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IN THE HIGH COURT OF JUDICATURE AT MADRAS
R.MAHADEVAN, J.
K.J.Saravanan - Petitioner
Vs.
The Chief Secretary to Government of Tamil Nadu Secretariat, Fort St. George, Chennai – Respondent
WP.No.4349 of 2015 And MP.No.2 of 2015
Decided on : 29.10.2015
WRIT PETITION - CHALLENGING CIRCULAR ISSUED BY 4TH RESPONDENT - COLLECTION OF ENTERTAINMENT TAX UNDER SECTION 4 OF TAMIL NADU ENTERTAINMENT TAX ACT, 1939 - CIRCULAR NOT PASSED ON TO VIEWERS - THEATRE OWNERS COLLECTING HUGE SUMS AND APPROPRIATING THEMSELVES - EXEMPTION GRANTED TO PROMOTE VIEWERS AND BENEFIT MUST BE PASSED ON TO VIEWERS - CIRCULAR QUASHED - DIRECTIONS ISSUED TO ENSURE TAX BURDEN NOT PASSED ON TO VIEWERS - INVENTORY OF TICKETS SOLD TO BE TAKEN - REFUND OF RS.107/- TO PETITIONER.
Fact of the Case:
Petitioner challenged the circular issued by the 4th respondent, in respect of collection of entertainment tax under Section 4 of the Tamil Nadu Entertainment Tax Act, 1939, on the ground that the benefit of exemption from the entertainment tax is not being passed on to the viewers and the Theatre owners collect huge sums and appropriate themselves. The Petitioner had gone to the 5th Respondent Theatre to view the movie ‘Kayal’, to which an exemption from entertainment tax has been granted by the Government. Despite the exemption, Rs.120/-per ticket was collected by the 5th Respondent. On enquiry, the Petitioner was informed that the 5th respondent is only following the instructions in the impugned circular. Aggrieved and agitating that the exemptions are granted to promote the viewers and the benefit must be passed on to the viewers, this Writ Petition has been filed, challenging the above said circular of the 4th Respondent.
Finding of the Court:
The court held that the benefit of exemption from the entertainment tax must be passed on to the viewers, as the burden falls on them. The court found that the circular issued by the 4th respondent was not bad in law, as it only lacked clarity. However, the court directed the Respondents 1 to 4 to ensure that the tax burden is not passed on to the viewers by the theatre owners in cases of exemption from the levy of entertainment tax by issuing appropriate orders within four weeks from the date of receipt of a copy of this order.
Issues: Whether the benefit of exemption from the entertainment tax must be passed on to the viewers?
Ratio Decidendi: The court held that the benefit of exemption from the entertainment tax must be passed on to the viewers, as the burden falls on them. The court relied on various judgments of the Supreme Court and High Courts to hold that the tax burden is ultimately borne by the movie goer rather than by a Producer, distributor or film exhibitor. The court also held that the taxing event under the Act is on the entertainment of the movie goer. The rate of tax is determined on the basis of the amount collected from such person.
Final Decision: The court disposed of the Writ Petition with the following directions: (a) The Respondents 1 to 4 shall ensure that the tax burden is not passed on to the viewers by the theatre owners in cases of exemption from the levy of entertainment tax by issuing appropriate orders within four weeks from the date of receipt of a copy of this order. (b) The Respondents 1 to 4 shall take inventory of the tickets sold by the 5th Respondent and the members of the 6th respondent association to verify whether the exemption has been passed on to the viewers or not and if any violation is found out, initiate proceedings as per law. (c) The 5th respondent shall refund the sum of Rs 107/-to the Petitioner. No costs.
The Circular No.14/2014 Acts Cell IV/13086/2014, dated 6.5.2014 issued by the 4th Respondent, in respect of collection of entertainment tax under Section 4 of the Tamil Nadu Entertainment Tax Act, 1939, has been challenged in this Writ Petition.
2. The brief facts of the case are that based on the impugned circular, the benefit of exemption from the entertainment tax is not being passed on to the viewers and the Theatre owners collect huge sums and appropriate themselves. The Petitioner had gone to the 5th Respondent Theatre to view the movie ‘Kayal’, to which an exemption from entertainment tax has been granted by the Government. Despite the exemption, Rs.120/-per ticket was collected by the 5th Respondent. On enquiry, the Petitioner was informed that the 5th respondent is only following the instructions in the impugned circular. Aggrieved and agitating that the exemptions are granted to promote the viewers and the benefit must be passed on to the viewers, this Writ Petition has been filed, challenging the above said circular of the 4th Respondent.
3. In reply, the respondents have independently filed their courter affidavit and sought for dismissal of this Writ Petition, raising the following objections:-
(a) The Government only fixes the minimum and maximum rates and it is only the licensing authority, who decides on the rate of tickets and the licensee cannot alter the rates.
(b) The exemptions are granted to uplift the movie industry and promote Tamil culture and not to the viewers.
(c) Without challenging the Government Orders, based on which the circular was issued, this Writ Petition is not sustainable,
(d) There is no provision under the Entertainment Tax Act, permitting the licencee to sell the tickets at a lesser rate than fixed by the competent authority.
(e) The issue has been already dealt with by the First Bench of this Court
(f) The entertainment tax Officers are strictly monitoring the Theatres and the Theatre owners are not collecting any amount up and over the admission rates fixed.
(g) The Petitioner is seeking to rewrite the provisions of the Entertainment Tax Act, which is impermissible.
(h) The availability or non-availability of exemption or the rate of entertainment tax does not alter the admission rate.
(i) The licencees are acting as per the licensing conditions.
4. Mr. P. Wilson, the learned senior counsel appearing for the Petitioner painstakingly contended that the proprietor or the owner of the Theatre is only an agent to collect the tax from the public and remit the same to the Government, as evident from Section 7 of the Tamil Nadu Entertainment Tax Act. The power to grant exemption vested in Section 8 can only be meant to be for the benefit of the viewers and the Section is very clear without any room for any other interpretation than that the tax is to be collected from the viewers. The 3rd Respondent, for the reasons best known, is taking a different stand now in this writ petition contrary to the earlier stand. The learned senior counsel, referring to various Government Orders, pointed out that initially exemption was granted with regard to films with Tamil title. Later, it was extended to old films and subsequently, few conditions were imposed in GO.Ms.89, dated 21.07.2011. The conditions would imply that the exemption was to attract more viewers and for promoting Tamil and Tamil Culture. The learned senior counsel also countenanced the contentions of the respondents that the admission rate cannot be varied by the licencee, by relying upon Rule 83 (1) (A) (c) of the Tamil Nadu Cinema Regulation Rules, 1957 and also relied upon Condition No.6 to the Form C licence. By placing reliance upon a chart, it was also contented by the learned senior counsel that the ticket price collected from the Petitioner and others is constantly Rs.120/-notwithstanding the exemption and the rate of tax, which is illegal and contrary to the object of the Act. Relying upon the decisions of the Honorable Supr
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