Judgment
ORDERSyed Shah Mohd. Quadri, J.
1. This special appeal under Section 9E of the Andhra Pradesh Entertainments Tax Act (for short 'the Act') is referred to the Full Bench by a Division Bench of this Court observing that there appears to be a direct conflict between the judgment of a Division Bench of this Court dated 8-2-1988 in Triveni Theatre, Anantapur v. Deputy Commissioner Commercial Taxes, Special Appeals Nos. 43 to 46 of 1984 and a judgment of another Division Bench in Sri Rama Theatre v. Dy. C.T.O., Kakinada, 1982 (2) APLJ (HC) 209.
2. We shall presently refer to the controversy which led to the reference to the Full Bench. But before we do so, we would give the relevant facts of this case to appreciate the controversy.
3. The appellant is a proprietary concern carrying on the business of exhibiting films. The rates of admission to the appellant-theatre are governed by the Andhra Pradesh Cinemas (Regulation) Rules, 1970 (for short 'the Cinemas Rules') and the Andhra Pradesh Entertainment Tax Rules (for short 'the Entertainment Tax Rules'). Under Rule 12(3) of the Cinemas Rules the Licensing Authority fixes the maximum rates of payment for admission to different classes in the theatre. Section 4 of the Act imposes entertainment tax on the payment for admission in accordance with the rates mentioned therein. Section 4-A of the Act imposes additional tax on cinematograph exhibitions according to the rates specified therein. The dispute in this appeal relates to liability of the appellant to pay additional tax assessed for the four quarters ending on 30-6-1981, 30-9-81, 31-12-81 and 31-3-82 of the assessment year 1981-82. Under the Cinema Rules the maximum rates fixed by the Licensing Authority earlier to the period ending on 31stMarch, 1981 for the reserved class and the second class, with which we are concerned in this appeal, were Rs. 2-30 PS. and Re. 0-75 PS., respectively. On the request of the petitioner for enhancement to Rs. 3-00 and Re. 1-00, the Licensing Authority, the Joint Collector, by his proceedings dated 20-3-1981 permitted the enhancement of the maximum rate to Rs. 2-50 Ps. and Re. 0-85 Ps., respectively. On the tickets meant for the reserved class the appellant printed the break-up of the figure as follows :--
'Entertainment Tax Re. 0-70 Ps.
Addl, Tax 0-30 Ps.
Net. Rs. 1-50 Ps.'
For the second class the amount noted on the ticket is 85 Paise, the break-up of which isgiven as follows :--
'Entertainment Tax Re.O-19
Addl. Tax 0-10
Net Rs. 0-50'
By orders of assessment passed by the Entertainment Tax Officer, Anantapur on 9-11-1982 and 27-8-1983 deficit of additional tax of 8 Paise per ticket for the reserved class and 10 Paise per ticket for the second class in respect of the tickets sold for the said quarters was held to be payable. The appellant filed an appeal before the Commercial Tax Officer, Anantapur, who allowed the appeals on 28-9-1983. The Deputy Commissioner, Commercial Taxes, Kurnool (The 1st respondent) in exercise of his power under Section 9-D of the Act revised the orders of the Appellate Authrity after issuing the show-cause notice and considering the objections of the appellant, set aside the same and restored the order of the 2nd respondent by Proceedings No.Re.801/85.F1, dated 21-7-1988. Aggrieved by the said order of the 1st respondent the appellant preferred this special appeal.
