Liberty Talkies & Ors Vs. State of
Gujarat [1971] INSC 29 (21 January 1971)
[J. C. SHAH, C.J., K. S. HEGDE AND A. N.
GROVER, JJ.]
ACT:
Bombay, Entertainments, Duty Act (1 of 1923),
ss. 3 and 4 and 7 of the Rules made thereunder-Scope of.
HEADNOTE:
From March 1960 to January 1962 entertainment
duty, was levied on the appellants at the rates, prescribed in s. 3 of the
Bombay Entertainment Duty Act, 1923, on the net pi-ice receivable by the
proprietor of a theatre and not on the total amount including entertainment
duty collected from visitors. Thereafter entertainment duty was levied on the
aggregate of the net value of the ticket and duty paid by the visitors. The
appellants challenged the validity of the levy but the High Court dismissed
their petition.
In appeal to this Court,
HELD : (1) By s. 3 of the Act duty is
leviable at therates prescribed on all payments for admission and the method of
levy isprescribed by s. 4.Under s. 4(1) on the ticket for admission to any
entertainment, an impressed, embossed, engraved or adhesive stamp issued by the
State Government of the value specified in s. 3 must be affixed. The definition
of 'payment for admission' in s. 2(b) includes payment for any purpose
whatsoever connected with an entertainment which a person is required to make
as a condition of attending or continuing to attend the entertainment. The
price which the visitor pays for a ticket for admission to the entertainment is
thus the value of the stamp affixed and the net value of the ticket, and the
proprietor of the theatre is therefore liable to pay entertainment duty on the
gross sum received from a visitor, [402 E, H; 403 A-B; 404 D] (2)The use of the
expression "affixed to it a stamp of the value of the duty payable out of
the said price of admission" "in rule 7 of the rules framed under the
Act does not support the view that the amount of entertainment duty represented
by the ticket alone is payable by the proprietor. It only means that the
proprietor shall specify on the ticket the amount chargeable by him to the
visitor. [403 F-G] (3) The proprietor thus passes on a part of the duty payable
by him to the visitor but he does not act as an agent of the Government for
collecting the duty, because, tinder ss. 3 and 4 the liability for payment of
the duty is imposed upon the proprietor and not upon the visitors to the
theatre. [402 H; 403 B] (4)A proprietor paying entertainment duty on the total
amount received by him 'from the visitor will never be able to collect the full
amount of entertainment duty from such visitor. A part of the duty payable by
him will have to come out of the amount received by him as the net charge for a
ticket. \But-questions of hardship cannot justify a departure from the
provisions of ss. 3 and 4 of the Act, The Legislature must be deemed to have
contemplated that only a part of the entertainment duty levied by the
Government must be collected from the visitors to the theatre and the balance
should be paid by the proprietor. [4O4 F-H] 399 (5)But the Act contains no
provision for reopening assessments already made and the State cannot therefore
reopen the concluded assessments prior to January 1962. [405 B]
CIVIL APPELLATE JURISDICTION: Civil Appeals
Nos. 416 to 426 of 1967.
Appeals by special leave from the judgment
and order dated November 8, 9, 1968 of the Gujarat High Court in Special Civil
Applications Nos. 595, 634, 636, 693, 694, 695, 696, 771 of 1962, 57 and 128 of
1963 and 39 of 1964.
S.T. Desai, 1. N. Shroff and M. N. Shroff for
the appellants (in all the appeals).
C.K. Daphtary, K. L. Hathi, B. D. Sharma for
S. P. Nayar, for the respondents (in all the appeals).
The Judgment of the Court was delivered by
Shah, C. J.-Under the Bombay Entertainments Duty Act 1 of 1923 entertainment
duty is chargeable on the total collections from the visitors to a theatre. On
March 18, 1960 the Collector, Junagarh issued instructions to his subordinate
officers directing them to levy entertainment duty at the prescribed rate only
on the net price receivable by the proprietor of the theatre and not on the
total amount including entertainment duty collected from the visitors.
Entertainment duty so computed was paid till
January 1962 by the appellants who own a theatre at Junagadh.
