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Odeon Mani Tiraiarangam, Represented by Its Partner, M. Rajasekharan and ors. Vs. the State of Tamil Nadu, Represented by Secretary to Government Commercial Taxes and Religious Endowments Department and ors. - Court Judgment

LegalCrystal Citation
SubjectOther Taxes
CourtChennai High Court
Decided On
Reported in(1983)2MLJ392
AppellantOdeon Mani Tiraiarangam, Represented by Its Partner, M. Rajasekharan and ors.
RespondentThe State of Tamil Nadu, Represented by Secretary to Government Commercial Taxes and Religious Endow
Cases ReferredIn Visakhapatnam Municipality v. K. Nukaraju
Excerpt:
- - 2055 of 1978, the petitioners in these petitions as well attack the said g. may, 1978 and the notification made thereunder clearly declare 12 panchayats specified in the schedule thereto, as forming part of the city of madias' with effect on and from the 1st june, 1978. this g. and the notification ara bad. where an act confers a power to make any rules or by-laws, or to issue notifications or orders, the power shall be construed as including a power exercisable in the like manner and subject to the like consent and conditions, if any, to rescind, revoke, amend or vary the rules, by-laws, notifications or orders. in these circumstances, the supreme court held that unless there is an amendment to the fiscal act the benefits enjoyed under the fiscal act cannot be taken away. once an.....p.r. gokulakrishnan, c.j.1. this batch of writ petitions question validity of the application of sections 4, 4-a, 4-b and 4-c of the tamil nadu entertainments tax act, 1939 and section 3 of the tamil nadu local authorities finance act, 1961, with effect from 1st june, 1978, to the various theatres which according to the petitioners herein are only liable to pay the compounded rate of tax under sections 5-a and 5-b of the tamil nadu entertainments tax act.2. since the prayer involved is the same in all these writ petitions and the question involved relates to the payment of entertainment tax at the compounded rate under sections 5-a and 5-b, we can usefully refer to the facts in w.p. no. 2505 of 1978. the petitioner in w.p. no. 2505 of 1978 is the licencee of a theatre called 'theagaraja.....
Judgment:

P.R. Gokulakrishnan, C.J.

1. This batch of writ petitions question validity of the application of Sections 4, 4-A, 4-B and 4-C of the Tamil Nadu Entertainments Tax Act, 1939 and Section 3 of the Tamil Nadu Local Authorities Finance Act, 1961, with effect from 1st June, 1978, to the various theatres which according to the petitioners herein are only liable to pay the compounded rate of tax under Sections 5-A and 5-B of the Tamil Nadu Entertainments Tax Act.

2. Since the prayer involved is the same in all these writ petitions and the question involved relates to the payment of entertainment tax at the compounded rate under Sections 5-A and 5-B, we can usefully refer to the facts in W.P. No. 2505 of 1978. The petitioner in W.P. No. 2505 of 1978 is the licencee of a theatre called 'Theagaraja Talkies' in Thiruvanmiyur. He is running a theatre for over ten years in that place. Originally, he was paying the taxes under Sections 4, 4-A and 4-B of the Tamil Nadu Entertainments Tax Act and under Sections 3(1)(a), 3(1)(b) and 4-C of the Tamil Nadu Local Authorities Finance Act. While so, the Government of Tamil Nadu amended the Tamil Nadu Entertainments Tax Act by Ordinance V of 1977 promulgated on 2nd December, 1977. The amendment was brought into force from 26th December, 1977. The Ordinance was subsequently replaced by Act V of 1978, which received the assent of the Governor on 20th January, 1978. As per Section 1(2) of the said Act V of 1978, the Act was deemed to have come into force as and from 26th December, 1977. By virtue of the said Act V of 1978, Sections 5-A and 5-B were introduced into the main Act.

