IN THE HIGH COURT OF GUJARAT AT AHMEDABAD SPECIAL CIVIL APPLICATION NO. 3040 of 2012 FOR APPROVAL AND SIGNATURE:
HONOURABLE MR.JUSTICE VIJAY MANOHAR SAHAI and HONOURABLE MR.JUSTICE N.V.ANJARIA ================================================================
1 Whether Reporters of Local Papers may be allowed to see the judgment ?
2 To be referred to the Reporter or not ?
3 Whether their Lordships wish to see the fair copy of the judgment ?
4 Whether this case involves a substantial question of law as to the interpretation of the constitution of India, 1950 or any order made thereunder ?
5 Whether it is to be circulated to the civil judge ?
================================================================ HANJAR CINEMA - THROUGH ADMINISTRATOR BAHADURBHAI LALJIBHAI Petitioner(s) Versus STATE OF GUJARAT - THROUGH COLLECTOR & DISTRICT MAGISTRATE & 1 Respondent(s) ================================================================ Appearance:
MR CHINMAY M GANDHI, ADVOCATE for the Petitioner(s) No. 1 MR MB GANDHI, ADVOCATE for the Petitioner(s) No. 1 MR KABIR HATHI AGP for the Respondent(s) No. 1 NOTICE NOT RECD BACK for the Respondent(s) No. 1 NOTICE SERVED for the Respondent(s) No. 2 ================================================================ CORAM: HONOURABLE MR.JUSTICE VIJAY MANOHAR SAHAI and
HONOURABLE MR.JUSTICE N.V.ANJARIA
Date : 25/06/2012 ORAL JUDGMENT (PER : HONOURABLE MR.JUSTICE N.V.ANJARIA) By filing the present petition under Article, 226 of the Constitution, the petitioner seeks a writ of mandamus to hold and declare that the petitioner has already paid the full amount of tax and that he is not liable to pay any interest which is demanded in the impugned notice. It is further prayed to set aside the notice proposing attachment and sale of the property.
2. The following questions arise for consideration.
(i) Where the entertainment tax is due against a cinema hall and the Court allows payment of the said dues by installment, whether levy of interest on such dues of tax under sec.10(2) of the Gujarat Entertainment Tax Act, 1977 would be justified.?
(ii) Whether doctrine of estoppal is applicable in claiming interest amount from the cinema hall owner under the provisions of Gujarat Entertainment Tax Act, 1977.
3. The profile of facts is thus. The petitioner herein runs a cinema in the name and style “Hanjar Cinema”. The competent authority under the Gujarat Entertainment Tax Act, 1977 (hereinafter referred to as ‘the Act’), received report about irregularities committed by the petitioner in the matter of payment of entertainment tax by mentioning less amount on the ticket, but actually charging higher amount than one printed/mentioned on the ticket. The irregularities related to the period from 7.4.98 to 21.12.98 show cause noticed dated 31.5.1999 was issued calling upon the petitioner to explain the discrepancy. In the show cause notice, payment of entertainment tax and penalty for breach of section 21 of the Act read with the relevant Rules of Gujarat Entertainment Tax Rules, 1979 to the tune of Rs. 10,10,863/- demanded. The petitioner was further called was upon to show cause as to why action should not be taken under section 16 of the Act.
3.1 The Dy. Commissioner of Entertainment Tax, after considering reply of the petitioner, by order dated 13/18.11.2000 reduced the demand by assessing short payment of entertainment tax, at Rs. 4,39,054/- and imposed reduced penalty of Rs. 20,000/- instead of the penalty at 150% as provided under section 9(3) of the Act. The appeal of the petitioner against the said order of the adjudicating authority came to be dismissed on 10.03.2003 by the District Collector-the Appellate Authority. Revision against that order was also rejected on 17.03.2004. The petitioner challenged those orders before this Court by way of Special Civil Application No. 7169 of 2004. The same was dismissed on 09.09.2010. A Review Application being Misc. Civil Application No. 2622 of 2010 against the said judgment was also dismissed on 14.10.2010. With regard to prayer of the petitioner for installments in payment of tax, it was observed by this court that the petitioner was at liberty to approach the competent authority if permissible under the law.
