Judgment

Shah, C.J.I. Under the Bombay Entertainments Duty Act 1 of 1923 entertainment duty is chargeable on the total collections from the visitors to a theatre. On March 18, 1960, Collector, Junagadh issued instructions to his subordinate officers directing them to levy entertainment duty at the prescribed rate only on the net price receivable by the proprietor of the theatre and not on the total amount including entertainment duty collected from the visitors. Entertainment duty so computed was paid till January 1962 by the appellants who own a theatre at Junagadh.

2. On January 11, 1962 the Government of Gujarat issued a memorandum that "the duty (entertainment duty) is a percentage of the payment for admission, i.e, the amount which a person pays for being admitted to witness the entertainment; inclusive of the various items mentioned in clause (b) of Section 2 of the Bombay Entertainments Duty Act, 1923. The amount which a person pays includes both sums (i) what the Manager has to pay by way of duty; and (ii) what the Manager can retain as Net receipts and hence the duty has to be charged on the total amount payable by the person buying the ticket, including any sum charged separately by way of duty." Pursuant to that notification entertainment duty was levied on the gross sum levied and paid by the visitors for admission to the theatre.

3. By a petition moved in the High Court of Gujarat the appellants challenged the validity of the memorandum, dated January 11, 1962 and the notice of demand issued pursuant thereto and urged that the primary liability for payment of entertainment duty is by the Act imposed upon the visitor to the theatre, and that the proprietor of the theatre is merely an agent of the Government for collecting the duty ; and that the proprietor has under the Act to pay the duty which he collects from the visitors; and that he cannot be required to pay an amount which he does not collect from the visitors. The High Court rejected the petition and against the order of the High Court this appeal has been preferred.

4. The Act and the rules framed there under prescribe the method of collection of entertainment duty. On each ticket issued to a person entitling him to enter the theatre for entertainment a revenue stamp of a specified face value is affixed. The total amount that the visitor pays consists of two items, the net charge which the proprietor makes for the ticket and the value of the stamp. Under the memorandum issued on March 13, 1960, the aggregate of the duty received by the appellants was paid over to the Government and the net value of the tickets remained with the proprietor, under the memorandum issued on January 11, 1962, the duty payable to the Government was calculated at the appropriate rate applicable to the aggregate of the net value of the ticket and the duty paid by the visitor. In consequence of the notification the proprietor could collect from the visitor the amount shown as entertainment duty on one ticket but he was obliged to pay duty equal to the amount computed on the total amount paid by the visitor at the appropriate rate. The difference between the entertainment duty computed on the total value of the ticket and value of the stamp affixed on the ticket was therefore borne by the proprietor.

5. The relevant provisions which have a bearing on the question are these : Section 3 of the Art is the charging section. Insofar as it is relevant it provides :

"(1) There shall be levied and paid to the State Government on all payments for admission to any entertainment a duty thereinafter referred to as entertainment duty at the following rate.

Untitled Document

(a)

X

X

X

X

(b)

In any other area -

I.

X

X

X

X

II.

In any other case -

(i)

out of the first 100 naye paise of payment for admission

..

30 per cent. of such pay-ment.

(ii)

out of the next 100 naye paise of payment for admission

..

45 per cent. of such pay-ment.

(iii)

out of the balance of the total payment for admission

.

60 per cent. of such pay-ment