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TMI Blog2015 (10) TMI 2602X X X X Extracts X X X X X X X X Extracts X X X X ..... towards the Tamil language and Culture. Therefore, it can be safely said that the exemptions are to woo more viewers and therefore, the benefit of an exemption is only for the viewers, who bare the tax burden. An exemption is not a right. It is only a grant. The authority, granting the same, has powers to impose any conditions. Section 8 of the Act has to be read along with Section 4 of the Act and the provisions of the TNCR Act. Unjust enrichment - Held that: - the collection and retention of tax against the provisions of law is unjustifiable and would amount to unjust enrichment. As evident from the various cases relied upon by the learned senior counsel for the Petitioner above, once it is found that the tax is collected against the statute, the same is liable to be refunded. Any levy of tax or any amount in the like nature would be amenable to Article 265 of the Constitution of India. Further, the Government issued orders in GO.Ms.No.159, Commercial Taxes and Registration (C1) Department, dated 22.08.2007, restricting the concession not to those old or new Tamil films bearing Tamil titles, but only to those conforming with Tamil culture and dignity, that is the movies not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tax Act, permitting the licencee to sell the tickets at a lesser rate than fixed by the competent authority. (e) The issue has been already dealt with by the First Bench of this Court f) The entertainment tax Officers are strictly monitoring the Theatres and the Theatre owners are not collecting any amount up and over the admission rates fixed. (g) The Petitioner is seeking to rewrite the provisions of the Entertainment Tax Act, which is impermissible. (h) The availability or non-availability of exemption or the rate of entertainment tax does not alter the admission rate. (i) The licencees are acting as per the licensing conditions. 4. Mr.P.Wilson, the learned senior counsel appearing for the Petitioner painstakingly contended that the proprietor or the owner of the Theatre is only an agent to collect the tax from the public and remit the same to the Government, as evident from Section 7 of the Tamil Nadu Entertainment Tax Act. The power to grant exemption vested in Section 8 can only be meant to be for the benefit of the viewers and the Section is very clear without any room for any other interpretation than that the tax is to be collected from the viewers. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of exemption is enjoyed by them. The exemption is for promoting Tamil movies. Referring to Section 4 of the Tamil Nadu Entertainment Tax Act,1939, the learned Advocate General submitted that the Entertainment Tax is to be calculated at 30% for new films and 20% for the old films, on each admission and the admission rate is determined by the licensing authority under the Tamil Nadu Cinema Regulations Act. The learned Advocate General contended that the issue has been categorically put to rest by the decisions of the First Bench of this Court made in Cont.P.No.1798 of 2014 and WP.Nos.29757/2013, batch etc., as the Government orders have not been challenged. The learned Advocate General also pointed out that the stand of the 3rd respondent in the earlier counter is incorrect and only the current stand that the exemption is for the benefit of the Theatre owners is to be considered. It was also submitted that the Officers of the Commercial Taxes Department are monitoring the Theatres as to whether the ticket charges are collected as per the rates indicated by the licencing authority and tax, whenever there is no exemption, is promptly paid. Placing reliance upon the Judgement reported ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... C 536 (Mafatlal Industries Limited and others Vs. Union of India and others), the Honourable Supreme Court has held as under:- 108. The discussion in the judgement yields the following propositions. We may forewarn that these propositions are set out merely for the sake of convenient reference and are not supposed to be exhaustive. In case of any doubt or ambiguity in these propositions, reference must be had to the discussion and propositions in the body of the judgement. (i) Where a refund of tax/duty is claimed on the ground that it has been collected from the Petitioner/ Plaintiff whether before the commencement of the Central Excise and Customs Laws (Amendment) Act, 1991 or thereafter by misinterpreting or misapplying the provisions of the Central Excises and Salt Act, 1944 read with Central Excise Tariff Act, 1985, or Customs Act, 1962, read with Customs Tariff Act or by misinterpreting or misapplying any of the rules, regulations or notifications issued under the said enactments, such a claim has necessarily to be preferred under and in accordance with the provisions of the respective enactments before the authorities specified thereunder and within the period of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the High Court of the Supreme Court challenging the constitutional