JEEVAN REDDY Vs. STATE OF ANDHRA PRADESH

JUDGEMENT

(1.) The Entertainments Tax Act, 1939, was enacted by the Madras Legislature in 1939 with a view to provide for the levy of tax on amusements and other entertainments. The Madras Act, as amended from time to time, is now in force in this State. Under Sec. 4 of the Act, on each payment for admission to any entertainment, there shall be levied and paid to the State Government a tax, called 'entertainments Tax,' at the rates specified therein. The expression 'entertainment' is defined by Clause (4) of section 3 as a cinematograph exhibition to which persons are admitted on payment. The Government realized from its experience that it is very difficult to check the avasion of payment of entertainments tax in rural areas, particularly in small villages and towns. With that view, section 4-C was introduced and section 5 was substituted by Amendment Act No. 58 of 1976, which replaced the Andhra Pradesh Entertainments Tax (Second Amendment) Ordinance, 1976. By section 4-C it is provided that on the entertainments held within the jurisdiction of any local authority, whose population does not exceed 25,000 the entertainments tax shall be calculated at a flat rate fixed with reference to the 'gross collection capacity per show'. In other words, the State is not concerned with the number of persons admitted to a show. The entertainments tax is levied at a flat rate determined in accordance with the formula prescribed by the section. In case of entertainments to which section 4-C applies, section 4 as well as section 4 A are made inapplicable. Section 5 provides yet another and for more convenient method of taxation. Section 5 says that in lieu of tax payable under section 4-C (I), the^proprietor may opt to enter into an agreement with the prescri. bed authority to compound the tax payable for a year for a fixed sum, which sum shall be determined in accordance with the formula prescribed by Sec 5. In case of such an agreement, the State is not only not concerned with the number of persons admitted to an entertainment show, but also with the number of shows an exhibitor gives. A consolidated tax is collected for the year at prescribed intervals. There is no question of any assessment, nor any enquiry in that behalf. The two procedures prescribed by section 4-C and section 5 are thus convenient not only from the point of view of the exhibitor but also from the point of view of the State

(2.) Section 4-C (I) and Section 5(1) both contain an Explanation each, which define the expression 'gross collection capacity per show' The Explanation contained in Section 4-C (I) is expressly stated to be applicable both for the purpose of Section 4-C, and Section 5. Yet, Section 5(1) contains an Explanation which is apparently inconsistent with the explanation contained in Section 4-C (I). The said apparent inconsistency has led to the present controversy.

(3.) Before proceeding further, it would be appropriate to state the facts in Writ Appeal No. 277 of 1978, which arises from Writ Petition No. 863/1978. In this writ petition, the 1st petitioner is the Andhra Pradesh Cinema Exhibitor's Council, while the 2nd petitioner is one of the member-theatres of the 1st Petitioner-Association. The 2nd petitioner entered into a composition agreement with the authorities under Section 5 of the Act, valid for one year, i.e., from 4-10-1976 to 3-10-1977 Meanwhile, it applied for reduction of the seating capacity, to the appropriate authorities under the Andhra Pradesh Cinemas (Regulation) Act, 1955, which was sanctioned with effect from 1-1-'78. On 6-2-'78 the 2nd petitioner applied to the authorities for entering into a fresh composition agreement with reference to the reduced seating capacity with effect from 4 10-1977. The authorities refused to enter into an agreement with reference to the reduced seating capacity on (he ground that, according to the Explanation to Section 5(1), the seating capacity as on 1-4-1976, or the seating capacity on the date of the agreement whichever is higher, should be taken, and hence in the case of the 2nd petitioner the seating capacity as on 1-4-1976, alone can be made the basis of such an agreement, and not the reduced capacity. Thereupon, the 2nd petitioner, as also the Association of the Cinema exhibitors approached this Court.