V. Manickavasagam vs The State of Tamil Nadu

Maheswaran, J.—The lessee, Eros Theatre, Adayar, who is the petitioner herein has filed these petitions to quash the proceedings initiated by the Entertainments Tax Officer before the IX Metropolitan Magistrate, Madras-15, in C.T.M.P. 1 to 4 of 1978.

The petitioner who is a lessee of Eros Theatre at Adayar was originally a lessee of Kabali Talkies. He opted for submitting weekly returns of entertainments tax and therefore, a permk in form IV (the affidavit does not say under what rules, but obviously under the Tamil Nadu Entertainments Tax Rules), was granted to him. Rule 31 of the Tamil Nadu Entertainments Tax Rules, 1939, says that the proprietor of a theatre should furnish security for proper payment of entertainments tax. While he was a lessee of Kabali talkies, he has paid a cash deposit of Rs. 9,804 and in respect of Eros theatre a cash deposit of Rs. 7,700 has been paid and therefore, there was a total cash deposit of Rs. 17,504, and the Entertainments Tax Officer, Adyar assessment circle, Madras, has adjusted a sum of Rs. 6,373 (the affidavit does not anywhere show as to what this adjustment pertains to) and after such assessment, a balance of cash deposit of Rs. 11,131 is left with the Entertainments Tax Officer. The petitioner states in the affidavit filed in support of the petition that for the weeks starting from 22nd January, 1978, 29th January, 1978, 5th February, 1978 and 12th February, 1978, a total sum of Rs. 16,685 is payable as entertainments tax, that he was asked to submit from 14th December, 1977 daily returns instead of weekly returns, that as he was asked to file returns daily, it is enough if 75 per cent of the tax payable on tickets based on full capacity of the auditorium for a day is deposited security, that he requested the department to adjust the balance of cash deposit towards arrears of tax payable that he also deposited a sum of Rs. 5,254 towards the balance of arrears and therefore, the entire arrears were thus settled (obviously meaning that the arrears have been wiped out). He adds that he also deposited a sum of Rs. 2,000 as security and that fact was also informed to the Deputy Commercial Tax Officer, Adyar division.

It is further stated in the affidavit that on an erroneous assumption, that 75 per cent of tax for the full week should be deposited under R.21, the department insisted on maintaining the security amount already furnished and was reluctant to adjust the security deposit towards the arrears and therefore, the stand taken by the department is contrary to the provisions of the rules and is untenable, that he now understands that the department has moved the IX Metropolitan Magistrate under S. 10(i)(b) of the Tamil Nadu Entertainments Tax Act, 1939, to realize the arrears as if it were a fine imposed by the Magistrate, that he also understands that distrait warrant has also been issued, that as he was asked to submit returns daily, he is entitled to request the department to adjust the security deposit amount and if the amount is deposit is so adjusted, there will be no arrears and that the action taken by the department under S. 10(1)(b) is therefore, without jurisdiction and the proceedings initiated before the IX Metropolitan Magistrate should be quashed.

A counter-affidavit was filed by the Entertainments Tax Officer, Adyar assessment circle. Hi admitted that the petitioner opted for submission of weekly returns of center teguments tax and that a permit in Form IV was issued to him. He stated that the security deposit payable by the Eros Theatre is Rs. 13,270, that according to the R.21 (1) of the Tamil Nadu Entertainments Tax Rules, a sum of Rs. 12.070-80 should always remain with the Commercial taxes department (Entertainment Tax Officer, Adyar circle) as security deposit in respect of Eros Theatre, that under R. 25 only the amount that remains in excess of Rs. 12,070-80 can be adjusted towards future arrears, if any, due by the lessee of the theatre and that the petitioner cannot as a matter of right insist on the security deposit being adjusted towards tax arrears.

The respondent also states that a sum of Rs. 9,804-10, which was paid by the petitioner towards security deposit as lessee of Kabali Talkies has also been taken into account and that amount together with the sum of Rs. 8,800 paid by the petitioners as security deposit for Eros theatre amounts to Rs. 18,604-10, that after a sum of Rs. 6,373 has been adjusted towards arrears of tax due by the petitioner and after adjustment of a sum of Rs. 1,550 towards penalty for nonpayment of compounding fees fixed by the Entertainments Tax Officer, Adyar, for the delay in the submission of weekly returns and remittance of tax, the amount lying to the credit of the petitioner is Rs. 10.681, and that amount fell short of Rs. 1,389-80 of the required security deposit of Rs. 12,07040 and therefore, the petitioner cannot ask for adjustment of tax arrears from the security deposit of Rs. 10,681. The respondent denied the allegation that the petitioner has been permitted to submit daily returns instead of weekly returns.

