JUDGMENT Ravi S. Dhavan, J. - This petition by Messrs Sarswati Talkies has been presented through its proprietor Satendra Pratap Singh. The matter is in reference to a cinema at Kamalganj District Farrukhabad. The business of the proprietorship firm, aforesaid (hereinafter referred to as the petitioner) is exhibition of motion pictures. Exemption from entertainment tax has not been granted by respondent No. 1, that is, the Joint Secretary, Finance (Tax), State of Uttar Pradesh, Lucknow, the denial of exemption from entertainment tax has occasioned the present writ petition. 2. At the outset the court may set on record that neither the petitioner nor on behalf of State respondents, any arguments have been presented in reference to the legislation in pursuance of which exemption from entertainment tax is granted. The pleadings are in ignorance of the law and no reference has been made to the legislation which governs the claim on the relief sought. The petitioner refers to exemption from entertainment tax. The grant of exemption or denial of it is under the Uttar Pradesh Entertainment and Betting Tax Act, 1979 (referred to as the Act) and the rules framed in 1981, the Uttar Pradesh Entertainment and Betting Tax Rules, 1981 henceforth referred to as the 1981 Rules. 3. Any issue in the petition, thus, is in reference to the Act and the Rules aforesaid. Exemption, of the nature sought by the petitioner is one which can be granted under S. 11. Section 11 refers to the criteria on the basis of which exemption from tax can be granted. It further mentions that apart from being granted to an exhibitor it may be granted, in public interest to any class of audience or spectators. The said section also refers to the conditions upon which the exemption granted may be recalled, the latter aspect is not relevant in the present writ petition. In reference to grant of exemption the relevant text of the said section is reproduced below : "11. Exemption :- (1) The State Government may, for promotion of peace, international goodwill, arts, sports or other public interest, by general or special order, exempt any entertainment or class of entertainments from liability to pay tax under this Act. (2) The State Government may, by general or special order, exempt in public interest any class of audience or spectators from liability to pay tax under this Act. (2) The State Government may, by general or special order, exempt in public interest any class of audience or spectators from liability to pay tax under this Act. (3) Without prejudice to the generality of the provisions of sub section (1) where the State Government is satisfied that any entertainment (a) is wholly of an educational character, or (b) is provided partly for educational or partly for scientific purposes by a society not conducted or established for profits or (c) is provided by a society not conducted for profit and established solely for the purpose of promoting public health or the interests of agriculture, or a manufacturing industry, and consists solely of an exhibition of articles which are of material interest in connection with questions relating to public health or agriculture or are the products of the industry for promoting the interest whereof the society exists, or the material, as, machinery, appliances or foodstuff used in the production of such products, It may, subject to such terms and conditions as it may deem fit to impose, grant exemption to such entertainment from payment of tax under this Act." 4. In so far as the rules are concerned they prescribe the manner in which the exemption will be sought. This is Rule 36. The text is reproduced : "36. Exemption by Government under S. 11(3) of the Act - Any person seeking exemption from payment of the tax under sub-s. (3) of S. 11 of the Act, shall apply to the State Government in the Finance (Entertainment Tax) Department through the District Magistrate of the district where the entertainment is to be held at least thirty days before the proposed date of entertainment stating clearly the full description and nature of entertainment with necessary proof as also the particular clause of sub-s. (3) of S. 11 under which the exemption is sought." Thus, any person seeking exemption, from entertainment tax, which exemption can be granted under sub-s. (3) of S. 11 of the Act, aforesaid, will apply to the State Government through the District Magistrate. The application is to be made at least thirty days before the proposed date of entertainment. 5. The petitioners' request for exemption from entertainment tax has been turned down by an order of the Joint Secretary Finance (Tax) Government of U.P., Lucknow conveyed to the District Magistrate, Farrukhabad. The order is dated February 25, 1988. The application is to be made at least thirty days before the proposed date of entertainment. 