Full Judgment Text
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PETITIONER:
LIBERTY TALKIES & ORS.
Vs.
RESPONDENT:
STATE OF GUJARAT
DATE OF JUDGMENT21/01/1971
BENCH:
[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 amountchargeable 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
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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]
JUDGMENT:
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 percen-
tage 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 appel-
lants 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
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appeal has been preferred.
The Act and the Rules framed thereunder 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 ad- 30
per cent of such
mission payment.
(ii)out of the next too naye paise of payment for ad- 45
per cent of such
mission payment.
(iii)out of the balance of the total payment for ad- 60
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 enter-
tainment 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
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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 tainments
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
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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 therefrom 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
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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.
406