# Bulbul Banerjee v. State Of U.P. & Ors

- **Citation:** (2016) 8 ILRA 966
- **Court:** High Court of Judicature at Allahabad
- **Decided:** 2016-08-09
- **Bench:** Sudhir Agarwal, Dr. Kaushal Jayendra Thaker
- **Source:** https://unisonlegal.in/judgment/allahabad-high-court/bulbul-banerjee-v-state-of-u-p-ors-44291
- **Pages:** 11

## Text

966 INDIAN LAW REPORTS ALLAHABAD SERIES

(2016) 8 ILRA 966
ORIGINAL JURISDICTION
CIVIL SIDE
DATED: ALLAHABAD 09.08.2016

BEFORE

THE HON'BLE SUDHIR AGARWAL, J.
THE HON'BLE DR. KAUSHAL JAYENDRA THAKER, J.

Writ Tax No.- 1238 Of 2010
&
Connected With Other Cases

Bulbul Banerjee ...Petitioner
Versus
State Of U.P. & Ors. ...Respondents

Counsel for Petitioner:
Govind Krishna, Ashok Kumar Pandey, Purusottam Upadhyay, Vipin Kumar, T.S. Dabas, N.S. Chahar, Durga
Prasad Singh, Rajendra Tiwari, Sanjay Singh Sengar, Haridwar Singh (for respective petitioners)

Counsel for Respondents:
C.S.C.

U.P. Entertainment and Betting Tax Act, 1979 -- Section 3 -- Entertainment Tax (Amendment)
Act, 2009 -- Explanation (2) -- Scope of Challenge -- Though validity of Section 3 as amended was
challenged in the writ petitions, dispute during argument was found confined to Explanation (2) inserted at
the end of Section 3 -- Question was whether Explanation (2) contemplates computation of entertainment tax
on the amount of entertainment tax already computed under Section 3(1), or is merely clarificatory --
Explanation (2) defines 'aggregate payment' to include entertainment tax and other amounts payable under
the Act, but this definition operates only for the purpose of levying tax on 'aggregate payment required for
admission' under Section 3(1) -- It cannot be read to permit double computation, i.e., tax upon tax already
computed. (Para 1)

Explanation to Statute -- Nature and Limits -- An explanation to a statutory provision is ordinarily
clarificatory in nature, meant to remove ambiguity -- What is not contemplated by the principal charging
section cannot be supplied or expanded through an explanation -- Entertainment tax once computed under
Section 3(1) does not attract further entertainment tax on the tax so computed. (Para 2)

Section 3-A -- Extra Charges for Maintenance and Air-Conditioning -- Effect of Amendment Act,
2009 -- Prior to amendment, extra charges collected for maintenance of cinema premises and for aircooling/air-conditioning facilities stood excluded from being treated as payment for admission and were thus
not exigible to entertainment tax -- Post-amendment, Section 3-A(1) requires the proprietor to utilise a
notified portion of the ticket value itself for such maintenance and facilities, without a separate exclusion --
The earlier exemption stands validly withdrawn by the new provision -- A principal legislative enactment
altering an earlier benefit cannot be struck down merely because it takes away what an earlier provision
conferred, absent violation of constitutional provision or legislative competence. (Para 3)
8 All. Bulbul Banerjee Vs State Of U.P. & Ors.
967
Definition of 'Payment for Admission' -- Amendment -- Gross Payment Deemed Aggregate
Payment -- Insertion of clauses (vi), (vii) and (viii) in Section 2(l) by the Amendment Act, 2009, including
the deeming provision that gross payment on admission shall be treated as aggregate payment, is consistent
with the scheme requiring cinema owners to value tickets inclusive of maintenance and air-conditioning
charges, all of which now form part of aggregate payment for admission. (Para 4)

