# 398 LIBERTY TALKIES & ORS v. STATE OF GUJARAT

- **Citation:** [1971] 3 S.C.R. 398
- **Court:** Supreme Court of India
- **Decided:** 1971-01-21
- **Case number:** Civil Appeals Nos. 416 to 426 of 1967
- **Bench:** J.C. Shah, K. S. Hegde, A. N. Grover
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/398-liberty-talkies-ors-v-state-of-gujarat-5139
- **Pages:** 8

## Headnote

Bombay Entertainments Duty Act (1 of 1923), ss. 3 and 4.and r. 7
of tlze Rules made thereunder-Scope of.
A
B
From March 1960 to January 1962 entertainment duty, was1 levied on
the appellants at the rates prescribed in s. 3 of the Bombay Entertainment
Duty Act, 1923, on the net price receivable by the proprietor of a theatre
and not on the total amount including entertainment duty collected from
C
visitors.
Thereafter entertainment duty was levied on the aggregate of the
net value of the ticket and duty paid by the • visitors. The appellants
challenged the validity o'f the levy but the High Court dismissed their
petition.
Jn appeal to this Court,·
HELD: (1) Bys. 3 of the Act duty is leviable at the rates prescribed
D
on all payments for admission and the· method of levy is prescribed by s.
4. Under s. 4(1) on the ticket for admission to any. entertainment, an impressed, einbossed, engraved or adhesive stamp issued by the State Government of the value specified in s. 3 must 'be
affixed.
The definition of
'payment for admission' ins. 2(b)- includes payment for any purpose '"·hat·
soever connected with an entertainment which a person is required to make
as. a condition of attending. or continuing to attend the entertainment. The
price which the visito·r pays for a ticket for admission to the entertainment
E
is thus the value uf the stamp affixed and the net value -0f the ticket. and
the proprietor of the theatre is therefore liable to pay entertainment duty
on the gross sum received from a visitor. r402 E, H; 403 A-~; 404 Dl
(2) The use of the expression "affixed to it a stamp of the value of
the duty payable out of the said price di admrssiori" "in rule 7 of the
rules framed under the Act does not support the view that the amount of
cntert.ainment duty represented by the ticket alone is payable by the proF
prietor. It only means that the proprietor shall specify on the ticket the
amount chargeable by him to the visitor. [403 :C-G]
( 3) !he proprietor thus passes on a part of the duty payable by him
to the VIS1to·r but he does not act as an agent of the,,GOvernment for col1ccting the duty, because. under ss. 3 and 4 tl}_e _liability for pavrncnt cf the
duty is in1posed upon the proprietor and not upon the viSitors to the
G
theatre. [402 H; 403 BJ
( 4) A proprietor paying entertainment duty on the total amount received by him lfrorri the visitor will never be able to col!ect the full amount
of entertainment duty from such visitor.
A part of the duty pavable b1·
him will haye to come ?lit of the amo.unt receiv~d ~y him as the net charge
for a ticket. But questions of hardship cannot 1ushfy a departure from the
provisions of ss. 3 and 4 o'f the Act The Legislature must be deemed to
H
have contemplated that only a part of the entertainment duty l1evied by the
;'1Government must be collected from the visitors to the theatre and the
balance should be paid by the proprietor. [404 F-H]
•
LIBERTY TALKIES V. GUJARAT (Shah, C.J.)
399
A
(5) But the Act contains no provision for reopening assessments already made and the State cannot therefore reopen the concluded assessments
prior to January 1962. [405 Bl