4. Before going into the rival contentions of the parties, it would be useful to read here Section 4 of the Act in so far as it is relevant for our purpose :
'S.4 : Tax on payment for admission to entertainment :--
(1) Save as otherwise provided in this Act on each payment for admission to any entertainment, there shall be levied and paid to the State Government a tax calculated at the following rates namely :
Where such payment exclu- Rate ofsive of the amount of tax. tax. .1. Is not more than Re. 1.00 35% ofand fifty Paise. such pay-ment. 2. Is more thaqn Re. 1.00 45% of'and fifty Paise. such payment. (1-A) (a): There shall be levied and paid to State Government an additional tax on each payment for admission to any entertainment; together with tax payable under sub-sec. (1) at the following rates namely:-- Where such payment exclu- Rate of sive of the amount of tax. tax.1. is not more than fifty Re. 0.10 Ps.Paise.2. is more than 50 Paise Re. 0-20 Ps.but is not more than onerupees.3. is more than 1.00 but Re. 0.30 Ps.is not more than 1.50 Ps.4. is more than Rs. 1.50but is not more thanRs.2.00. Re. 0.40 Ps.
From a perusal of the provisions extracted above it can be noticed that on each payment for admission to any entertainment, entertainment tax is payable according to the rates mentioned therein. In the case of the appellant, on the reserved class where net payment exclusive of amount of tax is shown as Rs. 1-50 Ps. entertainment tax of 53 Paise is payable and on the second class the entertainment tax payable is 19 Paise as the net amount for that class was noted as 56 Paise. As against this, entertainment tax of 70 Paise and 19 Paise, was paid on each ticket of thereserved class and the second class respectively. There is no dispute with regard to the payment of entertainment tax.
5. The dispute relates to payment pf additional tax. Sub-section (1-A) of Sec. 4 pf the Act imposes additional tax on each payment for admission to any entertainment together with entertainment tax at the rates specified. In the case of the appellant on the reserved class the net amount shown in the ticket (that is, the amount exclusive of the tax amount) is Rs., 1-50 Ps. on which additional tax of 30 Paise is payable. In respect of second class the net amount shown on the ticket (that is, the amount exclusive of the tax amount) is 56 Paise on which the additional tax of 20 Paise is payable.
6. In so far as the reserved class is concerned, the entertainment tax and the additional tax were accordingly paid. But by a cuirious method of calculation, the 1st respondent added the net amount of Rs. 1-50 Ps. and the entertainment tax of 70 Paise and after arriving at total of Rs. 2-20 Ps. again split same into :
Net amount ... Rs. 1-52
Entertainment ... 0-68
and on the basis that the net amount is Rs. 1-52 Ps raised a demand of 40 Paise as additional tax; as the appellant had already paid additional tax of 30 Ps. the difference of 10 Paise on each admission is demanded. In our view, the exercise done by the 1st respondent, noted above, is wholly erroneous. The maximum rate for the reserved class permitted by the Licensing Authority, is Rs. 2-50 Ps. The break-up of that amount is given as:
Net Rs. 1-50 Ps.
Entertainment tax. Re. 0-70 Ps.
Addl. Tax Re. 0-30 Ps.
and accordingly the appellant was collecting Rs. 1-50 as net, 70 Paise as entertainment tax and 30 Paise as additional tax on each ticket and remitting the amount of taxes accordingly to the respondents. The additional tax is payable on the 'net amount. Admittedly, the appellant is collecting net' amount ofRs. 1-50 Ps. but not Rs. 1-52 Ps., therefore, additional tax at the rate of 40 Paise cannot be levied. It is true that on Rs. 1-50 Ps., the entertainment tax payable is only 53 Paise as against which an amount of 70 Paise as against which an amount of 70 Paise was being collected contrary to the statute and remitted to the Government. But that would not give a ground to the respondents to increase the net amount to an artificial figure of Rs. 1-52 Ps. which is neither, collected nor shown on the ticket. Therefore, the claim of additional tax in respect of reserved class is wholly untenable and the order under appeal to that extent is liable to be set aside.
7. We shall now consider the validity of the demand of additional tax with regard to the second class. The maximum payment for entertainment, permitted by the Licensing Authority, is 85 Paise. The break-up of the figure given on the ticket under Rule 27(1) is-
Net: Re.0-56 Ps.
Entertainment tax : 0-19 Ps.
Addi. Tax. 0-10 Ps.