3. Section 5-A of the main Act provides for levy and payment of a tax ranging from 20 to 27Yz per cent, of the gross collection capacity for every show in respect of permanent, semipermanent and temporary touring theatres in certain specified local areas. The gross; collection capacity has been explained to mean the notional aggregate of all payments for admission for a show inclusive of all taxes and surcharges, if all the seats or other accommodation available in the theatre were occupied by spectators. 'The local area covered are Municipalities second grade, Municipalities third grade and selection grade, Panchayat Towns, other Panchayat Towns, and Panchayat Villages.. Under Section 5-C, the tax the under Sections 5-A and 5-B will be in lieu of other taxes under the Act and the (Tamil Nadu Local Authorities Finance Act, 1961.

4. Since the petitioner's theatre is located in Thiruvanmiyur Panchayat, he exercised his option for pay tax under Section 5-B on a consolidated basis per week at the rate of 19% of the gross collection capacity per show multiplied by 16, irrespective of the actual number of shows held by him. This option was permitted under Section 5-B (3) by the second respondent, and accordingly the petitioner has been paying Rs. 4,517 every week to the Entertainment Tax Officer. According to the petitioner, this option was permitted during the financial year 1978-79 and as per Section 5-B (5) would continue to be in force till 31st March 1979, which was the end of that current financial year.

5. While so, the State Government, purporting to exercise power under Section 3(9) of the Madras City Municipal Corporation Act, 1919, issued a notification in G.O. Ms. No. 190, 29th May, 1978 declaring that certain areas comprised within the village and town Panchayats specified in the Schedule to the notification, shall be included within the Madras City limits and would form part of the city of Madras with effect on and from 1st June, 1978. Following this, the Entertainment Tax Officer has issued a circular, dated 1st July, 1978 informing the exhibitors that:

Cinematograph exhibitions held in the erstwhile ordinary panchayat towns and panchayat villages will be liable to tax under Sections 4, 4-A, 4-B and 4-C of the Tamil Nadu Entertainments Tax Act, 1939, and the provisions of the Tamil Nadu Local Authorities Finance Act, 1961 with effect from 1st June, 1978, and not under Section 5-B of the Tamil Nadu Entertainments Tax Act.

The second respondent has issued a further notice to the petitioner, dated 1st July, 1978 requiring him to submit revised daily collection reports for the weeks ended 4th June, 1978 ; 11th June, 1978; 18th June, 1978 and 25th June, 1978 along with the tax or taxes due thereon. The demand was retrospectively given effect to as and from 1st June, 1978. Thus, according to the petitioner, the facility accorded to the exhibitors under Sections 5-A and 5-B was suddenly withdrawn with retrospective effect as and from 1st June, 1978 The petitioner claimed that his rights are violated and hence he is aggrieved. The petitioner claimed that his theatre is still in the panchayat area' and in the absence of any notification under Section 3(2)(c)(ii) of the Tamil Nadu Panchayats Act (XXXV of 1958), cancelling the notification under Section 3(1), thereof declaring the area as 'Panchayat', the area in which his theatre is situate is still a Panchayat, and therefore, he is entitled to pay the compounded tax under Section 5-B of the Tamil Nadu Entertainments Tax Act. In any event, according to the petitioner, under Section 5-B (5) of the Tamil Nadu Entertainments Tax Act, the concession shown must enure to his theatre till the financial year ending 31st March, 1979. Therefore, it was claimed that the circular, dated 1st July, 1978 demanding with retrospective effect the entertainment tax under Sections 4, 4-A, 4-B and 4-C of the Tamil Nadu Entertainments Tax Act is ultra vires Section 5-B of the same Act.

6. It was further submitted by the petitioner that he was paying the compounded tax in accordance with Section 5-B even after 1st June, 1978. The Entertainment Tax Officer (second respondent) it is claimed, would not be competent to seek to levy tax otherwise than under Section 5-B on a retrospective basis.

7. The petitioner further submitted that the State Government (first respondent) has no power to expand the area of the city of Madras by issuing a notification under Section 3(9) of the Madras City Municipal Corporation Act, 1919. It was claimed that Section 3(9) does not confer any power upon the State Government and therefore, the expansion of the City of Madras by including the area in which the petitioner's theatre is situate by G. O. Ms. No. 790 is invalid and ultra vires Madras City Municipal Corporation Act.

