REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 4798 OF 2008

[Arising out of SLP© No.9512 of 2006]

Entertainment Tax Officer, Madhapur

… Appellant

Circle, Hyderabad

Versus

M/s. Geeta Enterprises

… Respondent

WITH

CIVIL APPEAL NO. 4799 OF 2008

[Arising out of SLP© No.11420 of 2006]

Entertainment Tax Officer, Rajendra

… Appellant

Nagar, Ranga Reddy, Distt. Hyderabad, A.P.

Versus

M/s. Sreedevi 70 MM

… Respondent

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AND

CIVIL APPEAL NO. 4800 OF 2008

[Arising out of SLP© No.21778 of 2006]

The Commercial Tax Officer,

…

Appellants

Machilipatnam & Anr.

Versus

M/s. Kumari Talkies

… Respondent

J U D G M E N T

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

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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.

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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

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amounts as shown in their respective permits, at the rate relating to a grade

III municipality. The Prescribe