5. The petitioners' request for exemption from entertainment tax has been turned down by an order of the Joint Secretary Finance (Tax) Government of U.P., Lucknow conveyed to the District Magistrate, Farrukhabad. The order is dated February 25, 1988. This is Ann. CA 6 to the counter- affidavit filed on behalf of respondent No. 2, the District Magistrate, Farrukhabad This order mentions that the petitioners' request for exemption from entertainment tax has been rejected by the Government as it can only be granted to those exhibitors who had applied and filed their site plans on or after January 1, 1983 in reference to the orders of the State Government dated September 17, 1983 and July 21, 1986. The order also mentions that the petitioners' initial application by which the site plan had been submitted was dated September 23; 1982 and thus having been filed before January 1, 1983 the benefit of exemption from tax cannot be granted to the petitioner. The application and site plan is in reference to R. 3 of the U.P. Cinematograph Rules, 1951. 6. It must be placed on record that no counter-affidavit has been filed on behalf of the respondent No. 1, that is, the Joint Secretary, Finance (Tax) State of U.P., Lucknow but only on behalf of respondent No. 2, that is the District Magistrate, Farrukhabad. 7. The entire issue in the writ petition is on the solitary objection of the State Government in denying exemption from entertainment tax on the ground that the initial application by which the site plan of the cinema was to be submitted had been made before January 1, 1983 and not after that date. The application of the petitioner is dated Sept. 23, 1982. But this aspect does not end here. It is also not in dispute that the petitioner had moved an application subsequently for the cancellation of the request for approval of the site plan as submitted. Permission to establish to cinema is to be sought under the Uttar Pradesh Cinematograph Rules 1961 framed under the Cinematograph Act, 1918. A reference to the application of September 23, 1982 accompanied by the site plans has been made in para 2 of the writ petition. Permission to establish to cinema is to be sought under the Uttar Pradesh Cinematograph Rules 1961 framed under the Cinematograph Act, 1918. A reference to the application of September 23, 1982 accompanied by the site plans has been made in para 2 of the writ petition. In this para a reference has also been made to an application by which the petitioner desired that the application of 23 Sept. 1982 be not considered as presented, for the reason that the cinema was intended to have been jointly financed by other persons also and all the co-sharers were to run the cinema as partners. 8. In the counter-affidavit of the District Magistrate respondent No. 2, the statement in the writ petition of the filing of the application dated 23 September 1982 and the subsequent application that the request of the petitioner be not considered has not been denied. The counter-affidavit in reference to this particular pleading of the petitioner merely states that proceedings had been initiated on the application of the petitioner dated September 23, 1982. The relevant question now is, can the proceedings continue to be initiated when the petitioner had desired it to be dropped and had given a reason for it. The petitioners' reason was valid, that considering the application as if it had been made by joint financiers who were later to become partners in the business of running a cinema may create misunderstandings when all except the petitioner had backed out of the venture to in the establishment of the cinema. The issues in the petition are now to be seen in this perspective. 9. The cause for not considering the petitioners' request for grant of exemption from entertainment tax is given in the order of February 25, 1988 itself. The petitioner having made an application for submission of site plans on 23 September 1982 a date before 1 January 1983 and not after, was thus rejected. 10. From the facts on record which are not in dispute while the respondent No. 1 the Joint Secretary was passing the order of February 25, 1988 the past record clearly had been lost track of and was not noticed. The application dated 23 September, 1982 by which the site plans of the cinema were submitted as a prelude to seeing grant of licence under the 1981 Rules could not be taken note of. The reason was simple. The application dated 23 September, 1982 by which the site plans of the cinema were submitted as a prelude to seeing grant of licence under the 1981 Rules could not be taken note of. The reason was simple. The petitioner had, subsequently, placed on record that the application of 23 September 1982 be not considered lest