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Judgment
A. Lakshmana Rao, J.—This writ petition has been filed questioning the demand made by the 1st respondent herein calling upon the petitioner to pay Rs. 47,530 towards differential entertainment tax payable for the year 1984-85 and from April 1, 1985 to February 20, 1986. The demand was made on 31st May, 1991.
The case of the petitioner is that on March 25, 1984, the theatre was inspected by the Executive Engineer, R & B. Through the communication dated May 5, 1984 addressed to the Collector, West Godavari District he intimated that the petitioner should be ordered to close the boxes class in the theatre permanently since the approaches were not in accordance with the Cinema Rules. As the petitioner also was simultaneously informed of the requirement to close the boxes class, it is stated that the petitioner had closed the boxes class with effect from March 26, 1984 reducing the seating capacity to 324 from 382.
It is also the case of the petitioner that he had entered into an agreement u/s 5 of the A.P. Entertainments Tax Act, 1939, with the department for the year 1984-85 and part of the year 1985-86 showing that he was liable to pay entertainment tax on the basis of seating capacity of 324. The petitioner continued to pay entertainment tax every week pursuant to the agreement on the basis of the seating capacity of 324. The department received the tax and raised no objection at any time. While so, for the first time by the impugned demand notice dated 31st May, 1991, the petitioner was asked to pay the differential tax of Rs. 47,530 on the ground that no order was passed by the licensing authority under the A.P. Cinemas (Regulation) Act, 1955, reducing the seating capacity from 382 to 324 and the B form licence also was to the effect that the seating capacity was 384. In the counter-affidavit filed on behalf of the respondent it is stated that the audit department had raised an objection against collecting entertainment tax on the basis of seating capacity of 324 instead of 382, as no order was passed reducing the seating capacity and the B form licence showed that the seating capacity was 382.
On a perusal of the application submitted by the petitioner for entering into an agreement u/s 5 of the A.P. Entertainments Tax Act, 1939, we are satisfied that from the beginning the case of the petitioner was that the seating capacity of the theatre was reduced from 382 to 324 in the year 1984 pursuant to the directions of the Executive Engineer and he was liable to pay entertainment tax only on the basis of seating capacity of 324. Though there was no order passed by the licensing authority reducing the seating capacity as required under the A. P. Cinemas (Regulation) Act, 1955, the department took it for granted as if the seating capacity had been reduced from 382 to 324 and has collected the tax only on that basis. In these circumstances we do not see any justification on the part of the department in making demand after a lapse of more than six years on the technical plea that there was no order passed by the licensing authority reducing the seating capacity from 382 to 324.
As we have already mentioned, as a matter of fact the petitioner reduced the seating capacity pursuant to the directions issued by the Executive Engineer and the department also had accepted the same as is evident from their conduct over the period. In these circumstances the impugned demand notice is quashed and the writ petition is accordingly allowed. No order as to costs. Advocate''s fee Rs. 250.
Writ petition allowed.