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TMI Blog1987 (10) TMI 361X X X X Extracts X X X X X X X X Extracts X X X X ..... ing cinematograph films in Sirsi in his theatre-Nataraj Talkies. The notice issued by the Assistant Commercial Tax Officer and Entertainment Tax Officer, Sirsi, dated 15th April, 1987 under section 6B of the Act calling upon the petitioner to pay the difference of tax of Rs. 42,539.90 is challenged. The petitioners have opted for the levy and payment of entertainment tax under section 4A of the Act. Such tax is known as composition tax payable in lieu of the tax payable under sections 3 and 3A of the Act. The population of Sirsi and Dandeli exceeds 25,000 and the petitioners therefore come under serial No. (d) of the table annexed to section 4A as amended by Act 3 of 1985. Such option was exercised and notified to the assessing authority by the petitioners after the provisions of section 4A were amended with effect from 15th February, 1986 by section 5 of the amending Act 3 of 1985, when section 4A of the principal Act underwent radical changes. In the table annexed to section 4A there was reduction of tax and entries (c) to (f) were inserted extending the benefit of composition tax to places which had population up to one lakh indicating different rates of tax payable under seve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) in the case of cinema theatres exhibiting cinematograph shows immediately prior to the date of commencement of section 5 of the Karnataka Taxation and Certain Other Laws (Amendment) Act, 1982, at the rates of all payments for admission to such seats or accommodation which were in force immediately prior to such date; and (ii) in the case of cinema theatres commencing to exhibit cinematograph shows after the aforesaid date, at the rates of payment for admission to such seats or accommodation provided for by the proprietor." The benefit of composition was extended up to one lakh population by Act 3 of 1985 as already stated. The difference of tax due from each of the theatres in these cases, is sought to be recovered on the basis of the rates of admission that were in force after 15th February, 1986 when section 4A was amended, and on the dates the applications for permits were made by the petitioners. The statement of objections is filed on behalf of the respondents traversing the allegations with reference to facts in W.P. No. 10162 of 1987 (Ashoka Talkies). It is explained by the second respondent in the said statement, how he has arrived at the sum of Rs. 16,216.20, bei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the first instance, advanced argument challenging the recoveries on the ground that the provisions of section 4A are ultra vires the Act. Later, the petitioners were permitted to urge additional grounds and a common statement of objections is filed on behalf of the respondents. The common grounds urged on behalf of the petitioners in both the petitions are these: Section 4A was introduced, for the first time, by Act 16 of 1977, when it was made applicable to places whose population was less than 10,000 and the tax payable under the scheme of section 4A of the Act was 12 per cent of the gross collection capacity of the theatre. The gross collection capacity of the cinema theatre was to be determined on the basis of the rates of admission which were in force immediately prior to 1st April, 1979, when section 4A was brought into force for the first time. When section 4A was amended and the benefit was extended to places whose population did not exceed 25,000, the mode of determining the GCC of the theatre, as mentioned in the explanation was required to be calculated on the basis of the rates that were in force immediately prior to 1st July, 1982 on which day, the amendment cam ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... granted, would be depriving the State of the legitimate tax due under the Act and further would be permitting the petitioners to make an unjust gain. The point that therefore arises for decision in these two cases is, whether the recovery of the difference of tax by the respondent is sustainable in law, in the absence of an explanation appended to section 4A(i) as amended by the Karnataka Act 3 of 1985. The recovery of difference of tax is sought to be justified by the learned Government Pleader on the principles of harmonious construction of all the relevant provisions of section 4A of the Act, which provide for a composition levy. The rate of tax to be levied was provided in the table and was levied at certain percentage of the gross collection capacity of the theatre (for short "GCC"). The provisions of section 4A, as introduced by Act 16 of 1977 and as amended by Act 13 of 1982 indicating in the explanation how the GCC should be calculated, are reproduced already in this order. It is relevant to notice that the rate of tax depended on the rate of tax for admission which was in force at the relevant point of time, namely, 31st March, 1979 and 30th of June, 1982 when the two ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rule of construction is well-settled that when there are in an enactment two provisions, which cannot be reconciled with each other, they should be so interpreted that, if possible, effect could be given to both. This is what is known as the rule of harmonious construction." The rule of construction that should come to the aid of courts in a case like this what is known as "schematic construction" which is now accepted as a departure from the well-known "golden rule" of construction, namely, that the words of a statute must, Prima facie, be given their ordinary meaning. This Court applied such a construction in a case arising under the Karnataka Debt Relief Act in Gowramma v. Taluka Magistrate [1986] 1 Kar LJ 406, in which the observations of Lord Chancellor in Grey v. Pearson [1857] 6 HL Cases 61, that the "golden rule" of construction has yielded place to what is now come to be known as schematic interpretation, was applied. It would be useful to reproduce their Lordships' observations from the said decision at para 9: "But, the literal construction or the strict construction which goes by the letter of the law dominated in the legal scene in the 19th century is no longer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hich appear to have been accidentally omitted or adopting a construction, it deprives certain existing words of all meaning, it is permissible to supply the words (see Craies on Statute Law, 7th edition, at page 109). The courts have recognised such a rule as the rule "casus omissus". This case is one such where these principles and rules of construction have to be applied. On doing so, what is required to be done is to read into and supply the explanation as an appendage to the table annexed to section 4A, as amended by Act 3 of 1985 and assume the date 15th February, 1986 in place of 1st July, 1982 for purposes of ascertaining the gross collection capacity of the petitioners' theatres based upon the rates of admission that were in existence immediately prior to 15th February, 1986. So read and interpreted, the provisions of section 4A, as amended by Act 3 of 1985 and the scheme of composition levy become meaningful and the object of the amendment effectuated and fulfilled, and not defeated. For the above reasons, I reject all the contentions of the petitioners and dismiss the writ petitions, and uphold the notices demanding difference of tax from the petitioners. Writ petit ..... X X X X Extracts X X X X X X X X Extracts X X X X
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