validity of a provision, but fails, he cannot take advantage of the declaration of unconstitutionality obtained by another person on another ground; this is for the reason that so far as he is concerned, the decision has become final and cannot be reopened on the basis of a decision on another person's case; this is the ratio of the opinion of Hidayatullah,C.J. In Tilokchand Motichand (1969-1-SCC-110) and we respectfully agree with it. Such a claim is maintainable both by virtue of the declaration contained in Article 265 of the Constitution of India and also by virtue of Section 72 of the Contract Act. In such cases, period of limitation would naturally be calculated taking into account the principle underlying clause (c) of sub-section (1) of Section 17 of the Limitation Act, 1963. A refund claim in such a situation cannot be governed by the provisions of the Central Excises and Salt Act or the Customs Act, as the case may be, since the enactments do not contemplate any of their provisions being struck down and a refund claim arising on that account. In other words, a claim of this nature is not contemplat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t differently the expression incidence of such duty in relation to its being passed on to another person would take it within its ambit not only the passing of the duty directly to another person but also cases where it is passed on indirectly. This would be a case where the duty paid on raw material is added to the price of the finished goods which are sold in which case the burden or the incidence of the duty on the raw material would stand passed on to the purchaser of the finished product. It would follow from the above that when the whole or part of the duty which is incurred on the import of the raw material is passed on to another person then an application for refund of such duty would not be allowed under Section 27(1) of the Act. 18. Section 27(2) of the Act, as already noticed, deals with the cases where application for refund had been made prior to the amendment of the Act in 1991. Sub-section (a) of the proviso is similar to the provisions contained in Section 27(1) of the Act i.e. refund of duty paid by the importer will be allowed if he had not passed on the incidence of such duty to any other person. Section 28C of the Act would have reference to those goods wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Constitution of India nothing is realizable as a tax or by way of recovery of tax or any action akin thereto which is not permitted by law. 21. Increase in rate of interest in terms of Section 26C of the Act, thus, has a direct nexus with the statutory impost. The action on the part of the appellants in rounding up of the interest, thus, was wholly unjustified. Once it is held that increase in interest in a justifiable manner pertains to passing of the burden of tax, the contention that the same had been done by the bank in exercise of its contractual power must be rejected. A taxing statute must be construed reasonably. Nothing can be realised by way of tax or akin thereto which has not been authorised by the Parliament. 22. The Executive cannot levy tax. It, for the said purpose, therefore, cannot even take recourse to the process of interpretation of a statute. 13. In 2009 (8) SCC 235 (State of Maharashtra and others Vs. Swanstone Multiplex Cinema Limited) , it has been held thus:- 22. We may hereto below notice the method of computation which the respondent themselves showed vis-`-vis the correct method of computation and entertainment duty as per the Stat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st be confined only to the extent provided for therein. 26. A proprietor of a multiplex cinema theatre when collects tax by way of entertainment duty from the cinema-goers, it would be entitled to collect such tax which is subject to levy and collection by the State. The authority in this behalf is implicit. For the aforementioned purpose, only the statute provides for the mode and manner in which the tax is to be collected. Once it is held that the amount realizable from the cinema-goers by way of entertainment duty comes within the purview of the definition of `tax', we see no reason to justify the conclusion of the High Court that the State Government for all intent and purport conferred the retention benefit. If the State intended to provide for a grant, the same should have expressly been stated. Respondent cannot be granted a huge amount by a welfare state indirectly which it cannot do directly. 