JUDGMENT
N.V. Dabholkar, J.
1. Writ petition under Article 226 of the Constitution, filed by Proprietor of Deepali Theatre, Ahmednagar challenges order Exhibit ‘F’ dated 23-10-1989 issued by respondent No. 2 Collector and District Magistrate, Ahmednagar, by which petitioner is directed to pay an amount of Rs.14,207.65 Ps. towards the entertainment duty on exhibition of tax free movie ‘Salam Bombay’. Further amount of Rs. 1,634.15 Ps. is claimed by way of interest. Petitioner is also cautioned that in case of failure to deposit the amount within ten days, the amount would be recovered as if arrears of land revenue, in view of section 9 of the Bombay Entertainments Duty Act, 1923 (for the sake of brevity, hereinafter the Act of 1923).
Petition also prays a declaration that Clauses (f) and (g) of section 3(3) of the Act of 1923 are illegal and hence inoperative.
2. Petitioner is the proprietor of Cinema House, styled as ‘Deepali Theatre’ at Ahmednagar and holds valid licenses in forms ‘E’ and ‘F’ granted by respondent No. 2 under Rules 101 and 108 of the Maharashtra Cinemas (Regulation) Rules, 1966 (for short, the Rules of 1966). Respondent No. 2 had been collecting the entertainment duty under the provisions of the Act of 1923, and more particularly, as per provisions of section 3(1)(c). The relevant provision is reproduced at Exhibit ‘A’ to the petition. Under this provision, entertainment duty was levied on the exhibition of cinematograph on percentage basis over the payment for admission. Maharashtra Act VII of 1987 introduced new provision. Sub-section (3) of section 3 of the Act of 1923 is reproduced at Exhibit B to the petition. Under the new provision introduced by amendment, as can be seen from Exhibit B; the entertainment duty was leviable every week, at 25% of notional gross collection capacity of a show, multiplied by 21.
It is not in dispute that theatre of petitioner is permanent cinema as defined by section 2(f-1) of the Act of 1923 and for the purposes of section 3(3)(a) and more particularly the table below the same, it is covered by entries (iii) (i), which reads as follows:
——————————————————————
Area Type of exhibition Amount of duty
------------------------------------------------------------------
(iii) Within the limits Permanent Cinema 25 per cent of
of areas referred to clause (III) the gross capacity
in sub-of Clause (b)
collection
for a show multiplied
by 21
This is because, the theatre is situated within the limits of Ahmednagar city, which was having population exceeding 25,000 but below 1,50,000 at the material time.
Newly introduced provision – section 3(3) – gave an option to the licensee to pay the consolidated entertainment duty as per formula mentioned therein, irrespective of number of shows held by the licensee, in view of sub-section (3)(b) of section 3. Thus, by virtue of amendment, there were two classes of licensees, on the basis of manner of payment of entertainment duty, i.e. those, who continued to pay the entertainment duty under existing section 3(1)(c) i.e. percentage on actual payment for admissions and second those, who paid the consolidated entertainment duty on the basis of notional gross collection capacity for a show.
Petitioner opted for the payment of consolidated entertainment duty under the newly introduced provision by application Exhibit ‘C’ dated 26-12-1988 for the year 1989 and taking into consideration the notional gross collection capacity for a show i.e. 256 seats at the rate of admission of Rs. 4/- and 545 seats at the rate of admission of Rs. 3/- i.e. gross collection of Rs. 2659 for a show, the consolidated entertainment duty per week was fixed at Rs. 13,960. Permit to that effect seems to have been issued by the Collector, Ahmednagar dated 22-12-1988 Exhibit ‘D’. (Although during the course of his arguments, learned Counsel Shri Gursahani claimed that the petitioner’s theatre is covered by section 3(1)(II) and therefore, relevant entry under the amended section 3(3)(a) is entry Nos. (ii), (i) of the table below said section. On reference to Exhibits ‘C’ and ‘D’ to the petition, this appears to be wrong submission, and on the basis of petitioner’s application his permanent cinema is covered under entry Nos. (iii), (i) of the table below section 3(3)(a) i.e. amended provision).