Impugned Circulars of Commissioner (Entertainment Tax) -- Validity -- Circulars directed that extra
charges for maintenance and air-conditioning could no longer be levied separately post-amendment, and
amounts so collected be refunded -- Circulars are only for guidance of field authorities and do not permit levy
of entertainment tax on entertainment tax already computed -- Circulars are consistent with the statute as
amended and are not ultra vires; direction for refund of separately charged maintenance/air-conditioning
amounts upheld. (Para 5)

Disposal --All writ petitions disposed of with the clarification that entertainment tax cannot be computed
twice on the same component, and that Section 3-A as amended is not ultra vires. (Para 6)

(Delivered by Hon'ble Sudhir Agarwal, J.
&
Hon'ble Dr. Kaushal Jayendra Thaker, J.)

1. Heard Sri Govind Krishna, Sri Vipin Kumar and Sri N.S. Chahar, Advocates for
petitioners in all the writ petitions and learned Standing Counsel for respondents.

2. Though validity of Section 3 of U.P. Entertainment and Betting Tax Act, 1979
(hereinafter referred to as the "Act, 1979") as amended by U.P. Entertainment and Betting Tax
(Amendment) Act, 2009 (Act No. 25 of 2009) (hereinafter referred to as the "Amendment Act,
2009") has been challenged in all these writ petitions but during course of argument we find that as
a matter of fact dispute relates to Explanation (2) inserted by Amendment Act, 2009 at the end of
Section 3 only and not entire Section 3 as amended by Amendment Act, 2009. We further find
during course of argument that dispute was confined to interpretation of meaning of Explanation
(2), whether it contemplates computation and demand of entertainment tax on the amount of
entertainment tax already computed under Section 3(1) or is only clarificatory in nature.

3. Section 3 as it stood prior to Amendment Act, 2009 and after said amendment are
reproduced as under:

Before Amendment Act, 2009

After Amendment Act, 2009

3. Tax on payment for admission
to entertainment- (1) Subject to the
provisions of this Act, there shall be
levied and paid on all payments for
admission to any entertainment, other
than an entertainment to which Section 4
or Section 4-A or Section 4-B applies or a
3. Tax on entertainment- (1) Subject
to the provisions of this Act, there shall be
levied and paid on all aggregate payments
required for admission to any entertainment
other than an entertainment to which Section 4
or Section 4-A or Section 4-B applies or a
compounded payment is made under the
968 INDIAN LAW REPORTS ALLAHABAD SERIES

compounded payment is made under the
proviso
to
this
sub-section,
an
entertainment tax at such rate not
exceeding one hundred and fifty per cent
of each such payment as the State
Government may from time to time notify
in this behalf, and the tax shall be
collected by the proprietor from the
person making the payment for admission
and paid to the Government in the manner
prescribed:

Provided that a proprietor of a
cinema of cable operator in a local area
having a population not exceeding one
lac, may, in lieu of payment under this
subsection, pay a compounded payment
to the State Government on such
conditions and in such manner as may be
prescribed and at such rate as the State
Government may from time to time
notify, and different rates of compounded
payments may be notified for different
categories of local areas.

proviso to this sub-section, an entertainment
tax at such rate not exceeding one hundred
and fifty per cent of each such payment as the
State Government may from time to time
notify in this behalf, and the tax shall be
collected by the proprietor from the person
making the payment for admission and paid to
the Government in the manner prescribed:

Provided that a proprietor of a cinema
of cable operator in a local area having a
population not exceeding one lac, may, in lieu
of payment under this subsection, pay a
compounded
payment
to
the
State
Government on such conditions and in such
manner as may be prescribed and at such rate
as the State Government may from time to
time notify, and different rates of compounded
payments may be notified for different
categories of local areas.