it might be misunderstood, in effect, that the permission to build or the licence is being granted on a joint venture. The petitioner had mentioned in his subsequent application, Ann. 2 to the writ petition, that the request for a licence by application 23 September 1982 be not considered and the application be treated as rejected. This is what the petitioner stated : Jheku ftykf/kdkjh Q:[kkckn egksn;] lsok esa lfou; fuosnu gS fd izkFkhZ us ,d izkFkZuk i= fnukad 23&9&62 dks bl vk'k; ls fn;k gS fd mls (illegible) vuqefr iznku dh tkosA izkFkhZ vc flusek cukuk ugha pkgrk gS D;ksafd izkFkhZ ds Hkkxhnkj vc rS;kj ugh bl dkj.k izkFkhZ vc flusek ugh cukuk pkgrk gSA vr% Jheku th ls vuqjks/k gS fd izkFkhZ dk fnukad 23&9&82 dk izkFkZuk i= fujLr djus dh d`ik dh tkosa ,oa ml ij dksbZ vfxze dk;Zokgh u dh tkosA izkFkhZ g0 viBuh; lR;sUnz izrki flag ia= Jh vksadkj flag jsyos jksM dekyxat] Q:[kkckn 11. As stated earlier this fact has not been denied in the counter-affidavit. The totality of the record was not considered by the Joint Secretary, respondent No. 1, while denying exemption from entertainment tax. 12. In accordance with the Government orders, being general orders dated 17 Sept. 1983 and 21 July, 1986 (Anns. 7 and 8 to the writ petition) respectively the criteria for considering the request for exemption from entertainment tax was that an application for seeking permission to construct a cinema should have been submitted after January 1, 1983 and the licence under the Cinematograph Act 1918 ought to have been obtained between January 1, 1984 to December 31, 1985. 13. The permission for constructing a cinema in pursuance of R. 3(3) of the 1981 (Sic) Rules was granted to the petitioners on 20th October 1985. This is mentioned in the letter of 24th October, 1985 from the District Magistrate, Farrukhabad, respondent No. 2 addressed to the petitioners' proprietor. 13. The permission for constructing a cinema in pursuance of R. 3(3) of the 1981 (Sic) Rules was granted to the petitioners on 20th October 1985. This is mentioned in the letter of 24th October, 1985 from the District Magistrate, Farrukhabad, respondent No. 2 addressed to the petitioners' proprietor. The licence was granted to the petitioner at a meeting presided by the District Magistrate, Farrukhabad on 18th January 1985 in accordance with the R. 7(2) of the 1951 Rules. This was indicated to the petitioner by letter dated 18th February, 1985 on behalf of the District Magistrate, Farrukhabad, Anne. 3 to the counter-affidavit. 14. With these facts on record what has to be seen is whether the petitioner had come within the eligibility criteria for seeking exemption from the entertainment tax in accord with the policy of the State Government. In reference to. the general orders of the State Government dated 17 September, 1983 and 21 July, 1986 laying down the policy for the grant of exemption from entertainment tax, the preconditions are : (1) That the application for construction of the cinema hall together with the site plans should have been submitted on or after January 1, 1983 and (2) the application for a licence under the U.P. Cinematograph Rules, 1951 should have been made between January 1, 1984 and December 31, 1985. 15. There has been an error in intimating the petitioner, in the impugned order of 25th February, 1988 that as he had applied for constructing the cinema before January 1, 1983, that is by the application of 23th September, 1982, thus, his request for exemption from entertainment tax cannot be considered. The State respondents overlooked that the petitioner had already intimated the District Magistrate, Farrukhabad, that his application of Sept. 23, 1982 ought not to be acted upon. In these circumstances it was as error (not) to have taken in account this application, for denying the tax relief sought. The only other application which remained was the one given on 11 July, 1984. This application satisfied the preconditions for seeking exemption from entertainment tax in reference to the general orders of the State Government, aforesaid. In these circumstances it was as error (not) to have taken in account this application, for denying the tax relief sought. The only other application which remained was the one given on 11 July, 1984. This application satisfied the preconditions for seeking exemption from entertainment tax in reference to the general orders of the State Government, aforesaid. The two conditions were that an application seeking permission to construct a cinema hall along with site plans should have been made after January 1, 1983 and the request for a licence to run a cinema should be between January 1, 1984 and 31st December, 1985. The record shows that both these conditions had been satisfied. 