JUDGMENT R.K. Agrawal, J.
1. By means of aforesaid writ petitions, the petitioners have challenged the proviso to sub-section (1) of Section 3 of the U. P. Entertainments and Betting Tax Act, 1979 (in short referred to as the Act), claiming to be ultra vires on the ground that it suffers from the vice of excessive delegation and is discriminatory, therefore, hit by Article 14 of the Constitution of India. The petitioners have prayed for issuing a writ of certiorari calling for the records of the case concerned and to quash the impugned notification dated 21.10.1997 issued by respondent No. 1 and further to quash the notices issued to the respective petitioners by the District Magistrate concerned to the extent it demands tax except that has already been accepted in Form 'S' from the respective petitioners. The petitioners have also prayed for issuing writ of mandamus directing the respondents not to coerce the petitioners to pay enhanced tax except what has already been directed to be paid by each petitioners under their respective order in Form 'S' by the District Magistrate concerned.
2. We have heard Shri A. Kumar, learned counsel for the petitioners in Civil Misc. Writ Petition No. 742 of 1997. Civil Misc. Writ Petition No. 751 of 1997 and Civil Misc. Writ Petition No. 761 of 1997. Civil Misc. Writ Petition No. 16 of 1998. Civil Misc. Writ Petition No. 19 of 1998 : Shri Govind Krishna learned counsel for the petitioners in Civil Misc. Writ Petition Nos. 748. 757. 766 and 779 of 1997 ; Shri Vishnu Gupta learned counsel for the petitioners in Civil Misc. Writ Petition No. 77 of 1997 : Shri Rakesh Ranjan Agrawal learned counsel for the petitioners in Civil Misc. Writ Petition No. 747 of 1997 ; Shri Rajesh Kumar, teamed counsel for the petitioner in Civil Misc. Writ Petition No. 790 of 1997 and Shri C.S. Singh and Sri B.K. Pandey, learned standing counsel for the respondents.
3. These writ petitions involve common question of law having same controversy with slight variation in facts and the learned counsel for the both sides are agreed that these cases may be finally decided at the admission stage itself, hence they are being decided finally by a common judgment. The Civil Misc. Writ Petition No. 742 of 1997 is being treated as the leading case.
4. The facts of the case He in a narrow campass. In Writ Petition No. 742 of 1997, the facts are that the petitioners are carrying on the business of exhibiting cinematograph films and the licences granted by the Licensing Authority/District Magistrate under the provisions of U.
P. Cinema (Regulations) Act, 1955.
The cinema halls of the petitioners are located in local areas where the population is less than one lac.
5. Under the proviso to Section 3 of the Act, each of the petitioners (8 in number) applied to the District Magistrate for payment of entertainment tax on compounded basis. They applied in the prescribed Form 'R'. The District Magistrate passed separate orders on 31.3.1997 permitting each of the petitioners to deposit tax on compounded basis in prescribed Form 'S'. It has been stated by each of the petitioners that they had declared 14 shows to be held in one week. On the basis of declaration given by the petitioners, the District Magistrate directed the petitioners to pay 20% of the gross collection capacity per week, i.e., 20% of the gross collection capacity of one show multiplied by the total number of shows declared by the petitioners. The rate of 20% has been fixed by the notification dated 27th April, 1989, issued by the State Government and is applicable to cinema situated in local area with population upto twenty five thousand. The case of the petitioners is that their cinema houses are situated in local area where the population is not more than 25 thousand. This fact is not in dispute.
6. The State Government by Notification dated 21.10.1997, has amended the Notification dated 27.4.1989. By means of aforesaid notification dated 21.10.1997, the State Government has amended the Schedule of the Notification dated 27.4.1989. The amended schedule in so far as it is relevant for the purposes of deciding the present controversy provides for calculation of tax payable on compounded basis, is as under :
(I) Cinema situated in local area :
with population :
(a) exceeding 50 thousand but not exceeding one lac.
25% of the gross collection capacity X 22 shows per week.
(b) up to fifty thousand 24% of the gross collection capacity X 22 show per week.