Provided further that in the case of cable
service, the proprietor of the cable service
control room/multi system operator shall be
liable to pay the tax, irrespective of the fact
whether he collect it directly from the person
making the payment for admission or
indirectly through an associate or franchise
cable operator or an agent, who in turn
collects it from the person making the
payment:

Provided also that a proprietor of a cinema, in
lieu of payment under this sub-section, shall
make a lump sum payment to the State
Government
on
such
conditions
and
restrictions and in such manner as may be
prescribed and at such rate as the State
Government may from time to time notify,
and different rates of lump sum payments may
be notified for different categories of local
areas or cinemas or for different payment for
admission.
8 All. Bulbul Banerjee Vs State Of U.P. & Ors.
969

(2) Nothing in sub-section (1)
shall preclude the State Government from
notifying different rates of entertainment
tax for different areas or for different
classes of entertainment or for different
payments for admission to entertainment.

(3) Where the payment for
admission to an entertainment, together
with the tax, charges for maintenance of
cinema premises and extra charge for air
cooling or air conditioning facility, is not
a
multiple
of
one
rupee,
then
notwithstanding anything contained in
sub-section (1) or sub-section (2) or any
notification issued thereunder, the tax
shall be increased to such extent and be so
computed that the aggregate of such
payment for admission to entertainment,
the tax, charge for maintenance of cinema
premises and extra charge for air cooling
or air conditioning facility is rounded off
to the next higher multiple of one rupee
and such increased tax shall also be
collected by the proprietor and paid to the
Government in the manner prescribed.

(4) If in any entertainment,
referred to in sub-section (1), to which
admission is generally on payment, any
person is admitted free of charge or on a
concessional rate, the same amount of tax

(2) Nothing in sub-section (1) shall
preclude the State Government from notifying
different rates of entertainment tax for
different areas or for different classes of
entertainment or for different aggregate
payment
required
for
admission
to
entertainment.

(2-a) It shall be lawful for the State
Government to notify lump sum rate of
entertainment tax for any entertainment or
class of entertainments or for different
payment for admission to entertainment or for
different area.

(3) Where the aggregate payment
required for admission to an entertainment
together with any other charge leviable under
this Act, is not a multiple of one rupee then
notwithstanding anything to the contrary
contained in sub-section (1) or sub-section (2)
or any notification issued thereunder, the tax
shall be increased to such extent and be so
computed that the aggregate of such aggregate
payment and other charges is rounded off to
the next higher multiply of one rupee and such
increased tax shall also be collected by the
proprietor and paid to the State Government in
such manner as may be prescribed.

(4) If in any entertainment, referred to
in sub-section (1), to which admission is
generally on payment, any person is admitted
free of charge or on a concessional rate, the
same amount of tax shall be payable as would
have been payable had such person been
admitted on full payment.

(5) Where the aggregate payment
970 INDIAN LAW REPORTS ALLAHABAD SERIES

shall be payable as would have been
payable had such person been admitted on
full payment.

(5) Where the payment for
admission to an entertainment, referred to
in sub-section (1), is made wholly or
partly, by means of a lump sum paid as
subscription, contribution, donation or
otherwise, the tax shall be paid on the
amount of such lump sum and on the
amount of payment for admission, if any,
made otherwise.

(6) Where in a hotel or a
restaurant, entertainment by way of
cabaret or floor show (by whatever name
called, but excluding a mere band in
attendance or recorded music) is provided
along with any meal or refreshment with
a view to attracting customers, whether or
not payment for admission is charged
distinctly for such entertainment, twenty
per cent of the amount payable by the
customer for such meal or refreshment or
the amount charged distinctly for such
entertainment, whichever is higher, shall
be deemed to be the payment for
admission to such entertainment and the
tax shall be levied and paid accordingly.

(7)
where
in
a
hotel,
entertainment by way of cable service is
provided in rooms or other places, the
entertainment so provided in each room
or other place shall be deemed to be a
separate
entertainment
and
the
subscription for admission to each such
entertainment shall be deemed to be equal
to the amount of subscription charged
from a subscriber in the vicinity of the
hotel by the cable operator providing
cable service in the hotel, and the tax
required for admission to an entertainment,
referred to in sub-section (1), is made wholly
or partly, by means of a lump sum paid as
subscription,
contribution,
donation
or
otherwise, the tax shall be paid on the amount
of such lump sum and on the amount of
payment
for
admission,
if
any,
made
otherwise.

