Mahendra Pratap Singh S/O Narayan ... vs District Magistrate Raibareli & ...
2013 Latest Caselaw 1309 ALL

HIGH COURT OF JUDICATURE AT ALLAHABAD, LUCKNOW BENCH
 
 

Court No.24
 

 
Writ Petition No. 134 (M/B) of 2011
 

 
Mahendra Pratap Singh 		........		Petitioner
 

 
Versus
 

 
District Magistrate, Raibareli 
 
and another 				.........	Respondents
 

 
*******
 
Hon'ble Rajiv Sharma, J.

Hon'ble Arvind Kumar Tripathi (II), J.

Heard Sri Gopesh Tripathi, learned Counsel for the petitioner and Sri H.P. Srivastava, learned Additional Chief Standing Counsel.

Through the instant writ petition under Article 226 of the Constitution of India, the petitioner challenges the order dated 23.9.2010 passed by the District Magistrate, Raibareli, whereby petitioner was directed to pay Rs.39,400 towards delayed payment of entertainment tax from 2004-2005 to 2008-2009.

To appreciate the controversy involved in this writ petition, it would be necessary to notice the following facts :

Petitioner, who is the proprietor and owner of the Cable T.V. Network, namely, Vision Cable T.V. Network, is operating the cable and T.V. Network after obtaining permission from the District Magistrate, Raibareli. For carrying out the said business, petitioner is required to collect and pay entertainment tax under the U.P. Entertainment and Betting Tax Act, 1979 [hereinafter referred to as the "Act"].

In the year 2008, an assessment was made by the District Magistrate for payment of entertainment tax and on the basis of survey, the District Magistrate, vide order dated 24.7.2008, required the petitioner to pay Rs.2,45,970/- as entertainment tax along with penalty of Rs.20,000/-. Against the said order dated 24.7.2008, the petitioner preferred an appeal before the State Government.

The State Government, after hearing the parties, allowed the appeal of the petitioner partly vide order dated 30.1.2009 and set-aside the order dated 23.7.2008 passed by the District Magistrate and reduced the fine to the tune of Rs.5000/-from Rs.20,000/-. The District Magistrate was also directed to assess the tax liability of the petitioner on the basis of information given by the petitioner in his letter dated 1.5.2006.

According to the petitioner, he had already deposited Rs.5000/- as penalty and also deposited Rs.80,600/- on different dates and nothing was remained to be paid but during the audit, an objection was raised by the audit department and on the basis of the said audit objection, the impugned order has been passed by the District Magistrate, requiring the petitioner to pay Rs.39,400.00 from the period 2004-2005 to 2008-2009 as entertainment tax.

Hence the instant writ petition.

Learned Counsel for the petitioner has submitted that on account of loss in cable business and after receiving assessment order dated 24.7.2008, the petitioner has stopped the business in the month of August, 2008. He submits that in compliance of the order dated 30.1.2009, petitioner has submitted an application on 13.2.2009 mentioning therein his liability of Rs.72,500/- and further prayed that visualizing his miserable financial condition Rs.18,000/- may be accepted and for rest of the amount, he may be allowed sometime, to which petitioner was permitted. Accordingly, petitioner deposited entertainment tax as Rs.18,000 on the same day, Rs.20,000/- on 30.3.2009, Rs.30,000/- on 6.7.2009, Rs.4500 on 13.7.2009 and Rs.8,100 on 24.8.2009. Accordingly, the petitioner has cleared entire dues in the month of August, 2009 but even then, the impugned order has been passed.

Elaborating his submission, learned Counsel for the petitioner submits that prior to passing of impugned order dated 23.9.2010, which was served on the petitioner on 31.12.2010, no notice of demand of interest was ever served upon the petitioner.

Per contra, Sri H.P. Srivastava, learned Additional Chief Standing Counsel submits that after passing of order dated 30.1.2009 by the appellate authority, on the basis of self-assessment for the period w.e.f. May, 2006 to August, 2008, the petitioner deposited an amount of Rs.80,600.00 through different challans. However, the petitioner has failed to deposit the interest on the defaulted amount of entertainment tax amounting to Rs.39,400.00 as required under Rule 11 of the Uttar Pradesh Cable Television Network (Exhibition) Rules, 1997 [hereinafter referred to as the "Rules 1997"].

Elaborating his submission, Sri Srivastava submits that pursuant to the order dated 30.1.2009 passed by the appellate authority, the District Magistrate, Raibareli, vide order dated 23.9.2010, issued a demand notice and directed the petitioner to deposit the entertainment tax for 90 cable connections for the period w.e.f. May, 2006 to August, 2008 amounting to Rs.75,600.00 plus penalty amounting to Rs.5,000.00 plus 2 per cent interest amounting to Rs.39,400.00 over the defaulted amount of entertainment tax as per Rule 11 of the Rules, 1997. It was also directed that the said amount be deposited in the Government Treasury. He further submits that under notice dated 23.9.2010, no amount has been included which the petitioner has previously paid. Thus, there is no illegality and infirmity in the impugned order.

Having heard learned Counsel for the parties and perusing the records, we are of the view that the short question that arises for consideration is whether interest can be demanded on delayed payments of entertainment tax ?.

Section 11 of the Rules 1997 provides as under :

"11. Payment of Tax.- (1) The Proprietor of cable Television shall deposit the amount of Entertainment Tax into Government Account in the State Bank of India conducting Government business or the Treasury, as the case may be within one week from the last day of every month, failing which simple interest at the rate of two per cent per month shall became due and be payable on the unpaid amount with effect from immediately following the last date prescribed till the date of payment of such amount :

Provided that where the payment is made by cheque, which shall invariably be drawn on local Nationalised or Schedule Bank the same shall be handed over to the State Bank or the Treasury as the case may be, within two days from the ends of the period to which payment relates.