He also stated that a sum of Rs. 5,254 remitted by the petitioner has been adjusted towards arrears of tax for the week ending 22nd January, 1978 and for the balance of arrears, action was taken against the petitioner under S. 10(M)(b) of the Tamil Nadu Entertainments Tax Act, 1939 and under those, circumstances the petitions to quash the proceedings have to be dismissed.

In a reply affidavit, the petitioner stated that the allegation that he has not been directed to submit daily returns is not correct, that the Entertainments Tax Officer requested the petitioner to submit Form IV permit issued by him for verification and returned retained it and issued a fresh Form IV permit for the period subsequent to 24th April, 1978 in which he has altered the permit as one for weekly returns.

A written argument was filed by Mr. Alagiriswami, learned counsel for the petitioner in these cases and the learned Public Prosecutor also filed a written argument, but after some adjournments another counsel Mr. V. Gopinathan, entered appearance for the petitioner and submitted another written argument. Mr. Gopinathan, learned counsel, stated that he is not entering into the questions of fact relating to the correctness of the amount of arrears due or into the adjustment of the security deposit amount, but confines himself to the question as to whether S. 10(1)(b) of the Tamil Nadu Entertainments Tax Act can be invoked for collection of surcharge and whether such procedure is valid in law. The learned Public Prosecutor agreed to this and arguments were advanced only on that question.

Mr. Gopinathan contended that the Entertainments Tax Officer is not legally empowered according to S. 10 of the Tamil Nadu Entertainments Tax Act, to initiate proceedings for recovery of arrears of surcharge from the petitioner. S. 10(1) of the Act runs thus- 10 (1). Any amount due on account of the tax tinder S. 4 or 4-A or under both may, without prejudice to any other mode of collection, be recovered-(a) as if it were an arrear of land revenue, (b) on application to any Magistrate, by such Magistrate as if it were a fine imposed by him.

S.4 is to the effect that on each payment for admission to any entertainment there shall be levied and paid to the State Government entertainments tax calculated at the rates given in S. 4. The proviso to that section says that in the case of cinematograph exhibitions, the tax shall be calculated at the rates specified and shown in S. 4 on each payment for admission after excluding from such payment the amount of tax. S. 4-A(1) of the Act runs thus-

4-A.(1) In the case of cinematograph exhibitions in addition to the tax under S. 4. there shall be levied and paid to the State Government, a tax calculated it the follow rates, namely:-

Bath S. 4 and S. 4 A of the Act relate to collection of tax and additional tax at the rates specified in those sections. S. 10(1)(b) refers to the manner of recovery of tax due under S. 4 or 4-A of the Act or under both and priority of arrears of tax over other claims (see amended section).

The argument, as I earlier pointed out, is that S. 10 does not empower the collection of surcharge. The question is whether surcharge has been levied. In paragraph 4 of the counter-affidavit of the Entertainments Tax Officer, Adyar, certain particulars relating to seating capacity and the tax payable have been given. In his reply affidavit, the petitioner has stated that the Entertainments -Tax Officer has erred in calculating the tax payable for a day for the purpose of security deposit taking into account the surcharge payable under the Tamil Nadu Local Authorities Finance Act, 1961 and it is also pointed out that there is no specific provision in the Tamil Nadu Entertainments Tax Act for demanding security deposit for the surcharge payable under the Tamil Nadu Local Authorities Finance Act.) This fact has not been disputed and therefore, it could be taken that surcharge on tax has also been demanded of the petitioner. The contention of Mr. Gopinathan is that S. 4-B of the Act empowers the collection of additional tax for admissions to entertain meats, but S. 10 does not empower the collection of arrears of surcharge as S 10 of the Act does not include in it S. 4-B. What is contended by Mr. Gopinathan is that the omission in S. 10 of S. 4-B is deliberate and the Legislature in its wisdom thought not to collect the area s of surcharge in the manner specified in S. 10. This contention (sic) well founded as it is attractive, S. 10 does not speak anything about S. 4-B., but still reliance was placed on the ruling in Raghavendra v. Entertainments Tax Officer, 1979 M.LJ. (Crl.) 170 which does not in any way advance the case of the petitioner. S. 9(3) of the Karnataka Entertainments Tax Act which has been dealt with by the said decision runs thus-

Any amount of tax, surcharge or additional tax or any other amount including penalty due under this Act may, without prejudice to the any other mode of collection be recovered-(a) at if it were an arrear of land revenue, or (b) on application to any Magistrate, by such Magistrate at if it were a fine imposed by him.

