ISMAIL v. ALWAYE MUNICIPALITY, ALWAYE — 1975 DIGILAW 153 (KER)

Judgment :- 1. A common question arises for decision in the Original Petition and the two Writ Appeals and we propose to deal with them by a common judgment. The question relates to the quantum of the entertainment tax that has to be levied under S.3 of the Kerala Local Authorities Entertainments Tax Act, 1961 after the passing of the Kerala Additional Tax on Entertainments and Surcharge on Show Tax, Act, 1963 and the Kerala Additional Tax on Entertainments and Surcharge on Show Tax (Amendment) Act, 1972. The Kerala Local Authorises Entertainments Tax Act, 1961, hereinafter referred to as the Entertainments Tax Act, 1961, came into force on 3rd July 1961 and the Kerala Additional Tax on Entertainments and Surcharge on Show Tax Act, 1963, for short, Act 22 of 1963, on 1st April 1963. The Kerala Additional Tax on Entertainments and Surcharge on Show Tax (Amendment) Act, 1972, for short Act 7 of 1972, came into force on 28th March 1972. 2. It has been a matter of controversy as to whether the entertainments tax charged by S.3 of the Entertainments Tax Act, 1961 should be calculated on the price of admission as envisaged by R.8 of the Kerala Local Authorities Entertainments Tax Rules, 1962 or whether it should be calculated on the price of admission as envisaged by R.8 of the Kerala Local Authorities Entertainments Tax Rules, 1962 or whether it should be calculated on the pries of admission as envisaged in that rule plus the tax payable under the Act. The relevant sections to be considered for this purpose are S.2 (7) and 3 of the Entertainments Tax Act, 1961 and we shall extract those sections: "2(7) 'payment for admission' includes (a) any payment made by a person who having been admitted to one part of a place of entertainment, is subsequently admitted to another part thereof, for admission to which a payment involving a tax or a higher rate of tax is required; (b) any payment for seats or other accommodation in a place of entertainment; and (c) any payment for any purpose whatsoever connected with an entertainment which a person is required to make as a condition of attending or continuing to attend the entertainment in addition to the payment, if any, for admission to the entertainment. 3. General provision regarding the levy of the tax and the rate of tax. 3. General provision regarding the levy of the tax and the rate of tax. Any local authority may levy a tax (hereinafter referred to as the entertainment tax) at a rate not less than ten per cent and not more than twenty-five per cent on each payment for admission to any entertainment." Construing these sections it was ruled by this Court in Ismail v. The Commissioner, Mattancherry Municipality (1960) 11 KLR. 456 that the entertainments tax payable under the Entertainments Tax Act, 1961 will be a payment for a purpose connected with an entertainment coming within the expression 'payment of admission' in S.2 (7) of the Entertainments Tax Act, 1961. This position has been affirmed by a Full Bench of this Court in Ismail v. Commissioner, Mattancherry Municipal Council 1963 KLT. 1080. There is a later Full Bench of five judges of this Court in Municipal Council, Kottayam v. K. Mahadeva Iyer 1970 KLT. 577 wherein the same view has been taken. The question thus having been decided by this Court repeatedly, we do not consider that the matter is now open to argument. Further, the Supreme Court has taken the same view in M/s Liberty Talkies and others v. State of Gujarat and Another (1971) II S.C.W.R. 388 wherein it has been clearly laid down that payment for admission will include entertainments duty chargeable under the Entertainments Duty Act, 1923, Bombay. The relevant sections of that statute are similar to the sections of the statute that we have to consider. Therefore the matter is not arguable before the High Court. 3. We have to consider now the effect of Act 22 of 1963. The relevant section of this statute with which we are concerned is S.2 which runs as follows: "2. Levy of additional tax on entertainments Notwithstanding anything contained in the Kerala Local Authorities Entertainments Tax Act, 1961 (Act 20 of 1961), with effect on and from the commencement of this Act, on each payment of admission to any entertainment which is subject to the levy of entertainments tax under S.3 of the said Act there shall be levied an additional tax on entertainments calculated at the following rates, namely Table:#1 4. Act 22 of 1963 does not define 'payment of admission' or 'payment for admission' though S.2 uses the words'on each payment of admission'. Act 22 of 1963 does not define 'payment of admission' or 'payment for admission' though S.2 uses the words'on each payment of