31. In absence of any express statutory provision, allowing the proprietors of the multiplex theatre to retain the benefit, it is difficult for us to arrive at such an inference. The State has power to impose tax. The State has a power to grant exemption or concession in res ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tax will be due to the Government and not to the proprietor of the cinema. There is however no evidence in this case to show whether the Appellant collected the tax by adding the sum of one anna to a four anna ticket, or by collecting five annas in lump sum from the picture goes undertaking to pay whatever tax that may be duo thereon to the Government from out of the collections. Ex.B1 is a typical statement of the tickets sold. That gives only particulars of the number of tickets sold, total amount collected and tax due thereon at one anna per ticket. It does not show that one anna was collected from each member of the audience on the representation that it was for entertainment tax. But the learned trial judge has observed in his judgement thus: Further it will be seen that the collections of tax at the rate of one anna per ticket of 5 annas was made by holding out that it was payable to the Government. The seal or stamp on the ticket bears that the tax payable is one anna. The correctness of this statement has not been challenged in the grounds of this appeal. It would follow that although no five annas ticket during the relevant period has been produced in this case, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te with the duty of collecting a tax as a part of his business can be said to receive it as his business income, arose under the Madras General Sales Tax Act in Velayudhan Vs. Agricultural Income Tax and Sales Tax Officer, Perumbavoor, 1953 4 STC 338 (AIR 1953 Trav-Co 618). Subramania Iyer J while considering the question whether a tax realised by a dealer from his customer could be included in the dealer's turn over thereby subjecting it to further tax observed. The sales tax collected by the Petitioner is immune from the levy of any sales tax as the collection was made by him for and on behalf of the State and his obligation was to make it over to the State on whose behalf he made the collection. This view was affirmed in Agricultural Income Tax and Rural Sales Tax Officer Perumbavoor Vs. Velayudhan 1954 5 STC 285. In K.M.Kunju Vs. State of Travancore Cochin, 1954 5 STC 462: AIR 1956 Trav Co 111,it was held that any amount collected by a registered dealer from his customers by way of tax due to the Government regardless of the fact whether the tax so collected was actually due on the sales or not was a collection which had to be handed over to the State. In Deputy Commi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rchasers and, therefore, they were not entitled to get a refund. Only the persons on whom lay the ultimate burden to pay the amount would be entitled to get a refund of the same. The amount deposited towards the Fund was to be utilised for the development of sugarcane. If it is not possible to identify the persons on whom had the burden been placed for payment towards the Fund, the amount of the Fund can be utilised by the Government for the purpose for which the Fund Was created, namely, development of sugarcane. There is no question of refunding the amount to the respondents who had not eventually paid the amount towards the Fund. Doing so would virtually amount to allow the respondents unjust enrichment. 16. In 1999 (6) SCC 104 (K.S.Sathyanarayana Vs. V.R.Narayana Rao) , it has been held thus:- 8. It was a case where instead of going into a protracted trial, trial court could have decreed the suit of the plaintiff against the 1st defendant as well at the stage of Order X (Examination of Parties by the Court) of the Code of Civil Procedure. After the 1st defendant admitted having received rupees one lakh from the plaintiff he could not retain that money on the spacious ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by the court as the unjust retention of a benefit to the loss of another, or the retention of money or property of another against the fundamental principles of justice or equity and good conscience. A person is enriched if he has received a benefit, and he is unjustly enriched if retention of the benefit would be unjust. Unjust enrichment of a person occurs when he has and retains money or benefits which in justice and equity belong to another. 153. Unjust enrichment is the unjust retention of a benefit to the loss of another, or the retention of money or property of another against the fundamental principles of justice or equity and good conscience. A defendant may be liable even when the defendant retaining the benefit is not a wrongdoer and even though he may have received [it] honestly in the first instance. (Schock v. Nash, 732 A.2d 217, 232-33). 154. Unjust enrichment occurs when the defendant wrongfully secures a benefit or passively receives a benefit which would be unconscionable to retain. In the leading case of Fibrosa v. Fairbairn, [1942] 2 All ER 122, Lord Wright stated the principle thus : ....