1. Sri M. V. Veerendra Kumar, the petitioner, as the owner of a permanent cinema theatre called 'Lido' situated at Old Madras Road, Bangalore is eligible to taxes under the Karnataka Entertainments Tax Act, 1958 (Karnataka Act 30 of 1958) (hereinafter referred to as the Act) on the visitors that are admitted to different classes of that theatre.
2. On 1-5-1981, the Assistant Commercial Tax Officer, Mobile Squad-1, Bangalore as an officer authorised to perform the powers and functions or an Entertainment Tax Officer (hereinafter referred to as he ETO) under the Act inspected the theatre and found some excess admissions and other irregularities under the Act. On the very next day, one Ashok Kumar, the Manager of the theatre with the authority of the petitioner appeared before the ETO and expressed his readiness to compound the offences. Accepting that offer made by Ashok Kumar, the ETO has made an order on the same day (Annexure-D) levying a composition fee of Rs. 4,000/- which has since been paid by the petitioner. In this petition under Art. 226 of the Constitution, the petitioner has challenged the order dated 2-5-1981 (Annexure-D) of the ETO.
3. Among other grounds, the petitioner had urged that the ETO had no authority to inspect and compound the offences. But, at the hearing of the case Sri E. R. Indra Kumar, learned counsel for the petitioner, confines the challenge of his client only to the quantum of composition fee in excess of Rs. 2,000/- levied by the ETO.
4. Shri Kumar contends that the loss of taxes, if any, under the Act, did not exceed Rs. 20/- and that all that was open to the ETO under S. 13 of the Act was to impose a composition fee not exceeding double the amount of taxes evaded or a sum of Rs. 2,000/- whichever was greater and the excess of Rs. 2,000/- levied and collected was wholly unauthorised and illegal.
5. Smt. M. R. Vanaja, learned High Court Government Pleader, appearing for the respondents. in justifying the impugned order, urged that this is not (sic) a fit case in which this Court should decline to exercise its extraordinary jurisdiction in favour of the petitioner.
6. On the very statement recorded by the ETO on 1-5-1981 there was an excess of 7 persons in Rs. 5-20 class and one person in Rs. 4-00 class. Even assuming that the statement was correct. for purposes of this case. the loss of taxes under the Act to the State did not exceed Rs. 20/- as stated by Sri Kumar. Apart from this, the ETO states that there were other irregularities under the Act. Let me assume that everything stated by the ETO is correct for purposes of this case.
7. Section 13 of the Act that empowers composition of offences read thus:
'Composition of offences:- The prescribed authority may accept from any person who has committed or is reasonably suspected of having committed an offence against this Act, by way of composition of such offence-
(a) Where the offence consists of the failure to pay, or the evasion of any tax payable under this Act in addition to the tax so payable, a sum of money not exceeding two thousand rupees of double the amount of the tax payable, whichever is grater; and
(b) in other cases, a sum of money not exceeding two thousand rupees. Under this section it is open to an officer to collect the taxes that should have been paid or evaded and that if the amount of taxes that are not paid or evaded exceeds Rs. 2,000/- to collect a sum not exceeding double the amount of taxes not paid or evaded. But, in cases where the amount of taxes not paid or evaded so doubled does not exceed Rs. 2000/- then the officer is empowered to collect a sum not exceeding Rs. 2,000/- only. In either of the cases, an amount not exceeding greater of the two can be collected as composition fees.
8. Section 13 prescribes the permissible limits of composition fee to be collected by an officer. Any levy and collection of composition fee cannot exceed the maximum stipulated in S. 13 of the Act. Any levy and collection in contravention of S. 13 of the Act, would be without the authority of law and any agreement of a party thereto for the same, cannot validate it.
9. On the facts and circumstances of the case, the maximum composition fee that could have been levied and collected from the petitioner was Rs. 2,000 and no more. But, very strangely the ETO has levied and collected Rs. 4,000. In other words a sum of Rs. 2,000/- levied and collected from the petitioner was clearly unauthorised.
10. Sri Kumar also submits that this matter be finally settled by this Court by ordering the refund in excess of the maximum of Rs, 2,000/-. In this view, the levy and collection to the extent of Rs. 2000/- is upheld and refund for the excess only is granted.
11. A person who compounds an offence cannot normally challenge the composition nor the composition fee if the same is in conformity with the Act.
12. What is challenged by the petitioner is neither the composition of the offence nor the levy of fees in conformity with the Act. But, what is challenged by him is a levy and collection which is unauthorised by law. In this view, there are no circumstances to decline to exercise the jurisdiction of this Court under Art. 226 of the Constitution.
13. In the light of my above discussion, I allow this writ petition in part, quash the impugned order only to the extent it compounds in excess of Rs. 2,000/- and direct the respondents to refund the excess amount of Rs. 2,000 to the petitioner within 60 days from the date of receipt of this order.
14. Writ petition is disposed of in the above terms. But, in the circumstances of the case, I direct the parties to bear their own costs.
15. Let this order be communicated to the respondents within 15 days from this day. Let a copy of this order be also furnished to the learned Government Pleader within the same time.
16. Order accordingly.