Entertainment Tax Officer, Hyderabad vs M/S. Geeta Enterprises

4. Here, we may advert to the basic facts which are very brief and undisputed. All the three respondents are engaged in the business of exhibiting films having taken out requisite licenses under the Andhra Pradesh Cinematographic Act and the Andhra Pradesh Entertainments Tax Act, 1939. The cinema theatres of M/s. Geeta Enterprises and M/s. Sreedevi 70 MM (respondents in SLP(C) No.9512/06 and SLP(C) No.11420/06 respectively) are situate in Chandan Nagar, Serilingampally. For financial years 2001-02 and 2002-03 both the respondents paid entertainment tax on slab basis in terms of Section 5 of the Act (as it was in existence at that time) by making applications in Form III and obtaining their respective permits in Form IV. Serilingampally, where the two theaters are situate, used to be a Grade III Municipality but by a Government Notification issued on 19.5.2001 it was upgraded as a selection grade municipality with effect from 18.5.2000, that is to say, during the period the two respondents were granted permission to pay their taxes on the basis of the slab system. Here, it may be noted that in terms of the table that was part of Section 5, cinema theatres situate in a selection grade municipality attracted a higher rate of tax than the one situate in a grade III municipality. Notwithstanding the upgradation of the local authority within which the two cinema theatres were situate the appellants went on making weekly payments of the tax 4 amounts as shown in their respective permits, at the rate relating to a grade III municipality. The Prescribed Authority issued notices dated 31.8.2004 to the two appellants raising demands of the differential tax amounting to Rs.10,19,875/- in case of M/s. Geeta Enterprises and Rs.11,85,863/- in case of M/s. Sreedevi 70 MM for the period of 18.5.2001 to 31.3.2002. The prescribed authority issued another notice dated 1.6.2005 making a demand of Rs.3,91,377/- against M/s. Geeta Enterprises for the period 4.4.2002 to 27.6.2002: against M/s. Sreedevi 70 MM a similar demand of Rs.95,820/- was made on the basis of a revised Form IV for the year 2002-2003 vide order dated 30.5.2005. M/s. Kumari Talkies, the respondent in SLP (C) No.21778/2006 was given a similar demand for the differential amount of tax by the prescribed authority on the ground that during the period of option the population of Kaikalur Gram Panchayat, in Krishna district, where the respondent's cinema theatre was situate had increased and had gone over 15,000.

12. In view of the discussions made above, we find and hold that the decision of the A.P. High Court in the case of Swamy Theatre did not lay down the correct law. The orders passed by the High Court in the writ petitions filed by the three respondents relying upon the decision in Swamy Theatre are accordingly set aside and it is held that the impugned demands did not suffer from any invalidity simply because those were raised after the period of option was over. All the writ petitions filed by the respondents in the High Court stand dismissed. In the result, the appeals are allowed.

13. It may, however, be made clear that this judgment finds and holds that the impugned demands did not suffer from invalidity because those were raised after the period of option was over. In case the respondents have any other grievances against the impugned demands it will be open to them to seek their remedies, if any is available, under the provisions of the Act.