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1996 DIGILAW 45 (KER)

Prakashan Pillai v. Mararikulam South Panchayat

1996-01-24

K.A.ABDUL GAFOOR

body1996
Judgment :- Petitioner is the proprietor of a cinema house situated in the local jurisdiction of the first respondent Panchayat. Alleging violation of S.5 of the Local Authorities Entertainments Tax Act, 1965 and consequential evasion of tax found out on surprise visit held on 22.8.87 and 1.9.87, proceedings were initiated by the Executive Officer, directing him to close down the cinema house. Petitioner challenged these orders in O. P. Nos. 7528 and 8793 of 1987, which ended in Exts. PI and P2 judgments. The orders were quashed and the authorities were directed to take action giving the petitioner an opportunity to show cause, and to consider his explanation. 2. Based on Exts. PI and P2, Exts, R2(a) & R2(b) notices were issued to the petitioner. In Ext. R2(a) the provisions in Local Authorities Entertainment Tax is referred to whereas no provision is referred to in Ext. R.2(b). Petitioner submitted his explanation and the executive authority passed Ext. P4 and P5 orders imposing a fine of Rs. 500/- in respect of each of the occasions and levy of the tax alleged to be evaded. The said orders refer to the provisions of Cinemas (Regulation) Act, 195 8 and not Local Authorities Entertainments Tax Act. 3. Though these two enactments do not provide for an appeal, petitioner preferred Ext. R2(e) appeal and it was entertained by the first respondent Panchayat. Ext. P6 is the resolution containing the orders on the said appeal. As per Ext. P6, the Panchayat reduced the fine as well as the allegedly evaded tax by 40%. The net effect is that the petitioner was imposed with a fine of Rs. 300/- for each of the occasions, apart from a total amount of Rs. 4,781/- as allegedly evaded tax. 4. Invoking the Rules under S.144(2) of the Panchayat Act. petitioner filed an appeal before the 4th respondent. The 4th respondent rightly rejected that appeal, stating that he is no the appellate authority under the Local Authorities Entertainments Tax Act, 1965. S.144 (2) of the Panchayat Act specially shows that an appeal will lie only in respect of orders issued under the provisions of that Act. Necessarily an order issued under either the Cinemas (Regulation) Act, or the Local Authorities Entertainments Tax Act is not amenable to the appellate power of the 4th respondent. Thus, he rightly rejected the appeal by Ext. P9. Necessarily an order issued under either the Cinemas (Regulation) Act, or the Local Authorities Entertainments Tax Act is not amenable to the appellate power of the 4th respondent. Thus, he rightly rejected the appeal by Ext. P9. It is in that circumstances, petitioner has approached this court challenging Exts. P4, P5, P6 and P9. As I have already found, Ext.P9 cannot be assailed. 5. Petitioner contends that the effect of Exts. P4, P5 and P6 appellate order is imposition of a punishment of fine which can be done only after a prosecution. The allegation against the petitioner is not with reference to the Cinemas (Regulation) Act because there is no allegation that he did any act in violation of the conditions of the licence. On the other hand, admittedly, the allegation is that he evaded tax under S.5 of the Local Authorities Entertainments Tax Act. Necessarily, the punishment is referable to S.10 of the Local Authorities Entertainments Tax Act which shall be done only on conviction by a Magistrate. Therefore, the petitioner contends that Ext. P4, P5 & P6 orders cannot stand in the eye of law, because he had not been convicted by a magistrate before he being punished by the said orders. Counsel for the petitioner has brought to my notice the decision reported in Bhanumathy v. State (1970 KLT 346) in respect of Cinemas (Regulation) Act, 1958. Even if the proceedings are under the Cinemas (Regulation) Act, there is also S.10 which provides for a punishment of fine, which can only be done by a criminal court and not by Executive Authority or Panchayat. Petitioner's contention in this regard is sustainable and therefore, Exts. P4, P5 and P6 are liable to be quashed, 6. Counsel for the first and second respondents has contended that the tax leviable under the Local Authorities Entertainment Tax Act shall be recovered by resorting to the provisions in S.8 of that Act, in the same manner as the tax payable to the Local Authority in terms of S.74 of the Panchayat Act. It is true that any tax leviable under Local Authorities Entertainments Tax Act can be levied in the same manner as any tax due under the Panchayat Act. It is true that any tax leviable under Local Authorities Entertainments Tax Act can be levied in the same manner as any tax due under the Panchayat Act. But the question here is, whether an order of punishment can be passed against the petitioner under S.10 of the Local Authorities Entertainments Tax Act or under S.10 of the Cinemas (Regulation) Act, without he being prosecuted in a court of law. A person can be punishable with fine as mentioned in S.10 of Cinemas (Regulation) Act, only after a successful prosecution. The Executive Authority or Panchayat are not empowered to punish any citizen for any offence. S.10 of the Local Authorities Entertainment Tax Act is amply clear that the fine shall be imposed only on, conviction by a magistrate. Thus, the prosecution proceeding shell precede imposition of any order of punishment. 