(6) Where in a hotel or a restaurant,
entertainment by way of cabaret or floor show
(by whatever name called, but excluding a
mere band in attendance or recorded music) is
provided along with any meal or refreshment
with a view to attracting customers, whether
or not aggregate payment required for
admission is charged distinctly for such
entertainment, thirty per cent of the amount
payable by the customer for such meal or
refreshment or the amount charged distinctly
for such entertainment, whichever is higher,
shall be deemed to be the aggregate payment
required for admission to such entertainment
and the tax shall be levied and paid
accordingly.

(7) where in a hotel, entertainment by
way of cable service is provided in rooms or
other places, the entertainment so provided in
each room or other place shall be deemed to
be
a
separate
entertainment
and
the
subscription for admission to each such
entertainment shall be deemed to be equal to
the amount of subscription charged from a
subscriber in the vicinity of the hotel by the
cable operator providing cable service in the
hotel, and the tax shall he levied and paid on
the basis of such subscription:

Provided
that
where
the
cable
operator himself is the proprietor of the hotel,
the subscription for admission to each such
entertainment shall be deemed to be equal to
8 All. Bulbul Banerjee Vs State Of U.P. & Ors.
971
shall he levied and paid on the basis of
such subscription:

Provided that where the cable
operator himself is the proprietor of the
hotel, the subscription for admission to
each such entertainment shall be deemed
to be equal to the amount of subscription
charged from a subscriber in the vicinity
of the hotel by any other cable operator.

Explanation.-- For the purposes
of this sub-section and clause (ee) of
section
2,
'hotel'
includes
an
accommodational unit wherein rooms are
provided to the customers on rent, but
does not include the units approved under
the 'Paying Guest Scheme' of the
Department of Tourism of me State
Government."

the amount of subscription charged from a
subscriber in the vicinity of the hotel by any
other cable operator.

Explanation 1.- For the purposes of
this sub-section and clause (ee) of section 2,
'hotel' includes an accommodational unit
wherein rooms are provided to the customers
on rent, but does not include the units
approved under the 'Paying Guest Scheme' of
the Department of Tourism of me State
Government.

Explanation (2)-For the purposes of
this Act, the expression aggregate payment
shall mean a sum paid by a person for
admission to the entertainment which shall
include entertainment tax and any other
amount required to be paid under this Act but
does not include any fee or other charges
which is not a part of entertainment tax under
this Act."

4. The charging Section 3 contemplates levy of tax on all aggregate payments required for
admission to any entertainment at such rate not exceeding 150 per cent of each such payment as the
State Government may notify from time to time in this behalf. Aforesaid levy of tax is other than
entertainment to which Sections 4, 4-A, 4-B, 4-C apply or to a compounded payment made under
provision to Section 3(1). Petitioners before us are not covered by Sections 4, 4-A, 4-B, 4-C, or
proviso to Section 3(1). They are thus liable to pay "entertainment tax" at the rate prescribed by
Government under Section 3(1).

5. Payment of admission is defined in Section 2(l), which reads as under:

"(l) 'payment for admission' includes--

(i) any payment for seats or other accommodation in any form in a place of
entertainment ;

(ii) any payment for a programme or synopsis of an entertainment ;
972 INDIAN LAW REPORTS ALLAHABAD SERIES

(iii) any payment made for the loan or use of any instrument or contrivance
which enables a person to get a normal or better view or hearing or enjoyment of the
entertainment, which without the aid of such instrument or contrivance such person would not get ;

(iv) any payment, by whatever name called for any purpose whatsoever,
connected with an entertainment, which a person is required to make in any form as a condition
of attending or continuing to attend the entertainment, either in addition to the payment, if any,
for admission to the entertainment or without any such payment for admission ;