7. On the basis of the Notification dated 21.10.1997, the District Magistrate issued notices to the petitioners calling upon them to pay compounded tax on the basis of revised rates and formula. Instead of paying the tax on compounded basis at the revised rates as demanded by the District Magistrate, the petitioners have approached this Court by means of the instant writ petitions challenging the action of the District Magistrate in demanding the revised rates as per notification dated 21.10.1997. The petitioners have also challenged the validity of the Notification dated 21.10.1997 and proviso to Section 3 (1) of the Act, on the ground of excessive delegation, and discrimination, being violative of Article 14 of the Constitution of India.
8. The facts of Writ Petition No. 751 of 1997 are similar. The petitioners had declared 14 shows in a week and the rate of compounded tax applied by the District Magistrate is 20% of the gross collection per week.
9. In Writ Petition No. 761 of 1997, the number of shows declared by the petitioner is 28. Since the population of the local area in which the cinema hall of the petitioner is situated is more than 25 thousand but less than 50 thousand, the District Magistrate directed the petitioners to deposit 22% of the gross collection per week as entertainment tax on compounded basis.
10. In Writ Petition No. 16 of 1998, the petitioners had declared 21 shows per week. The District Magistrate while passing order in Form "S" directed the petitioners to deposit 20% of the gross collection per week as entertainment tax on compounded basis.
11. In Writ Petition No. 19 of 1998, the petitioners had declared 21 shows per week. The District Magistrate vide order dated 31st March, 1997, passed in prescribed Form "S" directed the petitioner to deposit 20% of the gross weekly collection as entertainment tax on compounded basis.
12. In Writ Petition Nos. 748, 757 and 779 of 1997, the petitioners had declared 28 shows per week. The District Magistrate vide order dated 31st March, 1997, directed the petitioners to deposit 20% of the weekly collection as entertainment tax on compounded basis.
13. In Writ Petition Nos. 766. 790 and 779 of 1997, the petitioners had declared 21 shows per week. The District Magistrate vide order dated 31st March, 1997, directed the petitioners to deposit 20% of the gross weekly collection as entertainment tax on compounded basis.
14. In Writ Petition Nos. 782 and 783 of 1997, the petitioners had declared 15 shows per week. The District Magistrate vide order dated 21.5.1997 directed the petitioners to deposit 20% of the gross weekly collection as entertainment lax on compounded basis.
15. In Writ Petition No. 784 of 1997, the petitioners had declared 14 shows per week. The District Magistrate vide order dated 31st March, 1997, directed the petitioners to deposit 20% of the gross weekly collection as entertainment tax on compounded basis.
16. In Writ Petition No. 749, of 1997, each of the petitioners had declared 21 shows per week. The District Magistrate passed order in Form "S" directing the petitioners to deposit 22% of the gross weekly collection as entertainment tax per week on compounded basis.
17. In Writ Petition Nos. 777 and 747 of 1997, the petitioners had declared 14 shows per week. The District Magistrate passed order in Form "S' directing the petitioners to deposit 22% of the gross weekly collection as entertainment tax per week on compounded basis.
18. In Writ Petition Nos. 777 and 747 of 1997, the petitioners had declared 14 shows per week. The District Magistrate directed the petitioners to deposit 20% of the gross weekly collection as entertainment tax on compounded basis per week.
19. In the counter-affidavit filed on behalf of the respondents by Shri K.K. Shukla. Assistant Entertainment Tax Commissioner. U. P. Allahabad, the averments made by the petitioners that they had opted for payment of entertainment tax on compounded basis have been admitted. It has also not been disputed that each of the petitioners had applied in prescribed Form 'R' declaring the number of shows per week held by them and also the gross collection per week. The respondents have further not disputed that the District Magistrate/Licensing Authority had granted the permission to the petitioners in the prescribed Form 'S' for payment of entertainment tax on compounded basis for the financial year 1997-98.
20. The case of the respondents is that on the amendment of the Notification dated 27.4.1989 by notification dated 21.10.1997, the compounded tax has to be paid according to the revised formula and hence the demand notices issued are valid.
Provisions of Law ;
21. Section 3 of the Act is the charging section. It runs as follows :
"Tax on payment for admission to entertainment:
(1) Subject to the provisions of this Act, there shall be levied and paid on all payments for admission to any entertainment, other than an entertainment to which Section 4 applies, an entertainment tax at such rate not exceeding one hundred and fifty percent of each such payment as the State Government may from time to time notify in this behalf, and the tax shall be collected by the proprietor from the person making the payment for admission and paid to the Government in the manner prescribed.
