(DR. D.Y. Chandrachud, J.)

1. The challenge in these proceedings is to the order passed by the State Government in revision, dated 15 May 2006, under the Bombay Entertainments Duty Act, 1923. By the impugned order, the State Government confirmed the dismissal of an appeal by the Commissioner, Konkan Division against an order of the Additional Collector calling upon the Petitioner to pay an amount of Rs.6,21,830/towards duty and Rs.12,43,660/towards penalty under Section 9(A) (1) (a).

2. A notice was issued to the Petitioner on 15 January 2004 by the Collector, Mumbai Suburban District in which it was alleged that the Petitioner had unauthorizedly conducted the business of a cable operator since April 2000 & that she had 504 connections. The Petitioner was informed that before a prosecution could be launched under Section 5 and Section 7(2), an opportunity was being furnished to her to compound the offence which she was reasonably suspected of having committed, under Section 9(A). The Petitioner submitted replies on 5 February 2004 and 11 February 2004 and denied that she had 504 cable connections. The Petitioner did not deny that she had been conducting the business of a cable operator, but stated that initially since April 2000 she had 50 connections in which there was an increase of another 50 connections in July 2002. The Petitioner expressed her readiness and willingness to pay the entertainment duty, but disputed the quantum of the connections as alleged in the notice. In the meantime, on 15 July 2004, a communication was addressed by the Additional Collector, Mumbai Suburban District among others to the Petitioner pointing out that a survey had revealed several unauthorized connections in the Bandra Assembly Voters’ Constituency, resulting in a loss of revenue to the State Government. The letter pointed out that the actual number of cable connections for which the entertainment duty was being recovered was far less than those found in actual fact. The Petitioner was informed that this may result in criminal prosecution. The Petitioner was also required to furnish a full disclosure. On 21 May 2005, an Order was passed by the Additional Collector by which the Petitioner was directed to pay an amount of Rs.6,21,830/towards entertainment duty and a penalty of Rs.12,43,660/under Section 9A(1)(a). The order of the Additional Collector relied on a survey conducted on 5 March 2005 which showed that there were 628 cable connections with the Petitioner. This order was challenged by the Petitioner initially in an Appeal before the Commissioner, Konkan Division and thereafter, in revision before the State Government, both of which came to be dismissed respectively on 28 June 2005 and on 15 May 2006.

3. Counsel appearing on behalf of the Petitioner submits that the proceedings were initiated under Section 9A, which is a provision for compounding of offences, in the present case, but there was no occasion to compound any alleged offence. In any event, it was urged, the power under Section 9A which is in the nature of a power to compound could not have been exercised without a prosecution having been launched or without the Petitioner being reasonably suspected of having committed an offence, as stipulated in Section 9A. Moreover, it was submitted that no assessment has been made under Section 4B. In these circumstances, it is urged that the entire action is vitiated.

4. Counsel appearing on behalf of the State of Maharashtra submitted on the other hand that the action which was initiated is lawful and that the Additional Collector has exercised the power of adjudication, which must be regarded in the nature of an assessment under Section 4B. In the present case, it is urged that the Petitioner has no licence or registration and is unauthorizedly carrying on cable business without maintaining any books of account.

5. The proceedings against the Petitioner were initiated on the basis of a notice dated 15 January 2004 of the Col