8. The petitioner further claimed that the power conferred under Section 3(9) of the Madras City Municipal Corporation Act, 1919, is without any guidelines and therefore, the provision is violative of Articles 245 and 14 of the Constitution of India.

9. It was further contended that even assuming that the State Government has power under Section 3(9) of the Madras City Municipal Corporation Act, to issue the impugned notification, the same will have effect and validity only if there is a corresponding notification under the Tamil Nadu Panchayats Act, 1958, derecognising the village or town as a 'panchayat' and therefore, the G.O. Ms. No. 790, dated 29th May, 1978 is nan est in the eye of law.

10. It was submitted that the area in which the petitioner's theatre is situate still continues to be a panchayat and it has not changed its character for the purpose of levy of tax, even though, under Section 3(9) of the Madras City Municipal Corporation Act, the area was annexed to the city area. The action of the State Government in seeking to levy entertainment tax, show tax and surcharge on the old basis as per the system prevailing prior to 26th December, 1977, in respect of the petitioner, while continuing the new system under Sections 5-A and 5-B in respect of similar persons in other Panchayat towns and panchayat villages, has no nexus to the object sought to be achieved by the introduction of the new system of taxation and therefore the more onerous and oppressive scheme comprised in Sections 4, 4-A, 4-B and 4-C of the Tamil Nadu Entertainments Tax Act, is discriminatory and violative of the petitioner's fundamental rights under Article 14 of the Constitution of India. The reverting back to the old system of collection of tax has no nexus to the object sought to be achieved and it will only create unnecessary hardship to the petitioner without any corresponding benefit to the respondents. The petitioner seems to have committed himself to various distributors on the fervent hope that Section 5-B alone is applicable for collection of entertainment tax. Since the second respondent held out that section S-B alone is applicable to the petitioner's theatre, he has made commitments with various distributors on that promise and therefore, the second respondent cannot revert back to the old system of collecting entertainment tax in respect of his theatre.

11. Finally, the petitioner stated that no advance notice had been given to him before reverting back to the old system of levy and this was in gross violation of the principles of natural justice.

12. On these allegations, the petitioner prayed for the issue of a writ of mandamus, or any other appropriate writ, order or direction in the nature of a writ of mandamus, forbearing the respondents from in any way giving effect to or enforcing the circular notice of the second respondent in Re. No. 7093 77-A4, dated 1st July, 1978 in so far as the petitioner is concerned.

13. Similarly, the areas in which the cinema theatres concerned in the other writ petitions are situate, have been declared in the said G.O. Ms. No. 790, dated 29th May, 1978 as forming part of the city of Madras. As a consequence demand in respect of tax payment under Sections 4, 4-A, 4-B and 4-C of the Tamil Nadu Entertainments Tax Act came to be issued by the respective Entertainment Tax Officer. On similar grounds as those in W.P. No. 2055 of 1978, the petitioners in these petitions as well attack the said G.O. Ms. No. 790 and the consequent demand made by the respective Entertainment Tax Officer.

14. In the counter-affidavit filed by the respondents it was submitted that the petition theatre came within the 'sity area' and so the Entertainment Tax Officer has issued the notice under Sections 4, 4-A, 4-B and 4-C of the Tamil Nadu Entertainments Tax Act. It was contended that the petitioners should exhaust the remedy provided under the Act before coming to Court by way of writ petitions and on this ground, the writ petitions will have to be dismissed. Once the area remained no longer as one where the compounded assessment would apply, it is just and necessary that appropriate rate should be levied. Irrespective of the fact whether the earlier declaration under the Tamil Nadu Panchayats Act, 1958 was amended or not, the areas in question became part of the City of Madras, from the notified date, vis., 1st June, 1978. Hence the Entertainment Tax Officer has no option but to apply the appropriate rate leviable for that area. The Government issued the notification for the inclusion of the areas in which the petitioners' theatres are situate, into the City of Madras after elaborate preparations and the petitioners should have been on guard to do the needful at the proper time and before the appropriate forum.

