D S CHAUHAN Vs. SUPERINTENDENT ENTERTAINMENT TAX DEPARTMENT

JUDGEMENT

(1.) These are two connected petitions which are being disposed of by this common judgment. Petitioner no. 5 in Civil Misc. Writ Petition No. 414 of 1977 is an organisation known as "Swar Singar Natya Bhartiya." Petitioners no. 1 to 4 to that writ petition are office bearers of that society. D.S. Chauhan the petitioner in the connected Civil Misc. Writ No. 311 of 1977 was a patron of that organisation. As office bearers of the organisation or society, petitioners no.1 to 4 of Civil Misc. Writ Petition No. 414 of 1977 and D.S. Chauhan, the petitioner in the connected writ petition, organised an entertainment programme described as "Sulakshana Pandit Hite" at the Kamla Club at Kanpur. Since entry to the programme was to be by the sale of the tickets, the petitioners in 'either of the two petitions applied for and obtained the requisite permission for holding the programme from opposite party no. 2. The "Sulakshana Pandit Hite" show admittedly took place on 11th Dec., 1976 and on 13th Dec., 1976 the petitioners were served with a notice under the signature of Manoranjan Kar Adhikshak, Kanpur intimating to them that as was required by Rule 16 of the Rules framed under the U.P. Entertainments and Betting Tax Act (hereinafter referred to as the Act) the petitioners had failed to submit their accounts within 3 days of the show having been held. By means of this notice the petitioners were also intimated that they had also failed to deposit the entertainment tax and surcharge payable within 3 days of the function having been held. By means of the notice the petitioners were required to submit their accounts by the 14th of Dec., 1976 and they were warned that on their failure to do so, they would be proceeded with in accordance with law. The petitioners failed to submit their accounts within the time mentioned in the notice but were granted extended time for complying with the notice. Subsequently by means of a letter dated 17th Dec., 1976 addressed to the District Magistrate, Kanpur, who, we are informed, is also ex-officio Manoranjan Kar Adhikshak, Kanpur, the petitioner submitted an account according to which the total number of tickets sold for the function was 3,700 and the petitioners were liable to pay an amount of Rs. 15,258.00 as entertainment tax and a sum of Rs. 370.00 as surcharge. By means of this letter the petitioners prayed that the security amount of Rs. 5000.00 be adjusted towards the tax dues and they may be permitted to deposit the balance. The allegation has not been denied that the balance of entertainment tax and the surcharge, as claimed to be due by them, was deposited by the petitioner in the State Bank of India at Kanpur. On the 1st of June, 1977 each one of the petitioners in either of the two petitions separately was served with a notice under the signature of the Tahsildar purporting to be under Sec. 280 of the U.P. Act no. 1 of 1951 intimating that an amount of Rs. 28,390. 20 was due as arrears of entertainment tax and in case the amount was either not deposited by 4th June, 1977 or the petitioners did not appear before the signatory of the notice and show cause, warrants for their arrest would be issued and proceedings for realisation of the tax dues by attachment and sale of their property would be resorted to. The petitioners allege that before they received this notice under the signature of the Tahsildar, no proceedings were held in their presence by opposite parties no. 1 to 2 for determining the organisation's tax liability in case the detailed account submitted by the petitioners was not acceptable. A counter affidavit has been filed on behalf of the opposite parties verified by one Jai Prakash Srivastava, the Entertainment Tax Inspector, Kanpur. The assertions made by the petitioners in the petition that the hall in which the function was held had a seating capacity of only 6000 has been denied and a copy of the letter sent by the petitioners seeking permission for holding the show has been referred to in which according to the petitioners themselves the hall had a seating capacity of 9000. It is denied that the petitioners had not been given an opportunity of showing cause before proceedings for realisation of their tax dues was resorted to by issuing warrants of their arrest. On an earlier hearing of this case, we directed the learned Standing Counsel to produce before us the relevant records relating to the petitioner' case in order to ascertain as to whether before recovery proceedings were resorted to against the petitioners, any proceedings for determination of the petitioners' tax liability had been taken after notice to the petitioners. In support of his contention that the petitioners' tax liability had been determined after notice to them, the learned Standing Counsel placed reliance on a letter dated 28th Dec., 1976 issued under the signature of Sri S.S. Dubey, Manorajan Kar Adhikshak, Kanpur, addressed to Gopal Das Gupta, the President of the society. We have accordingly examined this letter and in our opinion this cannot be read as a notice to the petitioners to show cause why the accounts and returns submitted by them should not be rejected and assessment according to best judgment on other material available be not made against the petitioners. It is stated in the letter dated 28th Dec., 1976 that the accounts submitted by the petitioners was unacceptable because the signatory of the letter himself had along with a Tax Inspector counted the number of persons who had attended the show and the account submitted by the petitioners did not tally with the counting undertaken by the Manoranjan Kar Adhikshak and the Tax Inspector when the performance was going on. This notice intimated to the petitioners that the performance had been attended by 8,112 persons on the basis of tickets sold by the petitioners and the petitioners were consequently liable to pay Rs. 43,136/- as entertainment tax and a sum of Rs. 811.20 as surcharge. The notice required the petitioners to deposit the amount mentioned therein within a week and further intimated that in the event of the failure to do so, the security amount deposited by the petitioners would be forfeited and proceedings would be taken to realise from them the tax dues as arrears of land revenue. This letter, as already observed, cannot be treated as a letter providing an opportunity to the petitioners to show cause as to why the returns submitted by them be not rejected and a best judgment assessment be made against them.

(2.) The Act and the Rules do not provide for any method by which the tax liability of a person meant to pay taxes under the Act is to be determined in the event of the return submitted by him under Sec. 4 (2) (b) not being found acceptable. In the absence of any detailed procedure being prescribed, since the determination of the petitioners' tax liability imposed a civil liability on them and laid them open to coercive means being employed for realisation of the amount claimed to be due, principles of natural justice require, even in the absence of any specific statutory provision, that the petitioners should have been accorded an opportunity of being heard in support of their claim that the returns submitted by them were accurate. This evidently has not been done in the instant case.

(3.) For the reasons given above, we quash the letter dated 28th Dec., 1976 issued to the petitioners by the Manoranjan Kar Adhikshak as well as the notice dated 30th May, 1977 issued by the Tahsildar under Sec. 280 of U.P. Act no. 1 of 1951, a true copy of which has been filed as Annexure '8' to Civil Misc. Writ Petition no. 311 of 1977. The opposite parties are further restrained from taking any coercive steps against the petitioners for realising any amount alleged to be due against the petitioners on account of entertainment tax or surcharge in connection with the "Sulakshana Pandit Nite" till their tax liability has been determined in accordance with law and the observations contained in this judgment. In the circumstances of the case, parties shall bear their own costs.