admission'. Counsel on behalf of the Writ Applicant in O.P. No. 4856 of 1972 contended before us that whatever may be the justification for holding that the payment of tax under the Entertainments Tax Act, 1961 is a payment for a purpose connected with an entertainment and therefore amounting to a payment of admission according to the definition in S.2(7) of the Entertainments Tax Act, 1961 there is no justification for attributing the same meaning to the words 'on each payment of admission' in S.2 of Act 22 of 1963 in the absence of any definition of the expression 'payment of admission' in Act 22 of 1963. It was submitted that the definition in the Entertainments Tax Act, 1961 cannot, on well-established principles and norms of interpretation be applied for the purpose of understanding the scope and ambit of the expression'on each payment of admission' in S.2 of Act 22 of 1963. Further, counsel urged that the latter part of S.2 of Act 22 of 1963 where it speaks of "Where such payment (inclusive of the amount of entertainments tax levied under the Kerala Local Authorities Entertainments Tax Act, 1961)" clearly indicates that without reference to Act 22 of 1963, the amount of entertainments tax to be levied under the Entertainments Tax Act, 1961 will have to be first determined before the additional tax payable under Act 22 of 1963 is determined. It was therefore stressed before us that the determination of the additional tax payable under Act 22 of 1963 for finding out the entertainments tax payable under the Entertainments Tax Act, 1961, would be putting the cart before the horse, and that such a procedure is unwarranted by the wording of the charging section, S.2 of Act 22 of 1963. We have carefully examined the question and we are unable to accept these submissions. S.2 of Act 22 of 1963 specifically speaks of 'payment of admission' to any entertainment which is subject to the levy of entertainments tax under S.3 of the Entertainments Tax Act, 1961. We have carefully examined the question and we are unable to accept these submissions. S.2 of Act 22 of 1963 specifically speaks of 'payment of admission' to any entertainment which is subject to the levy of entertainments tax under S.3 of the Entertainments Tax Act, 1961. So the question is whether the additional tax payable under Act 22 of 1963 has to be taken into account for determining the payment of admission for the purpose of calculating the entertainments tax payable under the Entertainments Tax Act, 1961 applying the definition of the 'payment of admission' and the charging section, S.3 of the Entertainments Tax Act, 1961. If the entertainment tax payable under the Entertainments Tax Act, 1961, is a payment for a purpose connected with an entertainment, we fail to see how it would be possible to say that the additional tax payable under Act 22 of 1963 is not a payment connected with the entertainment. If such payment of the additional tax under Act 22 of 1963 is also a payment for a purpose connected with an entertainment, such payment will form part of the price or part of the payment of admission and will have to be taken into account for determining the quantum of the entertainments tax payable under the Entertainments Tax Act, 1961. We feel compelled to come to such a conclusion in view of the specific reference to the charging section, S.3 of the Entertainments Tax Act, 1961 and for the purpose of applying that charging section, we have necessarily to import the meaning of the words 'payment of admission' which has been defined in S.2(7) of the Entertainments Tax Act, 1961. 5. The direction issued by Ext. P-1 produced along with O. P. No. 4856 of 1972 by the Kodungallur Panchayat to the petitioner in the Original Petition therefore is in accordance with the provisions in the relevant statutes, the Entertainments Tax Act, 1961 and Act 22 of 1963. We are therefore unable to grant the prayer for quashing this direction or to restrain the Panchayat from collecting the tax on the basis of that direction. 6. The same question arises in Writ Appeal No. 274 of 1973 which is from the judgment in O. P. No. 3900 of 1972 rendered by Viswanatha Iyer J., who disposed of that petition along with wo other Original Petitions, O. P. Nos. 6. The same question arises in Writ Appeal No. 274 of 1973 which is from the judgment in O. P. No. 3900 of 1972 rendered by Viswanatha Iyer J., who disposed of that petition along with wo other Original Petitions, O. P. Nos. 2469 of 1972 and 4674 of 1972. The appeal from the judgment in O.P. No. 2469 of 1972 is Writ Appeal No 339 of 1973 and we are told that no appeal has been filed from the judgment in O. P. No. 4674 of 1972 We are in respectful agreement with the reasoning of the learned judge in dismissing these petitions which is in accordance with what we have stated above. It follows that Writ Appeal Nos. 274of 1973 and 339 of 1973 have to be dismissed. 