Petitioner exhibited the feature film ‘Salam Bombay’ for three weeks i.e. 24-3-1989 to 30-3-1989, 31-3-1989 to 6-4-1989 and 7-4-1989 to 13-4-1989 daily one show commencing at 12 Noon (Matinee for the sake of brevity). Petitioner ran the show at usual rates of admissions i.e. Rs. 4/- and Rs. 3/- for balcony and dress circle respectively. This was for allegedly want of instructions from the respondents inspite of a specific enquiry, who professed that said feature film was declared as duty free. (During the arguments, it was not disputed that the feature film was so declared to be duty free). Respondents, therefore, contend that petitioner ought not to have charged the tax. Respondent No. 2 issued a notice Exhibit ‘E’ calling upon petitioner to deposit Rs.14,207.65, the amount recovered by petitioner towards the entertainment duty. He was also invited to state whether he was willing to pay entertainment duty for compounding offence as provided by section 9(A) of the Act of 1923. He was further directed to appear in person before respondent No. 2 on 11-7-1989.
It appears that after this notice, by communication dated 19-7-1989, petitioner submitted elaborate say and denied the liability to pay entertainment duty as claimed in the notice, claiming that entire entertainment duty towards exhibition of cinemas for any number of shows for the week was already paid by petitioner under the amended provision for payment of consolidated entertainment duty. According to petitioner respondent No. 2 was satisfied with the explanation of petitioner and promised to refer the matter to the State, instead, issued the impugned notice. Writ petition was filed in view of the threat in the said notice for recovery of entertainment duty as if the amount was arrears of land revenue.
The impugned notice is challenged mainly on the basis of section 3(3)(b) of the Act of 1923. According to petitioner, once the consolidated duty is paid on the basis of notional gross collection capacity, petitioner is not liable to pay any other amount towards the entertainment duty, irrespective of actual number of shows held during the week. Sub-clauses (f) and (g) of amended sub-section (3) of section 3 are challenged as illegal and inoperative, because according to petitioner, those frustrate the scheme as introduced by amended sub-section (3).
3. At the beginning of his argument Shri Gursahani conceded that subsequently in the year 1997, the State has introduced further amendment to section 3(3)(a) by which even the consolidated entertainment duty on the basis of percentage over the gross collection capacity for a show is now also based on number of shows actually held during the week. He, therefore, stated that the decision of the writ petition will govern the liability of petitioner only for the year 1989 and more particularly regarding peculiar case of exhibition of tax free feature film ‘Salam Bombay’.
4. Section 3(3)(b) on the basis of which petitioner claims that he is not liable to pay any entertainment duty on the exhibition of tax free feature film ‘Salam Bombay’ because of his having paid the consolidated entertainment duty for the relevant week, reads as follows :-
(b) The duty leviable under this sub-section shall be recoverable from the proprietor, irrespective of the actual number of shows held by him in a week.
In view of subsequent amendments, although Shri Gursahani did not press for a declaration that Clauses (f) and (g) are illegal and inoperative. Some reliance is placed on Clause (f) for the purpose of claiming that petitioner is not liable to pay any amount by way of entertainment duty from the collection of exhibiting 21 shows, in the span of three weeks, of tax free feature film “Salam Bombay”. The State has placed heavy reliance on Clause (f) for the purpose of claiming the amount under the impugned notice and hence Clause (f) can usefully be reproduced for ready reference:
“(f) Notwithstanding anything contained in this sub-section where a cinematograph film is allowed exemption from, or reduction in, the payment of duty under section 6, the rates of payment for admission shall be reduced in respect of each admission to the extent of the duty exempted or reduced in respect of such payment. Where a proprietor does not reduce the rates of payment for admission, he shall, in addition to any other penalty under this Act, be liable to pay duty as if no exemption or reduction from the payment of duty was made under section 6.”
5. While issuing notice before admission, by order dated 27-12-1989, ad interim relief in terms of prayer Clause (E) was granted upto 19-1-1990 and execution of the impugned notice was thereby stayed. Writ petition was admitted vide order dated 29-1-1990 and the interim relief was continued.
Reply affidavits are filed on behalf of the State on 18-1-1990 as also 5-11-2001. A copy of Government Resolution dated 28-12-1988 filed at Exhibit R-8 indicates that ‘Salam Bombay’ was the feature film exempted from entertainment duty under section 6 of the Act of 1923. From the annexures to first reply, it appears that the statement of petitioner was recorded on 31-3-1989, wherein petitioner indicated that although feature film Salam Bombay was being exhibited from 24-3-1989 he was unaware whether the said feature film was tax-free or not and therefore, tickets were issued at the usual rates. There appears correspondence between petitioner and respondent No. 2 as also between the respondents and ultimately by communication dated 13-6-1989, the Assistant Commissioner (Entertainment), Nasik Division, appears to have instructed District Magistrate, Ahmednagar to take suitable action against petitioner.