(v) any payment made by a person, who having been admitted to one part of a
place of entertainment is subsequently admitted to another part thereof, for admission to which a
payment involving tax or more tax is required;

Explanation.--Any subscription raised or donation collected in connection with an
entertainment in any form shall be deemed to be payment for admission ;

(vi) any payment made by a person by way of contribution or subscription or
installation and connection charges or any other charges collected in any manner whatsoever, by
whatever name called, for television exhibition through cable television network or any other such
network by whatever name called, attached to television set or any other device at a residential or
nonresidential place of a connection holder; or

(vii) any payment made by person to the proprietor of a Direct-to-Home service or
any other service by whatever name called, by way of contribution or subscription or installation
and connection charges or any charges collected in any manner by whatever name called either
directly or through any agency established for the purpose for Direct-to-Home service with the aid
of set top box or any other device of like nature which connects television set or any other device at
a residential or non-residential place of a connection holder directly to the satellite without passing
through an intermediary such as cable operator:

Explanation--For the purposes of sub-clauses (vi) and (vii) any expenditure
incurred by any co-operative society including a co-operative housing society or by the
management of any factory, hotel, lodge, bar, permit room, pub or by a person or group of persons
for the purchase of any type of antenna or any other apparatus for securing transmission through
cable television network, Direct-to-Home service or any other service by whatever name called, for
its member or for workers or customers or for himself or themselves, as the case may be shall be
deemed to be the payment made under the sub-clause;

(viii) Where in any entertainment admission has been allowed on a gross
payment, such gross payment shall be deemed to be aggregate payment." (emphasis added)

6. It is contended that by virtue of Section 3-A(1) the proprietors of Cinema have been
authorized to realize from the person making payment to admission to entertainment in such
8 All. Bulbul Banerjee Vs State Of U.P. & Ors.
973
Cinema, an extra charge which shall be utilized for maintaining Cinema premises and also in case
of a centrally air-cooled or centrally air-conditioned Cinema a further extra charge. This extra
charge under Section 3-A(1)(a) is not permissible to Cinema owners receiving grant-in-aid from
State Government under any scheme. Section 3-A(2) provides that amount charged under subsection (1) shall not be deemed to be payment to an admission to an entertainment.

7. Section 3-A has also been amended by Amendment Act, 2009 and now it reads as under:

"3-A - Extra charges for maintenance of cinemas and for air-cooled and airconditioned facility--(1) Notwithstanding anything to the contrary contained in any other provision
of this Act, the proprietor of a cinema shall utilize such amount of ticket value excluding
entertainment tax and in such manner as may be notified by the State Government from time to
time for maintenance of the cinema premises and for air cooling or air conditioning facilities."

(emphasis added)

8. Therefore, exclusion allowed earlier with respect to extra charge under Section 3-A(1)
now stand omitted. Petitioners have stated that prior to Amendment Act, 2009, Cinema owners
used to collect price of a ticket comprising of following:

(a) Payment for admission;

(b) Tax on payment for admission;

(c) Cinema maintenance charge;

(d) Air-cooling/air-conditioning charge; and,

(e) Film development fund.

9. It is argued that in view of Explanation (2) now entertainment tax computed on various
other items is again liable to be subjected to entertainment tax and thus such tax would now be
computed twice.

10. This has been controverted by learned Standing Counsel stating that there is no
duplicacy of entertainment tax inasmuch as tax would be computed only on various components
charged by Cinema owners and once various components of admission charge for entertainment tax
are computed, there is no question or occasion to calculate entertainment tax again on the amount
of entertainment tax. This stand taken by learned Standing Counsel, we find, is consistent with a
combined reading of Section 3(1) alongwith Explanation (2) of Amendment Act, 2009.

