SHANTI TALKIES Vs. GOVERNMENT OF ANDHRA PRADESH

JUDGEMENT

(1.) The petitioners in all these writ petitions made applications to the Entertainments Tax Officer, 3rd respondent herein, in form III signifying their intention to opt for payment of tax under section 5(1) in lieu of tax payable under section 4 of the A.P. Entertainments Tax Act (10 of 1939) (for short "the Act") for the financial year 1987-88. The 3rd respondents granted a permit in form IV in favour of each one of the petitioners. At the time when the permit in form IV was granted, the area in which the theatres were situated, was a gram panchayat. By a notification published in A. P. Gazette dated 7/09/1987, the State Government declared under sub-section (3) of section 3 of the A.P. Municipalities Act (6 of 1965) that the local area which was within the jurisdiction of Kamareddy gram panchayat shall be Kamareddy municipality with effect from 7/09/1987. Thus, the gram panchayat, Kamareddy, became Kamareddy municipality with effect from 7/09/1987. Sub-section (22) of section 2 of the A.P. Municipalities Act provides as under :

(2.) In G.O.Ms. No. 743, Housing, Municipal Administration and Urban Development (M.A.), dated 24/08/1987, it was stated that Kamareddy municipality will be classified as second grade municipality under sub-section (22) of section 2 of the A.P. Municipalities Act, 1965. But, the notification declaring Kamareddy municipalities as second grade municipality was published in Andhra Pradesh Gazette only on 11/04/1988. It is no doubt true that it was mentioned therein that the declaration as second grade municipality was with effect from 7/09/1987. Relying on G.O.Ms. No. 743 dated 24/08/1987, the Entertainments Tax Officer issued notices to the petitioners demanding payment of tax at 16 per cent. of the gross collection capacity multiplied by 21 with effect from 7/09/1987. This tax is leviable in respect of a theatre situated in second grand municipality. As we have already mentioned, at the time when permit in form IV was granted in favour of the petitioners, the tax was at 15 per cent. of gross collection capacity multiplied by 14. Questioning the validity of the demand notices, these writ petitions are filed.

(3.) It is submitted by Sri. M. R. K. Chowdary, the learned counsel for the petitioners, that Kamareddy municipality was declared as second grade municipality only by notification published in the A. P. Gazette dated 11/04/1988 and therefore the Entertainments Tax Officer is not justified in issuing the demand notices asking the petitioners to pay the tax with effect from 7/09/1987, at a higher rate leviable in respect of a theatre situated in a second grade municipality. In other words, the contention advanced on behalf of the petitioners is that the local area in which the theatres are situated cannot be said to have been upgraded till the notification declaring the grade of municipality has been published in the A. P. Gazette.