7. The counsel for the Panchayat contended that the orders in Exts. P4 & P5, as modified by Ext. P6, have two parts, namely, one as respects the fine imposed and the other as respects the recovery of alleged evaded tax. Therefore, the latter part can be validly proceeded with without any prosecution. In this respect, a reading of S.10 of the Local Authorities Entertainments Act which deals with penalty for non payment of tax is advantageous. S.10(1) reads as follows: "If any person is admitted for payment to any place of entertainment and the provisions of S.5 are not complied with, the proprietor of the entertainment to which such person is admitted shall on conviction by a Magistrate, be liable in respect of each such offence to a fine not exceeding two hundred rupees and shall in addition be liable to pay any tax which should have been paid". 8. The above provision makes it clear that, whatever provided for, is a penalty for non payment of tax. A penalty arises only when it is found that any person had been admitted to entertainment without paying the tax. So, levy of tax payable in respect of such admission of persons without paying tax arises only after finding that such an offence had been committed, for which a trial is necessary. A penalty arises only when it is found that any person had been admitted to entertainment without paying the tax. So, levy of tax payable in respect of such admission of persons without paying tax arises only after finding that such an offence had been committed, for which a trial is necessary. It is only upon conviction by a magistrate and finding that he had violated S.5 of the Local Authorities Entertainments Tax Act, any order under S.10, either by imposing fine or levying the tax liable to be paid by the cinema house owner, can be passed. In other words, to impose the fine or to recover the tax liable to be paid by the petitioner, a prosecution ending with a conviction by a magistrate is essential. We cannot separate the part of fine and the part of levy of tax liable to be paid, under S.10. Therefore I hold that the contention in that respect, advanced by the counsel for the Panchayat, is not tenable. 9. Thus, Exts. P4, P5 and P6 are violative of S.10 of the Local Authorities Entertainments Tax Act, in so far as no prosecution was launched against the petitioner. Therefore, the said orders are quashed. It is not advisable to reserve the right of the Panchayat to launch prosecution against the petitioner, at this distance of time, after lapse of about six or seven years. That will prejudice the petitioner in the prosecution case. He may not be able to effectively defend such a prosecution at this distance of time. 10. Anyhow, the orders passed against the petitioner in Exts. P4, P5 and P6 are quashed on the technical ground that the Panchayat failed to launch prosecution against the petitioner. In this respect, it should be noted that the petitioner filed Ext. R2(e) appeal before the Panchayat, even though there is no provisions for such an appeal either under Cinemas (Regulations) Act or under Local Authorities Entertainments Tax Act. The petitioner submitted himself to the appellate jurisdiction of the first respondent and the first respondent entertained the appeal after imposing a condition of payment of 2,000/-. Petitioner has remitted that amount, complying with the condition and prosecuted the appeal and waited for Ext. P6 order. The petitioner submitted himself to the appellate jurisdiction of the first respondent and the first respondent entertained the appeal after imposing a condition of payment of 2,000/-. Petitioner has remitted that amount, complying with the condition and prosecuted the appeal and waited for Ext. P6 order. In the circumstances, I order that the amount already paid by the petitioner for entertaining the appeal shall be appropriated by the Panchayat towards the tax allegedly evaded by the petitioner. Subject to this observation, Exts. P4, P5, and P6 are quashed. The Original Petition is disposed of as above. There will be no order as to costs.