16. The insistence to consider the application of the petitioner dated 23rd September, 1982 was a manifest error. This application in any case was not considered by the State respondents at any stage either by accepting it or rejecting it. Nor was the petitioner intimated within a reasonable time that this application is rejected or is yet under consideration. The first unilateral reference to this application is in the letter of the District Magistrate, Farrukhabad, dated 28th October, 1985, Ann. C.A. 3' to the counter- affidavit. 17. Again, unknown to the petitioner, the State respondents, t-eing the Joint Secretary, respondent No. 1 and the District Magistrate, Farrukhabad, respondent No. 2, in the communication of 9th July, 1987 (reference Ann. C.A.4) were setting on record that the application of the petitioner dated 11th July, 1984 would be seen along with the application dated 23rd September, 1982 made five years ago, and the latter application was outside the period of Government policy in granting a tax holiday. This only implied that the application of 23rd September, 1982, was being rejected, without reasons on merits, after five years. It was more an exercise to deny a relief not even to consider it. But, when the District Magistrate, Farrukhabad, was seeking further information and inquiry by the letter of 5th August, 1985 (reference Ann. 3' to the writ petition) it was in reference to the petitioner's application of 11th July, 1984. This has not been denied in para 6 of the counter-affidavit, which actually accepts the submissions in para 4 of the writ petition. This aspect is again confirmed by record when the District Magistrate while writing to the petitioner by the letter of 18th February, 1985 (reference Ann. This has not been denied in para 6 of the counter-affidavit, which actually accepts the submissions in para 4 of the writ petition. This aspect is again confirmed by record when the District Magistrate while writing to the petitioner by the letter of 18th February, 1985 (reference Ann. 3A to the counter-affidavit) was accepting that it was the application of 11th July, 1984 that was under consideration. This confirms the petitioner's submissions that he had intimated the District Magistrate. Farrukhabad that the application of 23rd September, 1982 was virtually seeking permission to construct a cinema as a joint venture, a scheme which has not been successful and should be treated as abandoned. This has also not been denied by the State respondents. Then, why should the application of 23rd September, 1982 be dug out of it's grave, as a negative approach to a beneficial policy of the State? This is what a red tape is. 18. Before parting with this case this Court desires to place on record that the dominant purpose of the enactment the Uttar Pradesh Entertainment and Betting Tax Act 1979 and the Rules made in pursuance of this legislation must not be forgotten, in reference to the context. The purpose of granting exemption from entertainment tax has been spelled out in S. 11. It is for promotion of peace, international goodwill, arts, sports and other public interest. This is besides exempting, in public interest, any class of audience or spectators from the liability to pay entertainment tax. Barring the factors specifically mentioned, other public interest factors, in reference to the context. are generating revenues for the State. 19. Encouraging establishment of cinema, in accord with the criteria already set by the State Government, is a long term investment virtually for the State. Exemption from entertainment tax, i.e. tax holiday for a certain period logically reduces the cost of a cinema ticket. Thus, the encouragement for persons seeking entertainment in cinema to flock to cinema halls as there is more chance of people seeking such entertainment when the ticket is cheap. The prohibitive cinema ticket keeps the potential audience away. Exemption from entertainment tax, i.e. tax holiday for a certain period logically reduces the cost of a cinema ticket. Thus, the encouragement for persons seeking entertainment in cinema to flock to cinema halls as there is more chance of people seeking such entertainment when the ticket is cheap. The prohibitive cinema ticket keeps the potential audience away. Once the cinema houses have been encouraged to be built, then notwithstanding that the State does not receive immediate revenues for the period during which the tax has been remitted, as a consequence of the scheme, aforesaid, revenues continue to pour into the coffers of the State after the period of tax holiday is over. But this is only possible if more and more cinema houses are encouraged to be built. 20. The State Government is not unaware that its scheme to encourage building of cinema house is not yielding the desired result. The impetus is to have more and more cinema houses. The concern of the State Government has been expressed in the order circulated to all the District Magistrates. It says: (an extract from the State Government General Order No. 30 IB-6(15(/85-Finance (Entertainment Tax) Department dated 27th July, 1986, paragraph 2, Ann. 8' to the writ petition). 21. The genesis of the policy is to support the cinema industry by encouraging construction of cinemas. There is a method in the exercise. First let the cinemas be established with private capital by baiting businessmen to invest in it. The bait is exemption from entertainment tax for a specified period. Thereafter, the planned scheme and its mechanics generates tax as income for the State hitherto in abeyance under the scheme. 22. A cheaper ticket returns the investment in a cinema house quicker; there is a difference between cinema ticket which carries an entertainment tax and one which does not carry one. Thus, the policy of the State Government is beneficial to both. The cheaper ticket packs the cinema hall and the investment is returned within a reasonable time. The same investment generates revenue for the State Government later. 23. With modern audio visual entertainment technology, the framers of policy governing the cinema must not turn their backs to the hard realities that cinema in the conventional term has a rival. Audio visual entertainment has been brought home. The same investment generates revenue for the State Government later. 23. With modern audio visual entertainment technology, the framers of policy governing the cinema must not turn their backs to the hard realities that cinema in the conventional term has a rival. Audio visual entertainment has been brought home. On the improvement and advancement of new generation electronics, television and video cassette recorders and play there is a choice even to the die-hard cinema goer to sit in comfort of his house and see the same film for the same price which he would pay at a cinema theatre. In fact, the cost mechanism of the price when the family watches turns out advantageous to the television and video cassette recorder owner than watching it at the local cinema. 24. Cinema may become a losing concern and ours is about the second largest motion picture industry, if not the largest, in the world. The cinema industry cannot survive merely on the making of motion pictures, there has to be an encouragement not only to construct cinema houses, but the ultimate venture must succeed; an impetus to the people not to lose interest in the cinema. The degree of exemption from entertainment tax what ought to be the period of tax holiday or the quantum of remission is a matter of State policy but there must not be too rigid an approach discouraging those who seek exemption within the criteria already set. If this happens the scheme of the State Government will fail. This is what virtually happened in the present case. 25. Cinema is a poor man's entertainment in the third world. A quest for the cinematic art and proficiency in it brought the home audio visual entertainment factor, an absolute rival to the cinema. It has led to rackateering when it is watched by common subscription without license. Public cinema is within the control of copyright laws. The new generation audio visual entertainment has the potential to violate these laws with ease in countries where the enforcement machinery is inadequate thus, those responsible for making the State policy to encourage the establishment of cinema must not forget the realities that the cinema as was originally envisioned under the Cinematograph Act. 1918 has a dangerous rival now. 26. The order of 25th February, 1988 the text of which is reproduced in Ann. 1918 has a dangerous rival now. 26. The order of 25th February, 1988 the text of which is reproduced in Ann. C.A. 6' to the counter-affidavit denying exemption from entertainment tax to the petitioner, is quashed. The matter is remanded back to the respondent No. 1, Joint Secretary, Finance (Tax) State of U.P., Lucknow, to occasion a decision, afresh, in reference to the grant of exemption under the U.P. Entertainment and Betting Tax Act 1979 and the Rules made thereunder and in accord with the beneficial scheme of the State Government, in the light of the observations made in this judgment. The State respondents will accept the record as if the application of the petitioner of 23th September, 1982 is to be treated as redundant and not to be taken into consideration. The respondent No. 1 is directed to consider the matter within a period of two weeks after a certified copy of this order is placed before him, and if solicited, then affording an opportunity of hearing to a representative of the petitioner on a date indicated in advance. 27. The petition is allowed with costs.