(2) The Proprietor of a Cable Television shall, immediately after tax has been paid, intimate the Treasury Challan number and the date of deposit to the District Entertainment Tax Officer and shall also keep the depositor's copy of the treasury Challan received bank after deposition the Tax in a file strictly in chronological order and shall, on demand, produce the same before an inspection officer. "

From perusal of the above provision, it reflects that payment of entertainment tax under Section 11 of the Rules 1997 has to be done within one week from the last day of every month, failing which simple interest at the rate of 2% per month shall become due and be payable on the upaid amount with effect from immediately following the last date prescribed till the date of payment of such amount. It would be also proper to notice that if the tax due according to the return or the tax assessed under the Rules or any instalment thereof, is not paid, within the time specified, the proprietor shall pay by way of interest in addition to the amount of such entertainment tax, additional tax and show tax at the rate of two rupees for every hundred rupees or part thereof such amount for each month or part thereof after the date specified for its payment. In the instant case, the petitioner has not paid the entertainment tax as per Section 11 of the Rules 1997.

Rule 16 of Rules 1997 provides that :

"16. Notice for recovery of tax :- Where any sum due on account of tax under these rules has not been paid within the specified period by a Proprietor of a Cable Television, who is liable to make the payment, the District Magistrate shall, before issuing an order for recovery of the same as arrears of land revenue under Section 34 of the Act, issue a notice of demand calling upon such person to make the payment within the specified time."

From perusal of the above provision of Rule 16 of Rules, 1997, it reflects that prior to issue an order for recovery of the Entertainment Tax as arrears of land revenue, the District Magistrate shall issue a notice of demand calling upon person to make the payment within a specified time. Thus, it is evident that installment of entertainment tax, if not paid within the time specified for such payment, the proprietor is liable to pay interest calculated at such rate as may be prescribed in additional to such tax or penalty or installment. Thus, it is clear that there is a liability to pay interest on belated payment of installment

In Nagarathinam Ammal v. Deputy Commercial Tax Officer reported in [1987] 67 STC 464, a Division Bench of the Madras High Court dealt with the assessability of interest on penalty and delayed payment of tax. In that case, the demand of tax was made pursuant to the original order of assessment. That demand was already complied with. Later, a further demand was raised as penalty due in respect of the same assessment year. The writ petition filed by the appellant challenging the demand, was dismissed. On appeal, a Division Bench held that the dealer was liable to pay penalty if he failed to pay the tax in compliance with the notice of assessment. Referring to sub-section (3) of section 24 of the Tamil Nadu General Sales Tax Act, 1959 (as it then stood), the court held that unless there was fresh notice, there could be no liability on the part of the firm. As the appeals against the assessment orders were partly allowed, a fresh notice of demand had to be issued, so, it was only when the assessee failed to comply with the fresh notice, that he could be called a "defaulter" and before issuance of such a fresh notice, there could be no liability on the dealer for payment of penalty under the provisions of the Act and that the department was not entitled to raise the rate of penal interest relying on the amendment made in 1977. It was held that liability to pay penalty or interest was incurred with reference to the assessment year and the date of demand and default and not with reference to the assessment year and the date of demand and default and not with reference to any subsequent period. But in that case levying of penalty or making demand to pay interest itself was not upheld.

In Baidyanath Ayurved Bhawan (P) Ltd. Vs. Excise Commissioner, U.P. & Ors. reported in 1971 SCR (2) 590, the Apex Court has laid down the principle of interpretation of a taxing provision as follows :

"In interpreting a taxing provision, the courts should not ordinarily concern themselves with the policy behind the provision or even with its impact. In a taxing statute one has to look at what is clearly said. There is no room for any intendment. There is no equity about a tax. There is no presumption as to a tax. Nothing is to be read in, nothing is to be implied. One can only look fairly at the language used."

If we read Rule 11 of the Rules 1997 in the light of the principles noted above, it becomes evident that the interest can be levied at the rate specified therein from the date the instalment became due but was not paid accordingly.

From the above discussion it follow that unless there is specific authority to pass retrospective legislation, the subordinate legislation cannot be given effect to retrospectively. The subordinate legislation could be said to have retrospective effect, in the absence of specific words giving retrospective effect, if the words are capable of being construed as retrospective; the mere fact that it affects the period earlier to the passing of the rule, cannot be a ground to hold the subordinate legislation bad in law. In the instant case, the liability to pay interest existed even earlier to the impugned demand. The quantification of interest was provided under the rule by prescribing the rate of interest in Rule 11 which was made after period in question. But the rule read in that context provides that the interest would be payable from the date the tax became due but was not paid. Thus, it is clear that the impugned demand levying interest on delayed payment is valid.

So far as the submission made on behalf of the petitioner that imposition of penalty is in violation of the principles of natural justice, is concerned, we find from the orders passed by the authorities that the appellants had given incorrect information with regard to total number of connections given by them. The requisite information was not provided by the petitioner in spite of issuance of notices and requests made to the petitioner. In fact, notice had been issued before imposition of penalty to the petitioner as it can be seen from the orders passed by the authorities but in spite of grant of sufficient opportunities, the petitioner did not give correct information and made an effort to evade payment of Entertainment Tax by making wilfull mis-statements and suppression of facts. In the circumstances, it cannot be said that the imposition of penalty is in violation of the principles of natural justice.

For the aforementioned reasons, we dismiss the writ petition, but, having regard to the facts and circumstances of the case, we make no order as to costs.

Order Date : 25.4.2013

Ajit/-