(A) Any civilized system of law is bound to provide rem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... First of all it has to be remembered that burden of entertainment tax is ultimately borne by movie goer rather than by a Producer, distributor or film exhibitor. The taxing event under the Act is on the entertainment of the movie goer. The rate of tax is determined on the basis of the amount collected from such person. We fail to see any reason as to why a person who sees a film dubbed into Tamil would be required to pay more than a person who watches an original Tamil film. 11. Even assuming that it is the producer who has to pay the tax, discrimination is writ large on the face of it an we fail to see any rational for the purpose of payment of entertainment tax at different rates. A producer, who produces a film in Tamil and dubs such film in other language such as Telugu, English or Hindi and exhibits such film within Tamil Nadu is not required to pay at the rate of 50%. Similarly, a producer, whether within Tamil Nadu or without, produces a film in any other language such as Telugu, English or Hindi and exhibits such films within Tamil Nadu are also not required to pay entertainment tax at higher rate. Only a producer who produces a film in any other language such as Telugu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the manufacturer, then the method set out in paragraph 2(1)(b) of the notification is to be followed which is as follows :- For the purpose of determining the basic period, where the clearance of all specified goods are compared in terms of value as specified in column (4) of the said table, such value shall be value as determined under S. 4 of the Central Excises and Salt Act, 1944..... As adjusted with reference to the average index number of wholesale prices in India for manufacturers. There also the excise authorities had taken the view that since the benefit of exemption had to go to the consumer, the manufacturer was not entitled to the benefit of adjusting the actual money value of the goods in terms of the normal wholesale price with the index number for wholesale price manufactures current for the relevant years in India. The stand of the excise authorities was questioned in a writ petition before the High Court. The manufacturer contended that the benefit of paragraph 2(1)(b) of the notification requiring the actual value of the goods manufactured by the manufacturer under S. 4 modified by adjustment with the index under the wholesale price manufactures for th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es not mean that the excise duty is imposed on the selling price of the goods. This is demonstrated by the fact that it may be imposed only on the weight or volume or number irrespective of either the selling price or the tariff value. Further, it is quite open to the Government to grant an exemption subject to conditions. If the object of the Government in granting an exemption is to benefit the consumer by the reduction of the selling price of the goods, then the Government notification granting the exemption should itself say so. For instance, notification GSR 1089, dated 29th April, 1969 expressly stated that the benefit of the exemption was to be available only to those manufacturers who produce the proof to the satisfaction of the Collector that such benefit has been passed on by them to whom they have sold the goods. Such a condition has to be a part of the exemption notification. For the notification is 'law'. But after enacting the law, such a condition cannot be imposed by administrative directions, guidelines or press note. These administrative acts cannot go contrary to the statutory notification. On the question as to how the exemption provided for the i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... able only in cases where the excise duty is reduced from the wholesale price and the benefit of exemption is passed on to the consumers. As already pointed out the number in which the exemption notification is interpreted by the excise authorities involves the application of the notification twice, while the method adopted by the petitioners in the writ petitioners is a simple method giving due effect to the notification which provides for deduction of the portion of the excise duty from the total liability for excise duty. 21. In Cont.P.No.1728/14 batch etc., the Division Bench of this Court has held as under:- 4.Number of concerns which have been expressed by the respective petitioners, in our view, stand redressed if the G.Os. are read in the context of the Circular. The solution is crystallised in terms of para 9 of the Circular which reads as under:- 9.While so, it is vital to monitor the implication of the said Government Order, issued for each Tamil titled movie that: (i) Up to the date of issue of Government Order granting exemption, entertainment tax was properly collected from the viewers and remitted to the State exchequer, in accordance to the provisio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urt is of the view that the order of the Division Bench of this Court does not prevent this court from deciding the dispute on merits. 23. Section 4 of the Tamil Nadu Entertainment Tax Act reads as follows:- 4 . Tax on payment for admission to entertainments .