(2) Nothing in sub-section (1) shall preclude the State Government from notifying different rates of entertainment tax for different areas or for different classes of entertainment or for different payments for admission to entertainment ;
(3) Where the payment for admission to an entertainment together with the tax is not multiple of twenty five paisa, then notwithstanding anything contained in sub-section (1) or sub-section (2) or any notification issued thereunder, the tax shall be increased to such extent and be so computed and the aggregate of such payment for admission to entertainment and the tax is rounded off to the next higher multiple of twenty five paisa and such increased tax shall also be collected by the proprietor and paid to the Government in the manner prescribed.
(4) If any entertainment, referred to in sub-section (1) to which admission is generally on payment, any person is admitted free of charge or on a concessional rate, the same amount of tax shall be payable as would have been payable had such person been admitted on full payment.
(5) Where the payment for admission to an entertainment, referred to in sub-section (1), is made wholly or partly, by means of a lumpsum paid as subscription, contribution, donation or otherwise, the tax shall be paid on the amount of lumpsum and on the amount of payment or admission, if any, made otherwise.
(6) Where in a hotel or restaurant, entertainment by way of cabaret or floor show (by whatever name called, but excluding a mere band in attendance or recorded music) is provided along with any meal or refreshment with a view to attracting customers, whether or not payment for admission is charged distinctly for such entertainment, twenty percent of the amount payable by the customer for such meal or refreshment or the amount charged distinctly for such entertainment, whichever is higher, shall be deemed to be the payment for admission to such entertainment and the tax shall be levied and paid accordingly."
22. Section 3 of the Act was amended by U. P. Act No. 12 of 1989 w.e.f. 15.4.1989. A proviso was added to sub-section (1) of Section 3 of the Act. Section 3 (1) including proviso as substituted by U. P. Act No. 12 of 1989 which is relevant for the purpose of deciding the questions raised in the present writ petitions are reproduced below :
"3. Tax on payment for admission to entertainment.--(1) Subject to the provisions of this Act, there shall be levied and paid on all payments for admission to any entertainment, other than an entertainment to which (Section 4 or Section 4A or Section 4B applies or compounded payment is made under the proviso to this subsection), an entertainment tax at such rate not exceeding one hundred and fifty per cent of each such payment as the State Government may from time to time notify in this behalf, and the tax shall be collected by the proprietor from the person making the payment for admission and paid to the Government in the manner prescribed :
Provided that a proprietor of a cinema in a local area having a population not exceeding one lac, may, in lieu of payment under this sub-section pay a compounded payment to the State Government on such conditions and in such manner as may be prescribed and at such rate not exceeding forty percent of the gross collection capacity as the State Government may from time to time notify, and different rates of compounded payments may be notified for different categories of local areas."
23. The words "not exceeding 40% of the gross collection capacity" appearing in proviso to sub-section (1) of Section 3 was omitted by U. P.
Act No. 14 of 1989.
24. Simultaneously to the introduction of the aforesaid proviso to sub-section (1) of Section 3 of the Act, the State Government also amended U. P. Entertainment and Betting Tax Rules, 1981 (hereinafter referred to as the Rules) and inserted Rules 24 (A), 24 (B) and 24 (C) related to compounded payment of tax. Rule 24 (A) is alone relevant for deciding the present controversy. It is reproduced below :
"24A. Compounded payment of tax.--(1) The proprietor of a cinema opting to make compounded payment of entertainment tax under the proviso to sub-section (1) of Section 3 of the Act, shall submit his written option in duplicate to the District Magistrate before the last date fixed by the Commissioner in this behalf in Form 'R' appended to these rules declaring the total number of shows to be exhibited in a day, number of seats in the cinema classwise and the rates of tickets at full price and on reduced price, if any.
(2) The option once exercised shall be valid for the period of a financial year.
(3) (i) The District Magistrate shall within a week of the receipt of the application, communicate to the proprietor the gross collection capacity and the weekly tax payable by the cinema in Form 'S'.
(ii) The gross collection capacity shall be calculated by multiplying the number of seats in various classes in a cinema by the respective current ticket rates (including payment for admission and entertainment tax thereon) and multiplying the sum so derived by such number of shows as the proprietor of the cinema declares to give in a day.
