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TMI Blog2010 (2) TMI 1117X X X X Extracts X X X X X X X X Extracts X X X X ..... otices are without the sanction of law and therefore, without jurisdiction. For the reasons stated supra, the impugned orders are liable to be set aside and accordingly, set aside. X X X X Extracts X X X X X X X X Extracts X X X X ..... s the legal position until the Government have issued G.O. Ms. No. 1016, Home (Cinema) Department, dated April 23, 1987, amending condition No. 6, to the effect that prior permission from the licensing authority is not necessary, for any alteration in the rates of admission. It is the case of the petitioners that despite the abovesaid valid and legal objections, the appeals were dismissed on the ground that the theatre owners have no power to reduce the rates of admission, without the prior approval of the licencing authority. Against the orders of the third respondent, the petitioners preferred individual revision petitions to the Deputy Commissioner (CT), Salem Division, Salem, the second respondent herein and the revision petitions were also dismissed. It is the grievance of the petitioners that the second respondent has failed to note that the word "increase" occurring in condition No. 6 of the C form licence, was substituted with effect from April 23, 1987 only and therefore, the authorities have failed to consider the scope and the purport of the amendment. Left with no other option, the petitioners filed further revision petitions to the Joint Commissioner (CT), ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... court to G.O. Ms. No. 1016, Home (Cinema) Department, dated April 23, 1987, by which, the Government have issued an amendment to condition No. 6, of C form licence, wherein, the word "increase" occurring in the said condition was substituted by the word "alteration", learned counsel for the petitioners submitted that prior to the said amendment, the theatre owners were not required to obtain prior permission from the licencing authorities, if the rates of admission were to be reduced and only in the case of increase in the rates of admission, such permission was required. The learned counsel for the petitioners further submitted that the amendment made in the year 1987, cannot be applied retrospectively for the earlier periods. He further submitted that the position which stood before the amendment has been properly interpreted by then Board of Revenue, as stated supra, as well as by the District Collector, Salem, in his Reference in Mu.Mu. No. 189481/82, dated September 30, 1982, wherein, he has clarified the Deputy Commercial Tax Officer, Omalur, that with regard to reduction in the rates of admission, the theatre owners were not required to obtain prior per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eunder and also taking into consideration a judgment of the Division Bench of this court in Annamalai v. Assistant Commissioner (CT) reported in [1990] 76 STC 271, held that the licencees have to get prior permission for reduction of rates of admission from the licensing authority concerned and approved by the Entertainments Tax Officer, as required under rule 32M of the Tamil Nadu Entertainments Tax Rules, 1939, even if the tickets were issued with the seal of the Entertainments Tax Officer, that would not invalidate the revision of assessment made for the earlier period. He therefore submitted that the issues raised in the present writ petitions have been already dealt with and the decision made in W.P.Nos. 16668 of 1990, etc., batch, dated January 20, 1994 (Devi Theatre v. Deputy Commercial Tax Officer [1994] 5 MTCR 183) squarely applies to the facts of the present case and hence, prayed for dismissal of the writ petitions. Heard the learned counsel for the parties and perused the materials available on record. Before adverting to the facts of this case, it is necessary to have a cursory look at some of the provisions dealing with the prescription of rates of admission by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is in force, nothing contained in the Schedules shall apply to such theatres. Explanation I.--For the purposes of this section and section 5B, 'gross collection capacity' in relation to a cinematograph exhibition, means the notional aggregate of all payments, for admission for a show (inclusive of the entertainments tax) if all the seats or other accommodation in the theatre as specified in the licence issued by the competent authority under the Tamil Nadu Cinemas (Regulation) Act, 1955 (Tamil Nadu Act No. IX of 1955) were occupied by spectators. Explanation II.--For the purposes of this section and of section 5B-- (1) 'Municipalities, Selection Grade' means the Municipalities specified in Part A of Schedule I; (ii) 'Municipalities, First Grade' means the Municipalities specified in Part B of Schedule I; (iii) 'Municipalities, Second Grade' means the Municipalities specified in Part C of Schedule I (iv) 'Municipalities, Third Grade' means the Municipalities specified in Part D of Schedule I; (v) 'Selection Grade Panchayat Towns' means the selection grade panchayat towns specified in Schedule II; (vi) 'Townships (Municipal) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vernment every week-- (i) as specified in the corresponding entry in column (3) thereof for new film; and (ii) as specified in the corresponding entry in column (4) thereof for old film;" Section 7B of the said Act deals with payment for admission and escaped assessment and the same is extracted hereunder: "7B. Payment for admission, etc., escaping assessment.