On January 11, 1962 the Government of Gujarat
issued a memorandum that "the duty (entertainment duty) is a percentage of
the payment for admission i.e. the amount which a person pays for being
admitted to witness the entertainment, inclusive of the various items mentioned
in clause (b) of section 2 of the Bombay Entertainment Duty Act, 1923. The
amount which a person pays includes both sums-(i) what the Manager has to pay
by way of duty; and (ii) what the Manager can retain as Net receipts' and hence
the duty has to be charged on the total amount payable by the person buying the
ticket, including any SLIM charged separately by way of duty." Pursuant to
that notification entertainment duty was levied on the gross sum levied and
paid by the visitors for admission to the theatre.
By a petition moved in the High Court of
Gujarat the appellants challenged the validity of the memorandum 'dated January
11, 1962 and the notice of demand issued pursuant thereto and urged that the
primary liability for payment of entertainment duty is by the Act imposed upon
the visitor to the theatre, and that the proprietor of the theatre is merely an
agent of the Government for collecting the duty :
and that the proprietor has under 400 the Act
to pay the duty which he collects from the visitors;
and that he cannot be required to pay an
amount which he does not collect from the visitors. The High Court rejected the
petitions and against the order of the High Court this appeal has been
preferred.
The Act and the Rules framed there under
prescribe the method of collection of entertainment duty. On each ticket issued
to a person entitling him to enter the theatre for entertainment, a revenue
stamp of a specified face value is affixed. The total amount that the visitor
pays consists of two items, the net charge which the proprietor makes for the.
ticket and the value of the stamp. Under the memorandum issued on March 18,
1960 the aggregate of the duty received by the appellants was paid over to the
Government and the net value of the tickets remained with the proprietor. Under
the memorandum issued on January 11, 1962, the duty payable to the Government
was calculated at the appropriate rate applicable to the aggregate of the net
value of the ticket and the duty paid by the visitor. In consequence of the
notification the proprietor could collect from the visitor the amount shown as
entertainment duty on the ticket but he was obliged to pay duty equal to the
amount computed on the total amount paid by the visitor at the appropriate
rate. The difference between the entertainment duty computed on the total value
of the ticket and the value of the stamp affixed on the ticket was therefore
borne by the proprietor.
The relevant provisions which have a bearing
on the question are these : Section 3 of the Act is the charging section.
Insofar as it is relevant it provides:
"(1) There shall be levied and paid to
the State Government on all payments for admission to any entertainment a duty
(hereinafter referred to as "entertainments duty" at the following
rate(a)* * * (b) in any other case
1. * * * * *
11. in any other area(i)out of the first 100
naye paise of payment for ad30 per cent of such mission payment.
(ii)out of the next too naye paise of payment
for ad45 per cent of such mission payment.
(iii)out of the balance of the total payment
for ad60 per cent of such mission payment. (1 A) (2)Where the payment for
admission to an entertainment is made by means of a lump sum paid as a
subscription or contribution to any society, or for a 401 season ticket or for
the right of admission to a series of entertainments or to any entertainment
during a certain period of time, or for any privilege, right, facility or thing
combined with the right of admission to any entertainment or involving such
right of admission without further payment or at a reduced charge, the
entertainments duty shall be paid on the amount of the lump SUM.
Section 3A provides for payment of duty at
the appropriate rates on complimentary tickets. By that section entertainment
duty at the appropriate rates prescribed under s. 3 is payable as if full
payment had been made for admission to the entertainment according to the class
of seat or accommodation which the holder of such, ticket shall, be deemed to
have been admitted for payment for the purpose of the Act. Section 4 provides
for-the method of levy of duty. It provides, insofar as it is relevant :
"(1) Save as otherwise provided by this
Act, no person other than a person who has to perform some duty in connection
with an entertainment or a duty imposed upon him by any law, shall be admitted
to any entertainment, except with a ticket stamped with an impressed, embossed,
engraved or adhesive stamp(not before used) issued by the State Government for
the payments for admission to the entertainment duty, has been paid.
