Case Note & Summary
The petitioner, Minakshi Chitra Mandir, a cinema hall in Sailu, District Parbhani, was granted exemption from payment of entertainment tax under the Maharashtra Entertainment Duty Act for five years from 26.6.2014 to 15.6.2019 by the Divisional Commissioner, Aurangabad. During the exemption period, an inspection revealed that the tickets issued by the theater contained the caption 'entertainment tax' and an amount was collected from customers towards that tax. Consequently, the Collector, Parbhani, assessed the tax liability at Rs. 7,97,514/- and imposed a penalty double that amount, totaling Rs. 23,92,542/- vide order dated 15.3.2017. The petitioner appealed to the Divisional Commissioner, who confirmed the order on 31.7.2017. The petitioner then filed a writ petition challenging both orders. The High Court examined the issue and held that the exemption from payment of entertainment tax does not prohibit the theater from collecting the tax from customers; however, the amount so collected must be deposited with the government. Since the petitioner collected the tax but did not deposit it, the liability to pay the tax amount was justified. However, the court found that the imposition of penalty was excessive and not warranted in the facts of the case, as there was no deliberate evasion. The court set aside the penalty portion and directed the petitioner to pay the principal tax amount of Rs. 7,97,514/- within eight weeks. The writ petition was partly allowed.
Headnote
A) Entertainment Tax - Exemption - Collection of Tax - Maharashtra Entertainment Duty Act - The petitioner was granted exemption from payment of entertainment tax for five years. During inspection, it was found that tickets mentioned 'entertainment tax' and amount was collected from customers. The Collector assessed tax and imposed penalty. The High Court held that exemption does not prohibit collection of tax from customers, but the amount collected must be deposited with the government. Since the petitioner did not deposit, liability arises. However, penalty was excessive and set aside. (Paras 1-10)
Issue of Consideration
Whether the petitioner, who was granted exemption from payment of entertainment tax, could be held liable for entertainment tax and penalty for collecting tax from customers during the exemption period.
Final Decision
The High Court partly allowed the writ petition. The order of the Collector dated 15.3.2017 and the Divisional Commissioner dated 31.7.2017 were modified. The petitioner was directed to pay the principal tax amount of Rs. 7,97,514/- within eight weeks. The penalty portion was set aside.
Law Points
- Entertainment tax exemption
- collection of tax during exemption period
- penalty for non-deposit
- Maharashtra Entertainment Duty Act
Case Details
2023 LawText (BOM) (03) 10
Writ Petition No. 2318 of 2019
Mr. P.F. Patni for petitioner, Mr. S.P. Tiwari, AGP for respondent Nos. 1 to 4
Minakshi Chitra Mandir through its proprietor Sanjay Prabhakar Rajurkar
The State of Maharashtra, The Divisional Commissioner Aurangabad, The Collector Parbhani, The Tahsildar Sailu
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Nature of Litigation
Writ petition challenging orders of Collector and Divisional Commissioner regarding entertainment tax assessment and penalty.
Remedy Sought
Quashing of orders dated 15.3.2017 and 31.7.2017 imposing tax and penalty.
Filing Reason
Petitioner was granted exemption from entertainment tax but was assessed for tax and penalty for collecting tax from customers during exemption period.
Previous Decisions
Collector, Parbhani passed order on 15.3.2017 assessing tax of Rs. 7,97,514/- and penalty of double the amount, total Rs. 23,92,542/-. Divisional Commissioner confirmed the order on 31.7.2017.
Issues
Whether the petitioner is liable to pay entertainment tax and penalty despite exemption.
Whether the penalty imposed is justified.
Submissions/Arguments
Petitioner argued that exemption from payment of entertainment tax means no tax is payable and collection from customers was permissible.
Respondents argued that exemption does not permit collection of tax without depositing it with the government.
Ratio Decidendi
Exemption from payment of entertainment tax does not prohibit the collection of tax from customers, but the amount collected must be deposited with the government. Failure to deposit creates liability for the tax amount. However, penalty may be excessive and can be set aside if not warranted.
Judgment Excerpts
The petitioner is running a cinema hall, now multiplex cinema at Sailu, District Parbhani in the name and style as Minakshi Chitra Mandir, Sailu.
The respondent No. 2 - Divisional Commissioner Aurangabad granted exemption to the petitioner from the payment of entertainment tax under the Maharashtra Entertainment Duty Act for the period of five years from 26.6.2014 to 15.6.2019.
During the period of exemption of entertainment tax, inspection of the theater was conducted and the inspector found that the tickets had the caption ‘entertainment tax’ and an amount was collected from the customers towards ‘entertainment tax’ and accordingly, the petitioner was held liable for the payment of entertainment tax.
Procedural History
The petitioner applied for exemption from entertainment tax, which was granted for five years from 26.6.2014 to 15.6.2019. Inspection revealed collection of tax from customers. Collector assessed tax and penalty on 15.3.2017. Petitioner appealed to Divisional Commissioner, who confirmed the order on 31.7.2017. Petitioner then filed writ petition in High Court.
Acts & Sections
- Maharashtra Entertainment Duty Act:
