R.S.A. No. 874 of 1986 1 IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH R.S.A. No. 874 of 1986 Date of Decision: 27.07.2010 1. Punjab State Secretary Excise and Taxation, Punjab Government, Civil Secretariat. 2. The Excise and Taxation Officer, Hoshiarpur. ... Appellants Versus Swarn Talkies Hoshiarpur Pvt. Ltd., Hoshiarpur, near bus stand Hoshiarpur through Amrik Singh son of Daulat Singh, Managing Director. ...Respondent CORAM: HON'BLE MR. JUSTICE SHAM SUNDER Present: Mr. A.S. Jattana, Additional Advocate General, Punjab, for the appellants. Respondent exparte. SHAM SUNDER, J. * * * * This appeal, is directed against the judgement and decree dated 04.11.85, rendered by the Court of Additional District Judge, Hoshiarpur, vide which, it accepted the appeal, against the judgement and decree dated 09.04.81, rendered by the Court of Sub Judge 1st Class, Hoshiarpur, dismissing the suit of the plaintiff. 2. The facts, in brief, are that, on 14.07.71, Hazara Ram, Assistant Excise & Taxation Officer, Hoshiarpur, inspected the R.S.A. No. 874 of 1986 2 premises of the plaintiff-cinema, and directed its owner, to deposit the entertainment tax @ Rs. 6/- per hundred occupied seats per show, w.e.f. 06.07.71. Thereafter, the owner of the plaintiff-cinema, deposited the show tax and submitted the requisite returns thereof, with the concerned department. However, on 07.10.74, W.C. Vashisht, Assistant Excise & Taxation Officer, inspected the premises of the plaintiff-cinema, and directed its owner, to deposit the arrears of entertainment tax, to the tune of Rs. 29,545.76/-, from 01.07.71 to 30.09.74 @ Rs. 8/- instead of Rs. 6/- per hundred occupied sets per show. Feeling aggrieved, the owner of the plaintiff-cinema, moved a representation, before the concerned authorities, that the aforesaid demand of entertainment tax was illegal, null and void, but to no avail. Ultimately, on 06.10.77, D.R. Jain, Excise & Taxation Officer, Hoshiarpur, exercising the powers of Assistant Collector 1st Grade, issued a demand notice, for the recovery of the aforesaid amount, to the plaintiff-cinema. It was stated that, the aforesaid demand notice, was violative of the mandatory provisions of Sections 7 and 8 of the Punjab Entertainment Tax (Cinematograph Shows) Act, 1954 (hereinafter to be called as the 'Act' only), and, Rule 17 of the Punjab Entertainment (Cinematograph Shows) Rules, 1954 (hereinafter to be called as the 'Rules' only). It was further stated that, from 01.07.71 to 30.09.74, the owner of the plaintiff-cinema, leased out the premises, to different persons, at a fixed rate of Rs. 6/- per hundred occupied seats per show, in pursuance of the directions of the R.S.A. No. 874 of 1986 3 concerned department. It was further stated that since the agreements with the previous lessees of the plaintiff-cinema, stood already terminated, the arrears of show tax, with regard to the excess amount of Rs. 2/- per hundred occupied seats per show, could not be recovered from it. The defendants, were many a time asked, to refrain, from recovering the arrears of entertainment tax, from the plaintiff, but to no avail. Ultimately, a suit for permanent injunction, was filed. 3. The defendants, put in appearance, and filed written statement wherein, they took up various objections, and contested the suit. It was pleaded that the proper court fee had not been paid. It was pleaded that the suit was time barred. It was further pleaded that, since the demand notice, directing the plaintiff-cinema, to deposit the arrears of entertainment tax, to the tune of Rs. 29,545.76/-, from 01.07.71 to 30.09.74, was issued, by the Excise and Taxation Officer, exercising the powers of Assistant Collector 1st Grade, Hoshiarpur, the Civil Court, had no jurisdiction, to decide the suit. It was further pleaded that, the requisite notice, under Section 80 CPC, was not served upon the defendants, before filing the suit. It was further pleaded that the suit was not maintainable, as the plaintiff-cinema, was neither a registered firm nor a registered company. It was stated that the earlier suit, under Order 9 Rule 8 CPC, bearing No. 239 of 1974, filed by the plaintiff- cinema, against the defendants, was dismissed, by the Court of Sub Judge 