Judgment:
ORDER
S.R. Rajasekhara Murthy, J.
1. Both the cases are listed for preliminary hearing. After issuing notice re. rule to the respondents and after hearing the learned counsel for the petitioners and the learned High Court Government Pleader, the matters are disposed of finally.
2. The petitioners have challenged rule 41C of the Karnataka Entertainments Tax Rules, 1959, as amended by the Karnataka Entertainments Tax (Amendment) Rules, 1986 (hereinafter referred to as 'the Rules').
3. The petitioners are the exhibitors of cinematograph shows and are assessed to entertainment tax under the Karnataka Entertainments Tax Act, 1958 (the 'Act').
4. The petitioner in W.P. No. 2054 of 1987 is an exhibitor in Pavagada. The population of Pavagada is less than ten thousand. Under the scheme of the Act two modes of levy of taxes are provided. Under section 3, tax on entertainment is levied and collected on the basis of admission to entertainments. The rate of such levy is provided in the table annexed to section 3 of the Act.
5. Under section 3A, in addition to the entertainment tax payable under section 3, a surcharge is also levied.
6. Section 4 provides for levy of additional tax on cinematograph shows. This tax is known as show-tax and is levied in addition to the tax leviable under section 3 and surcharge leviable under section 3A or the tax leviable under section 4A of the Act. Show-tax is common to all the exhibitors.
7. Section 4A was inserted with effect from 1st April, 1979 by Act 16 of 1977. Under the scheme of section 4A of the Act, it is provided that an exhibitor falling under serial Nos. (b), (c), (d), (e) and (f) of the table may opt for paying tax as per the provisions of sections 3 and 3A, or on each show of entertainment under section 4A on the basis of the rates specified in column 3 of the table annexed to the section depending upon the population of the place in which the exhibitor is licensed to run the shows.
8. This option under section 4A to be taxed under section 3 of the Act is, however, available only to the exhibitors who are running their shows in places where the population exceeds fifteen thousand. As regards the place whose population does not exceed 15,000, they have to pay on the basis of the 'gross collection capacity' only.
9. The petitioner in W.P. No. 2054 of 1987, as already stated, is an exhibitor in Pavagada, whose population is less than ten thousand.
10. The petitioner in W.P. No. 9510 of 1987 has a licence to run the cinematograph shows in K. R. Nagar, whose population exceeds fifteen thousand, and has opted for the levy of tax under section 4A of the Act.
11. Under the rules framed in Part VI-A of the Rules, is provided a procedure for obtaining the permit for running cinematograph shows under section 4A of the Act. An application in form VI-A is required to be filed and the permit is issued in accordance with the provisions of the Act, in form VI-B. The permit so issued will hold good until it is altered in the circumstances referred to in section 4A(2).
12. It is necessary to deal with some of the columns in this form VI-B.
13. The tax is levied on exhibitors who come under the scheme of section 4A of the Act on the basis of the 'gross collection capacity'. This phrase is to be understood as provided in the explanation to section 4A. The 'gross collection capacity' in relation to a cinema theatre means a sum equal to the aggregate of all payments for admission to a show, if all the seats and accommodation available and provided for the audience in such theatre, are occupied and the aggregate of all payments for admission shall be calculated in the manner provided in the said section.
14. As is seen from the permit - form VI-B (annexure-D), the tax payable by the petitioner per show is determined as Rs. 152 based on the calculation referred to in column 6 of the permit.
15. Under rule 41C of the Rules, which applies to persons coming under the scheme of section 4A of the Act, they are required to submit a return in form XA, disclosing the number of shows held on each day of the week and the total number of shows for the proceeding week. The proprietor is also required to make full payment of the tax in accordance with the return and the treasury receipt or crossed cheque or demand draft for payment of the tax has to be produce along with the return.
16. By the amendment of rule 41C(1) and insertion of sub-rule (6) by the Karnataka Entertainments Tax (Amendment) Rules, 1986, the exhibitor is new required to maintain a register in form XB and submit an extract of such accounts along with the return for the week-end.
17. This insistence on maintaining the register in form No. XB, which is more or less similar to as form II register prescribed under sections 3 and 3A, which is known daily collection register, (DCR) for short, is challenged in these two writ petitions on several grounds.
18. Sri B. G. Sridharan, learned counsel for the petitioner in W.P. No. 2054 of 1987, and Sri B. V. Katageri, learned counsel for the petitioner in W.P. No. 9510 of 1987, have addressed arguments on this point. Their main contention is that the insistence on maintaining and submission of extracts of such accounts, is ultra vires the Act, and is wholly unnecessary for the purpose of levy of entertainment tax under section 4A of the Act.
19. These two writ petitions were heard along with W.P. No. 13638 of 1986 (Nirmala Chitra Mandira v. State of Karnataka) in which the provision of section 4A(6) as inserted by Karnataka Act 22 of 1985, is challenged.
20. Sub-section (6) is reproduced below :
'It shall be presumed that the proprietor of an entertainment has conducted all the shows permitted to be conducted by him under the Karnataka Cinemas (Regulation) Act, 1964, unless he produces a certificate in the prescribed form along with his returns from the local authority or any other authority notified by the Government that any such show has not been conducted.'
21. A rule was framed to give effect to this provision by the Karnataka Entertainments Tax (Amendment) Rules, 1985. Under that rule, namely, sub-rule (1a) framed under rule 41C, the certificate specified in sub-section (6) is required to be submitted in form No. XC.
22. The object of introducing rule 41C(6) under which the register in form XB is required to be maintained and the object of insisting on a certificate being produced along with the return in form XC appears to be same. The object, no doubt, is to prevent evasion of tax payable by the exhibitor on each show, under the scheme of section 4A. He is, therefore, required to produce a certificate in form XC, if any show was not conducted during the week. Such a certificate would be necessary in the interests of Revenue.
23. Sub-section (6) of section 4A, as inserted by Amendment Act 22 of 1985 has been upheld by me as valid provision in a separate order made by me today in W.P. No. 13638 of 1986 (Nirmala Chitra Mandira v. State of Karnataka). That this is the position and the two rules overlap, is not disputed by Sri Dattu.
24. After the hearing was adjourned last time, Sri Dattu submits, on instructions today that the department would not insist on the maintenance of register in form XB. But at the same time, it would be in the interests of Revenue to insist on the compliance of production of a certificate in form XC as prescribed under section 4A(6) of the Act.
25. In view of this submission, it would be unnecessary to deal with the other contentions of the petitioners and decide the question.
26. The writ petitions are, therefore, disposed of without going into the merits of the contentions.
27. Writ petitions disposed of accordingly.