J K KAPUR Vs. STATE OF GUJARAT

JUDGEMENT

(1.) These two civil appeals may be disposed of together. Both the appellants who were running cinema theatres in the state of Gujarat, have hitched their litigation wagon to the Liberty Talkies star. In Liberty Talkies v. The State of Gujarat, (1971) 3 SCR 398 this Could laid down certain principles which according to the appellants govern their cases although the State has refuted this contention.

(2.) Very briefly the appellant in Civil Appeal No.1779 of 1969 was carrying on the business of showing cinemas in the name and style of Sadhana Talkies. He paid entertainment tax as required under the Bombay Entertainments Duty Act, 1923 (for short the Act). From 1959 to 1962 such duty was paid and requisite returns made, but by notice dated 24-1-1969, the officers of the State demanded payments of Rs.10,140/- as being the shortfall in the duty paid as against the duty due. This difference arises on account of the interpretation put by the State, now upheld by this Court in the Liberty Talkies case (1971) 3 SCR 398 that the duty is payable on the gross collection, that is, the price of the ticket plus the tax and not on the net collection, that is, the price of the ticket simpliciter. It cannot be disputed that the State's construction of the statutory liability under S.3 is sound since the Liberty Talkies has declared the law in the same strain. The narrowquestion that falls for decision now is as to whether it is open to the State to demand by notice in 1969 the difference in duty payable for the period ending 19-9-62. This is possible only if there is a power of reassessment or reopening of assessment vested by the Statute in the State.

(3.) In Civil Appeal No. 1780 of 1969, the problem is similar. There, the appellants were running the Chitra cinema and were paying entertainment tax between 1-4-1957 and 30-4-1962. Returns were made in the due course, but by letter dated 16-5-1962, the appellants were told that the entertainment tax paid by them for the period referred to was short by Rs.35,679/58, this difference having arisen on account of the alternative interpretation but by the State. The liability to pay is based on the new demand which is sought to be sustained by the State on the score that a power to revise, reopen or reassess is available to it under the Act.