1st Class, Hoshiarpur, on 07.05.77. It was further stated that, as such, the suit of the plaintiff, being based on the same cause of action, R.S.A. No. 874 of 1986 4 was also liable to be dismissed, under Order 9 Rule 9 CPC. It was further stated that, Hazara Ram, Assistant Excise and Taxation Officer, Hoshiarpur, had inadvertently, directed the plaintiff-cinema, to pay show tax @ Rs. 6/- per hundred occupied seats per show, as he overlooked the notification No. S.O. 36 PAB/54 S. 3/71, vide which, the cinemas, falling in 'A' category of Municipal Committees, were required to be charged @ Rs. 8/- per hundred occupied seats per show. It was further stated that, however, later on, W.C. Vashisht, Assistant Excise and Taxation Officer, Hoshiarpur, rightly directed the plaintiff- cinema, to deposit the arrears of show tax @ Rs. 8/- per hundred occupied seats per show, as per the notification. It was admitted that the plaintiff-cinema, had been depositing the show tax @ Rs. 6/- per hundred occupied seats per show, from 01.07.71 onwards. It was further admitted that, on 06.10.77, D.R. Jain, Excise and Taxation Officer, Hoshiarpur, issued a demand notice, to the plaintiff-cinema, with regard to the recovery of the aforesaid arrears of show tax. It was further stated that, due opportunity of being heard, was afforded, to the plaintiff-cinema, before issuance of the demand notice. It was further stated that, notice under Rule 17, was served upon the plaintiff-cinema, on 18.09.74, and, as such, the assessment made for the recovery of show tax, to the tune of Rs. 29,545.76/-, was well within time. It was further stated that the plaintiff-cinema, was bound to pay the show tax @ Rs. 8/- per hundred occupied seats per show, as per the provisions of Section 3 of the Act. The remaining averments, were denied, being R.S.A. No. 874 of 1986 5 wrong. 4. On the pleadings of the parties, the following issues were struck:- (i) Whether the suit is barred under Order 9 Rule 9 CPC? OPD (ii) Whether the Civil Court has no jurisdiction to try the suit? OPD? 5. The following additional issues, were framed, by the trial Court, on 12.11.80:- (i) Whether the defendants are estopped from demanding or realizing the amount in dispute as alleged? OPP (ii) Whether the suit has been filed without serving a notice under Section 80 CPC on the defendant, if so its effect? OPD (iii) Whether the suit has been validly instituted by Amrik Singh on behalf of Swaran Takies? OPP (iv) Whether the suit has been filed within limitation? OPP (objected to) (v) Relief. 6. After hearing the Counsel for the parties, and, on going through the evidence, on record, the trial Court, dismissed the suit of the plaintiff. 7. Feeling aggrieved, an appeal was preferred by the plaintiff (now respondent), which was accepted, by the Court of Additional District Judge, Hoshiarpur, vide judgement and decree dated 04.11.85. 8. Feeling dissatisfied, the instant Regular Second Appeal, has been filed by the appellants. R.S.A. No. 874 of 1986 6 9. I have heard the Counsel for the appellants, and, have gone through the evidence and record of the case, carefully. 10. The following substantial questions of law, arise in this appeal, for the determination of this Court:- (i) Whether the first Appellate Court, on misreading and misappreciation of evidence, recorded perverse findings, that the appellants, were not entitled to recover the arrears of show tax, as the proper procedure, under the Rules, was not followed? (ii) Whether the first Appellate Court, recorded perverse findings, that permission for waiving the service of notice, under Section 80 CPC, was impliedly granted by the trial Court? (iii) Whether the first Appellate Court, recorded perverse findings, tha the suit, was not barred by limitation? 