A reading of that section shows that surcharge also can be collected as if it were an arrear of land revenue on or application to any Magistrate, as if it were fine imposed by him. As I earlier pointed out, S. 10(l) d with only the amount due on account of tax under S. 4 or 4-A or both and does not concern itself with S. 4-B of the Act.

8.1 But the learned Public Prosecutor would state that S. 4(2) of the Tamil Nadu Local Authorities Finance Act authorising the Entertainments Tax Officer to follow the procedure laid in S 10 of the Tamil Nadu Entertainments Tax Act, to collect arrears of surcharge. S. 4(2) of the Tamil Nadu Local Authorities Finance Act, 1961 (Act 52 of 1961) runs thus-

The Authorities for the trace being empowered to assess, collect, and enforce payment of any tax under the Entertainments Tax Act shall, subject to any rules made under this Act, assess, collect and enforce payment of any tax payable under clause (a) or clause (b) of sub-Sec. (11 of S.I (including any penalty payable in respect thereof) in the same manner as the tax under S. 4 or S. 4-A as the case may be, of the Entertainments Tax Act (s assessed, paid and collected; and for this purpose they may exercise all or any of the powers they have under the Entertainments Tax Act; and the provisions of that Act including the provisions relating to composition of tax. returns, appeals revisions, offences, penalties and the compounding of offences, shall apply accordingly.

The learned Public Prosecutor pointed out that S. 10(l)(b) of the Tamil Nadu Entertainments Tax Act is the only provision for the recovery of the alleged arrears. A reference to S. 4(2) of Act 52 of 1961 shows that the authorities empowered to assess, collect and enforce payment of tax under the Tamil Nadu Entertainments Tax Act shall subject to any rule made under Act 52 of 1961 assess, collect and enforce payment of any tax payable under clause (a) or (b) of S.(l) of S. 3 including any penalty payable in respect thereof in the same manner as the tax under S. 4 or 4-A of the Tamil Nadu Entertainments Tax Act is assessed, paid and collected. S. 3(1) of Act 52 of 1961 states as follows:-

Any local authority may levy in the form of surcharge-

(a) a tax on each payment for admission to any entertainment held within the local limits of the lost. authority at such a rate, not exceeding the rate of tax levied under S. 4 of the Entertainers Tax Act for that payment, as the local authority may determine;

(b) a tax on each show or cinematograph exhibition held within the local limits of the local authority at such rates mt. exceeding one and half times the rate of tax levied under S. 4-A of the Entertainments Tax Act for that show, as the local authority may determine.

Therefore, the surcharge on entertainment tax and on tax for cinematograph exhibitions payable under clause (a) or (b) of Sub-s. (l) of S. 3 of Act of 1961 can be collected in the same manner as the tax under S. 4 or 4-A of the Tamil Nadu Entertainments Tax Act and for that purpose the authorities empowered under the Entertainments Tax Act may exercise all or any of the powers under the Entertainments Tax Act. S. 4(2) of Act 52 of 1961 states that the provisions of the Entertainments Tax Act including the provisions relating to composition of tax, returns, appeals, revisions, offices, penalties and the compounding of offences, shall apply accordingly But Mr. Gopinathan pointed out that the applications made before the Magistrate were under S. 10(l)(b) of the Tamil Nadu Entertainments Tax Act and not under S. 4 not of act 52 of 1961 and therefore toe applications under S. 10(1)(b) are bad in law. He also pointed out that the surcharge due under S 4-B of the Tamil Nadu Entertainments Tax Act 1939 should reach the State Government and the surcharge under S. 3 of the Tamil Nadu Local Authority Finance Act should go to the authority. What is contended for the petitioner by his learned counsel is that there is no indication in the application about the enactment under which the surcharge is claimed. The mere fact that the applications omitted to mention the provisions of S. 4(2) of Act 52 of 1961 would not vitiate the proceedings under S. 10(1)(b) of the Entertainments Tax Act. It is a well accepted legislative practice to incorporate by reference, if the legislature so chooses the provisions of some other Act so far as they are relevant for the purpose and in furtherance of the scheme and objects of that Act (Please see observations in Agarwat Trading Corporation v. Collector of Customs (1971) S.C.J 534. The applications are therefore not bad in law. Unless there is any manifest or patent injustice apparent on the face of the record, the High Court will not quash the proceedings. The applications are dismissed.