- (1) There shall be levied and paid to the State government, a tax (hereinafter referred to as the entertainments tax) calculated at the following rates, namely:- (A) at the rate of 2 [thirty] per cent of the gross payment for admission inclusive of the amount of the tax for new film; and (B) at the rate of 2 [twenty] per cent of the gross payment for admission inclusive of the amount of the tax for old film. A reading of the above Section indicates two acts. One is levy and the other is the payment to the state Government, implying that the Theatre owners collect the taxes from the viewers and remit it to the authorities. There cannot be any second opinion about the same. This court is of the view that the judgements relied upon by the counsel for the Petitioner in 2009 (8) SCC 235, AIR 1961 Mad 525 and AIR 2007 Mad 317 cited supra would be applicable and the judgement relied upon on behalf of the respon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ; 1/ Total Ticket Price paid by Viewer ₹ 120/- Unexempted Old Tamil Movies Net Rate of Admission ₹ 95.20 Entertainment Tax ₹ 23.80 Maintenance Charge ₹ 1/- Total Ticket Price paid by Viewer ₹ 120/- Exempted Tamil Movies Net Rate of Admission ₹ 119/- Entertainment Tax Nil Maintenance Charge ₹ 1/- Total Ticket Price paid by Viewer ₹ 120/- 27. The admission amount is indisputably paid by the viewers. The rate of tax is to be calculated based on the admission amount and not on the number of seats. Therefore, the theatre owners cannot even have any control over the tax amount, as the very calculation itself depends upon the viewers who visit the theatre. If the contention of the respondents are agreed, it would mean that the theatre owners pay entertainment tax at full rate of occupancy even if there are only some viewers. The said contention is fallacious and far from truth. The chart produced by both the parties are similar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of old and new films screened were in keeping with Tamil culture and dignified. 2. Just because films were titled in Tamil, it could not be ensured that the core of the stories of such films were in keeping with Tamil culture and dignified. Moreover, some films without standard get tax exemption just because they are titled in Tamil. 3. In the above circumstances, along with the condition that the films should be titled in Tamil for getting entertainment tax exemption, the following stipulations are determined and order issued. 1. Such a film should have obtained 'U' certificate from the Film Censor Board. 2. The core of the story of the film should be suitable for the development of Tamil language and culture. 3. Except for the scenes using other languages in consideration of the necessity of the film, mostly the dialogues of the film should be in Tamil. 4. If violence and obscenities are found more,such a film will lose eligibility for tax exemption. The above stipulations will be applicable for pending applications seeking entertainment tax exemption for films. Further the Government orders that a new special committee will be formed for viewing fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Petitioner above, once it is found that the tax is collected against the statute, the same is liable to be refunded. Any levy of tax or any amount in the like nature would be amenable to Article 265 of the Constitution of India. This court has already held that what is paid by the 5th Respondent is only the amount collected from the Petitioner and other viewers. Hence, the Petitioner is entitled to refund of ₹ 107/-. In so for as any similar claim, since it is not possible to refund the sums, the amounts shall be remitted to the Respondents 3 and 4. 31. The impugned circular reads as under:- Circular No.14/2014 Acts Cell IV/13086/2014 Office of the Principal Secretary Commissioner of Commercial Taxes, Chepauk, Chennai-5 Dated: 6.5.2014 CIRCULAR Sub: Tamil Nadu Entertainment Tax Act, 1939 Collection of Entertainments Tax under Section 4 of the TNET Act,1939 certain clarification issued reg. Ref: 1. GO.Ms.No.72, Commercial Taxes and Registration (C1) Department, dated 22.07.2006. 2. GO.Ms.No.147, Commercial Taxes and Registration (C1) Department, dated 20.11.2006. 3. GO.Ms.No.159, Commercial Tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ard of Film Certification. ii. The story should have explicit elements promoting Tamil language and Tamil culture. iii. The dialogue in the film should be in Tamil except these scenes which warranted usage of other language(s) depending upon the context. iv. Vulgarity and violence beyond the tolerable level will make the film ineligible for exemption. 7. Government also ordered constitution of a Committee to watch films that they confined to the above criteria and to recommend entertainment tax exemptions. 8. Based on the recommendations of the committee, by invoking the provisions in sub section 2 of Section 8 of the Tamil Nadu Entertainment Tax Act, 1939, Government have grants exemption from payment of entertainment tax, from the date of issue of the order. 9. While so, it is vital to monitor the implication of the said Government order, issued for each Tamil titled movie that: i. Up to the date of issue of Government Order granting exemption, entertainment tax was properly collected from the viewers and remitted to the State exchequer,in accordance to the provisions of the TNET Act, 1939. ii. From the date of issue of Government Order granting exemption ..... X X X X Extracts X X X X X X X X Extracts X X X X
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