15. As regards the applicability of Section 5-B (b), the respondents submitted that the Entertainment Tax Officer cannot levy a different rate of tax in view of the specific notification that the areas in which the petitioners' theatres are situate form part of the City of Madras as and from 1st June, 1978. The said notification was issued on 29th May, 1978 and was known to the public in time.

16. The respondents further submitted that there is no need for a separate deletion of the areas in question from the Tamil Nadu Panchayats Act, when once a notification has been issued under the City Municipal Corporation Act. Upon such notification, the areas automatically come within the fold of the 'city of Madras'. The Government in their preliminary notice issued in G.O. Ms. No. 312, Rural Development and Administration, dated 3rd March, 1978, made it clear that if the Panchayats are eventually included within the Madras City Corporation limits those Pancha yats would cease to exist as such on and from the date of the inclusion of the Panchayats within the Madras Corporation by virtue of the provision in Section 1(2) of the Tamil Nadu Panchayats Act. In view of this according to the respondents, the issue of another notification canceling any orders issued under Section 3(1) of the Tamil Nadu Panchayate Act by the appropriate authority declaring a particular area as town panchayat, does not arise.

17. The respondents submitted that the Government have ample power to issue a notification under Section 3(9) of the Madras City Municipal Corporation Act and once an area is declared to form part of the City, automatically the benefits under Sections 5-A and S-B of the Tamil Nadu Entertainments Tax Act are not available to the area brought under the 'city' limits. The mere fact that some other area still enjoys the benefits under the Act cannot be taken to be a discrimination, since there is reasonable classification of the areas for enjoying the benefits under the Tamil Nadu Entertainments Tax Act.

18. According to the respondents, the Panchayats concerned were given reasonable opportunity for showing cause against their inclusion within the Gty limits. Representations received were considered and then only the areas were included in the Madras City Corporation limits. It was submitted that there are absolutely no merits in the writ petitions and the petitioners are legally liable to pay the tax as per Sections 4, 4-A, 4-B and 4-C of the Tamil Nadu Entertainments Tax Act. On the above contentions, the respondents prayed that the writ petitions be dismissed withl costs.

19. Mr. V.P. Raman, learned Counsel appearing for the petitioners in these writ petitions, submitted that G.O. Ms. No. 690 is not valid since it is in excess of the powers conferred upon the State Government under the Municipal Corporation Act. According to him, the Panchayats specified in G.O.Ms. No. 790 were declared 'Panchayats' by different notifications and by different legislations, and until they are denotified, they cannot form part of the City of Madras by virtue of the G.O. passed under the Madras City Municipal Corporation Act. Even if the said G.O. is valid, it can be valid only for the purpose of the Madras City Municipal Corporation, Act. Such G.O. cannot automatically amend other statutes and particularly a fiscal statute such as the Tamil Nadu Entertainments Tax Act. The learned Counsel added that even as on date, it is the Collector of Chengalputtu, who is the licensing authority, that the theatres are semi-permanent ones which cannot be; licensed within the city limits and that the tax authorities and police authorities are from Chengalpattu district. The learned Counsel further submitted that by G.O. Ms. No. 790 even though an area has been brought within the city limits, it cannot enure for the benefit of the Tamil Nadu Entertainments Tax Act. Finally Mr. V. P. Raman would submit that since the petitioners have opted to pay tax under Section 5-B of the Act, that option is valid and current till the end of that financial year by virtue of section S-B (5) and the impugned circulars cannot override that option.