Explanation.--For purpose of this Sub-rule "the number of seats in various classes in a cinema" means the maximum permissible number of seats in various classes mentioned in the licence thereof and shall include any increase in the maximum number of seats by an amendment allowed by the licensing authority.
(4) The proprietor shall strictly adhere to the declaration under sub-rule (1) and shall obtain permission of District Magistrate before effecting any change in the number of seats, the ticket rate and the number of shows. The licensing authority shall have the power to revise the compounded amount of tax upwards if the gross collection capacity increases as a result of such permitted change.
(5) The proprietor of a cinema opting for compounded payment of tax shall inform the District Magistrate at least three days in advance if he proposes to hold any show at reduced price of ticket. The District Magistrate shall cause all such shows to be inspected and rates verified."
25. The State Government exercising powers under Section 3 of the Act issued notification dated 27th April, 1989, prescribing the rates on which entertainment tax on compounded basis is to be paid by the cinema licencee. Clause (1) of the Notification dated 27th April, 1989, as amended by Notification dated 27th March. 1991, which is relevant, is as under :
SCHEDULE RATES OF ENTERTAINMENT TAX Sl. No. Classes of Entertainment Rates of Entertainment Tax.
1. Cinematograph exhibition insituated in a local area with population upto one lac and making compounded payment of tax under proviso to sub-section (1) of Section 3:
(1) Cinema situated inlocal area with population
(a) exceeding 50,000 but not exceeding one lac.
25 per cent of gross collection capacity.
(b) exceeding 25,000 but not exceeding 50,000.
22 per cent of the gross collection capacity.
(c) upto 25,000.
20 per cent of the gross collection capacity.
(ii) Cinemas in the following areas of hill districts :
20 per cent of gross collection capacity All local areas in district Almora.
Pithoragarh. Tehri Garhwal, Uttar Kashi. Chamoli, all local areas of Dehradun district (excluding Rishikesh, Dehradun and Vikas Nagar) and Nainital Municipal Board of District Nainital and Pauri district excluding Kotdwar local area.
26. The aforesaid notification dated 27th April. 1989. as amended on 27.3.1991 was further amended by the State Government by notification dated 21st October, 1997. The following was substituted of the existing clauses in the schedule of the notification dated 27th April, 1989.
AMENDMENT In the Schedule to the said notification for entries columnwise shall be substituted, namely :
Sl No. Classes of Entertainment Rates of Entertainment Tax
1. Cinematograph exhibitions in a cinema situated in a local area with population up to one lac and making compounded payment of tax under proviso to sub-section (1) of Section 3 :(1) Cinema situated in local area with population :
(a) exceeding 50,000 but not exceeding one lac.
25 per cent ofthe gross collection capacity per show x 22 shows per
(b) Upto 50,000 24 per cent of t he gross collection capacity per show x 22 shows per week.
Cinemas in the following local areas of hill districts:
All local areas in districts Almora-
Pithoragraph, Tehri Garhwal Uttar Kashi.
Chamoli and all local areas of Dehradun excluding local areas of Rishikesh, Dehradun and Vikasnagar and all of District Nainital excluding Nainital and Haidwani and entire local areas of district pauri excluding local areas of Kotdwar.
22 percent of the gross collection capacity per show x 16 shows per week.
27. At the outset, it may be mentioned that Shri. A. Kumar learned counsel for the petitioners did not advance any arguments on the question of the validity of the proviso to Section 3 (1) of U. P. Entertainments and Betting Tax Act. 1979. He did not press the relief No. 1 contained in the prayer of the writ petition which was for declaration that the proviso to sub-section (1) of Section 3 of the Act is ultra vires. All other counsel appearing for the other petitioners also did not advance any arguments on the validity of the proviso to sub-section (1) of Section 3 of the Act. Thus, we are not called upon to decide the validity of the proviso to Section 3 (1) of the Act.
