G.B. Patnaik, J.
1. The levy of penalty for default in payment of show tax under the provisions of the Orissa Entertainments Tax Act, 1946 (hereinafter referred to as 'the Act') is under challenge in this writ application.
2. The petitioner's case, briefly stated, is that he was the owner of a cinema hall in Puri Town and in accordance with law he was paying show tax at the rate of Rs. 10 per show. An Ordinance was promulgated with effect from January 20, 1984, enhancing the show tax from Rs. 10 to Rs. 25 per show and as it was felt to be quite harsh and burdensome, the Eastern India Motion Pictures Association moved the State Government. Ultimately the State Government reduced the show tax again to Rs. 10 with effect from September 17, 1985 and thus for the period January 20, 1984 to December 31, 1984, the petitioner was bound to pay at the rate of Rs. 25 per show. The total amount thus calculated works out to Rs. 23,800. The petitioner on the basis of calculation at the rate of Rs. 10 per show had paid Rs. 9,520 and, therefore, there was a default to the tune of Rs. 14,280. Admittedly the petitioner has paid up the said amount of Rs. 14,280, but the Commercial Tax Officer, Puri, has levied penalty under Section 14 of the Act to the tune of Rs. 28,500 by order, annexed as annexure 1. The petitioner had carried an appeal under Section 14(3) of the Act, but the appellate authority confirmed the order of the assessing officer. The appellate order has been annexed as annexure 2. The petitioner had carried a further revision to the Commissioner of Commercial Taxes but the Commissioner having rejected the same, the petitioner has moved this Court. The revisional order has been annexed as annexure 3.
3. Mr. Lal, the learned counsel for the petitioner, raises two contentions in assailing the order levying penalty :
(i) Non-payment of the tax at the enhanced rate being under a bona fide belief as the matter was pending before the State Government and there being absolutely no mens rea against such non-payment, levy of penalty is bad in law ; and
(ii) Even assuming that penalty is leviable, on a proper construction of the provisions of the Act, it cannot be said that there has been any 'evasion of tax' and, therefore, the penalty could be only Rs. 250 and not the double of the unpaid amount.
The learned Standing Counsel appearing on behalf of the Revenue, on the other hand, contends that admittedly it is the liability of the owner of the cinema hall to pay the tax in question in accordance with law and that payment not having been made, he incurs the liability for levy of penalty and consequently, the sales tax authorities were fully within their jurisdiction to levy the penalty in question. The learned Standing Counsel further urges that on a proper construction of Section 14(2)(b) of the Act, the defaulted amount being Rs. 14,000, the officer concerned had no other discretion than to levy the penalty to the tune of Rs. 28,000 in accordance with the statute and, therefore, there has been no infirmity in the same. The rival contentions require a careful examination of the provisions of the statute.
4. For better appreciation of the point in issue, Section 14 of the Act is quoted herein below in extenso:
'14. Penalties.--(1) The proprietor of any entertainment who--
(a) admits any person for payment to any place of entertainment in contravention of the provisions of Section 6 ; or
(b) fails, without sufficient cause, to pay the tax due from him within the time prescribed ; or
(c) fraudulently evades the payment of arrears of tax due under this Act; or
(d) contravenes any of the provisions of this Act,
shall, on conviction by a Magistrate, be liable in respect of each offence to a fine which may extend to five hundred rupees, and shall, in addition, be liable to pay any tax which should have been paid.
(2) Without prejudice to the provisions of Sub-section (1) the proprietor of any entertainment shall be liable to pay--
(a) in case of a default in a manner specified in Clause (a) of the said sub-section a penalty amounting to fifty rupees for each person admitted to the place of entertainment ; and
(b) in case of default in a manner specified in any of the Clauses (b) to (d) of the said sub-section a penalty amounting to two hundred and fifty rupees or double the amount of tax evaded, if any, whichever is greater,
if so ordered by the Commercial Tax Officer :
Provided that before imposing a penalty under this sub-section the proprietor concerned shall, in every case, be given a reasonable opportunity of adducing evidence in answer to the allegations made against him and of being heard.* * *'
Section 14(1) dealt with punishment on a conviction by a Magistrate for having contravened the provisions of the Act. Section 14(2), however, is the power of the commercial tax authorities to levy penalty without prejudice to the provisions contained in Sub-section (1). Under Section 14(2), a proprietor of any entertainment hall is liable to pay a penalty amounting to fifty rupees per each person admitted to the place of entertainment where the default comes within the ambit of Clause (a) of Sub-section (1). Under Section 14(2)(b), however, if the default comes within the ambit of Clauses (b) to (d) of Sub-section (1) then a penalty amounting to Rs. 250 or double the amount of tax evaded, whichever is greater, has to be levied. The proviso to Sub-section (2) stipulates that before levy of penalty, the proprietor concerned will have a reasonable opportunity of adducing evidence in answer to the allegations made against him. There is no grievance in this case with regard to the affording of an opportunity to the petitioner. The entire