20. Mr. Kanakaraj, learned Governments Pleader, submitted that Section 3(9) of the Madras Gty Municipal Corporation Act gives sufficient power to the Government to notify an area as forming part of the City of Madrast from time to time and such power can be spelt out from Sections 3(5) 13, 15 and 22 of the General Clauses Act. Once the power is there either to include or exclude a particular area, it does not matter whether the power is elaborate or skeletal. According to the learned Government Pleader, the Tamil Nadu Entertainments Tax Act is clear to the effect that particular levy of tax will apply to the particular area mentioned therein and once an area comes within the particular area mentioned in the fiscal Act, automatically the levy for that area is attracted. The learned Government Pleader also refuted the arguments on behalf of the appellants on the other aspects of the case which we will be considering in the succeeding paragraphs.

21. G.O. Ms. No. 790, Rural; Development and Local Administration, dated 29th; May, 1978 and the notification made thereunder clearly declare 12 Panchayats specified in the Schedule thereto, as forming part of the City of Madias' with effect on and from the 1st June, 1978. This G.O. was issued under Section 3(9) of the Madras. City Municipal Corporation Act, 1919. Clause (9) of Section 3 aforesaid, reads as follows:

City of Madras or 'city' means the area declared by the State Government by notification to be the City of Madras, but excludes the Fort St. George with the glacis.

It is the contention of Mr. V.P. Raman that the Panchayats in which the petition theatres are situate were declared as 'panchayats' under different notifications under the Tamil Nadu Panchayats Act and unless they are excluded from that Act, there cannot be any valid declaration under Clause (9) of Section 3 of the Madras City Municipal Corporation Act. In other words the learned Counsel submitted that there is no denotification in regard to Thiruvanmiyur and other panchayats. concerned in these petitions, without which the G.O. in question cannot be issued.

22. To substantiate his argument, the learned Counsel would point out Section 2(9) of the Madurai City Municipal Corporation Act, 1971, which reads as follows:

'City of Madurai' or 'city' means the local area comprised in the Madurai Municipality and includes any local area which after the commencement of this Act, is included in the City but does not include any local area which after the commencement is excluded from the city.

Section 3(4) of the Madurai Municipal Corporation Act reads as follows:

4. The Government may, by notification, declare their intention--(a) to exclude from the city any local area comprised therein and defined in such notification; or (b) to include within the City any local area in the vicinity thereof and defined in such notification:Provided that no cantonment shall be included within the City.

Mr. V.P. Raman, states that there is no analogous provision in the Madras City Municipal Corporation Act, such as Sub-section (4) of Section 3 of the Madurai Municipal Corporation Act. Under the Madurai City Municipal Corporation Act, the Government has been given power to exclude or include any local area from or within the city limits. In the absence of such a power in relation to Madras City and in the absence of denotifi-cations of the concerned Panchayats in the Panchayat Act, according to Mr. V.P. Raman, the G.O. and the Notification ara bad.

23. Mr. Kanakaraj pointed out that Section 3(9) of the Madras City Municipal Corporation Act is wide in its scope as to take in the power to include or exclude from the city limits any area. The learned Government; Pleader, to substantiate his contention, would point out certain provisions in the Madras General Clauses Act.

24. Section 3(5) of the Madras General Clauses Act reads as follows:

'City of Madras' shall mean such local area as is declared from time to time to be the City of Madras under any Act for the time being in force relating to the municipal affairs of such city.

Section 13 of the Madras General Clauses Act states:

Where an Act confers a power to make any rules or by-laws, or to issue notifications or orders, the power shall be construed as including a power exercisable in the like manner and subject to the like consent and conditions, if any, to rescind, revoke, amend or vary the rules, by-laws, notifications or orders.

Section 22 of the Madras General Clauses Act states:

When, by any Act any Government is empowered to extend or apply an Act or any provision of an Act to any place in, or to any portion of, the State, the Government may, in any order extending or applying such Act or provision in a subsequent order, notify the time at which the same shall come into force in the place or portion of the State to which it is so extended or applied; and, unless it is otherwise provided in the Act, the Government may, by notification in the Official Gazette, from time to time postpone the time at which the Act or provision shall' come into force in such place or portion of the State or cancel the order for extending or applying the same to such place or portion of the State; provided that no order postponing the time at which an Act or provision shall come into force, or cancelling an order for extending; or applying the same, shall be made after the Act or provision has actually come into force in the place or portion of the State to which such order relates.