11. State is authorized to levy tax on all aggregate payments required for admission on any
entertainment at a rate not exceeding 150 per cent of each such payments. Meaning thereby,
974 INDIAN LAW REPORTS ALLAHABAD SERIES

payment for admission, when comprises of various components, on each such payment or
component, an entertainment tax is leviable at a rate not exceeding 150 per cent as prescribed by
State Government. Prescription of rate of tax is subsequent to various payments which have been
termed as "aggregate payment required for admission" to tax.

12. Section 3(1) further authorizes a proprietor of Cinema to collect tax from the person
making payment for admission. It is in this context Explanation (2) has clarified that aggregate
payment shall mean a sum paid by a person for admission to entertainment and it shall include
"entertainment tax" and other amount required to be paid under this Act but for the purpose of
attracting "entertainment tax" under Section 3(1) at the rate prescribed by State Government, the
words are qualified that "all aggregate payment requirement for admission to any entertainment".
Thus, Explanation (2) cannot be read so as to permit respondents firstly to compute tax on various
components of payments made for admission to entertainment and thereafter further compute
entertainment tax on entertainment tax so arrived at.

13. Learned Standing Counsel fairly stated that there is no case of such double taxation and
impression otherwise gathered by respondents is neither justified, nor correct, nor otherwise so
provided in Amendment Act, 2009.

14. Further, the fact that earlier amount charged for maintenance etc. under Section 3-A
even if utilized for maintenance etc. but still has been subjected to entertainment tax would not
make Section 3-A, as amended by Amendment Act, 2009, bad or ultra vires for the reason that
legislature can always frame its policy in the manner it likes and a legislative enactment can be
challenged only on the ground of violation of constitutional provisions or legislative competence
but not for the reason that a benefit otherwise provided in earlier provision has been taken away by
new provision.

15. Impugned circulars issued by Commissioner (Entertainment Tax) is only for guidance
of field authorities but we do not find anything therein which permits field authorities to compute
and levy "entertainment tax" on the amount of "entertainment tax" computed under Section 3(1) of
Act, 1979.

16. Even otherwise an explanation to a provision is normally clarificatory to explain some
kind of ambiguity, if there may be any occasion but what is not contemplated under principal
charging Section cannot be supplied by way of an explanation. We, therefore, make it clear that by
taking recourse to Explanation (2) respondents cannot compute entertainment tax on the amount of
entertainment tax computed on various payments authorized for admission for an entertainment.
Entertainment tax once computed under Section 3(1) will not attract further computation of
entertainment tax on already computed entertainment tax.

17. It is argued that Commissioner (Entertainment Tax) vide circulars impugned in this writ
petitions has provided that after amendment of Section 3-A by Amendment Act, 2009 the authority
to charge extra charges for maintaining and for air-cooling and air-conditioning facilities has been
8 All. Bulbul Banerjee Vs State Of U.P. & Ors.
975
stopped and now Cinema owners cannot charge such amount and wherever it has been charged
must be refunded.

18. To this extent it is said that direction issued by Commissioner (Entertainment Tax) are
contrary to statute inasmuch as Section 3-A, as amended now, provides that amount of ticket value
charged by Cinema owners shall be utilized in such manner as may be notified by State
Government from time to time for maintenance of Cinema premises and for air-cooling and airconditioning facilities. This shows that amount of ticket value is not restricted and instead Cinema
owners may merge the same in the value of ticket and it would attract entertainment tax also but out
of such amount of ticket value some part can be directed by State Government to be utilized for
maintenance of Cinema premises and for air-cooling and air-conditioning facilities. The intention is
very clear. Earlier a separate provision was made entitling Cinema owners to raise extra charge on
these two heads and the same was not subjected to "entertainment tax" when utilized for the
purpose the same were charged but now that authority to charge and exemption has gone. A new
provision has come in a different way. Cinema owners now may value the amount of their ticket in
such manner so as to cover expenses, if any, they may require for maintenance of Cinema premises
and for air-cooling and air-conditioning facilities. In fact now it would be a part of payments
required for admission to any entertainment. This is also evident from the fact that definition of
"payment for admission" has also been amended by Amendment Act, 2009 and Clauses (vi), (vii)
and (viii) have been inserted. In Clause (viii) it is said that any entertainment admission if allowed
on gross payment such gross payment shall be deemed to be aggregate payment.