28. Shri A. Kumar, learned counsel for the petitioners submitted that the notification dated 21.10.1997 issued by the State Government is arbitrary since it not only enhances the percentage of gross weekly collection while computing the compounded rate of entertainment tax payable per week by the petitioners but it also increases the number of shows per week to be taken for calculating the compounded rate for taking entertainment tax payable on compounded basis. He submitted that the petitioners had declared 14 shows to be held in a week whereas the notification dated 21.10.1997 stipulates 22 shows per week. Thus, the petitioners are made liable to pay tax on compounded basis in respect of shows which they have not held at all. The increase of 8 shows in a week is wholly arbitrary and without any justification.
29. He further submitted that if the petitioners are required to pay entertainment tax on compounded basis as per notification dated 21.10.1997 on the basis of 22 shows per week whereas factually the petitioners have held only 14 shows in a week, the petitioners shall be required to deposit tax which they had not even collected from the viewers. He laid emphasis on the fact that under the Act, tax is leviable on payment for admission to entertainment and not otherwise. If the petitioners have not held 22 shows in a week and they held only 14 shows in a week, the petitioners cannot be required to pay entertainment tax on the basis of 22 shows per week.
30. On the other hand, the learned standing counsel submitted that it is the option of the petitioners either to pay entertainment tax on actual basis under sub-section (1) of Section 3 of the Act and, if the petitioners opt to pay tax on compounded basis under the proviso to Section 3 (1) of the Act, they have to pay at such rate which may be prescribed by the State Government. It was further submitted that the petitioners having given up their challenge to the validity of the proviso to Section 3 (1) of the Act. It is now not open to the petitioners to say that the rates prescribed by the State Government is arbitrary. According to him, the petitioners have right to opt for payment of entertainment tax on compounded basis on the rates prescribed by the State Government and in fact by paying entertainment tax on compounded basis instead of actual payment of tax, the petitioners are gainers.
31. Having considered the rival submissions, we are of the view that the submission made by Shri A. Kumar, learned counsel for the petitioners, is not correct. The petitioners have given up their challenge to the validity of the proviso to Section 3 (1) of the Act. The proviso empowers the State Government to fix rates for payment of entertainment tax on compounded basis. The State Government had revised the rates vide notification dated 21.10.1997 by increasing percentage of the gross weekly collection as also number of shows held in a week. There is no compulsion on the petitioners for payment of entertainment tax on compounded basis. If the petitioners feel that they might have to pay more entertainment tax on compounded basis under the proviso to Section 3 (1) of the Act, than what they shall be paying at actual rates under Section 3 (1), the petitioners need not opt for payment on compounded basis. The petitioners have not given any facts and figures to establish that they are required to pay more entertainment tax if they opt for payment on compounded basis on the basis of the notification dated 21.10.1997, than what they would have paid on actual basis under the main part of Section 3 (1) of the Act. We therefore, hold that the notification dated 21.10.1997 is neither arbitrary nor rates fixed therein for calculating the entertainment tax payable on compounded basis either by increasing the percentage on gross weekly collection or by increasing the number of shows to be without authority of law. The notification dated 21.10.1997 is valid in law.
32. Shri A. Kumar, learned counsel for the petitioner submitted that even if the notification dated 21.10.1997 is held to be valid, it shall not be applicable to the case of the petitioners where the District Magistrate/Licensing Authority had also passed orders in the prescribed Form "S" prior to 21.10.1997, directing the petitioners to pay entertainment tax on compounded basis for financial year 1997-98.
33. He further submitted that the notification dated 21.10.1997 issued by the State Government being a delegated legislation cannot be held to apply retrospectively and to those cases where the cinema exhibitors have already been granted permission to pay entertainment tax on compounded basis for the financial year 1997-98. He submitted that the Act does not give any power to the State Government to issue notifications which may have retrospective effect.
34. Shri C.S. Singh, learned counsel for respondents, however submitted that the notification dated 21.10.1997 is not being given retrospective effect at all. From and on the date of issue of the notification dated 21.10.1997, the petitioners are being asked to pay entertainment tax on compounded basis as per rates given in the notification dated 21.10.1997. The notification dated 21.10.1997, is being applied for the remaining part of the financial year 1997-98, i.e., w.e.f. 21.10.1997 to 31.3.1998. He further submitted that the rates prescribed in the earlier notification dated 27.4.1989 as amended on 27.3.1991 stood modified on 21.10.1997 when the State Government issued a fresh notification and, therefore, the petitioners are liable to pay entertainment tax on compounded basis in accordance with the notification dated 21.10.1997 for the period w.e.f. 21.10.1997 to 31st March. 1998.