--(1) Where, for any reason any payment for admission to any entertainment or any amount collected for television exhibition has escaped assessment to tax under section 4, 4E or 4F or 4G or 5A or 5B, as the case may be, the authority prescribed under sub-section (1) of section 7A may, subject to the provisions of sub-section (3) and at any time within such period as may be prescribed, assess to the best of its judgment the tax due on such payment or exhibition under section 4 or 5A or 5B or on such amount collected for television exhibition under section 4E or on such payment under section 4F, or on such payment for recreation parlour under section 4G as the case may be, after making such enquiry as it may consider necessary and after giving the proprietor a reasonable opportunity to show cause against such asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s a single order in respect of a financial year or any part thereof. (4) The powers under sub-section (1) or sub-section (2) may be exercised by the authority prescribed under sub-section (1) of section 7A even though the original order of assessment, if any, passed in the matter has been the subject-matter of an appeal or revision. (5) In computing the period of limitation for assessment or reassessment under this section, the time during which the proceedings for assessment or reassessment remained stayed under the orders of a civil court or other competent authority shall be excluded." Let us now see the various changes made by the authorities to the words used in the statutory provisions and as to how the authorities have understood the word "alteration" employed in condition No. 6 of the C form licence, from 1975 to 1987. When the question of obtaining permission from the licensing authority for reduction in rates of admission, came up for consideration, the then Board of Revenue, in its letter in L.Dis 5297/ 75, dated October 20, 1975, has ordered that, "what had been fixed were only the maximum rates and that it was open to the licensees to fix any ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with word "actual". In the year 1987, the Government, by G.O. Ms. No. 1016, Home (Cinema) Department, dated April 23, 1987, have issued a notification, by which, an amendment to condition No. 6 in C form licence was issued and the said amendment is extracted hereunder: "In the said Rules, in form C, in condition 6, for the word 'increase', the word 'alteration' shall be substituted." The moot question to be considered in these writ petitions is, what is the effect of the change to the word from "increase" to "alteration" in condition No. 6 of C form licence and by such modification in the language, whether the Legislature has imposed a condition that, whenever the theatre owners reduce the rates of admission to any class fixed earlier by the licencing authority, prior permission is required for both reduction in rates of admission and also for enhancement of the rates from the date of amendment, i.e., prospectively or whether such amendment would cover all the cases, where the rates of admission were reduced by the theatre owners, without the prior approval of the licensing authority, based on the position, which stood befo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ery proposed change or variation in the gross collection capacity of the place of the entertainment either by virtue of any modification or revision of the rate or rates of admission or any change in the accommodation or class of accommodation as approved by the competent authority, not less than fifteen days prior to such change. Where the rates of admission are modified or revised, the tickets bearing the modified or revised rates shall not be issued until they are stamped with the seal of the Entertainments Tax Officer. The tax as per the revised or modified gross collection capacity shall be payable for the shows held thereafter. Where any modification or revision in the rates of admission has the effect of reducing the gross collection capacity, the proprietor shall be liable to pay tax at the old rates till the tickets bearing the new rates are sealed and issued." Reading of the rules indicate that if the modification or revision of rates of admission or any change in the accommodation as approved by the competent authority should be brought to the notice of the Entertainments Tax Officer, not less than 15 days prior to the change. The rules do not specifically speak ab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of admission, if any, was not agreeable to the Government and that therefore, the Deputy Commercial Tax Officer/Entertainments Tax Officer sent a circular, dated September 17, 1990 to all Assistant Commercial Tax Officers, informing them that the reduction of rates of admission can be done only with the prior approval of the competent licensing authorities. Besides the said authority also revised the assessments covered by the period relatable to the