3.2 Petitioner’s representation dated 19.10.2010 made thereafter to the Collector. Entertainment Tax, requesting for the installments was not accepted by the authority. The petitioner was accordingly intimated by the communication dated 20.12.2010. The petitioner thereafter once again moved this Court by filing Special Civil Application No. 16450 of 2010, wherein it was submitted that the petitioner would need twelve installments to pay the total amount in question as the financial position of the petitioner was critical. Against the prayer for installments, it was respondents’ case that the authority had in its discretion rightly declined the installments and the petitioner was simply whiling away the time. The Court partly allowed the petition by order dated 28.12.2010.
3.3 On 23.09.2011, Mamlatdar Entertainment Tax Act, inter alia stated that as per order dated 28.10.2012 by the Hon'ble Gujarat High Court the amount of Entertainment Tax Due was payable by six monthly installments of Rs. 80,000/- from 1.1.2011 to 30.06.2011 and the interest amount had become due and payable from 2001 to 30.03.2007 and thereafter from 1.4.2007 till the date of payment. The petitioner replied to the said notice through advocate and contended a sum of Rs. 4,79,055/- was paid in six installments as granted by the High Court therefore, question for payment for interest etc. would not arise. By communication dated 13.12.2011, the authority sated to the petitioner that originally the entertainment tax was adjudicated under section 9(2) and under section 9(3) reduced penalty of Rs. 20,000/- at reduced rate was imposed and the action under section 16 was not taken. The interest was demand @ 24% from 1.1.2001 to 31.3.2007 being Rs. 6,12,031/-, and @ 18% from 1.4.2007 until it was paid being Rs. 3,06,597/- totalling Rs. 9,18,628/-, was raised. The petitioner was asked to pay.
3.4 As the petitioner did not pay the amount, the competent authority issued noticed dated 15.2.2012 asking the petitioner to clear the dues, and intimated further that unless the amount is paid, the same will be recovered under section 154 and 155 of the Bombay Land Revenue Code, 1879, by attaching the movable and immovable properties including action under section 157 of the Code could be taken. What is impugned in the present petition are the aforesaid notices dated 23.9.2011, 13.12.2011 and 15.02.2012.
4. Learned advocate Mr. M.B.Gandhi for the petitioner submitted that the tax amount was fully paid up pursuant to the order of this court as per the schedule of installments. According to him, the order of the high court provided for payment of tax which was abided by, therefore the interest was not chargeable. He relied on the order dated 28.12.10 passed by this court to contend that only in the event of non observance of schedule of payment , the interest could be charged by the authorities from the date of default and that it was to be at the lending rate charged by the nationalized banks. It was submitted that interest charge was @ 24% and 18%. It was submitted that there being no default in paying the installments, interest was not recoverable. He further contended that the authority had not demanded interest and the order granting installments was passed after hearing the respondent authority. Therefore, he submitted that the principle of estoppal would apply and the authority is now estopped form raising interest demand.
4.1 Learned Assistant Govt. Pleader contended with reference to affidavit in reply filed on behalf of respondent authorities that the payment of interest was statutory and it formed part of the recoverable amount. Learned Assistant Govt. Pleader relied on the provisions of section 10(2) of the Act. It was contended that the respondent authorities demanded amount of Rs.13,97,693/- which was inclusive of interest payable. It was contended that as per order dated 28.10.2012 by this Court, the petitioner was supposed to pay the entire dues and the petitioner having paid only the principal amount, the interest amount was required to be paid.
4.2 The facts involved in the case and the submissions made by learned advocate are considered. What emerges is that tax payable by the petitioner was assessed at Rs.4,79,055/-. The said dues of took were upheld by this court by discussing Special Civil Application No. 71691 of 2004 in which it was challenged. Thereafter in subsequent writ petition being Special Civil Application No. 16450 of 2010, the court observed as under “6. The petitioner shall clear the entire dues demanded by the authority in six monthly installments starting from 10th January, 2011 i.e. on or before 10th June, 2011. The petitioner shall make payment of the first installment on or before 10th January, 2011 and the balance amount will be cleared in five installments. In the last installment, the entire balance of outstanding dues shall be cleared so that on the expiry of the time limit, no amount may remain unpaid. The petitioner shall file, through its all Directors or all partners or the sole proprietor, as the case may be, on or before 11th January, 2011, an undertaking on affidavit declaring and stipulating he/they shall abide by the aforesaid conditions and that the payment shall be made as per the schedule directed by present order. A copy of such undertaking shall be forwarded to the Competent Authority and also to the learned Assistant Govt. Pleader, besides filing it on record of present petition.
7. In the event, the schedule is not diligently observed, present order shall cease to operate and it would be open to the authority to take steps to recover the amount in accordance with law and it would also be open to the authority to charge interest from the date of default until the date of recovery at the lending rate charged by the Natiionalized Banks.”
