Judgement

IYER, J.:- These two civil appeals may be disposed of together. Both the appellants who were running cinema theatres in the state of Gujarat, have hitched their litigation wagon to the Liberty Talkies star. In Liberty Talkies v. The State of Gujarat, (1971) 3 SCR 398 this Could laid down certain principles which according to the appellants govern their cases although the State has refuted this contention.

2. Very briefly the appellant in Civil Appeal No.1779 of 1969 was carrying on the business of showing cinemas in the name and style of Sadhana Talkies. He paid entertainment tax as required under the Bombay Entertainments Duty Act, 1923 (for short the Act). From 1959 to 1962 such duty was paid and requisite returns made, but by notice dated 24-1-1969, the officers of the State demanded payments of Rs.10,140/- as being the shortfall in the duty paid as against the duty due. This difference arises on account of the interpretation put by the State, now upheld by this Court in the Liberty Talkies case (1971) 3 SCR 398 that the duty is payable on the gross collection, that is, the price of the ticket plus the tax and not on the net collection, that is, the price of the ticket simpliciter. It cannot be disputed that the State s construction of the statutory liability under S.3 is sound since the Liberty Talkies has declared the law in the same strain. The narrowquestion that falls for decision now is as to whether it is open to the State to demand by notice in 1969 the difference in duty payable for the period ending 19-9-62. This is possible only if there is a power of reassessment or reopening of assessment vested by the Statute in the State.

3. In Civil Appeal No. 1780 of 1969, the problem is similar. There, the appellants were running the Chitra cinema and were paying entertainment tax between 1-4-1957 and 30-4-1962. Returns were made in the due course, but by letter dated 16-5-1962, the appellants were told that the entertainment tax paid by them for the period referred to was short by Rs.35,679/58, this difference having arisen on account of the alternative interpretation but by the State. The liability to pay is based on the new demand which is sought to be sustained by the State on the score that a power to revise, reopen or reassess is available to it under the Act.

4. The contention of the State has been stated thus :

"The State Government is empowered to review the assessment made earlier by the authorities and raise a demand for the correct amount towards entertainment tax."

The facts, as such, are not very much in controversy. The appellants stated in one of the writ petitions thus:

"The Bombay Entertainment Duty Act, 1923 (Act 1 of 1923) hereinafter referred to as the Act, was applied to Godhra and the entertainment duty on admission to the cinema was leviable under the Act from 1st April, 1957. The Mamlatdar of Godhra Taluka was the authority concerned for the collection of the said duty. The rate which was imposed so far as the town of Godhra was concerned was 20 per cent on admission to entertainment. These duties were to be paid in any of the methods prescribed under Section 4 of the Act.

For the purpose of checking the enforcement of the tax of every show special clerk was appointed in the Collective Office and one Inspector was also appointed for the said purpose. Over and above, the petitioners were required to send reports of the collections every day in which the tax collection was required to be shown and thereafter a weekly report mentioning the collections and the entertainment duty was sent. It was also incumbent upon the petitioners to send monthly reports, three-monthly reports, six monthly reports and yearly reports of the total collection and entertainment tax collections to the authorities. The said reports contained the rates of the tickets in various classes and the entertainment duties collected and paid to the Government.

But, the petitioners and the authorities of the respondents, interpreted t