7. The only other question that is mooted for our consideration in this batch of cases is the submission made by Mr. Rama Shenoi, counsel for the petitioner in O. P. No 4856 of 1972 that in any view of the matter, there is no justification for reopening the assessments to tax which have been effected in the case of the petitioner in the Writ Application for the period from 11th April 1972 to 23rd October 1972. His submissions were that when returns have been filed by the petitioner in the Original Petition and when taxes have been paid, it must be deemed that there have been assessments made by the taxing authority, namely Panchayat and that there being no provision in the Entertainments Tax Act, 1961, or in Act 22 of 1963 or for that matter in any other statute for reopening the assessments, this assessment for and up to the period of 23rd October 1972 must stand and necessarily therefore no additional tax or additional amounts by way of tax can be claimed by the petitioner in O. P. No. 4856 of 1972 for the period from 11th April 1972 to 23rd October 1972. This submission is fully supported by the decision of the Supreme Court in M/s Liberty Talkies and others v. State of Gujarat and another (1971) II S. C. W. R.388 in which Shah C. J, observed as follows: "Till January II, 1962, the proprietor acted pursuant to the memorandum dated March 18,1960 issued by the Collector and collected the duty and paid it over. The Government of Gujarat later advised that the method of collection notified by the Collector was not the correct method. But the Act contains no provision for reopening assessments already made. When pursuant to return by the proprietor, payments were made and accepted under S.4(2) (b), the tax may be deemed to be assessed and paid, and the State cannot thereafter reopen the concluded assessments and seek to levy tax or duty which has escaped." 8. The same is the position even if the levy of tax is under S.4 (1) of the Act has been ruled by another decision of the Supreme Court in J. K. Kapur etc. v. State of Gujarat and others AIR. 1974 S. C. 1996. In Para.7 of the judgment, Krishna Iyer J., observed as follows: 7. Counsel for the State contends that the provisions applicable to the present case in S.4 (1) and not S.4 (2) (b), as fell for decision in Liberty Talkies (1971) 3 S.C.R. 398. May be technically, the provisions are perhaps different. Even so. it is indisputable that there is no provision in the Act for reopening closed assessments and our enquiry must be focused on the fact of assessment being concluded or not. Whether it comes under S.4(1) or S.4 (2) is immaterial for this purpose. Under S.4(1) stamps have to be affixed to the tickets. Returns have to be made periodically which will indicate to the authority concerned the total number of persons admitted to the entertainment, the value of stamp used etc. on the basis of this return and on such enquiry the authorities deem fit to make by way of inspection at the time of the show or otherwise, they either accept the payment already made by way of use of stamps or they make fresh demands. In the present case it has been pointed out already by us that officers concerned had the returns before them of the tax collections and of the persons who had been admitted to the shows but on account of a wrong impression about the meaning of the statute the respondents kept quiet. Long later demands were made when they awakened to the new interpretation which happens to be the correct interpretation. Long later demands were made when they awakened to the new interpretation which happens to be the correct interpretation. To accept the payments made by use of stamps from April 1957 to April 1962, after the returns were sent to the relevant authorities, is in our view sufficient to imply assessment and payment." 9. Issac J., in the judgment in O. P No. 1221 of 1971 from which Writ Appeal No. 335 of 1973 has come up before us has referred to the earlier decision of the Supreme Court in Liberty Talkies v. State of Gujarat (1971) II S.C.W.R. 388 and has reached the same conclusion. 10. We do not think there is any justification whatever in claiming any amount by way of tax from the petitioner in O.P.No. 4856 of 1972 for the period from 11th April 1972 to 23rd October 1972. We would therefore direct that no amount by way of tax in addition to what has been paid by the petitioner for the period from 11th April 1972 to 23rd October 1972 will be demanded by the respondent in O. P. No. 4856 of 1972. To this extent, we allow O. P. No. 4856 of 1972. 11. We direct the parties to bear their respective costs.