(2) The State Government may, on the
application of any entertainment in respect of which the entertainment duty is
payable under section 3, allow the proprietor on such conditions as the State
Government may prescribe to pay the amount of the duty due(a) by a consolidated
payment of a percentage to be fixed by the (State Government) of the gross sum
received by the proprietor on account of payments for admission to the
entertainment and on account of the duty;
(b) in accordance with returns of the
payments for admission to the entertainment and on account of the duty;
(c) in accordance with the results recorded
by any mechanical contrivance which automatically registers the number of
persons admitted.
(3)* * * * * L807Sup CI/71 402 Section 6
provides for exemptions from payment of entertainment duty in certain specific
classes of cases.
Section 7 authorises the State Government to
make rules for securing the payment of the entertainment duty and generally for
carrying into effect the provisions of the Act. The expression "entertainment"
is defined in s. 2(a) as including any exhibition, performance, amusement, game
or sport to which persons are admitted for payment. A cinematograph show is
"entertainment" within the meaning of the Act. Section 2(b) defines "payment
for admission" as including(ii) any payment for seats or other
accommodation in a place of entertainment.
(iv) any payment for any purpose whatsoever
connected with an entertainment which a person is required to make as a
condition of attending or continuing to attend the entertainment in addition to
the payment, if any, for admission to the entertainment;" Section 2(c)
defines "proprietor" in relation to any entertainment as including
any person responsible for, or for the time being in charge of, the management
thereof.
By section 3 the duty is levied at the rates
prescribed on all payments for admission and the method of levy is prescribed
by s. 4(2). The proprietor is enjoined by S. 4(1) not to admit any person to an
entertainment without a ticket. The proprietor pays the entertainment duty
determined in the manner provided by clauses (a), (b) & (c) of sub-clause
(2) of s. 4. He is permitted by the Act to collect entertainment duty on the
net amount receivable by him, but he does not on that account become an agent
for the Government. The charge is by s. 3 on payments received by the
proprietor for admitting visitors to entertainment.
Even where a ticket is not issued for an
individual show but payment is received "by means of a lump sum" as
subscription or contribution to any society, or by. season ticket or for the
right of admission to a series of entertainments or during ascertain period of
time, or for any privilege, right, facility, thing combined with the right of
admission to any entertainment without further payment or at a reduced charge,
the entertainments duty is payable on the lump sum :
see s. 3 (2). Where a complimentary ticket is
issued the duty is payable by the proprietor at the appropriate as if full
payment had been made rate prescribed under the Act for admission to the
entertainment. These provisions leave no room for doubt that liability for
payment of the duty is imposed upon the proprietor and not upon the visitors to
the theatre. Under s. 4(1) on the ticket for admission to any entertainment,
403 an impressed, embossed, engraved or adhesive stamp (.not before used)
issued by the State Government of the value specified. in s. 3 must be affixed.
The price which the visitor pays for a ticket for admission to 'an
entertainment is the value of the stamp affixed and the net value of the
ticket. But the statutory liability to pay the entertainment duty is imposed
upon the proprietor and not on the visitor. The proprietor it is true passes on
a part of the duty payable by him to the visitor, but even in respect of that
amount he does not act as an agent of the Government.
The rules framed under the Bombay
Entertainments Dirty Act, 1923 do not also suggest a contrary scheme. Rule 7,
insofar as it is relevant, provides :
"Except as provided in rules 15 and 23,
every dutiable ticket, not being a complimentary ticket, issued on payment for
admission to entertainment shall be in three parts. One part shall remain on
the ticket book and the remaining two parts shall be detached there from and
issued to the purchaser. Every dutiable ticket shall have each part clearly
marked with the price of admission. and with the date and show for which it is
available and also with the book number and the serial numbers and shall also
have securely affixed to it a stamp of the value of the duty payable out of the
said price of admission.