6. The fate of the claim of petitioner hinges on interpretation of Clause (b) of sub-section (3) of section 3. It is the claim of learned Counsel for petitioner that clause irrespective of actual number of shows held by him in a week enables petitioner to hold any number of shows, subject to restrictions of timings of exhibition as imposed by the Rules of 1966. As can be seen from condition No. 24 below license for cinema in form ‘E’ under Rule 101, the only restriction regarding timing is non exhibition of cinematograph after 1 a.m. There does not appear any restriction as to when exhibition can be started in a day. Hypothetically presuming, a morning show, matinee and three regular shows (in all five shows) can be comfortably accommodated between 9 a.m. to 12 mid night.
For the purpose of interpretation of sub-clause (b) reference to the entry under which petitioner has paid the consolidated tax is a must. As can be seen, petitioner has paid consolidated tax at 25 per cent of notional gross collection for a show. This 25 percent of notional gross collection is multiplied by 21, which multiplier is of vital importance. It can be seen that when the consolidated tax is payable on weekly basis the multiplier 21 pre supposes three shows per day and thus 21 shows in a week. Thus, under the scheme for payment of consolidated tax every week, which was introduced for the purpose of removing the hazard of collection of counter foils of tickets, calculating the collection on the basis of actual admission and thereafter computing the entertainment duty leviable upon the same; it was presumed that a theatre owner would ordinarily run 21 shows in a week. The scheme of consolidated tax thus did not take into consideration the contingency of fourth (matinee) or fifth (morning) show that may be exhibited by the theatre owner. It can be safely said that the scheme of consolidated entertainment duty was collection of duty based on the presumption that there will be exhibition of 21 shows in a week. The clause irrespective of actual number of shows held in a week is required to be read in the context of multiplier 21.
The amendment was introduced in order to remove the hazard of collection of counter foils and computation of tax on actual admission payments and ultimately to rule out possibility of evasion. The scheme of consolidated tax was introduced mainly for the convenience of revenue and not for the convenience of theatre owner alone. If petitioner was to pay tax under old provision section 3(1)(c) which was/is still on statute book, it must be taken a note that percentage of duty was 80 for tickets upto rupee one, 90 for admission fee above one rupee but not exceeding two rupees and 100 per cent for admission for exceeding Rs. 2/-. Thus duty at lower rate was the beneficial part for theatre owner under the new scheme. Viewed from this angle, it is not possible to accept the interpretation of petitioner that clause irrespective of actual number of shows enables petitioner to conduct more than three shows in a day, without being liable to pay any entertainment duty for the shows exceeding 21 shows, in a week, once he has paid consolidated tax on the basis of 25 per cent of notional gross collection multiplied by 21. The clause relied upon by learned Counsel for petitioner must be read to mean that even if less than 21 shows are held in a week, the consolidated duty will not be reduced. It cannot be read to permit the theatre owner to exhibit more than 21 shows in a week by payment of consolidated tax for 21 shows and swallow the entertainment duty collected either improperly or inadvertently on the shows exceeding 21. The interpretation as tried to be adopted by the learned Counsel for petitioner would permit black market of the admission tickets, because the theatre owner shall be selling the tickets at a price, exceeding fixed admission fee, as the ticket in its printed price includes the entertainment duty.
7. Once it is accepted that clause irrespective of actual number of shows in a week means any number of shows not exceeding 21, reliance placed by learned Counsel Shri Gursahani on the terminal part of Clause (f) renders no assistance to petitioner. The terminal piece of Clause (f) reads thus:
….be liable to pay duty as if no exemption or reduction from the payment of duty was made under section 6.
Under this very clause, the State claims that, petitioner is liable to pay to the Government the amount, exceeding the admission fee, which is collected by him towards tax free feature film ‘Salam Bombay’. Shri Gursahani tried to lay emphasis on this clause. By pointing out that petitioner has already paid the consolidated tax and having sought option to pay consolidated tax, which is permitted by the State, it was argued that petitioner is not liable to pay any further amount towards entertainment duty, irrespective of the fact whether he has exhibited all the shows of feature film chargeable for entertainment duty, not chargeable for entertainment duty or some chargeable and some not chargeable for entertainment duty.
We are of the considered view that the consolidated tax under the amended provision was based on the presumption that there would be 21 shows. This stands confirmed by the fact that in the year 1997, the State has removed the lacuna by amending the table and now the entertainment tax is leviable on the percentage of notional gross collection multiplied by actual number of shows held.
8. Since we are unable to accept the interpretation as tried to be attributed to Clause (b) of section 3(3) of the Act of 1923, the petition fails.
The writ petition is therefore, dismissed. Rule discharged. Interim relief stands vacated. No order as to costs.