STATE OF TAMIL NADU Vs. M RAYAPPA GOUNDER

JUDGEMENT

(1.) In these appeals by special leave this Court is called upon to consider the true effect as well as validity of some of the provisions of the Madras Entertainments Tax [Amendment) Act, 1966 (Madras Act XX of 1966) (to be hereinafter referred to as the Act) . For the purpose of pronouncing on the questions of law arising for decision. it is sufficient to refer to the facts of the case in Civil Appeal No. 2462 of 1969 as has been done by the High Court.

(2.) The 1st respondent in Civil Appeal No. 2462 of 1969, is the Managing Partner of the cinema theatre Known as "the K. M. S. Theatre " at Mettupalayam in Coimbatore District. On November 7, 1965 the C. T. O. Erode, made surprise inspection of the theatre and found the booking clerk actually selling unauthorised tickets with a forged seal "C.T.O. Mettupalayam". The officer seized the forged seal and other connected materials alongwith the bogus tickets. Thereafter he served on the respondents notices calling upon them to show cause why the price of the tickets issued which had escaped assessment should not be brought to tax under the Madras Entertainments Tax Act, 1939 and further to levy surcharge on the payments for admission under the Madras Local Authorities Finance Act, 1961. The respondents, objection was duly considered and rejected. Thereafter the assessing authority levied entertainment tax and surcharge on the price of the tickets which according to him had escaped assessment. The respondents moved the High Court of Madras under Article 226 of the Constitution to quash the assessment.

(3.) The question as to the power of the assessing authority to re-assess the receipts that had escaped assessment under the Madras Entertainments Tax Act, 1939 had come up for consideration before the High Court of Madras in W. P. No. 513 of 1963 (Mad.) R. Sundararaja Naidu v. Entertainment Tax Officer. Therein the High Court of Madras held that there was no power to re-assess under that Act. Thereafter the State legislature enacted the Act. The Act among other provisions contains S. 7, a provision relating to validation of assessment and collection of certain taxes. That section reads: