Case: State Of Madhya Pradesh And Ors Vs. Home Decorators And Finance (Pvt.) Ltd. And Anr

had dexterously prepared a panchanama at the spot. He determined the amount of tax recoverable on the said collections, and issued to the respondents two separate notices on July 9, 1974 demanding the tax along with the duty surcharge thereon for the collections made on July 7 and 8, 1974 respectively. The total amount so demanded by both the notice was Rs. 35, 429.76. 4. The respondents challenged the notices by a writ petition under Article 226 of the Constitution before the High Court. The High Court by the impugned decision held that the assessment of the tax made by the officer was arbitrary because, firstly, there was no allegation that the invitation cards which were issued were sold, and secondly, the subscription fee of Rs. 10 recovered from each member was not divided by 10 which it was necessary to do, for the entertainment tax could be collected only on Re 1 per year for the next 10 years. The High Court, therefore, allowed the writ petition and quashed the notices. It also appears that the respondents had paid Rs. 5000 in part payment of the amount demanded under the notices. The High Court, therefore, also directed the appellants to refund the said amount as being "exacted" from the respondents. 5. We are afraid, the High Court completely missed the crucial point and, therefore, misdirected itself. The admitted facts as stated above were that the respondents had collected in all Rs. 12 from each of members out of which Rs. 2 was non-refundable being the so called admission fee and Rs. 10 were refundable only after 10 years. The "members" were not issued the membership cards nor were they left either with any trace of their membership forms or receipts for the payments they had made. Instead they were handed over entrance slips during interval which were collected at the door. The result was that even if the "members" were to claim an entry for programmes, if any in future, they would not have been able to do so. As it happened further, in fact, no programmes were ever staged at any time thereafter. The so called "Nav Nirman Group" did not have any legal existence. It was an amorphous body. The rules and regulations framed for the said body further showed some interesting features as follows: "For the purpose of Prizes there shall be Five Sub-groups of one lakh members each. After every Sub-group of one lakh members there shall be total 4280 prizes divided into 20 half-yearly draws and valuing total amount of Rs. 5 lakhs. The date of the First Draw will be announced through Newspapers Every member, irrespective of whether he has received any prize(s) or not shall be entitled to the refund of his deposit of Rs. 10 after the maturity of the duration of group, i.e., 10 years, along with a bonus of Rs. 2 on surrender of the official Receipt-cum-Membership Evidence issued by the Company. Duration of the Group shall be commenced from the date of the First Draw For the purposes of Bumper Draw there shall be 50 Sub-Groups of 10, 000 continued members each and after every such sub-group there shall carry various valuable prizes to the tune of about Rs. 2, 50, 000. Members of incomplete sub-group of 10, 000 continued members shall be given an extra bonus of Rs. 25 in the shape of articles, the list of which shall be declared nearing maturity of the Group, instead of participating in Bumper DrawEvery member will be issued a receipt while being admitted as a member and the number of such receipt shall be his membership number also. No separate pass book will be issued. The receipt itself shall be treated as final and conclusive evidence of membership After the completion of First sub-group one lakh members the First Draw shall be conducted, but in case total membership of the sub-group does not attain the target necessary to form the sub-group before date of the draw (which shall be announced through Newspapers) then the remaining membership number of the sub-group shall be treated as the Companys membership numbers and any prize/benefit accruing through these numbers as a result of the draw shall remain the Companys property. The Company may allot such membership numbers subsequently to the new applicants for the remaining period with the subsequent benefits only. The same rule apply to every further sub-group of one lakh members Membership of the Group is for 10 years and cannot be cancelled or withdrawn by the member before maturity of the Group. Prizes and Film Star show are added incentive and not Part of the Scheme and are not binding on the Company under circumstance beyond control The management may change any article of the declared prize looking to the time and circumstances prevailing at the time of the particular draw The management of the Company reserves the right to add, alter, or amend the rules and regulations as and when necessary for the efficient and proper conduct of the group as well as in compliance with the government rules and regulations which may come in force hereafter and the same shall be binding on all the members." It will be apparent from the scheme that it was not meant for promoting music. It was a pure business proposition meant to collect money and earn profits, and it was to be used as a device to evade the entertainment duty. The receipts and/or the invitation cards were nothing but tickets for the show and only for one show, and were collected at the door. In the circumstances, whatever be the description given to the receipts/cards they were liable to the entertainment duty. The impugned notices were, therefore, properly issued by the appellants. We are, therefore, unable to accept the reasoning of the High Court that Rs. 10 collected by the respondents were the membership subscription or that the duty could not have been collected at a time on Rs. 10.

Decision (1 = appeal accepted, 0 = rejected): 1

Explanation:
1[ds]5. We are afraid, the High Court completely missed the crucial point and, therefore, misdirected itself. The admitted facts as stated above were that the respondents had collected in all Rs. 12 from each of members out of which Rs. 2 was non-refundable being the so called admission fee and Rs. 10 were refundable only after 10 years. The "members" were not issued the membership cards nor were they left either with any trace of their membership forms or receipts for the payments they had made. Instead they were handed over entrance slips during interval which were collected at the door. The result was that even if the "members" were to claim an entry for programmes, if any in future, they would not have been able to do so. As it happened further, in fact, no programmes were ever staged at any time thereafter. The so called "Nav Nirman Group" did not have any legalwill be apparent from the scheme that it was not meant for promoting music. It was a pure business proposition meant to collect money and earn profits, and it was to be used as a device to evade the entertainment duty. The receipts and/or the invitation cards were nothing but tickets for the show and only for one show, and were collected at the door. In the circumstances, whatever be the description given to the receipts/cards they were liable to the entertainment duty. The impugned notices were, therefore, properly issued by the appellants. We are, therefore, unable to accept the reasoning of the High Court that Rs. 10 collected by the respondents were the membership subscription or that the duty could not have been collected at a time on Rs. 10