MARUTHI TALKIES Vs. ENTERTAINMENT TAX OFFICER BHIMAVARAM

JUDGEMENT

(1.) The sole question that falls for decision in this batch of writ petitions is whether, after the reduction in gross collection capacity of the theatre, the proprietor or the exhibitor thereof, who opted for payment of a specified amount every week as agreed to in terms of section 5 of the A.P. Entertainments Tax Act, 1939 (Act 10 of 1939), hereinafter referred to as "the Act", is entitled to claim during the continuance of the agreement, that is from the date of such reduction in the gross collection capacity till the end of the financial year during which the agreement is valid, a reduction in tax in proportion to the reduction in the gross collection capacity of the theatre.

(2.) We will state the facts in W.P. No.15992 of 1986 for understanding the nature of the question of law raised; the petitioner, who had opted for paying entertainment tax in respect of his theatre under section 5 of the Act, agreed to pay for the year 1984-85 at the rate of Rs. 6,634 per week calculated at 18 per cent. multiplied by 21 shows on gross collection capacity of Rs. 1,755. While so, on 17/11/1984 the petitioner made an application to the Joint Collector, who is a licensing authority, for reducing the weekly tax payable from Rs. 6,634 to Rs. 5,761 stating that the seating capacity of his theatre had been reduced from 870 to 792, the difference in gross collection capacity having come down from Rs. 1,755 to Rs. 1,524. The Joint Collector, having allowed the application by his order dated 19/06/1985, the petitioner on 22/06/1985 filed revision in form III before the respondent, the Entertainment Tax Officer, and requested him to revise the weekly tax. Though the respondent did not pass any order, since then tax was paid and received at the reduced rate till the end of the year, up to 31/03/1986. This writ petition has been occasioned by the notice dated 6/10/1986 issued by the respondent-Entertainment Tax Officer, asking the petitioner to remit a sum of Rs. 34,920 being the differential tax for the period 22/06/1985 to 3/04/1986 stating that there was no provision to reduce the tax during the period covered by the agreement under section 5 of the Act.

(3.) The counsel for the petitioner submitted that the respondent had acted illegally in having demanded the differential tax inasmuch as under rule 27(10) of the A.P. Entertainments Tax Rules, the petitioner was entitled to pay tax at the reduced rate whenever there was a reduction in the seating capacity of the theatre. Rule 27(10) relied on by the petitioner reads as follows :