11. The Counsel for the appellants, submitted that, the trial Court, was right, in holding, that the suit, was barred by limitation. He further submitted that, even no requisite notice of two months, under Section 80 CPC, was served upon the appellants, before filing of the suit, nor any order, was passed, by the trial Court, to dispense with the same, and, as such, the suit, was not maintainable. He further submitted that proper procedure, was followed, by the appellants, for recovery of the arrears of show tax, but, the first Appellate Court, on account of misreading and misappreciation of evidence, as also the relevant provisions of the Act, fell into a grave error, in recording perverse findings, that the arrears of show tax, could not be recovered, as the R.S.A. No. 874 of 1986 7 proper procedure, had not been followed, under the Act and the Rules, framed thereunder. He further submitted that the judgement and decree of the first Appellate Court, being illegal, are liable to be set aside. 12. After giving my thoughtful consideration, to the contentions, raised by the Counsel for the appellants, in my considered opinion, the appeal deserves to be dismissed, for the reasons to be recorded, hereinafter. It is settled principle of law, that this Court, in the Regular Second Appeal, cannot interfere with the findings of fact, recorded by the first Appellate Court, until and unless, it comes to the conclusion, that the same were the result of misreading or misappreciation of evidence. First coming to the question, as to whether, the trial Court, impliedly dispensed with the requisite notice, under Section 80 CPC, or not it may be stated there that it was a suit for permanent injunction only. No doubt, the notice for the requisite period of two months, under Section 80 CPC, had not been served upon the defendants/appellants. The trial Court, however, granted interim- injunction, in favour of the plaintiff/respondent. Later on, the same, was modified. This all goes, to show that, though, no specific order, was passed, by the trial Court, dispensing with the requisite notice, under Section 80 CPC, yet, by granting the ad interim injunctive relief and modifying the same, in my opinion, the trial Court impliedly granted leave to the plaintiff, to file the suit without service of requisite notice, under Section 80 CPC. The findings of the Courts below, in this regard, being correct, are affirmed. R.S.A. No. 874 of 1986 8 13. No doubt, the trial Court, held that, the suit, was barred by time, whereas, the first Appellate Court, held that, it was not barred by time. By filing a suit for injunction, the plaintiff, challenged the legality and validity of the demand notice dated 06.10.77. The cause of action, thus, accrued, to the plaintiff, to file a suit for challenging the notice, when the same was issued. The plaintiff, filed the suit, on 26.09.78. Thus, the first Appellate Court, was right, in holding that, the suit, was filed within a period of limitation, from the date of accrual of the cause of action, to the plaintiff/respondent. The findings of the first Appellate Court, in this regard, do not suffer from any illegality or perversity, warranting the interference of this Court, but, on the other hand, the same, being correct, are affirmed. 14. Now coming to the question, as to whether, proper procedure, under the Act and Rules, was adopted, before issuance of the notice for the recovery of the arrears of show tax, from the plaintiff, or not. It may be stated here, that the same, was not followed, as would be discussed, hereinafter. The amount, had allegedly fallen due, to the plaintiff, on or before 30.09.74. Clauses (i) to (iv) of Section 7 and Section 8 of the Act, read as under:- “Section 7: - (i) Tax payable under this Act shall be paid in the manner hereinafter provided. (ii) Every person liable to pay tax under this Act shall furnish to the prescribed authority such returns as may be prescribed. (iii) A separate return shall be furnished R.S.A. No. 874 of 1986 9 every fortnight, one pertaining to the period from the first to the fourteenth of the month and the other for the period from the fifteenth day of the month to the end of the month. (iv) The return for each period shall be submitted within seven days of the close of the period to which it pertains:- Provided that the prescribed authority, for reasons to be recorded in writing, extend the time for furnishing of the returns by a period not exceeding thirty days. Section 8:- If no returns are furnished by the proprietor of a cinema premises, in respect of any period within the time allowed by Sub-Section (iv) of Section 7 or if the prescribed authority is not satisfied that the returns furnished are correct and complete, it shall, within twelve months after the expiry of such period, after giving the proprietor a reasonable opportunity of being heard, proceed in such manner, as may be prescribed to assess to the best of his judgement the amount of tax due from any particular proprietor.” 