From the above, provisions of the Madras General Clauses Act, read along with Section 3(9) of the Madras City Municipal Corporation Act, we would see that once the power is there under a Statute, for the Government to declare by notification any area to be the City of Madras, that power will definitely give rise to the State Government either to include in or exclude from the city limits any area. It does not matter whether the power is elaborate or skeletal.

25. In Managiri Village Panchayat v. Government of Tamil Nadu : (1975)1MLJ107 this Court had occasion to consider whether an area included in a Panchayat has to be first excluded from Panchayat before it is taken into the fold of a 'city municipal corporation'. No doubt that case arose in respect of the Madurai city which is governed by the Madurai City Municipal Corporation Act. The facts of that case are as follows:

A Corporation charged with the Municipal Government of the City of Madurai to be known as the Municipal Corporation of Madurai came into existence under the provisions of the Madurai City Municipal Corporation Act, 1971. The Government of Tamil Nadu issued a notification proposing to include the areas mentioned in the appendix to the Notification, within the city of Madurai. There were representations from different Panchayats and Panchayat Unions affected by the proposal. After considering the representations, the Government issued a notification under Sub-section (6) read with Sub-section (7) of Section 3 of the Act, including the areas specified in the annexure to the notification within the jurisdiction of the Madurai Municipal Corporation. The Presidents of the affected Panchayats in challenging the notifications contended that the areas in question should first be excluded from the Panchayats under the provisions of the Panchayats Act and there-alter alone they could be included with-in the jurisdiction of the Madurai City Municipal Corporation under the provisions of the Tamil Nadu Act XV of 1971, and as the Government had not taken any such steps, the impugned notifications were not valid.

Mr. V.P. Raman submitted that in the case referred to above the areas were in respect of the Madurai City Municipal Corporation Act, wherein the power to exclude or include an area from the city is given to the Government and that procedures have also been laid down under Sub-sections (5) and (6) of Section 6 of the said Act, but that regarding the Madras City Municipal Corporation Act, no such procedure or power is given.

26. We have already seen that under the Madras General Clauses Act, the power which vests with the State Government under Section 3(9) of the Madras City Municipal Corporation Act is sufficient to include within or exclude from the Madras City Municipal Corporation limits, any area. On facts, it is clear that before including the panchayats, in question within the city area under G.O. Ms. No. 790, the Panchayats concerned were required to make representations and the procedures contemplated under Sub-sections (5) and (6) of Section 3 of the Madurai City Municipal Corporation Act have been followed. When especially the power of the Government can be spelt out to include within or exclude from the 'city' any area, no prejudice is caused to the Panchayats concerned, since the Panchayats were given opportunity to represent their case against the inclusion before the notification under the G.O. was issued.

27. Ismail, J. (as he then was), in the above case, gave the ruling that it could not have been in the contemplation of the statute that the process of exclusion should be first under the Panchayats Act and thereafter repeated or duplicated under the Madurai City Municipal Corporation Act. This decision was affirmed by a Bench of our Court in Managiri Village Panchayat v. Government of Tamil Nadu : (1975)1MLJ265 . The Bench held:

The scope of the Madurai City Municipal Corporation Act and that of the Tamil Nadu Panchayats Act are entirely different. While the Madurai City Municipal Corporation Act makes provision for including local area in the Municipal Corporation area, the Tamil Nadu Pandhayats Act restricts itself to forming town panchayats and village panchayats and adjusting their jurisdiction. There is no overlapping and the requirements of the Panchayats Act need not be fulfilled when a Municipal Corporation is constituted under the Madurai City Municipal Corporation Act, 1971.

28. Inasmuch as we have found that the purport of both the Madras City Municipal Corporation Act and the Madurai City Municipal Corporation Act is the same, the resasoning given in the decision mentioned above would squarely apply to the facts of this case.

