JUDGMENT
S.R. Nayak, J.
1. The petitioner is a
film Theatre represented by its Managing
partner Sri O.K. Laxminarayana. The petitioner applied for reduction of seating capacity from 342 to 274 in 1st class and from
285 to 225 in 2nd class. The said application was rejected by the Joint Commissioner-Licensing Authority, Anantapur, the
second respondent herein, on 23-6-1987 on
the ground that there would be loss of revenue to the State. The validity of the said
order of the 2nd respondent was assailed
by the petitioner in W.P. 10073 of 1987 in this Court. While entertaining that writ petition on 23-7-1987, in WPMP No. 13422 of
1987, this Court passed the following in
terim order:
“It is further ordered that the respondent herein viz., the Joint Collector, Anantapur, be and hereby is directed to permit the petitioner to reduce the seating capacity in first and second classes of the petitioner’s theatre as applied for before the Respondent, pending further orders on this petition.”
Subsequently that writ petition was allowed on 9-2-1990 in terms of the interim order dated 23-7-1987. It reads as under:
“In view of the interim direction granted earlier, the Joint Collector, Anantapur shall incorporate the reduced seating capacity of the petitioner’s theatre in Form ‘B’ License issued to the petitioner.”
3. In pursuance of the above writ orders, the 2nd respondent issued proceedings dated 24-3-1990 permitting the petitioner to reduce the seating capacity as noticed above with effect from 23-7-1987. In the interregnum the 1st respondent issued the impugned proceedings dated 19-9-1987 calling upon the petitioner to pay the balance of tax of Rs.37,176/-. Hence this writ petition assailing validity of the above demand notice.
4. We have heard Sri P. Gangaiah Naidu, learned Senior Counsel for the petitioner and the Special G.P. for Taxes.
5. The learned Senior Counsel for the petitioner would contend that having regard to the orders made by this Court in WPMP No. 13422 of 1987 and W.P. No. 10073 of 1987 and also the proceedings of the 2nd respondent dated 24-3-1990, the 1st respondent has seriously erred in computing the tax liability of the petitioner even for the period posterior to 23-7-1987 and therefore, the impugned demand cannot be sustained. In law.
6. On the other hand learned Special Government Pleader for Taxes placing reliance on the judgment of this Court in W.P. No.13132 of 1987 dated 21-9-1987 would contend that in view of the amendment of Rule 27 (10) (II) of A. P. Entertainment Tax Rules, 1939 as amended by G.O. Ms. No. 197 dated 23-2-1987, Which came into force with effect from 1-1-1984, the reduction of seating capacity directed by this Court and implemented by the respondent authorities would take effect only from 1-4-1988 in the present case and therefore, in terms of the agreement entered into between the petitioner theatre and the Department under Section 5 of the A.P. Entertainment Tax Act, no exception can be taken to the impugned demand notice issued by the 1st respondent.
7. We do not find any force in the contention of the learned Senior counsel for the petitioner. The demand relates to assessment year 1987-88 i.e. to say a period posterior to the amendment of Rule 27(10)(ii) of the A.P. Entertainment Tax Rules, 1939, as amended by G.O. Ms. No. 197 Revenue dated 23-2-1987.
8. If that is so, in terms of the said amendment, inspite of reduction in the seating capacity during the course of financial years, the assessee is under liability to pay the tax for the whole of the financial year at the contract rate in terms of the agreement entered into between the parties. A Division Bench of this Court dealing with the effect of amendment in W.P. No. 13132 of 1997 was pleased to observe as follows :–
“The challenge in this writ petition is directed against endorsement No.740/87-B2
dated 22-8-1987 of the 1st respondent, the Assistant Commercial Tax Officer-1, Cuddapah wherein the petitioner was told that in view of the amendment of Rule27( 10)(ii) of the Andhra Pradesh Entertainment Tax Rules. 1939, as amended by G.O. Ms. No.197 dated 23-2-1987, which had come into force With effect from 1-1-1984; he had to pay the tax as per the agreement. What is really relevant is the requirement of the amended rule that, in spite of reduction of the seating capacity during the course of the financial year, the assessee would continue to pay the tax for the financial year at the contract rate in terms of the agreement and that it would take effect only from the next financial year. Inasmuch as ft is knowing this provision in the amended rule that the petitioner appears to have/ applied for and obtained the permission fort reduction in the seating capacity, we do not find any merit in the contention that the quantum of tax payable should be reduced with effect from the date on which the order was passed. The proper way of looking at the thing would be that the reduced seating capacity would take effect only 1-4-1988, inasmuch as the petitioner is under an obligation to continue to pay the tax at the rate under the contract till the end of the year 1987-88. In view of the fact that the petitioner would be liable to pay entertainment tax at the contract rate without taking into consideration the reduction allowed till the end of the financial year, it is only just and fair that we make it clear that he would be entitled to put back the seats as were available before the order reducing the seating capacity was passed by the Joint Collector, till the end of the financial year when he dervies the benefit of the reduction of the seating capacity for the purpose of tax.”
9. In the light of the above view taken by the Division Bench of this Court, and in view of the amendment of the Rule, no relief can be granted to the petitioner. The writ petition is therefore, devoid of merits and it is accordingly dismissed. No costs.
10. Before parting with the case, the submission made by the learned Senior Counsel for the petitioner would be noticed. The learned senior counsel for the petitioner would submit that in terms of the interim order made by this Court in WPMP No. 19682 of 1987 in W.P. No. 14780 of 1987 dated 12-10-1987 a sum of Rs. 15,000/- was
paid by the petitioner to the Department towards tax liability and that amount was not adjusted by the Department towards any tax liability of the petitioner. If that is so, the petitioner can make appropriate application in that regard to the competent respondent authority and it is for the competent authority to verify and adjust the said amount for the present demand impugned in this writ petition. No costs.