A similar provision is made in respect of
"plural tickets" where a number of persons are to be admitted on a
single ticket. The use of the expression "affixed to it a stamp of the
value of the duty payable out of the said price of admission" does not
support the view that the amount of entertainment duty represented by the
ticket alone is payable by the proprietor. It only means that the proprietor
shall specify on the ticket the amount chargeable by him to the visitor and the
duty in respect of which the stamp has been affixed. Rule 7 cannot operate to
modify the charging section 3, nor section 4 relating to the method of levy.
Rule; 15 and 23 which are referred to in r. 7 also do not support the
submission made by counsel for the appellant. Rule 15 deals with unstamped
tickets and r. 23 deals with the form of exemption granted by the District
Magistrate or the Commissioner of Police. Rule 16 imposes.
a duty upon every proprietor either making a
consolidated payment under cl. (a) of sub-s. (2) of s. 4 or making payment in
accordance with return of the payments for admission under cl. (b) of sub-s.(2)
of s. 4, within ten days of the date of entertainment and to submit to the
prescribed 404 officer a return in Form "B" showing the number of
tickets (not being complimentary tickets) issued at each rate, the serial
number of tickets issued, the gross amount received by sale of tickets and the
amount of duty payable to the State Government. Under section 4(2) (a) the
consolidated payment is a percentage of the gross sum (.not charge and the
entertainment duty) received by the proprietor on account of payments for
admission to the entertainment.
That duty is charged under s. 4 (2) (b) in
accordance with the returns relating to the payments for admission to the
entertainment, under r. 16 the duty is again chargeable on the gross amount
received by the proprietor. The definition of the expression "payment for
admission" in S. 2(b) of the Act, is an inclusive definition; it includes
by clause (iv) payment for any purpose whatsoever "connected with an
entertainment which a person is required to make as a condition of attending or
continuing to attend the entertainment". In our judgment entertainment
duty is a payment which the proprietor is required to make as a condition for
enabling visitors to attend or continue to attend the entertainment. Without
such a payment the visitor cannot be admitted to the entertainment under s.
4(1) of the Act. That being so the expression
"payment for admission" includes entertainment duty.
We agree with the High Court that the
appellant was liable to pay duty computed in the manner provided by S. 3 ( 1 )
(b) (ii) on the total amount received by the proprietor.
But the method of levy of entertainment duty
from the proprietors involves some hardship. It is implicit in the Act that the
proprietor is entitled "to pass on the liability" for payment of
entertainment duty to the visitors. But the visitor only pays the amount
represented by the stamp affixed on the ticket. A proprietor paying
entertainment duty on the total amount, received by him from the visitor will
never be able to collect the full entertainment duty from the visitor. Apart of
the duty payable by him Will have to come out of the amount received by him as
net charge for the ticket. But we are dealing with a taxing statute and
questions of hardship cannot justify us in departing from the provisions of ss.
3 and 4 of the Act. The Legislature must be deemed to have contemplated that
only a part of the entertainment duty levied by the Government may be collected
in the manner provided from the visitors to the theatre and the balance shall
be paid by the proprietors. It may be observed that between March, 18, 1960 and January 11, 1962 the appellant collected and paid the duty which was actually
received from the visitors to the theatre by stamps affixed on the tickets
issued to them according to the notification issued by the Collector. It was
thereafter when a fresh memorandum dated January 11, 1962 was issued requiring
the proprietors of the theatres to pay tax on the aggregate amount of the net 4
05 value of the ticket and the entertainment duty that the proprietor was
called upon to pay the difference. Till January 11, 1962 the proprietor acted
pursuant to the memorandum dated March 18, 1960 issued by the Collector and
collected the duty and paid it over. The Government of Gujarat later advised
that the method of collection notified by the Collector was not the correct method.
But the 'Act contains no provision for reopening assessments already made. When
pursuant to return by the proprietor, payments were made and accepted under S.
4 (2) (b), the tax may be deemed to be assessed and paid, and the State cannot
thereafter reopen the concluded assessments and seek to levy tax or duty which
has escaped.
The appeals fail except as to the amount
claimed to be due for the period between March 18, 1960 and January 11, 1962.
There will be no order as to costs.
V.P.S. Appeals dismissed.
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