29. The next argument advanced by Mr. V.P. Raman is that for the purpose of the, Tamil Nadu Entertainments Tax Act, which is a fiscal enactment, the areas in which the theatres are situate, would be deemed to be continued in the Panchayat areas alone. We. can now look into the relevant provisions in the Tamil Nadu Entertainments Tax Act, 1939.

30. Section 3(6)(a) of the Act defines 'local authority' as meaning

(a) the Municipal Corporation of Madras, or of Madurai;

(b) a Municipal Council constituted under the Tamil Nadu District Municipalities Act (V of 1920)...

(c) a panchayat union council or a panchayat constituted under the Tamil Nadu Panchayats Act (XXXV of 1958).

Section 4 is the charging section wherein the rates of tax are given. The table (given under Section 5-A sets out the tax on shows held in certain theatres. Section 5-B reads as follows:

5 (b). Option, to pay.-(1) In lieu of the tax payable under Section I-A, in the case of cinematograph exhibitions held in the theatres specified in column (2) of the Table below and located in the local areas specified in the corresponding entry in column (1) of the said taible, the proprietor of such cinematograph exhibition may, at his option and subject to such conditions as may be prescribed, pay the amount of tax to the State Government every week as specified in the corresponding entry in column (3) thereof.

The Table*****

Section 5-B (5) states:

The option permitted under this section shall continue to be in force till the end of the financial year in which such option is permitted.

With reference to the above provisions, Mr. V.P. Raman submitted that unless the area is taken out from Panchayat area by deleting it under the Panchayats Act, the provisions applied for collecting the entertainment tax must continue irrespective of the fact that the area has been included in the City. For this proposition, the learned Counsel cited the decision reported in Bagalkot City Municipality v. Bagalkoti Cement Co. : AIR1963SC771 . In that decision, it is stated that where a bye-law framed by a Municipality in exercise of its powers under, Section 48 of the Bombay District Municipal Act provided that the octroi limits of the Municipal district shall be the same as the Municipal district, the expression 'municipal district' in the bye-law must be understood as referred to the Municipal district as existing when the bye-law was framed. The context would prevent the definition in the Act being applied to interpret the bye-law. The bye-law cannot, therefore, refer to the Municipal district as from time to time existing. If sub-, sequent to the framing of the bye-laws, the limits of the municipal district are extended by a Government Notification under Section 4, the octroi limits fixed by the bye-law would nevertheless be the same as that of the original municipal district. Unless the bye-law is duly altered or amended it would not be competent to the Municipality to demand any octroi tax on the goods brought within the new area because such area even after its inclusion in the municipal district, will be outside the octroi limits fixed by the bye-law.

31. In Atlas Cycles Ltd. v. Haryana State : [1972]85ITR121(SC) the Supreme Court has held that a taxing provision always received a strict interpretation for the obvious reason that there must be dear and express language imposing a tax and the idate from which such tax shall come into effect. The Supreme Court has also held that taxes will not become automatically leviable to the new areas added to the municipal limits.

32. In Visakhapatnam Municipality v. K. Nukaraju : [1976]1SCR544 the view expressed in Atlas, Cycle Ltd. v. Haryma State : [1972]85ITR121(SC) is reiterated.

33. Mr. Kanakaraj, learned Counsel appearing for the Government submitted that the Tamil Nadu Entertainments Tax Act is dear that the particular levy applies to the area mentioned therein and therefore once an area comes under a particular category mentioned in the fiscal Act, it automatically attracts the levy relating to that area. The option exercised under Section 5-B (5), dearly indicates that certain percentage of tax is payaible, if the local area is within the category mentioned therein. In the Supreme Court dedsion cited above, a particular area is mentioned as attracting octroi tax. If any new area is added to such area, that added area cannot automatically attract octroi tax. In these circumstances, the Supreme Court held that unless there is an amendment to the fiscal Act the benefits enjoyed under the fiscal Act cannot be taken away. But, as far as the present case is concerned we have found that Section 3(9) of the Madras City Municipal Corporation Act vests ample power in the Government to include in or delete from the city limits any area. Once an area is basified as coming under 'city' the benefit enjoyed under Section 5-B of the Tamil Nadu Entertainments Tax Act are automatically taken away. The only restriction that we can see is that under Section 5-B (5), the option permitted shall continue to be in force till the end of the financial year in which such option is permitted. That right given to an individual by the final Act cannot be taken away till the financial year in which such option to pay is granted, is over.

