Important Point
The expression “during the period of option permitted under this section at any time” occurring in section 5(6) does not refer to the power of the prescribed authority at all. It refers to the happening of the events enumerated therein.

Judgment

Aftab Alam, J. —

1.Heard counsel for the parties.

2.Leave granted.

3.All the three appeals arise from same or similar sets of facts and involve a common question of law. Hence, all the three appeals were taken up together and are being disposed of by this Judgment. The dispute relates to demands raised by the prescribed authority in terms of Section 5(6) of the Andhra Pradesh Entertainments Tax Act, 1939 as the provision was in existence at the material time (Section 5 now stands deleted by Act 32 of 2005 with effect from 4.6.2005). The Prescribed Authority raised the impugned demands in view of the fact that the local authorities within which the respondents’ cinema theatres were situate were upgraded during the period the three respondents had the permission to pay their taxes following the slab system as provided under section 5 of the Act. The demands were, of course, raised long after the period for which permission was granted was over. The controversy in regard to the legal validity of the demands turns on an interpretation of the expression “during the period of option permitted under this Section at any time” occurring in sub-section (6) of Section 5 and the expression “at any time” used in sub-rule (13) of Rule 27 of the Andhra Pradesh Entertainment Tax Rules, 1939. The Andhra Pradesh High Court has interpreted the aforesaid expressions in a certain way and if that interpretation is correct the conclusion arrived at by the High Court that the demands were invalid and unenforceable is perfectly unexceptionable. But the question is whether the High Court’s interpretation of those expressions is correct and sound.

4.Here, we may advert to the basic facts which are very brief and undisputed. All the three respondents are engaged in the business of exhibiting films having taken out requisite licenses under the Andhra Pradesh Cinematographic Act and the Andhra Pradesh Entertainments Tax Act, 1939. The cinema theatres of M/s. Geeta Enterprises and M/s. Sreedevi 70 MM (respondents in SLP(C) No.9512/06 and SLP(C) No.11420/06 respectively) are situate in Chandan Nagar, Serilingampally. For financial years 2001-02 and 2002-03 both the respondents paid entertainment tax on slab basis in terms of Section 5 of the Act (as it was in existence at that time) by making applications in Form III and obtaining their respective permits in Form IV. Serilingampally, where the two theaters are situate, used to be a Grade III Municipality but by a Government Notification issued on 19.5.2001 it was upgraded as a selection grade municipality with effect from 18.5.2000, that is to say, during the period the two respondents were granted permission to pay their taxes on the basis of the slab system. Here, it may be noted that in terms of the table that was part of Section 5, cinema theatres situate in a selection grade municipality attracted a higher rate of tax than the one situate in a grade III municipality. Notwithstanding the upgradation of the local authority within which the two cinema theatres were situate the appellants went on making weekly payments of the tax amounts as shown in their respective permits, at the rate relating to a grade III municipality. The Prescribed Authority issued notices dated 31.8.2004 to the two appellants raising demands of the differential tax amounting to Rs.10,19,875/- in case of M/s. Geeta Enterprises and Rs.11,85,863/- in case of M/s. Sreedevi 70 MM for the period of 18.5.2001 to 31.3.2002. The prescribed authority issued another notice dated 1.6.2005 making a demand of Rs.3,91,377/- against M/s. Geeta Enterprises for the period 4.4.2002 to 27.6.2002: against M/s. Sreedevi 70 MM a similar demand of Rs.95,820/- was made on the basis of a revised Form IV for the year 2002-2003 vide Order dated 30.5.2005. M/s. Kumari Talkies, the respondent in SLP (C) No.21778/2006 was given a similar demand for the differential amount of tax by the prescribed authority on the ground that during the period of option the po