P. Muthalagu vs The Collector of Tiruchirapalli and Others

T. Ramaprasada Rao, J.—The petitioner and the third respondent applied for the issue of no-objection certificate to conduct a touring

cinema in Perambalur Taluk, Tiruchirapalli district. It is common ground that the petitioner''s application was earlier and the third respondent''s

application was later. If other circumstances were equal, the petitioner ought to have been preferred as he in point of time was the earlier applicant

and as the site chosen by the third respondent, in relation to the petitioner''s site, was within the prohibited distance. But the petitioner''s application

was rejected by the Collector in the first instance on the ground that as a past Manager of a Touring Cinema which belonged to his brother-in-

Law, the petitioner''s conduct disclosed that in relation to the payment of entertainment tax there was an attempted evasion since the petitioner

encouraged the sale of duplicate tickets during the shows conducted at the theatre belonging to his brother-in-Law. The Entertainment Tax Officer,

who is the Commercial Tax Officer of the division, was by then in seisin of the matter and the assessing authority found that there was such

evasion. The matter was, however, taken up in appeal and the said appeal before the appellate authority under the Entertainment Tax Act was

pending. During the pendency of the said appeal, the petitioner filed an appeal against the order of the Collector refusing the grant in his favour on

the only ground that his antecedents were not satisfactory. The Board set aside the order of the Collector on the ground that the appeal before the

Commercial Tax Officer was by then finding and it would be unsafe to reject or finally dispose of the implication for the grant made by the

petitioner on the foot that his antecedents were bad, since that question was being agitated in the appellate Court and no one was sure of the result

by then. But, while disposing of the matter, the Board observed that the Collector should await the findings of the Joint Commercial Tax Officer in

the remanded enquiry with respect to not only the alleged sale of duplicate tickets, but also the personal responsibility of the petitioner. It appears

that the appellate authority remanded back the subject once again for disposal by the Joint Commercial Tax Officer. It was this which was noticed

by the Board in its order. The observation of the Board that the Collector should take note of any finding as to personal responsibility of the

petitioner, is pressed very much into service in this proceeding.

After remand, the Collector was satisfied that the Joint Commercial Tax Officer held that there was evasion of tax by using duplicate series of

tickets and that there was evasion of entertainment tax to the extent of Rs. 1,501-8-4. After having satisfied himself that the Commercial Tax

Officer so dealt with the delinquent proprietor under the Entertainment Tax Act, he was of the view that the petitioner as Manager of the Talkies

belonging to his brother-in-Law was co-extensively responsible for it and viewed in that light his antecedents according to the Collector, were

proved to be not satisfactory. He also found that the local Panchayat did not recommend the application of the petitioner. On all these grounds and

as a licence to run a cinematographic exhibition should be given to persons of integrity and not to those who resort to dishonest practice, he

rejected the petitioner''s application. The appeal of the petitioner to the Board of Revenue was unsuccessful. This time, however, the Board found

that the proprietor of a cinema theatre includes a Manager as well and as the Manager (petitioner) was admittedly in charge of the day-today

administration of his brother-in-Law''s theatre, his conduct in having evaded the entertainment-tax was a relevant consideration, and in that view,

held that his antecedents were bad and agreed with the Collector and dismissed the appeal. It is as against this the present writ petition has been

filed.

Mr. Chidambaram, the learned Counsel for the petitioner, raises two interesting points. The first one is that Sections 3-A and 5(1)(b) of the

Madras Cinemas (Regulation) Act, 1955, are mutually exclusive and the word ''antecedents'' appearing in Section 5(1)(b) should be understood

de hors the disqualification mentioned in Section 3-A, and thus interpreted, the rejection of the application of the petitioner for the grant is not

warranted in Law. His second contention is that under the Madras Entertainments Tax Act of 1939 even though the expression ""proprietor"" might

include in its fold a Manager of the cinema theatre concerned, yet as there is no finding involving the petitioner personally in the matter of evasion of

entertainment tax and as he was admittedly not convicted u/s 14 of the Act, the reasoning of the Board as well as the Collector is vitiated.

