibitor is required to pay entertainment tax either under section 4(1) or 5(1) and show tax under section 4 of the Act. The entertainment tax payable under section 5 of the Act is a composition scheme and the tax would be determined depending upon the nature of the theatre and the local area in which it is situated. The tax payable is on the gross collection capacity of the theatre multiplied by fixed percentage and further multiplied by fixed number of shows screened in a week. While that being the position of law regarding payment of entertainment tax, the petitioner filed form III under rule 27 of the Rules for the financial year 2001-02 indicating the nature of the theatre as air-cooled and the place where it is situated as Serilingampalli Municipality showing it as III Grade Municipality and offered to pay a sum of Rs. 47,333 as weekly entertainment tax [Rs. 18,562 being gross collection capacity of the theatre per week multiplied by 15 per cent and further multiplied by 17 shows as per column (f) to the table appended to G.O. Ms. No. 789, Revenue (CT-III) Dep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of entertainment tax as applicable to III grade municipality instead of selection grade and sought for rectification. In the light of the above, a show cause notice was issued on June 24, 2005 proposing to levy entertainment tax at the rates applicable to selection grade municipality for the period from May 18, 2001 to March 31, 2002. The petitioner filed objections to the said notice on July 25, 2005 primarily contending that the upgradation of Serilingampally III grade municipality to selection grade municipality is bad in law and they are not aware of the upgradation of the municipality. The objections filed by the petitioner have been considered and found untenable. Heard the learned counsel for the petitioner and the Special Standing Counsel for Commercial Taxes appearing for the respondent. The only question that falls for consideration is whether form IV issued in the year 2001-02 can be revised in 2005-06 on the ground that the entertainment tax was collected on the basis that Serilingampally Municipality was a III grade municipality in spite of the fact that it was notified as special grade municipality with effect from May 18, 2001. Learned counsel for the petitioner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s being renewed at the end of every quarter and for the year 2001-02, the petitioner had paid tax in form IV for all performances during the week from Friday to Thursday (both days inclusive) and sent it to the Office of the Entertainments Tax Officer on the following Monday of every week along with the challans of the treasury. The same were accepted and now only on the basis of some audit report purported to have been made during 2005, present demand has been made, which is not permissible. Whether there is any objection from the audit department or not, it is immaterial. The only option left for the department was to vary the tax even on the basis of the fact that Serilingampally, which was a III grade municipality, was upgraded as special grade municipality with effect from May 18, 2001, only during the period of option and not otherwise. Assuming that the option was available up to the last quarter of 2001-02, no such steps were taken by the department before end of that quarter. Therefore, varying of tax at this length of time is impermissible apart from being illegal, in view of sub-section (6) of section 5 read with rule 27(13) of the A.P. Entertainments Tax Rules. The re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ust, therefore, be interpreted as limiting the power to vary the tax 'during the period of option'. The words 'during the period of option' occurring in sub- section (6) of section 5 must be read into sub-rule (13). Otherwise, it will be ultra vires the section . . ." (emphasis supplied) A bare reading of the above rule coupled with the judgment in Swamy Theatre's case [1992] 15 APSTJ 63 would indicate that the authorities are empowered to vary/revise the tax only during the period of option and not otherwise. Thus, having regard to the express language employed in sub-section (6) of section 5 of the Act, we have no hesitation to reject the contention advanced by the leaned counsel for the department. The case relied upon by the Revenue in Sikender Picture Palace case [1993] 88 STC 287 (AP); [1992] 14 APSTJ 25 arose under different circumstances, as noticed above. Therefore, it has no relevance to the facts of this case. Admittedly, in this case, the option period was in between the assessment year of 2001-02, but the show cause notice was issued on June 24, 2005, i.e., much after the expiry of the option period. Further, the impugned orders amount to varying the tax with ret ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his case the respondent filed an application in the prescribed "form" exercising an option under section 5 of the Act. The cinema theatre in question is situated within Serilingampally Municipality. It is now not in dispute that in terms of a notification dated May 18, 2001, the Municipality was upgraded to Grade II from Grade III. Form IV was issued to the respondent on May 25, 2001. Although, the correct date of the filing of the application is not available on records but the respondent must have filed the said application prior to May 18, 2001. It is possible that during the assessment of tax proceedings in terms of the option exercised by the respondent, the Entertainment Tax Officer was not aware of the factum of upgradation of the municipality in terms of the said notification dated May 18, 2001. The mistake was pointed out only by the Office of the Accountant General. A show cause notice in terms of section 5(6) of the Act was, therefore, issued on the respondent on or about June 24, 2005. The question which arose for consideration before the appellant and, consequently, before the High Court was as to whether in terms of sub- section (6) of section 5 of the Act read ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o be rectified the same should be done as expeditiously as possible. (See: Board of Secondary Education of Assam v. Mohd. Sarifuz Zaman [2003] 12 SCC 408). We are not oblivious that in Ram Chandra Tripathi v. U.P. Public Services Tribunal IV [1994] 5 SCC 180, an order passed by way of a mistake was permitted to be corrected as the same was done in violation of the order of injunction. In such a situation only, this court held that an opportunity of being heard for correcting such mistake would not arise because there would not have been any occasion to take one view or the other in the matter on the basis of representation to be made by the affected employee. It is also not a case where a mistake was apparent on the face of the records and, thus, compliance with the principles of natural justice would not have made any difference as was in the case of Smt. Ratna Sen nee Roy v. State of West Bengal [1995] 1 Cal LT 462. Requirements to comply with the principles of natural justice would, therefore, vary from case to case. If upon giving an opportunity of hearing to an affected employee, it is possible to arrive at a different finding, the principles of natural justice must be c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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