CHITRANI CINEMA Vs. DEPUTY COMMERCIAL TAX OFFICER

JUDGEMENT

(1.) The petitioner-Cinema Theatre - a partnership firm, challenges the validity of the proceedings of the respondent in Procs. No. A2 /2 /87, dated 25-4-1987 by praying for an appropriate Writ to call for the records relating to it and to quash the same.

(2.) To appreciate the controversy involved in this writ petition, it would be necessary to notice the following facts: The petitioner has opted to pay Entertainment Tax under Section 5 of the A.P. Entertainments Tax Act, 1939 (for short the 'Act'). Having regard to the provision of Rule 26(a) (sic. 27(9)) of the A.P. Entertainments Tax Rules, 1939, (for short the 'Rules'), the tax is payable each week by remitting the same on the Mondays immediately following the week to which the tax relates and if Monday happens to be a holiday, on the next working day. In the event of default in payment of tax as provided under Sections 5(8) and 10(1) of the Act, the tax has to be paid along with interest at such rate as may be prescribed. The petitioner says that the above said two provisions were inserted by Act 24 of 1984 with effect from 1-1-1984. But Rule 20-A prescribing the rate of interest at Rs.2/- for every one hundred rupees or part thereof was inserted by G.O.Ms. No.894 Revenue (S) dated 25-7-1985 and was published in the Gazette on 1-8-1985. As such there was no Rule, prescribing the rate of interest, in force during the period between 27th September, 1984 and 19th December, 1985, during which period the petitioner made delayed payments of tax. It appears that the Accountant General Audit Party took objection with regard to non-payment of the in terest on the belated payment thatled the respondents to issue show-cause notice to the petitioner on 20m January, 1987 calling upon it to explain as to why interest of Rs.31,710-66 ps. should not be levied for belated remittances of entertainment tax. The petitioner submitted its explanation to the said notice. On consideration of the same, the respondent passed orders dated 25th April, 1987 demanding the said amount of Rs. 31,710-66 ps., as interest for belated payment of entertainment tax during the period 27th September, 1984 to 19th December, 1985. Thereafter, he issued a distraint order dated 13-6-1987 in Form-I under the Revenue Recovery Act for recovery of the said amount.

(3.) The respondent filed counter-affidavit stating inter alia, that the petitioner made belated payments of entertainment tax. Having regard to the provisions of sub-section (8) of Section 5 and sub-rule (9) of Rule 27 of the Rules, the entertainment tax, not having been paid in time, interest ought to have been paid thereon. As that was not done, the proceedings dt. 25-4-1987 were initiated after giving opportunity to the petitioner ordering for payment of interest. It is submitted that payment of interest is mandatory on belated payment and as the rate of interest has been prescribed under Rule 20-A of the Rules, the petitioner is bound to pay interest at the prescribed rate. It is, however, added that Sections 5(8) and 10 (1) of the Act provide levy of interest. Those provisions came into force from 1-1-1984 after deletion of the earlier provision of Section 7(4) which provided payment of interest at the rate of Re.1/- for every hundred rupees or part thereof, after the date is specified for the payment of tax. It is further submitted that payment of interest was provided for belated payment even prior to 1-1-1984 and it has been in force after the said date under Section 5 (8) and 10 (1)of the Act. The rateof interest was prescribed on25-7-1985 by inserting Rule 20-A by G.O.Ms. No.894 Revenue dated 25-7-1985 and the said Rule was published in the Gazette on 1-8-1985. It is added that the Legislature has power to frame the Rules retrospectively under Section 16(2)(a) (sic. 2-A) of the Act. For these reasons, it is prayed that the writ petition he dismissed.