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IN THE HIGH COURT OF JUDICATURE FOR RAJASTHAN AT JODHPUR
P.K. LOHRA, J.
Alok Chitra Mandir
Vs.
Dy. Commissioner (Admn.) & Ors
S.B. CIVIL WRIT PETITION NO. 2813/1999
Decided on : April 4th, 2014
ENTERTAINMENT TAX - Composition Scheme - Amendment - Applicability - Rectification of Mistake - Principles of Natural Justice - Unjust Enrichment - Refund of Excess Tax Paid.
Fact of the Case:
Petitioner, a proprietorship concern, opted for the composition scheme for entertainment tax w.e.f. 01.02.1995. The scheme was amended on 23rd February 1995, reducing the composition amount for the first year from 25% to 10%. The petitioner claimed that it was entitled to the benefit of the amended scheme. The petitioner also filed an application for rectification of mistake under Rule 32 of the Rajasthan Entertainment & Advertisement Tax Rules 1957, alleging that the composition order was passed in accordance with the old unamended scheme. The application was rejected without affording an opportunity of hearing to the petitioner. The petitioner challenged the orders passed by the authorities and sought a refund of the excess tax paid.
Finding of the Court:
The Court held that the petitioner was entitled to the benefit of the amended composition scheme, which came into effect on 23rd February 1995. The Court also held that the rejection of the petitioner's application for rectification of mistake without affording an opportunity of hearing was violative of the principles of natural justice. However, the Court held that the petitioner was not entitled to a refund of the excess tax paid, as it had collected the tax from the consumers and the doctrine of unjust enrichment applied.
Issues: 1. Whether the petitioner was entitled to the benefit of the amended composition scheme? 2. Whether the rejection of the petitioner's application for rectification of mistake was violative of the principles of natural justice? 3. Whether the petitioner was entitled to a refund of the excess tax paid?
Ratio Decidendi: 1. The Court held that the petitioner was entitled to the benefit of the amended composition scheme, which came into effect on 23rd February 1995. The Court reasoned that the petitioner had opted for the composition scheme after the amendment was notified, and there was no justifiable reason to deprive the petitioner from the benefit of the amended scheme. 2. The Court held that the rejection of the petitioner's application for rectification of mistake without affording an opportunity of hearing was violative of the principles of natural justice. The Court reasoned that the application for rectification of mistake was for a mistake which was apparent on the face of the record, and the authority was required to examine the same objectively. The Court also held that the denial of reasonable opportunity of hearing by the authority to the petitioner had prejudiced the cause of the petitioner assessee. 3. The Court held that the petitioner was not entitled to a refund of the excess tax paid, as it had collected the tax from the consumers and the doctrine of unjust enrichment applied. The Court reasoned that the petitioner could not seek to collect the tax from both ends, i.e., from the consumers and from the State.
Final Decision: The Court allowed the writ petition, annulled the impugned orders, and remitted the matter back to the Deputy Commissioner for deciding the petitioner's application for rectification of mistake afresh in accordance with law and principles of natural justice.
BY THE COURT
Petitioner, a proprietorship concern, owns a Cinema House situated at Churu, which is exhibiting feature films. In the year 1982, State Government in exercise of powers under Section 6(3)(a) of the Entertainment Tax Act 1957 (for short, 'Act') floated a scheme for composition of entertainment tax on 8th of July 1982. The petitioner vide its letter dated 28th of December 1994 opted for the composition scheme w.e.f. 1st of January 1995 but later on made endeavour to alter the date of composition as 1st of February 1995. Acknowledging the same, the first respondent solicited requisite information from Commercial Taxes Officer, Circle Churu by its letter dated 28th of January 1995. Be that as it may, when the requisite order of the first respondent in this behalf under the composition scheme was awaited, the petitioner started paying tax on adhoc basis as per the composition scheme w.e.f. 01.02.1995. Thereafter, on 9th of March 1995, the petitioner sent a reminder to first respondent for passing requisite orders under the composition scheme. In the interregnum, an amendment was made in the composition scheme vide Notification No.F-10(31)FD/GR.IV/87 dated 23rd of February 1995 and the gist of which was circulated by the Commissioner, Commercial Taxes vide its letter dated 14th of March 1995. As no specific order for composition scheme was made uptil issuance of the amendment notification dated 23rd of February 1995, the petitioner harboured the impression that composition scheme as amended by Notification dated 23rd of February 1995 would govern his case. However, to petitioner's dismay the first respondent passed an order subject to approval of the Commissioner, Commercial Taxes on 5th of April 1995 ordering composition for the period 01.02.1995 to 31st of January 1996 at a sum of Rs.29,830 in accordance with the old unamended scheme and not in accordance with the Notification dated 23rd of February 1995. In adherence of the order, the requisite amount was paid by the petitioner and subsequent thereto also in terms of the orders passed by the first respondent requisite amount was remitted by the petitioner. The petitioner submitted an application on 9th of January 1997 seeking rectification under Rule 32 of the Rajasthan Entertainment & Advertisement Tax Rules 1957 (for short, 'Rules of 1957'). Rule 32 of the Rules of 1957 envisages a provision for rectification of mistakes. For the same prayer, petitioner also approached the Commissioner, Commercial Taxes, Jaipur seeking rectification of mistake. Taking cognizance of the application for rectification of mistake submitted by the petitioner, the Addl. Commissioner, Commercial Taxes issued a notice to the petitioner on 7th of February 1997 for personal hearing with records. The petitioner attended the hearing and made his submissions. After conclusion of the hearing, nothing was heard by the petitioner thereafter, nor any order was passed in this behalf and according to petitioner the application for rectification of mistake remained pending and inconclusive. The petitioner has very specifically stated in the writ petition that although no order was passed on his application for rectification of mistake, but the clerical staff of the first respondent orally informed that the application has been rejected. The petitioner has specifically averred in the writ petition that respondents are bound to give effect to amendment notification dated 23rd of February 1995 and thus are under an obligation to recalculate the monthly amount of composition in accordance with the same which would give rise to substantial refund/credit in favour of the petitioner. In the petition, figure of difference of amount was also incorporated with a prayer for refund of the same with interest thereon as per Section 9A of the Act. Setting out a specific case in the petition that instead of refunding the amount and paying interest on the difference of amount, the CTO has imposed interest on the p
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