Full Judgment Text
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CASE NO.:
Appeal (civil) 4491 of 2007
PETITIONER:
Entertainment Tax Officer,Madhapur Circle,Hyderabad
RESPONDENT:
M/s Hi Tech Theatre, Madhapur,Hyderabad
DATE OF JUDGMENT: 24/09/2007
BENCH:
S.B. SINHA & H.S. BEDI
JUDGMENT:
JUDGMENT
CIVIL APPEAL NO. 4491/2007
(Arising out of SLP(C) No.18792/2006)
S.B. Sinha, J
Delay condoned.
Leave granted.
(1) Interpretation of Sub-section(6) of Section (5) of the Andhra
Pradesh Entertainments Tax Act, 1939 in the facts and circumstances as obtaining
herein falls for our consideration in this appeal which arises out of a judgment and
order dated 6.1.2006 passed by a Division Bench of the Andhra Pradesh High Court
in Writ Petition No.20087 of 2005 allowing the writ petition filed by the respondent
herein.
(2) The basic fact of the matter is not in dispute.
(3) Respondent owns a cinema theatre. It is exigible to payment of
entertainment tax. Section 4 of the Andhra Pradesh Entertainment Tax Act provides
for the mode and manner for calculating the quantum of tax payable. Section (5) of
the said Act, however, provides for computation of tax on the basis of an option to be
exercised by the owner of the theatre subject to the conditions as may be prescribed
therefor. Indisputably, the State has made rules for calculation of the tax in lieu of
such an option exercised by the owner of the cinema theatre. The scheme for exercise
of such an option is that;(i) a proprietor shall file an application in the prescribed
form before the prescribed authority;(ii) the authority would pass an order upon
giving an opportunity of hearing to the owner of the theatre for correct determination
of the amount and the nature of security to be furnished by the proprietor for proper
payment of tax and the time within which such security to be furnished;(iii) once such
security is furnished the Entertainment Tax Officer is required to grant a permit in
the prescribed form, namely, Form IV wherafter, the proprietor of the cinema theatre
is to pay tax in the manner indicated therein.
(4) Sub-Section (6) of Section (5), however, entitles the prescribed
authority to vary the amount of tax payable if one or the other conditions contained
therein is satisfied.
(5) In this case the respondent filed an application in the prescribed ’Form’
exercising an option under Section 5 of the Act. The cinema theatre in question is
situated within Serilingampally Municipality. It is now not in dispute that in terms of
a Notification dated 18.5.2001 the Municipality was upgraded to Grade II from
Grade III.
(6) Form IV was issued to the respondent on 25.5.2001. Although, the
correct date of the filing of the application is not available on records but the
respondent must have filed the said application prior to 18.5.2001.
(7) It is possible that during assessment of tax proceedings in terms of
the option exercised by the respondent, the Entertainment Tax Officer was not aware
of the factum of upgradation of the Municipality in terms of the said Notification
dated 18.5.2001. The mistake was pointed out only by the Office of the Accountant
General. A show cause notice in terms of Sectin 5(6) of the Act was, therefore, issued
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on the respondent on or about 24.6.2005.
(8) The question which arose for consideration before the Appellant
and, consequently, before the High Court was as to whether in terms of Sub-section
(6) of Section (5) of the Act read with Sub-Rule 13 of Rule 27, the words "during the
period of option" referred to the power of the prescribed authority to vary the
amount of tax payable or only the amount of tax payable.
(9) Respondent in support of its plea that an order of varying the
quantum of tax could be passed only during the currency of the period for which
such tax is to be paid submitted that the said words restrict the power of the assessing
authority to vary the amount of tax payable which would mean that on the expiry of
the said period, the power to vary the amount of tax also comes to an end. Such a
construction appears to have found favour by the Andhra Pradesh High Court in
Swamy Theatre, Sanatnagar Vs. Deputy Commercial Tax Officer, Sanatnagar,
Hyderabad (1992 Vol. 15 A.P. Sales Tax Journal 63).