5. The relevant statutory provision in the Act is section 10, which reads as under.
“10. Payment of tax.- (1) The tax shall be recoverable from the proprietor and shall be paid by him in such manner and at such time as may be prescribed.
(2) If a proprietor does not pay any amount of tax within the time prescribed for its payment under sub-sec. (1), there shall be paid by such proprietor for the period commencing on and the day next after the date of expiry of the prescribed time and ending on the date of payment of the amount of tax, simple interest at the rate of twenty four percent per annum on the amount of tax not so paid or on any less amount thereof remaining unpaid during such period.”
5.1 Under sub-section (2) of sec.10 above, tax is recoverable from the proprietor, and the same is required to be paid by him in the manner and the time prescribed. The Rules called the Gujarat Entertainment Tax Rules 1979, provide for notice for failure to pay the tax, manner of payment, penalty, interest, the composition of month and such other matters. The payment of interest is provided in the same section. Interest liability accrues by very operation of sec.10(2). The rate of interest is also specified statutorily.
5.2 Reverting back to the relevant facts in the context of above statutory operation, the amount of tax determined and demanded came to be upheld by this court when on 09.09.2010, the writ petition came to be dismissed, and review application was also dismissed. The representation of petitioner for installments was rejected by the authority, and when this court allowed installments as par order dated 28.12.10 in Special Civil Application No. 16450 of 2010, it was clear from the order that it provided entire dues and entire balance of outstanding dues, to be paid in six monthly installments.
5.3 Once the tax determined is upheld and become payable, the provisions of section 10(2) of the Act became applicable and became operative. The petitioner having not cleared the payment of tax dues within time, the liability to pay interest automatically ensued in view of the statutory provision. There is nothing to indicate that the installments granted were in respect of the amount of tax only, and that the interest liability was excluded. Even otherwise, the order of the court cannot be read so as to scuttle the operation of statutory provision. When silent or nothing is indicated to the contrary or in case of interpretational ambiguity, the order of the court has to be read for applying the statutory provision, rather than for excluding its operation. An interpretation of court’s order so as to be in conflict with a provision of the statute which otherwise would operate has to be eschewed.
5.4 In the facts of the present case the aforementioned order dated 09.09.02010 in Special Civil Application No. 16450 of 2010 granting eight equal monthly installments to the petitioner is more than clear. A bare reading of the said order shows that the petitioner is directed to clear ‘the entire dues’ , and make payment by installments the entire balance of outstanding dues. The phrase entire dues and the phrase entire balance of outstanding dues used in the order takes within its compass not only the principal amount, but the interest part also, the liability of which arises due to operation of sub- section (2) of section 10 of the Act as above. The tax was assessed and the liability was determined. The petitioner did not pay when ultimately granted the installments the amount to be cleared by way of installments is the entire amount with interest. Nowhere in the order it is suggested that the interest part is to be excluded. The interest accrues at the rate as provided under- section (2) of section 10 and in terms thereof.
5.5 It is true that the aforementioned order in Special Civil Application No. 16450 of 2010 also mentions charging of interest. However, the interest contemplated thereby has to be the interest over and above what is provided for in section 10(2) of the Act. By making observation regarding levy of interest, the court has permitted the authority to charge additional interest in the eventuality if the petitioner fails to observe the installment schedule diligently. The interest made payable in that order by the court is to ensure that the petitioner, who had not paid the entertainment tax amount since long despite his challenge to the payability had failed, abides by the conditions of the installments scrupulously permitted by the said order. This is the only interpretation in respect of interest mentioned in the order is also buttressed by the fact that what is provided is that such interest would be at the lending rate charge by the nationalized banks. Therefore, obviously, the interest contemplated is the interest over and above what is provided in section 10(2) of the Act.
6. The contention of the learned advocate of the petitioner that by granting of installments by the court the authority under the tax is estopped from charging interest is stated to be rejected. The order cannot be read to have the effect contrary to the provisions of sub-section (2) of section 10, which would operate per force. Since the interest liability would arise by virtue of the aid statutory provision, there is no estoppal available against the operation of the statute. Therefore, the principle of estoppal is not attracted and the submissions of learned advocate in that regard is totally misconceived.
7. For the foregoing reasons and discussions, the petition is devoid of merits and is accordingly dismissed. Notice is discharged. No costs.
(V.M.SAHAI, J.) sndevu (N.V.ANJARIA, J.)