34. It is clear from the facts of the case that Thirnuvanmiyur does not find place in Schedule II of the Tamil Nadu Entertainments Tax Act. Further, there is no special schedule for 'other Panchayat towns' in the Table given under Section 5-A. But, as far as Municipalities Second Grade, Municipalities, Third Grade and Selection Grade Panchayat towns are concerned, they are specifically mentioned in Schedules I and II of the Tamil Nadu Entertainments Tax Act. The benefit accruing under Sections 5-A and 5-B will enure to those places until they are taken out of the schedules by proper legislation. The Tamil Nadu Entertainments Tax Act specifically mentions in its Schedules I and II the names of the particular places for the purpose of application of Sections 5-A and 5-B. Mr. V.P. Raman's contention that there are a number of Panchayat towns and panchayats and that is why their names have not been specifically mentioned in the fiscal Act as enjoying the benefits of Sections 5-A and 5-B, cannot be correct. Whatever may be the number, a legislation cannot leave them unspecified, if it intends to give the benefit of the legislation to those places. Therefore, in the absence of specific names of the Panchayats in the schedules to the Tamil Nadu Entertainments Tax Act there is need to specifically mention that these panchayats are excluded from enjoying the benefits of Sections 5-A and 5-B. As we have already observed, under the Madras City Municipal Corporation Act, Section 3(9), thereof, there is ample power to include these areas into the fold of the 'Madras city'.

35. In Visakhapatnam Municipality v. K. Nukaraju : [1976]1SCR544 the Supreme Court had occasion to consider the question of applicability of enhanced tax in the areas newly included in the municipality. Though, by virtue of Section 3(4) of the Andhra Pradesh Municipalities Act, the whole Act would apply to areas; newly included within the municipality, the Supreme Court held that it is not competent to the Municipality to have recourse to the resolution passed for imposing tax on the old areas for the purpose of levy of tax on new areas. As far as the present 'Act is concerned, we have already considered as to how the places in which petition theatres are situate come within the fold of the city of Madras. The benefits which panchayats can enjoy under the Tamil Nadu Entertainments Tax Act would cease to apply to those areas, when they come within the fold of the city No doubt, for levying the tax applicable to the city area, the authorities must follow the procedure set up in the Entertainments Tax Act. It is not the case that the authorities are not following the procedure for the levy, demand and recovery of such taxes from the theatres within the city limits.

36. From the foregoing discussions, we have no hesitation in coming to the conclusion that Section 3(9) of the Madras City Municipal Corporation Act gives ample power to the : State Government to exclude from or include within the City of Madras any area by means of a notification. The Tamil Nadu Entertainments Tax Act gives the option under Section 5-B to pay the tax for such of those theatres as are in the areas mentioned in the Table appended to Section 5-B. If once such an area ceases to find place in the Table by reason of its being included within the city of Madras on the strength of a notification under Section 3(9) of the Madras City Municipal Corporation Act, automatically that area ceases to enjoy as and from the date of such inclusion the benefits of Section 5-B of the Tamil Nadu Entertainments Tax Act. However, the option permitted under the section as per the provisions in Section 5-B (5) shall continue to be in force till the end of the financial year in which such option is permitted. Hence the taxing provision which has permitted that option for the financial year would enure to the benefit of the theatres which got the benefit under Section 5-B.

37. In these circumstances, we hold that the petitioners' theatres ceased to enjoy the benefit of Section 5-B of the Tamil Nadu Entertainments Tax Act, by virtue of the inclusion of these into the city limits, but, nevertheless, the benefit under Section 5-B (5) would continue to be in force till the end of the financial year in which! the option was permitted under Section 5-B.


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