It has already been noticed above that on 56 Paise the additional tax payable is 20 Paise. But the appellant has been collecting 10 Paise on each payment for admission. Under Sec. 7 of the Act the liability to pay the entertainment tax otherwise than by stamped ticket is that of the proprietor-appellant. The entertainment tax being an indirect tax, the appellant passes the burden of the tax on the persons admitted to the entertainment. But merely because he has not collected the requisite amount of tax, for whatever reason, from those admitted to the entertainment, it cannot be a ground to avoid the liability to pay the tax. Therefore, the correct amount of the additional tax can be demanded by the authorities from the appellant. The main contest in this appeal relates to this liability of the appellant, which is sought to be avoided on various grounds.
8. Sri S. Dasaratha Rama Reddy, the learned counsel for the appellant, has contended that the Commercial/EntertainmentTax, Officer by his letter dated 1-4-1981 communicated the break-up figures of the enhanced rate and in any event Rule 27(1) of the Entertainment tax Rules, casts an obligation on the officer sealing the tickets to specify the tax component before putting the seal and once the tickets are sealed the authority is bound by the tax mentioned on the tickets and is estopped from raising any demand of tax more than what is specified thereon.
9. The learned Government Pleader, on the other hand, contended that Rule 27(1) did not cast any obligation on the authorities to verify the correctness or otherwise of the break-up of the amount noted on the tickets for admission to the entertainment. He further contended that there could be no estoppel against the statute, therefore, if the tax component noted on the ticket was found to be less the principle of promissory estoppel could not be invoked so as to prevent the authorities from collecting the amount of correct tax payable under law.
10. On these rival contentions two points arise for determination :
(i) Whether on the facts of this case the requirements of the 'Doctrine of promissory estoppel' are satisfied;
(ii) Can the Doctrine be invoked against-the Revenue to prevent it from collecting the right amount of tax under law?
11. We shall now take up the first point. Here it is necessary to note the Doctrine of Promissory Estoppel. The principle of promissory estoppel is stated in Halsbury's Laws of England, Fourth Edition, Vol. 16 in Para 1514 at page 1017 is in the following terms:--
'1514. Promissory estoppel: When one party has, by his words or conduct made to the other a clear and unequivocal promise or assurance which was intended to affect the legal relations between them and to be acted on accordingly, then, once the other party has taken him at his word and acted on it, the one who gave the promise or assurance cannot afterwards be allowed to revert to their previous legal relations as if no such promiseor assurance had been made by him, but he must accept their legal relations subject to the qualification which he himself has so introduced.
12. The origin of this doctrine is the leading case of Central London Property Trust Ltd. v. High Trees House Ltd. (commonly known as 'High Trees Case') (1947) KB 130, wherein Denning J. (as he then was), nonsuited the plaintiff on application of this doctrine. In Robertson v. Minister of Pensions, (1949) 1 KB 227 at 231, he formulated the principle as follows :--
'..... If a man gives a promise or assurance which he intends to be binding on him and to be acted on by the person to whom it is given, then once it is acted upon, he is bound by it.'
13. The essential features of the doctrine are,--
(i) One party should make to another a promise or assurance either by words or conduct;
(ii) The promise or assurance was intended to affect the legal relations between them and to be acted upon;
(iii) The other party must have acted uponit;
if these requirements are satisfied, then the one who gave the promise or assurance cannot afterwards be allowed to revert to his previous legal relations as if no such promise or assurance had been made by him.
14. We shall now examine whether these requirements are satisfied in the instant case. Sri B. Dasaratharama Reddy contended that communication of the Commercial Tax Officer, dated 14-1981 or alternatively the action of the Entertainment Tax Officer in impressing the official seal on the tickets on which net amount and tax components are printed, in discharge of the obligation cast on him under Rule 27 of the Rules, amounts to making promise or representation.
15. In so far as communication of the Entertainment Tax Officer dated 1-4-1981 is concerned it was not placed before the first respondent nor is it placed before us. Therefore, the contention that by the said communication dated 1-4-1981 the tax liability ofthe appellant under the head 'additional tax'as 10 Paise was intimated, cannot be accepted.