35. We have already reproduced Section 3 (1) of the Act including proviso and Rule 24 (A) of the Rules framed thereunder. The proviso to Section 3 (1) of the Act, empowers the State Government to lay down conditions for payment of entertainment tax on compounded basis, prescribing the manner and also the rate. The State Government has framed Rule 24 (A) of the Rules for compounded payment of lax. Sub-
rule 1 of the Rule 24 (A) provides that the proprietor of a cinema opting to make compounded payment of entertainment tax under the proviso to sub-section (1) of Section 3 of the Act, shall submit his written option in duplicate to the District Magistrate before the last date fixed by the Commissioner in this behalf in Form 'R' appended to these rules declaring the total number of shows to be exhibited in a day, number of seats in the cinema class wise and the rates of tickets at full price and on reduced price, if any. Sub-rule (3) (i) of Rule 24 (A) authorises the District Magistrate to communicate to the proprietor who has applied for making payment of tax on compounded basis, the gross collection capacity and the weekly tax payable by the cinema in Form 'S'.
36. Sub-rule (2) of Rule 24A provides that the option once exercised shall be valid for the period of a financial year. Sub-rule (3) (ii) of Rule 24A, provides for calculation of the gross collection capacity of a cinema. It provides that the gross collection capacity shall be calculated by multiplying the number of seats in various classes in a cinema by the respective current ticket rates (including payment for admission and entertainment tax thereon) and multiplying the sum so derived by such number of shows, as the proprietor of the cinema declares to give in a day.
37. Thus, from perusal of Rule 24A, it will be seen that the scheme for payment of entertainment tax on compounded basis is that the proprietor of the cinema has to declare the number of shows which he proposes to hold in a day, number of seats in the cinema classwise and current rates of tickets at full price and on reduced price, if any. Thereafter, the gross collection capacity is worked out as per Rule 24A (3) (ii) of the Rules. The State Government has prescribed rates of tax vide notification dated 27.4.1989 as amended on 27.3.1991 to be 20% of the gross collection capacity with population upto 25,000 in a local area and 22% of the gross collection capacity where the population exceeds 25,000 but do not exceed from 50,000 and 25% of the gross collection capacity where the population exceed 50,000 but do not exceed one lac. The District Magistrate concerned had to, under Rule 24A (3) of the Rules, communicate all the petitioners the gross collection capacity and weekly tax payable by the cinema under prescribed Form 'S'. The weekly tax payable by the proprietor of the cinema had been worked out by the District Magistrate in accordance with the notification dated 27.4.1989 as amended on 27.3.1991. Rule 24A (2) provides the option which has been exercised by the proprietor of the cinema is valid for period of the financial year. In the present case, each of the petitioners had exercised their option for payment of entertainment tax on compounded basis for the financial year 1997-98. Thus, in view of Rule 24A (2), the option exercised by the petitioners is to remain valid for the entire financial year. Based on the option given by the petitioners, the District Magistrate had passed orders under Rule 24A (3) communicating the petitioners the gross collection capacity and weekly tax payable by them.
38. The weekly tax payable by the petitioners was calculated on the basis of the rates specified in the notification dated 27.4.1989 as amended on 27.3.1991. Shri A. Kumar, learned counsel for the petitioners had relied upon the decision of Hon'ble Supreme Court in the case of State of U. P. and others v. Vinay Kumar Jain. 1997 (1) SCC 195 : AIR 1997 SC 342, wherein the Hon'ble Supreme Court after considering Section 3 (1) of the Act and its proviso and Rule 24A of the Rules held that option once exercised shall be valid for the relevant financial year to which it pertains. Thus, in view of clear language of Rule 24A (2) and the decision of Hon'ble Supreme Court in case of State of U. P. v. Vijay Kumar Jain (supra), the option exercised by the petitioners for payment of tax on compounded basis is valid for the financial year 1997-98. The necessary corollary is that the District Magistrate shall also be bound by his order passed in Form 'S' for the entire financial year.
39. So far as the question as to whether the notification dated 21.10.1997 has any retrospective effect or not and can it be applied to the petitioners who have been granted permission to pay entertainment tax on compounded basis much prior to the corning into force of the notification dated 21.10.1997 is concerned, we are of the view that there is no provision in the Act or the Rules framed thereunder, which has retrospective effect.