assessment years in question in respect of the aforesaid two theatres, adopting the original rates of admission prescribed by the licensing authority. Such revision of assessment fastened on the licensees with an additional tax burden, impelling them to resort to invocation of writ jurisdiction to quash the revisions of assessment during the years in question." In the above unreported judgment, the points came up for consideration before this court, were as follows: "(1) The Tamil Nadu Cinemas (Regulation) Act, 1955 (Tamil Nadu Act IX of 1955--for short, 'TNC(R) Act') and the Tamil Nadu Cinemas (Regulation) Rules, 1957 (for short, "the TNC(R) Rules") cannot at all be relied upon for levying tax under the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ous classes of accommodation for the period subsequent to the periods, covered by the revised assessments in question. The vexed question is as to whether such reduced rates of admission should be presumed to be retrospective in operation. The answer to such a question cannot be anyone except an emphatic 'no', in the facts and circumstances of the case. There cannot at all be any presumption in law in respect of any retrospectivity." As regards the tickets bearing the revised or modified rates of admission and sealed by the Entertainments Tax Officer for the purpose of issuance to the spectators, the learned single judge has observed that all these things appeared to have been done, without the verification of the licensing authority concerned, as to the grant of approval for such reduced rates. The learned single judge has further observed that the Entertainments Tax Officer in passing orders relatable to assessment proceedings, discharge his functions in a quasi-judicial way and basing of reasons in such orders is a sine qua non. The learned single judge has further observed that if such authority passes orders therefor without due application of mind, as to the rel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... licence has not been considered. Whether the judgments relied on by the learned counsel for the Revenue can be applied as a precedent to the facts of the present case, has to be examined on the basis of the law laid down by the Supreme Court in Bihar School Examination Board v. Suresh Prasad Sinha reported in [2009] 8 MLJ 1306 (SC), wherein, their Lordships have extracted some of the earlier decisions on the law of precedent, as follows: "14. The courts should guard against the danger of mechanical application of an observation without ascertaining the context in which it was made. In Commissioner of Income-tax- v. Sun Engg. Works (P) Ltd. [1992] 198 ITR 297 (SC); AIR 1993 SC43; [1992] 4 SCC 363, this court observed: '. . . It is neither desirable nor permissible to pick out a word or a sentence from the judgment of this court, divorced from the context of the question under consideration and treat it to be the complete "law" declared by this court. The judgment must be read as a whole and the observations from the judgment have to be considered in the light of the questions which were before this court. A decision of this court takes its colour from the quest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of a general character which I wish to make, and one is to repeat what I have very often said before, that every judgment must be read as applicable to the particular facts proved, or assumed to be proved, since the generality of the expressions which may be found there are not intended to be expositions of the whole law, but (are) governed and qualified by the particular facts of the case in which such expressions are to be found. The other is that a case is only an authority for what it actually decides. I entirely deny that it can be quoted for a proposition that may seem to follow logically from it. Such a mode of reasoning assumes that the law is necessarily a logical code, whereas every lawyer must acknowledge that the law is not always logical at all.' 16. In Bhavnagar University v. Palitana Sugar Mills (P) Ltd. AIR 2003 SC 511; [2003] 2 SCC 111, this court observed: '. . . It is also well-settled that a little difference in facts or additional facts may make a lot of difference in the precedential value of a decision.' 17. As held in Bharat Petroleum Corporation Ltd. v. N.R. Vairamani AIR 2004 SC 4778; [2004] 8 SCC 579; [2004] 4 MI J 147, a decision cannot be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent, dated April 23, 1987, in condition No. 6 in form C licence for the word "increase", the word "alteration" shall be substituted. In my considered opinion, the word "alteration" employed in rule in 83(1A)(c) in condition No. 6, prior to the amendment was indicative of only increase in rates of admission for the reason that the words "such increase" occurring in the latter part of the sentence assumes significance in interpreting the meaning of the word "alteration". Prior to the amendment, the taxing authorities themselves, have understood that the theatre owners need not obtain any prior approval from the licensing authority, in the case of reduction in rates of admission, if the rates of admission are less than the maximum rate, fixed by the licensing authority and that is the reason, why the then Board of Revenue has issued