argument of Mr. Lal centres round the fact that there being no intentional default on the part of the petitioner and the petitioner having honestly believed that the Government would redress the grievance which in fact Government did on September 17, 1985, the levy of penalty is bad in law. We are unable to accept this submission of the learned counsel for the petitioner. The provisions of the Act make it abundantly clear that the proprietor of a cinema hall is liable to pay the entertainment tax as contained in the Act. With effect from January 20, 1984, in view of Clause 4-A of the Ordinance, the petitioner was liable to pay show tax at the rate of Rs. 25 per show and that liability continues until and unless the amount in question was again reduced by a subsequent Ordinance in the year, 1985. Admittedly, the petitioner had not deposited the said amount though the deposit had been made at the old rate of Rs. 10. According to Mr. Lal, Section 14(1)(b) covers a case of failure on the part of the proprietor of any entertainment to pay the tax due without a sufficient cause but here in the present case, there was sufficient cause, inasmuch as the petitioner and the Association had moved the State Government. In our considered opinion, moving the State Government for reduction cannot, be held to be a sufficient cause for not paying at the enhanced rate so as to take the case out of the purview of Section 14(1)(b) of the Act. On the other hand, an owner of a cinema hall having come to know that under the law he has to pay at the rate of Rs. 25 per show and not having paid the same must be held to have failed to pay the tax due without sufficient cause and, therefore, the case comes squarely under Section 14(1)(b) of the Act. Obviously, therefore, the petitioner incurs the liability to pay the penalty under Sub-section (2) of Section 14 of the Act. The first submission of Mr. Lal for the petitioner, is, therefore, without any force and is accordingly rejected.
5. So far as the second submission of Mr. Lal is concerned, we, however, find sufficient force in the same. The second contention really centres round an interpretation of Section 14(2)(b) of the Act. Under Sub-section (1) of Section 14, four different types of defaults are contemplated under Clauses (a) to (d). If the default in question is covered by Clause (a) of Sub-section (1), then the penalty is to be levied under Clause (a) of Sub-section (2), whereas if the default comes under Clauses (b) to (d) of Sub-section (1), then the penalty is to be levied under Clause (b) of Sub-section (2). So far as the present case is concerned, it comes under Sub-section (1)(b) of Section 14 and, therefore, penalty has to be levied under Clause (b) of Sub-section (2) of Section 14. According to Mr. Lal, under Clause (b) of Sub-section (2) penalty can be levied to the extent of double the amount of tax evaded, provided there has been an evasion of tax, but failure on the part of an owner to pay an amount under a bona fide belief that Government will redress the grievance while continuing to pay at the old rate, would not come within the concept of 'evasion'. In other words, penalty can be levied to the extent of double the amount of tax evaded provided the case comes under Clause (c) of Sub-section (1) of Section 14 and not when the case comes under Clause (b) of Sub-section (1). The learned Standing Counsel, however, strenuously argues that once that case comes under Clauses (b), (c) and (d) of Sub-section (1) of Section 14, the penalty has to be levied under Clause (b) of Sub-section (2) of Section 14 and, therefore, it would be either Rs. 250 or double the amount of evasion whichever is higher. In our considered opinion, the submission of Mr. Lal appearing for the petitioner, is of much force and has to be accepted. Clause (b) of subsection (1) of Section 14 speaks of a case of failure to pay the tax due within the time prescribed without sufficient cause, whereas Clause (c) speaks of a case of fraudulent evasion of payment of tax due under the Act. The expression 'fraudulent evasion' has a definite connotation and meaning. It is a positive act on the part of an owner to practise fraud and thereby to evade payment of a tax due. Where an owner pays the tax under the preexisting rate and has made a grievance before the State Government for reduction of the rate and under that belief has failed to pay the tax at enhanced rate, it cannot be a case of 'fraudulent evasion', within the ambit of Clause (c) of Section 14(1) of the Act. Section 14(2)(b) must be interpreted to mean that in case of a fraudulent evasion, the levy of penalty would be double the amount of tax evaded but if there has been no fraudulent evasion at all and it is a mere failure on the part of the owner to pay some tax without sufficient cause, thereby attracting Clause (a) of Sub-section (1) of Section 14, then the penalty to be levied would be Rs. 250. In case where the owner bona fide fails to deposit certain amount for which there is no sufficient cause, there would be no 'fraudulent evasion' of tax and, therefore, the question of levying penalty double the amount of evasion would not arise. In that view of the matter, the authorities below committed error in levying double the amount of tax not paid and they were entitled only to levy the penalty of Rs. 250 under Clause (b) of Sub-section (2) of Section 14. The impugned orders under annexures 1, 2 and 3 are, therefore, quashed and it is held that the petitioner is liable to pay only the penalty of Rs. 250.
6. The writ application is accordingly allowed to the extent indicated above, but there will be no order as to costs.
A.K. Padhi, J.
7. I agree.