16. This takes us to the alternative plea, whether Rule 27 of the Entertainment Tax Rules casts any obligation on the Entertainment Tax Officer to satisfy regarding the tax component before putting the seal. Here it could be apt to read Rule 27 which is in the following terms :
'27. (1) The proprietor shall not issue or cause or permit to be issued any ticket being a ticket authorising any person to be admitted to the entertainment, unless the price of admission, exclusive of the entertainment tax payable thereon, the entertainment tax so payable and the total payment for admission are legibly printed, stamped or otherwise marked on such a ticket, and if the ticket should be impressed with the official seal of the entertainment Tax Officer unless it has been so impressed.
(2) Where the price of admission, exclusive of the tax, and the total payment for admission are not separately printed, stamped 'or otherwise marked on the ticket, as required under sub-rule (1), the amount specified in the ticket as the price for admission shall be deemed to be the price of admission, exclusive of the tax, and the proprietor shall be liable to be assessed accordingly without prejudice to any other penalty to which he would be liable under the Act.'
A Plain reading of the above provision makes it clear that it casts an obligation on the proprietor not to issue or cause or permit to be issued any ticket authorising any personto be admitted to the entertainment without legibly printing,' stamping or otherwise marking on such ticket the price of admission (exclusive of entertainment tax payable thereon), the entertainment tax so payable and the total payment for admission, and if the ticket has to be impressed with the official seal of the Entertainment Tax Officer unless it has been so impressed. The consequence of default of compliance of sub-rule (1) is provided in sub-rule (2) by imposing liability of being assessed on the total price of admissionas if it is exclusive of tax, which is without prejudice to the other penalty that might be imposable under the Act. It is equally plain that impressing the tickets with the official seal of the Entertainment Tax Officer has nothing to do with the correctness of the amount of the entertainment tax and the additional tax, noted on the tickets. Impressing the official seal of the Entertainment Tax Officer on the tickets, is entirely for a different purpose viz, of making assessment of Entertainment Tax where admission to entertainment is made otherwise than on the basis of stamped tickets. A reading of Sec. 6 of the Act and Rules 22 to 24 of the Entertainment Tax Rules leads to the conclusion that the requirement pf impressing the tickets with the seal of the Entertainment Tax Officer is for the purposes of verification of the return; the tickets are impressed with the seal where permission is granted to the proprietor in Form IV. It is not necessary that the Entertainment Tax Officer himself should impress the, official seal on the tickets sent by the proprietor along with the application and the return; in his absence the clerk of the Entertainment Tax Officer authorised for this purpose has to impress the tickets with the official seal, which are required to be serially numbered and run consecutively from performance to performance until the series is completed. Thus it is clear that the impressing the seal of the Entertainment Tax Officer is not by way of certifying the correctness of the Entertainment tax and the additional tax on the tickets but for purposes of returns.
17. It would also be useful to refer here to Rule 12(3)(b) of the Cinemas Rules which is inthe following terms:--
'12.(3)(a) : The licensing authority, while granting or renewing a licence in Form B shall also fix the maximum rates of payment for admission to the different classes in the licensed premises.'
The above sub-rule also does not cast an obligation on the Licensing Authority to specify the break-up of the maximum rate of payment for admission by indicating the tax component therein.
18. In the absence of any obligation either, on the licensing authority or on the Entertainment Tax Officer to fix or certifty the tax component in the rate of payment for admission, we cannot accept the contention that the break-up of the figures on the ticket duly stamped constitutes a representation either by the licensing authority or by the Entertainment Tax Officer.
19. We have already held above that neither the authorities are obliged to make any representation to determine the tax component in the maximum rate of payment for admission, nor did the authorities make any such representation. Therefore, the doctrine of promissory estoppel is not attracted. In this view of the matter, it may not be necessary for us to consider the other question whether the authorities had any power or jurisdiction to make such a representation.