40. Hon'ble Supreme Court in case of Govinddas and others v. Income-Tax Officer and another, AIR 1977 SC 552 had occasion to consider as to when an enactment can be said to be retrospective. In para 10 of the aforesaid judgment, the Hon'ble Supreme Court has held as under :
"10. Now it is a well-settled rule of interpretation hallowed by time and sanctified by judicial decisions that unless the terms of a statute expressly so provide or necessarily require it, retrospective operation should not be given to a statute so as to take away or impair an existing right or create a new obligation or impose a new liability otherwise than as regards matters of procedure. The general rule as stated by Halsbury in Vol. 36 of the Laws of England (3rd Ed.) and reiterated in several decisions of this Court as well as English Courts, is that "all statutes other than those which are merely declaratory or which relate only to matters of procedure or of evidence are prima facie prospective" and retrospective operation should not be given to a statute so as to affect, alter or destroy an existing right or create a new liability or obligation unless that effect cannot be avoided without doing voilence to the language of the enactment. If the enactment is expressed in language which is fairly capable of either interpretation, it ought to be construed as prospective only."
41. If we apply the aforesaid principles of interpretation, it will be seen that notification dated 21.10.1997 nowhere specific of the rates being applied from the date prior to its coming into force, i.e., the date prior to 21.10.1997. Thus the rates specified therein cannot be held applicable to the rates of entertainment tax payable on compounded basis from 1st April, 1997 for the financial year 1997-98. We, therefore, hold that the notification dated 21.10.1997, is prospective in nature and has no retrospective operation.
42. Now the question is that if the notification dated 21.10.1997 is prospective in operation, whether it will apply to the case of the petitioners, where the District Magistrate had already communicated to the petitioners the gross calculation capacity and weekly tax payable by the cinema in Form 'S' for the financial year 1997-98. We have already held above that the option given by the petitioners for payment of tax on compounded basis for the year 1997-98 is valid for the entire financial year under Rule 24A (ii) of the Rules. Based on the option given by the petitioners in Form 'R', the District Magistrate communicated to the petitioners the gross collection capacity and weekly tax payable for the financial year 1997-98.
43. In our view the notification dated 21.10.1997, will have no bearing on the weekly tax payable by the petitioners since the District Magistrate while accepting the options given by the petitioners in Form 'R' have already informed the petitioners the gross collection capacity and weekly tax payable under the notification dated 27.4.1989 as amended on 27.3.1991.
44. In the case of Sri Vijyalakshmi Rice Mills v. State of Andhra Pradesh, AIR 1976 SC 1471, the questions are before the Hon'ble Supreme Court as to whether the appellants therein were to be paid price for the supplies of rice made them from January 26, 1964, to February 21, 1964, at the rate of Rs. 46.89 per quintal, the rate specified in the Rice (Andhra Pradesh) Price Control Order, 1963, dated December.
19, 1963 or at the enhanced rate of Rs. 52.25 per quintal as fixed by the Rice (Andhra Pradesh) Price Control (Third Amendment) Order, 1964 dated March 23, 1964. The Hon'ble Supreme Court, while considering the Rice (Andhra Pradesh) Price Control (Third Amendment) Order, 1964, held that there is no deeming clause or some such provision in the aforesaid Order, 1964, to indicate that it was intended to have a retrospective effect. It is a well recognised rule of interpretation that in the absence of express words or appropriate language from which retrospectivity may be inferred, a notification takes effect from the date it is issued and not from any prior date. The principle is also well-settled that statutes should not be construed so as to create new disabilities or obligations or impose new duties in respect of transactions which were complete at the time the Amending Act came into force. Hon'ble Supreme Court further held that the sales in the instant cases having been made by the appellants therein before the corning into force of the Rice (Andhra Pradesh) Price Control (Third Amendment) Order. 1964, and the property in the goods having passed to the Government of Andhra Pradesh on the dates the supplies were made, the appellants had to be paid only at the controlled price obtaining on the dates the sales were effected and not at the increased price which came into operation subsequently.