19. Cinema owners, therefore, are not justified to continue to charge additional charge/
extra charge by referring to Section 3-A of Act, 1979 after its amendment by substitution and
enactment of a different provision in which such authorization of extra charge has been taken away.
Circulars, impugned in these writ petitions, therefore, cannot be said to be bad or contrary to statute
and Section 3-A as amended by Amendment Act, 2009 also cannot be said to be ultra vires simply
because it is a different provision that what it was earlier. A principal legislation cannot be
challenged on the ground that it is contrary to what it was earlier. It is within the realm of
legislation and unless want of legislative competent or violation of constitutional provision is
shown, a principal legislation cannot be challenged as invalid or ultra vires.

20. In the light of clarifications/ observations made above all the writ petitions are disposed
of.
----------
976 INDIAN LAW REPORTS ALLAHABAD SERIES

(2016) 8 ILRA 976
ORIGINAL JURISDICTION
CIVIL SIDE
DATED: ALLAHABAD 10.08.2016

BEFORE

THE HON'BLE SUDHIR AGARWAL, J.
THE HON'BLE KAUSHAL JAYENDRA THAKER, J.

Writ Tax No.- 1448 Of 2009
&
Connected With Other Cases

M/S Uflex Limited ...Petitioner
 Versus
State Of U.P. & Ors. ...Respondents

Counsel for Petitioner:
Bharat Ji Agrawal (Senior Advocate), Piyush Agrawal, Rahul Agrawal, S.D. Singh (Senior Advocate), Nishant
Mishra, Diptiman Singh, Nikhil Agarwal

Counsel for Respondents:
C.B. Tripathi, learned Standing Counsel

U.P. Value Added Tax Act, 2008 -- Section 42(4) & (5) -- U.P. VAT Rules, 2008 -- Rule 70(5) --
Vires Challenged -- Petitioners, industrial units holding eligibility certificates under Section 4-A of the U.P.
Trade Tax Act, 1948 for exemption from tax, challenged Section 42(4) and (5) of the Act, 2008 as substituted
by the Amendment Act, 2008, and Rule 70(5) of the Rules, 2008 as substituted by the First Amendment Rules,
2009. Amended scheme requiring deposit of net tax along with return, followed by refund, is neither illegal
nor arbitrary nor beyond legislative competence -- Section 42(4) and (5) as amended are not ultra vires.
(Para 1)

Change of Exemption Scheme -- From Upfront Exemption to Deposit-and-Refund --
Retrospective
Operation
--
Under
the
erstwhile
scheme,
eligible
units
enjoyed
upfront
exemption/deferment of tax -- By Amendment Ordinance, 2008 and subsequent Amendment Act, 2008,
effective from 01.01.2008, the scheme was altered so that units must first deposit net tax with the return and
thereafter claim refund -- Rule 70(5), framed only on 30.01.2009, prescribed deposit deadlines for tax periods
between January 2008 and June 2008, i.e., periods that had already elapsed with returns already filed under
the earlier scheme before the new procedure was even notified. Compliance with the amended Rule 70(5) for
the already-elapsed period of January 2008 to June 2008 was rendered practically and legally impossible,
since the prescribed manner of compliance itself came into existence only on 30.01.2009, after the deadlines it
imposed had already expired. (Para 2)

Doctrine of Impossibility -- Lex Non Cogit Ad Impossibilia -- Applicability -- The maxims lex non
cogit ad impossibilia and impotentia excusat legem apply -- The law does not compel performance of an
impossibility; where a statute creates a duty and the party is disabled from performing it without default of his
own and has no remedy over it, the law excuses him -- Principle affirmed by the Supreme Court. (Para 3)