As regards the first contention, I am unable to agree. Section 3-A is an enabling provision which prescribes, as it were, a ban on persons

convicted for an offence under Clause (a) or (c) of Section 14 of the Madras Entertainment Tax Act, 1939, from applying for a licence under the

Madras Cinemas (Regulation) Act, unless a period of two years has elapsed since his conviction. Apart from the creation of a statutory ban in the

matter of applying for a licence, Section 3-A does not state any further principle for disqualification. On the other hand, Section 5, dealing with the

restrictions on the powers of the licensing authority in the matter of the grant of licences for cinematographic exhibitions, lays down certain

guidelines which ought to prevail with the licensing authority and which have to be necessarily considered by him while dealing with such

applications. Inter alia, the matters to which regard should be had by the licensing authority are, as provided in Section 5(1)(b) of the Act, the

status, antecedents and the previous experience of the applicant. The word ""antecedents"" in this Sub-clause has been inserted by the Amending

Act XX of 1964, which also brought in Section 3-A into the statute. The word ""antecedents"" means something relatable to a thing which has

happened or which has preceded or a circumstance which has so preceded or happened. The argument of Mr. Chidambaram is that the word

antecedents"" does not have any relation to the disqualification mentioned in Section 3-A but it should be understood as something which is not

covered by Section 3-A as such. This is an extreme contention. As already stated by me, Section 3-A imposes a ban on persons convicted for

offences in the matter of evasion of tax from applying for a licence within a period of two years. If a person was indeed convicted for an offence

u/s 14, Clause (a) or (c) of the Madras Entertainments Tax Act, it is certainly a circumstance or an incident which has happened and which cannot

be screened from being comprehended or appreciated if it becomes necessary at any future point of time even beyond the period of two years

stated in Section 3-A. For instance if A is convicted for an offence under Clause (a) or (e) of Section 14 in the year 1970, he cannot apply for a

licence till the expiry of 1972. Thereafter, if he applies for a licence under the Madras Cinemas (Regulation) Act, that does not mean that his

previous history that he evaded tax or that he admitted a person for payment to any place of entertainment in contravention of Section 6 can be

ignored by the licensing authority while deciding whether to grant or to refuse a licence to him under the Act. The expression ""antecedents"" in

Section 5(1)(b) enables the licensing authority to peep into the earlier circumstances connected with the conduct of the individual and have regard

to that matter as well, to find ultimately whether a grant should be made in his favour or not. In this view of the matter, the word ""antecedents

cannot be understood as being circumscribed or being governed by the principle or hypothesis mentioned in Section 3-A of the Act. Both Sections

ere mutt ally exclusive and are operative in their respective fields without the one having an impact on the other.

The Board of Revenue, in its first order, in my view, did not correctly appreciate the purport and intendment of Section 5(1) of the Madras

Cinemas (Regulation) Act, 1955. Whilst the Board rightly said that the delinquency of the proprietor can be extended to that of the Manager, it

made a very casual observation that unless the Manager is personally made responsible for the offences contemplated under the Madras

Entertainments Tax Act, he would not be a person whose antecedents could be said to be unsatisfactory. I am unable to agree with this

explanation.

Section 3(9) of the Madras Entertainments Tax Act defines a ''proprietor'' in relation to any entertainment, as one including any person

responsible for the management thereof. In the instant case, the petitioner was admittedly the Manager of the quondam talkies which was found to

have evaded tax by selling duplicate tickets. It is not also in dispute that the petitioner was in charge of the administration of the said theatre. In

those circumstances and having regard to the definition of the word ''proprietor'' in the Act, it is unnecessary that a finding as to the personal

involvement of the Manager in the delinquency should be separately given by the officers functioning under the Madras Entertainment Tax Act and

that such a finding alone could be taken into consideration for purposes of assessing the antecedents of the Manager. The definition of ""proprietor

is wide enough to take the delinquency of either the proprietor or the Manager or both into consideration when the said person applies for a grant

beyond the prohibited time and when such an application for grant is dealt with u/s 5 by the licensing authority. The second order of the Board of

Revenue, which is the challenged order, rightly, therefore, appreciated the position and observed that having regard to the definition of ""proprietor"",

the evasion of tax by persons responsible for the conduct of the theatre belonging to the brother-in-Law of the petitioner is a relevant circumstance

in deciding whether the petitioner''s antecedents are good enough for the grant of a no-objection, certificate.

Now that I find that the Board of Revenue and the Collector of the district were right in having interpreted the word antecedents and had taken the

petitioner as a delinquent in the sense that he was also impliedly or vicariously responsible for the evasion of tax, and that such a previous incident

is a relevant circumstance, I am unable to find any error of jurisdiction or apparent error of Law in the order challenged.

The writ petition, is, therefore, dismissed.

There will be no older as to costs.