45. Applying the principles laid down by the Hon'ble Supreme Court in the case referred to above, to the facts and circumstances of the present case. It will be seen that in the present cases also, the petitioners had given their options for payment of entertainment tax on compounded basis for the financial year 1997-98 before the commencement of financial year itself. The District Magistrate had accepted the said options given by the petitioners and communicated the gross collection capacity and the weekly tax payable by the petitioners in Form 'S' for the financial year 1997-98. The said weekly tax payable was calculated on the basis of rates provided in the notification dated 27.4.1989 as amended on 27.3.91. The options exercised by the petitioners are valid for the entire financial year 1997-98 in view of Rule 24A (2) of the Rules, Thus, any modification in the rates by subsequent notification will not effect the weekly tax payable on compounded basis by the petitioners.
46. Aprt from above, we find that payment of tax on compounded basis has been made applicable by the State Government in various indirect taxes which it levies. There is provision for payment of purchase tax on assumed basis under the provisions of U. P. Sugar Cane (Purchase Tax) Act. 1961. Similarly, under Section 7D of U. P. Trade Tax Act, 1948, the State Government has provided for payment of tax on compounded basis. It is called composition money. Section 7D of the said Act is reproduced as under :
"Section 7D. Composition of tax liability.--Notwithstanding anything contained in this Act, but subject to direction of the State Government, the assessing authority may agree to accept a composition money either in lump sum or at an agreed rate on his turnover in lieu of tax that may be payable by a dealer in respect of such goods or class of goods and for such period as may be agreed upon :
Provided that any change in the rate of tax which may come into force after the date of such agreement shall have the effect of making a proportionate change in the lump sum or the rate agreed upon in relation to that part of the period of assessment during which the changed rate remains in force.
Explanation.--For the purpose of this section the assessing authority includes an officer not below the rank of Trade Tax Officer Grade-11 posted at a checkpost."
47. From perusal of the proviso to Section 7D (supra) it will be seen that the State Legislature had taken care of increasing the amount proportionately wherever there is change in the rate of tax during the currency of lumpsum agreement. No such provision has been made by the State Legislature in so far as it relates to enhancing the entertainment tax proportionately on increase of rates under the Act or the Rules framed thereunder. Nor does the amending notification provide that if a licencee, does not want to bear the increased burden, he can opt out of the compounding scheme from 21.10.1997. A licensee cannot be forced to opt for the amended scheme. Option and compulsion cannot stand together. Thus, any modification in the rates payable on compounded basis by the notification dated 21.10.1997, will not apply to those cinema owners who have already opted for payment of entertainment tax on compounded basis and the District Magistrate prior to the notification dated 21.10.1997 passed appropriate direction in Form 'S'.
48. Therefore, we are unable to accept the contention of the learned standing counsel that the notification dated 21.10.1997 has to be applied prospectively even in those cases where the District Magistrate had communicated to the petitioners regarding the gross weekly collection capacity and weekly tax payable for the financial year 1997-98. The State Government can apply the notification dated 21.10.1997 where the District Magistrate had not communicated to the cinema owners the gross collection capacity and weekly tax payable prior to 21.10.1997. Since the said notification has been held to be prospective in operation and not to apply in the cases where the District Magistrate had already accepted the options exercised by the petitioners prior to the coming into force the notification dated 21.10.1997.
49. As result of aforesaid discussions our conclusions are as follows :
(i) The notification dated 21.10.1997 issued by the State Government is valid ;
(ii) The said notification dated 21.10.1997 is prospective in operation.
(iii) The notification dated 21.10.1997 does not affect the options exercised by the petitioners for the financial year 1997-98 which have been accepted by the District Magistrate and the District Magistrate had communicated to the petitioners regarding the gross collection capacity and weekly tax payable by them for financial year 1997-98 before 21.10.1997.
(iv) The notification dated 21.10.1997 shall apply to those cases where the District Magistrate communicated the cinema owners the gross collection capacity and weekly tax payable after 21.10.1997 and that too only for the period 21.10.1997 to 31.3.1998.
50. Therefore, all the petitioners succeed in part. We partly allow all the writ petitions and quash the demand notices issued to the petitioners by the District Magistrate to the extent it demands in excess of what have been communicated in Form 'S' from the petitioners for the financial year 1997-98.
In view of the divided success, the parties shall bear their own costs.