15. There is, no doubt, about the factum, that the proprietor of the plaintiff-cinema, did submit returns, in respect of the period, from 01.07.71 to 30.09.74, within the time allowed, according to clause (iv) of Section 7 of the Act. Admittedly, during this period, show tax, was deposited, at the rate of Rs. 6/- per hundred occupied seats per show. If the prescribed authority, was not satisfied with the correctness of the returns, furnished later on, in respect of the plaintiff-cinema, the amount of the actual tax, due from it, could be assessed, of course, in accordance with the provisions of Section 8 of the Act. The prescribed R.S.A. No. 874 of 1986 10 authority, was required, to assess the amount of actual show tax, due from the plaintiff-cinema, after giving to it, a reasonable opportunity of being heard, and, that too, within twelve months, after the expiry of the period, in relation to which, the return, was found to be not correct. Rule 17(1) of the Rules, is extracted hereunder, for the facility of reference:- (1) When it appears to the appropriate assessing authority to be necessary to make an assessment under Section 8 of the Act, in respect of a proprietor, he shall serve a notice in form PET-10 upon him:- (a) calling upon him to produce his books of accounts or other documents, which such authority wishes to examine together with any objection which the proprietor may wish to prefer and any evidence which he may wish to produce thereof; and (b) stating the period or the return period or periods, in respect of which assessment is proposed.” 16. No evidence, was adduced, on the record, that the assessing authority, had complied with the aforesaid provisions of the Act, and Rules, before the impugned notice, asking for the recovery of the disputed amount, as arrears of land revenue, was issued, to the plaintiff. It means that, no reasonable opportunity, was afforded, to the petitioner, before issuance of notice, regarding the recovery of the amount of show tax, as arrears of land revenue. Since the mandatory provisions of the Act and the Rules, framed thereunder, referred to above, were not followed, for the purpose of assessment of arrears of R.S.A. No. 874 of 1986 11 show tax, and no reasonable opportunity of being heard, was given, to the plaintiff/respondent, and, it was condemned unheard, the first Appellate Court, was, thus, right in holding, that the said notice, was bad, in law. The first Appellate Court, was also right, in holding, that the assessing authority, was not competent to revoke the assessment of the show tax, in respect of the plaintiff-cinema, after the expiry of twelve months, computed from the close of the period, in relation, to which, the show tax return furnished was found to be not correct. The findings of the first Appellate Court, in this regard, being based, on the correct reading and due appreciation of evidence, and law, on the point, do not suffer from any illegality or perversity, warranting the interference of this Court. The findings of the first Appellate Court, in this regard, are liable to be upheld. The submission of the Counsel for the appellants, in this regard, being without merit, must fail, and the same stands rejected. 17. The findings of fact, recorded by the first Appellate Court, on the aforesaid points, being based, on the correct reading and due appreciation of the evidence, and law, on the point, do not suffer from any illegality or perversity, and warrant no interference. The same, are liable to be upheld. The submission of the Counsel for the appellants, being without merit, must fail, and same stands rejected. 18. The substantial questions of law, depicted above, are answered, against the appellants. 19. For the reasons recorded above, the instant Regular Second R.S.A. No. 874 of 1986 12 Appeal, being devoid of merit, must fail, and the same is dismissed, with costs. 27.07.2010 (SHAM SUNDER) Amodh JUDGE