instructions to the Entertainments Tax Officers to deal with the request for change or variation in the gross collection capacity by virtue of any modification or revision of the rate or rates of admission in accordance with rule 32E or 32M of the Tamil Nadu Entertainments Tax Rules, 1939, as the case may ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... easons for remedy. A perusal of the judgment relied on by the Revenue shows that there was some ambiguity regarding assessment of the returns and consequently, the levy of entertainment tax. Therefore, administrative instructions seemed to have issued in the year 1990, clarifying that prior approval from the licensing authority is required in the case of reduction in rates of admission. It is thus evident that the Legislature, which noticed the defect has resorted to remedy the same by substituting the word "increase", occurring in condition No. 6 of C form licence as "alteration" to mean alteration of any kind. As regards interpretation of the provision or word employed in a statute, it is useful to extract some of the decisions of the Supreme Court. In Smt. Hira Devi v. District Board, Shahjahanpur reported in AIR 1952 SC 362, the Supreme Court, at paragraph 14, held that: ". . . No doubt it is the duty of the court to try and harmonise the various provisions of an Act passed by the Legislature. But it is certainly not the duty of the court to stretch the words used by the Legislature to fill in gaps or omissions in the provisions of an Act." In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt cannot rewrite, recast or reframe the legislation for the very good reason that it has no power to legislate. The power to legislate has not been conferred on the courts. The court cannot add words to a statute or read words into it which are not there. Assuming there is a defect or an omission in the words used by the Legislature the court could not go to its aid to correct or make up the deficiency. Courts shall decide what the law is and not what it should be. The court of course adopts a construction which will carry out the obvious intention of the Legislature but could not legislate itself. But to invoke judicial activism to set at naught legislative judgment is subversive of the constitutional harmony and comity of instrumentalities. . ." The Supreme Court held in Gurudevdatta VKSSS Maryadit v. State of Maharashtra reported in [2001] 4 SCC 534, that, ". . . it is a cardinal principle of interpretation of statute that the words of a statute must be understood in their natural, ordinary or popular sense and construed according to their grammatical meaning, unless such construction leads to some absurdity or unless there is something in the context or in the obje ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h the Legislature in its wisdom has deliberately not incorporated." Yet another substantial ground, though raised, not considered by all the authorities, is regarding the retrospective application of the amendment brought about in 1987, by substituting the word, "increase" as "alteration". It could be seen that the amendment to the word, "alteration" has been made after eight years and there is nothing to indicate in the amendment that the substitution effected will have any retrospective operation. In Income-tax Officer v. Ponnoose (M.C.) [1970] 75 ITR 174 relied on by the petitioner before the Deputy Commissioner (CT), Salem Division, third respondent, the court held as follows (at page 177 of ITR): "The courts will not, therefore, ascribe retrospectivity to new laws affecting rights unless by express words or necessary implication it appears that such was the intention of the Legislature . . . where any rule or regulation is made by any person or authority to whom such powers have been delegated by the Legislature it may or may not be possible to make the same so as to give retrospective operation. It will depend on the language employed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tment shall be retrospective, the courts will give it such an operation." In N.T. Devin Katti v. Karnataka Public Service Commission reported in [1990] 3 SCC 157, the Supreme Court held that: "A statutory rule or Government order is prospective in nature unless it is expressly or by necessary implication made to have retrospective effect. If the recruitment Rules are amended retrospectively during the pendency of selection, in that event selection must be held in accordance with the amended Rules. Whether the Rules have retrospective effect or not, primarily depends upon the language of the Rules and its construction to ascertain the legislative intent. The legislative intent is ascertained either by express provision or by necessary implication if the amended Rules are not retrospective in nature the selection must be regulated in accordance with the rules and orders which were in force on the date of advertisement. Determination of this question largely depends on the facts of each case having regard to the terms and conditions set out in the advertisement and the relevant rules and order." On perusal of the impugned orders, it could be seen that though the peti ..... X X X X Extracts X X X X X X X X Extracts X X X X
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