STATE OF UTTAR PRADESH Vs. KAMLA PALACE

JUDGEMENT

(1.) This order shall govern the disposal of a bunch of appeals grouped into three and arising in the backdrop of events stated hereinafter.

(2.) The Uttar Pradesh Entertainments and Betting Tax Act, 1979 (U. P. Act No. 28 of 1979) was enacted and came into force in the State of U. P. on August 16, 1981. It introduced the levy of the entertainment tax payable at a certain percentage on all payments for admission to any entertainment. Entertainment as defined in the interpretation clause includes cinematograph exhibitions amongst others. With a view to encouraging cinema construction the State of Uttar Pradesh extended a scheme of grant-in-aid for permanent cinema houses constructed within a specified period through a Government Order dated 17th September, 1983. Parmanent cinema houses constructed under the scheme depending on the population of the areas/towns wherein they were constructed were allowed grant-in-aid equivalent to 100%, 75% and 50% respectively for the first, second and third year of construction in the areas/places having the population of more than 20,000 but less than 1,00,000. In the areas/places having population of less than 20,000 the amount of grant-in-aid was equivalent to 100%, 75, 50% respectively for the first two years, the third year and the fourth year of construction. There were a few conditions attaching with the entitlement to the benefit of the grant-in-aid. The conditions relevant for our purpose were; (i) that the grant-in-aid shall be admissible only to such cinema houses which fixed their maximum entrance rates inclusive of tax at not more than Rs. 2.50; (ii) that the District Magistrate shall permit the grant-in-aid after providing the licence in the proforma enclosed with the Government Order; and (iii) that the permission shall be effective after the cinema owner signed the agreement contemplated by the scheme. The scheme was extended from time to time with effect from 21st July, 1986, and 18th July, 1989. The phraseology and tenor of all such subsequent schemes is more or less similar to the scheme of the year 1983 excepting that under the schemes of the years 1986 and 1989 the benefit was available to such permanent cinema houses as fixed admission rate at not exceeding Rs. 5/-.

(3.) The U. P. Cinemas and Taxation Laws Amendment Act, 1989 (U. P. Act No. 12 of 1989) introduced Section 3-A in the body of the main Act which by an overriding effect over other provisions of the Act authorised the proprietor of a centrally air-cooled or centrally airconditioned cinema to realise, subject to prior permission of the District Magistrate, in extra charge of 10 paise and 25 paise respectively over and above the admission fee during the period commencing on the 15th day of March and ending on the 15th day of September every year which amount was not to be taken into account for calculating the entertainment tax if the same was spent for providing the air-cooling or air-conditioning facility, as the case may be. The abovesaid Section 3A was further amended by Act No. 14 of 1992. Section 3A in its amended form along with the proviso appended to sub-section (1), which proviso is the bone of contention, is reproduced hereunder:-