EXPRESS NEWSPAPERS LIMITED Vs. STATE OF MAHARASHTRA

JUDGEMENT

(1.) THIS is plaintiff's appeal against dismissal of its suit to recover back the aggregate sum of Rs. 19,39,337 -13 -0 paid by it (the plaintiff Company) as tax under the provisions of the Bombay Lotteries and Prize Competitions Control and Tax Act, 1948.

(2.) THE facts which led the plaintiff Company (Express Newspapers Ltd.) to file the suit may briefly be stated. : The plaintiff is a Company incorporated, under the Indian Companies Act, 1918 and carries on the business of printing and publishing of newspapers and magazines etc. The plaintiff Company also promoted cross -word prize competitions through its papers published in Bombay. Between October 1948 and July 20, 1954 the plaintiff ran a Marathi cross -word prize competition in its Marathi Daily called 'Lokasatta,' while from January 1951 till October 1952 it ran a cross -word prize competition called 'Squarewords' in its English weekly 'Sunday Standard.' The Bombay Lotteries and Prize Competitions Control and Tax Act, 1948 (hereinafter referred to as 'the Act') came into force on December 1, 1948 which required every promoter to apply for and obtain a licence in respect of such prize competitions and therefore the plaintiff Company obtained requisite licences for running the said Marathi prize competition in 'Lokasatta' and English prize competition in 'Sunday Standard' under Section 7 of the Act. Under a notification dated December 24, 1948 issued under Section 12(1)(b) of the Act, the Government of Bombay directed that in respect of every prize competition for which licence had been obtained under Section 7 of the Act tax shall be levied at the rate of 25% of the total sum received in respect of such competition. Accordingly in respect of its English prize competition called 'Squarewords' run in its weekly 'Sunday Standard' the plaintiff Company between February 1951 and October 1952 made a total payment of tax to the tune of Rs. 5,23,542 -14 -0. In respect of Marathi prize competition in 'Lokasatta' the plaintiff Company paid tax at the rate of 25% from December 30, 1948 to August 81, 1950, in accordance with the notification dated December 24, 1948. By a notification dated July 15, 1950 issued under a. 12(2) of the Act the Government of Bombay directed that the tax to be levied with effect from September 1, 1950 in respect of each Lokasatta Marathi crossword prize competition shall be at the rate of 80% of the total sum. received or due in respect of each such competition and not at the rate of 25% as specified in the earlier notification dated December 24, 1948, and accordingly the plaintiff Company paid tax at the rate of 80% in respect of each of its Lokasatta Marathi competition from September 1, 1950 to October 31, 1952. It appears that as a result of representation made by the plaintiff Company, the Government of Bombay directed that the liability of the plaintiff Company to pay tax in respect of Lokasatta Marathi competition should be reduced to 25% with effect from April 1, 1952 and in that connection the excess amount of 5% paid was directed to be refunded to the plaintiff Company and accordingly the sum of Rs. 30,854 -7 -6 for the period from April 1, 1952 was actually refunded ; in other words, the excess of 5% recovered from the plaintiff Company in respect of its Lokasatta competition from September 1, 1950 up to March 31, 1952 (amounting to Rs. 82,819 -6 -6) was retained by the Government. The plaintiff Company further paid tax at the rate of 25% for Lokasatta competition from November, 1, 1952 to July 20, 1954. According to the plaintiff Company, the total payment of tax made in respect of its Lokasatta competition for the entire period from December 1, 1948 to July 1954 came to Rs. 14,46,649 -6 -6 and after giving credit for the amount of Rs. 80,854 -7 -6 refunded to it, the total amount thus retained by the Government as tax recovered from the plaintiff Company in respect of Lokasatta competition amounted to Rs. 14,15,794 -15 -0. The plaintiff Company thus claimed that in respect of its Lokasatta cross -word competition and English cross -word competition run in Sunday Standard, an aggregate sum of Rs. 19,89,337 -18 -0 had been paid as tax under the provisions of the said Act which the plaintiff sought to recover from the defendant ( State of Bombay ) and the basis on which it claimed to recover the same from the defendant was set out in paras. 9, 10,10 -A and 11 of the plaint.

(3.) BY a further amendment sought by Chamber Summons dated April 6, 1960 and granted by order dated June 27, 1960 the plaintiff inserted a new paragraph being para. No. 10 -A in the original plaint and by this amendment the plaintiff Company stated that its prize competitions involved a substantial degree of skill and that success in their solution depended upon the exercise of a substantial degree of skill and as such its prize competitions were not prize competitions within the meaning of the said Act, and the plaintiff submitted that the Supreme Court by its judgment delivered on April 9, 1957 in the case of State of Bombay v. Chamarbaugwala : [1957]1SCR874 for the first time held that the said Act applied only to prize competitions of a gambling nature and did not apply to prize competitions involving a substantial degree of skill for their solution and until the aforementioned judgment was delivered the plaintiff mistakenly was under the impression that the said Act applied to all prize competitions including its prize competitions and that the plaintiff discovered its said mistake on and after the said decision was pronounced by the Supreme Court. Under those circumstances the plaintiff further submitted that the total amount of tax was paid by it to the defendant due to the aforesaid mistake and the same was wrongfully, unauthorisedly and illegally recovered by the defendant and the defendant was bound to refund the same to the plaintiff. It may be stated that the aforesaid amendment in the plaint was granted by the learned Judge hearing the Chamber Summons subject to any point of limitation being allowed to be raised at the hearing.