20. We shall now refer to the difference of opinion Of the Division Benches which led to this reference. In Sri Rama Theatre's case supra the show-cause notice issued by the Entertainment Tax Officer inviting objections to the proposed enhancement of tax was questioned in the writ petition. The Division Bench held that it was for the exhibitor to print the break-up figures of the components of the rate of payment for admission if he wants to take advantage of Rule 27(1) of the Entertainment Tax Rules; otherwise, he would take the risk of being called upon to pay the entertainment tax and the additional entertainment tax on the price of admission as provided for under Rule 27(2) of the Entertainment Tax Rules. The Bench also held on examination of the above said rules that apart from fixing the maximum rate of payment for admission the licensing authority does not in any way prohibit the exhibitor from working out the components thereof in such a manner that the totals do not exceed the maximum rate of payment for admission fixed for each class of ticket and that the impression of official seal of the officer on each ticket did not amount to any representation made by the Entertainment Tax Officer. In that view of the matter the Bench held that the doctrine of promissory estoppel was not attracted. Weare in entire agreement with the reasoning and conclusion of the Division Bench in Sri Rama Theatre's case supra, in its understanding of Rule 27 of the Entertainment Tax Rules.
21. However, another Division Bench of our High Court in its judgment dated 8-2-1988 in Triveni Theatre's case supra rejected the contention that it was the obligation of the exhibitor to distribute the net rate of admission, the entertainment tax and the additional entertainment tax thereon once the maximum rate of admission is fixed by the licensing authority, holding that there was no foundation to such a position in the Entertainment Tax Act or the Rules made thereunder. The Bench was of the view that Rule 27(1) of the Entertainment Tax Rules casts an obligation upon the Entertainment Tax Officer to distribute the tax components and the basis admission fees. We have already held above that Rule 27(1) of the Entertainment Tax Rules does not cast such an obligation. Therefore, we are unable to agree with the interpretation placed on Rule 27(1) of the Entertainment Tax Rules by the Division Bench in Tribeni Theatre's case supra. In that case, the Bench noted that the Assistant Commercial Tax Officer, Anantapur, by his proceedings dated 1-4-1981 distributed, the net admission fee and tax components. In the instant case no such communication is placed before us.
22. It is next contended by Sri S. Dasaratha Rama Reddy that as the appellant has paid excess amoaunt on the reserved class, that may be adjusted against the demand made on the second class tickets: We find no force in this submission. It has been noted above that in the case of reserved class net admission fee was mentioned by the appellant at the rate of Rs. 1 -50 Ps. The whole amount thus collected was taken by the appellant. The excess amount paid by the appellant to the respondents on the reserved class at the rate of 70 paise per ticket was collected from the public and was passed on to the respondents. No part of that amount belongs to the appellant so as to claim adjustment against the said amount. The liability to pay tax under Section 7 of the Act is that of the appellant. He can pass on the rightamount of tax to the public, but if he has not collected proper tax his liability is not mitigated due to such non-collection. Therefore, the appellant is liable to pay the amount.
23. Before we part with this case, we would like to observe that on account of fixing of the maximum permissible rate of payment for admission by the licensing authority without taking into consideration the tax structure vis-a-vis the net amount of admission, the ultimate sufferer is the public. Amounts which could not have been collected under law have been collected from the public and passed on to the respondents, which they are not entitled to, either under the Act or under the Rules. It would, therefore, be in the fitness of things for the licensing authority to take into consideration the net amount and tax component at the time of fixing the maximum rate of payment for admission under Rule 12(3)(a) of the Cinemas Rules or at the time of enhancing the same under Rule 12(3)(b), so that the citizen is not made to pay anything more than what is required to be paid by him under law.
24. For the foresaid reasons, we set aside the demand of additional entertainment tax in regard to reserved class, but confirm the demand of the additional entertainment tax on the second class in the order of the 1st respondent. The appeal is accordingly allowed in part; in the circumstances of the case the parties are directed to bear their own costs.
25. Appeal partly allowed.