(10) Having heard learned counsel for the parties, we are of the opinion
that it is not necessary for us to go into the aforementioned question. In the fact
situation obtaining herein, we are satisfied that attention of the assessing authority
might not have been drawn to the Notification dated 18.5.2001 in terms whereof the
Municipality was upgraded from Grade III to Grade II, a mistake was committed in
the matter of computation of tax. If a genuine mistake has been committed not only
by the assessing authority in the said matter and furthermore as the respondent also
did not bring the same to the notice of the said authority, in our opinion, interest of
justice would be subserved if the said mistake be allowed to be rectified.
(11) In Union of India & Ors. Vs. Bikash Kuanar(2006(10) SCALE 86)
this Court held:
" It is now trite that if a mistake is committed in passing an administrative
order, the same may be rectified. Rectification of a mistake, however, may in a given
situation require compliance of the principles of natural justice. It is only in a case
where the mistake is apparent on the face of the records, a rectification thereof is
permissible without giving any hearing to the aggrieved party."
(12) In Shri Shekhar Ghosh Vs. Union of India and Anr.( 2006 11
SCALE 363) , it was held:
" It is not denied or disputed that even when a mistake is sought to be
rectified, if by reason thereof, an employee has to suffer civil consequences ordinarily
the principles of natural justice are required to be complied with..."
It was further held:
" If a mistake is to be rectified the same should be done as expeditiously as
possible. ( See: Board of Secondary Education, Assam Vs. Mohd. Sarjumma \026 2003
12 SCC 408)
We are not oblivious that in Ram Chandra Tripathi Vs. U.P. Public Services
Tribunal IV and Ors. - 1994 5 SCC 180, an order passed by way of a mistake was
permitted to be corrected as the same was done in violation of the order of injunction.
In such a situation only, this Court held that an opportunity of being heard for
correcting such mistake would not arise because there would not have been any
occasion to take one view or the other in the matter on the basis of representation to
be made by the affected employee.
It is also not a case where a mistake was apparent on the face of the records
and, thus, compliance of the principles of natural justice would not have been made
any difference as was in the case of Smt.Ratna Sen nee Roy Vs. The State of West
Bengal and Ors. (1995 (1) Cal. LT 462).
Requirements to comply with the principles of natural justice would,
therefore, vary from case to case. if upon giving an opportunity of hearing to an
affected employee, it is possible to arrive at a different finding, the principles of
natural justice must be complied with. We may notice that recently in Union of India
and Ors. Vs. Bikash Kuanar -2006(10) SCALE 86, a Division Bench of this Court
opined:
" ....It is now trite that if a mistake is committed in passing an administrative
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order, the same may be rectified. Rectification of a mistake, however, may in a given
situation require compliance of the principles of natural justice. It is only in a case
where the mistake is apparent on the face of the records, a rectification thereof is
permissible without giving any hearing to the aggrieved party."
(13) We may, however, notice that whereas according to the respondent
the difference in the quantum of tax was as under:
1) From 18-5-2001 to 25-5-2001 -Rs.16,724/-.
2) From 26-5-2001 to 14-6-2001 is Rs.27,624/-
(GCC increased due to enhancement of rates
of admission)
3) From 15-6-2001 to 31-3-2001 is Rs.16,724/-(GCC restored to
Rs.16,724/-because the licensing authority refused to grant
permission for enhancement);
according to the appellant the said difference would be:
1.GCC Rs.18,562.00 18-5-2001 to 25-5-2001 E.Tax Rs.89,840.00
2.GCC Rs.27,624.00 26.5.2001 to 14.6.2001 E.Tax Rs.1,33,700.00
3.GCC Rs.18,562.00 15.6.2001 to 2.9.2001 E.Tax Rs.89,840.00
4.GCC Rs.19,549.00 3.9.2001 to 31.3.2002 E.Tax Rs.94,617.00
(14) We are, therefore, of the opinion that the question in regard to the
quantum of difference may be determined by an appropriate authority after giving
an opportunity of hearing to the respondent. We, however, make it clear that the
respondent shall neither be liable to pay any interest on the said amount nor shall
not be exigible to any penalty . We also make it clear that computation of the
difference in the amount of tax shall be confined only to the matter of upgradation of
Municipality and no other.
(15) The appeal is allowed to the aforementioned extent. No costs.