The power of assessment under Section 7-B can be exercised to make a best judgment assessment in a case where the tax payable either under section 5-A or 5-B has escaped assessment.

P.D. Dinakaran, J.

The appeal is directed against the order dated 110. 1998 made in W.P.No.15868 of 1990 quashing the proceedings dated 27. 1987, in and by which the second appellant demanded the short levy of entertainment tax under the provisions of the Tamil Nadu Entertainment Tax Act, 1939 (for brevity, "the Act").

2. For the purpose of convenience, the parties are arrayed as per their rank in the writ petition.

3. The second respondent passed the impugned proceedings dated 27. 1987 as the petitioner-theatre did not obtain prior permission from the licensing authority for reduction in the rate of admission to the petitioner-theatre.

4. According to the petitioner, the theatre had opted to pay entertainment tax under Section 5-B of the Act based on gross collection capacity and therefore, the second respondent has no power to reassess the tax due invoking Section 7-B of the Act, which empowers the authorities to reassess only if the payment for admission to any entertainment escaped assessment. It was also submitted that as there was no payment for admission escaping assessment, the authorities ought not have invoked Section 7-B of the Act for passing the impugned order.

5. Per contra, the learned counsel for the respondents placing reliance on the Government letter No.30076/C1/ 87-1 CT & RE Department, dated 28. 1990, which is also challenged in the writ petition, contended that the petitioner-theatre ought not to have reduced the admission fee without prior permission of the licensing authority and such failure to obtain prior permission for reducing the admission fee has empowered the authorities to invoke Section 7-B of the Act for passing the assessment order for collecting the short levy of tax due to the Government, even though the theatre has opted for payment of tax on gross collection capacity under Section 5-B of the Act.

6. While the question was as to the power of the second respondent to pass the impugned order, what was contested before the learned Single Judge was whether the reassessment proceedings demanding tax due from the petitioner by the second respondent amounts to a penalty and if the same is penalty, whether the authorities have taken into consideration the petitioners previous conduct, viz., whether the petitioner is free from punishments or is an habitual offender, and consequently, the learned Single Judge, by order dated 110. 1998 made in W.P.No.15868 of 1990, rendering a finding that the writ petitioners previous service and conduct are free from any punishments, quashed the impugned order, which necessitated the Revenue to prefer the above appeal.

7. The power to reassess conferred on the authorities under Section 7-B of the Act, even in the case of theatres which are governed under Section 5-B of the Act is well settled. Whether the power of assessment under Section 7-B of the Act, can be exercised to make best of judgment assessment, in a case, where tax payable either under section 5-A or 5-B of the Act, has escaped assessment, came up for consideration before a Division Bench of this Court in the case of ANNAMALAI v. ASSISTANT COMMISSIONER (CT), [1990] 76 STC 271, in which it was held as under:

"The effect of sub-section (3) of Section 5-C of the Tamil Nadu Entertainments Tax Act, 1939, is that all provisions of the Act except sections 4, 4-A, 4-B, 4-C, 6 and 7 and the rules made thereunder, applicable in the case of a tax payable under Section 4-A of the Act can be invoked in the case of a tax payable under section 5-A or 5-B. Section 7-B of the Act expressly refers to the power to make a best of judgment assessment where the tax which the cinematograph exhibitor is liable to pay under Section 4-A has escaped assessment. Therefore, by virtue of Section 5-C(3) the power of assessment under Section 7-B can also be exercised to make a best judgment assessment in a case where the tax payable either under section 5-A or 5-B has escaped assessment."

(emphasis supplied)

8. In