## Text

:398
LIBERTY TALKIES & ORS.
v.
STATE OF GUJARAT
January 21, 1971
{J.C. SHAH, CJ., K. S. HEGDE AND A. N. GROVER, JJ.]
Bombay Entertainments Duty Act (1 of 1923), ss. 3 and 4.and r. 7
of tlze Rules made thereunder-Scope of.
A
B
From March 1960 to January 1962 entertainment duty, was1 levied on
the appellants at the rates prescribed in s. 3 of the Bombay Entertainment
Duty Act, 1923, on the net price receivable by the proprietor of a theatre
and not on the total amount including entertainment duty collected from
C
visitors.
Thereafter entertainment duty was levied on the aggregate of the
net value of the ticket and duty paid by the • visitors. The appellants
challenged the validity o'f the levy but the High Court dismissed their
petition.
Jn appeal to this Court,·
HELD: (1) Bys. 3 of the Act duty is leviable at the rates prescribed
D
on all payments for admission and the· method of levy is prescribed by s.
4. Under s. 4(1) on the ticket for admission to any. entertainment, an impressed, einbossed, engraved or adhesive stamp issued by the State Government of the value specified in s. 3 must 'be
affixed.
The definition of
'payment for admission' ins. 2(b)- includes payment for any purpose '"·hat·
soever connected with an entertainment which a person is required to make
as. a condition of attending. or continuing to attend the entertainment. The
price which the visito·r pays for a ticket for admission to the entertainment
E
is thus the value uf the stamp affixed and the net value -0f the ticket. and
the proprietor of the theatre is therefore liable to pay entertainment duty
on the gross sum received from a visitor. r402 E, H; 403 A-~; 404 Dl
(2) The use of the expression "affixed to it a stamp of the value of
the duty payable out of the said price di admrssiori" "in rule 7 of the
rules framed under the Act does not support the view that the amount of
cntert.ainment duty represented by the ticket alone is payable by the proF
prietor. It only means that the proprietor shall specify on the ticket the
amount chargeable by him to the visitor. [403 :C-G]
( 3) !he proprietor thus passes on a part of the duty payable by him
to the VIS1to·r but he does not act as an agent of the,,GOvernment for col1ccting the duty, because. under ss. 3 and 4 tl}_e _liability for pavrncnt cf the
duty is in1posed upon the proprietor and not upon the viSitors to the
G
theatre. [402 H; 403 BJ
( 4) A proprietor paying entertainment duty on the total amount received by him lfrorri the visitor will never be able to col!ect the full amount
of entertainment duty from such visitor.
A part of the duty pavable b1·
him will haye to come ?lit of the amo.unt receiv~d ~y him as the net charge
for a ticket. But questions of hardship cannot 1ushfy a departure from the
provisions of ss. 3 and 4 o'f the Act The Legislature must be deemed to
H
have contemplated that only a part of the entertainment duty l1evied by the
;'1Government must be collected from the visitors to the theatre and the
balance should be paid by the proprietor. [404 F-H]
•
LIBERTY TALKIES V. GUJARAT (Shah, C.J.)
399
A
(5) But the Act contains no provision for reopening assessments already made and the State cannot therefore reopen the concluded assessments
prior to January 1962. [405 Bl
CIVIL APPELLATE JURISDICTION: Civil Appeals Nos. 416 to
426 of 1967.
8
Appeals by special leave from the judgment and order dated
November, 8, 9, 1968 of the Gujarat High Court in Special Civil
Applications Nos. 595, 634, 636, 693, 694, 695, 696, 771 of
1962, 57 and 128 of 1963 and 39 of 1964.
c
D
E
F
G
H
S. T. Desai, I. N. Shroff and M. N. Shroff. for the appellants
(in al! the appeals).
C. K. Daphtary, K. L. Hathi, B. D. Sharma for S. P. Nayar,
for the respondents (in all the appeals l.
The Judgment of the Court was delivered by
Shah, C. J.-Under the Bombay Entertainments Duty Act
1 of 1923 entertainment duty is chargeable on the total collections
from the visitors to a theatre. On March 18, 1960 the Collector,
Junagarh issued instructions to his subordinate officers directing
them to levy entertainment duty at the prescribed rate only on
the net price recetvable by the proprietor of the theatre and not
on the total amountlrrcluding entertainment duty collected from
the visitors. Entertainmeni'11ufy so computed was paid till January 1962 by the appellants who own a theatre at Junagadh.
On January 11, 1962 the Government of Gujarat issued a
memorandum thal "the duty (entertainment duty) is a percentage ot the payment for admission i.e. the amount which a person
pays for bei,ng admitted to witness the entertainment, inclusive
of the various items mentioned in clause (b) of section 2 of the
Bombay Entertainment Dut,r Act, 1.923.
The amount which a
person pays includes both sums-(i) what the Manager has to
pay by way of duty; and (ii) what the Manager can retain as
'Net receipts' and hence the duty has to be ~barged on the total
amount payable by the person buying the ticket, including any
'um charged separately by way of duty." Pursuant to that notification entertainment duty was levied on the gross sum leviec!
and paid by the visitors for admission to the theatre.
By a petition moved in the High Court· (jf Gujarat the appellants·challenged the validity of the rnemorandum dated January
11, 1962 and the notice of demand issued pursuant thereto and
urged that the primary_ liability for· payment of entertainment
duty is by the Act impo5ed upon the visitor to the theatre, and
that the proprietor of the theatre i~ merely an agent of the Govern~
ment for collecting the duty : and that the proprietor has under
400
SUPREME COURT REPORTS
[ 1971) 3 :;.c.R.
the Act to pay the duty which he collects from the visitors; and A
that he cannot be required to pay an amount which he does not
collect from the visitors.
The High Court rejected the petitions
and against the order of the High Court this appeal has been
cpreferred.
·
The Act and the Rules framed thereunder prescribe the method
of collection of entertainment duty. On each ticket issued to a
B
person entitling him to enter the theatre for
entertainment, a
revenue stamp of a specified face value is
affixed.
The total
amount that the visitor pays consists of two items, the net charge
which the proprietor makes for the ticket and the value of the
stamp.
Under the memorandum issued on March 18, 1960 the
aggregate of the duty received by the appellants was paid over C
to the Government and the net value of. the tickets remained with
the proprietor.
Under the memorandum issued on January 11,
1962, the duty payable to the Government was calculated at the
appropriate rate applicable to the aggregate of the net valur. of
the ticket and the duty paid by the visitor. In consequence of
the notification the proprietor could collect from the visitor the
D
amount shown as entertainment duty on the ticket but he was
obliged to pay duty equal to the amount computed on the total
amount paid by the visitor at the appropriate rate. The difference between the entertainment duty computed on the total value
of the ticket and the value of the stamp affixed on the ticket was
therefore borne by the proprietor.
The relevant provisions which have a bearing on the question
are these : Section 3 of the Act is the charging section. Insofar
as it is relevant it provides :
I.
" ( 1) There shall be levied and paid to the State
Government on all payments for admission to any entertainment a duty (hereinafter referred to as "entertainments duty" at the following rate--
(a) .
•
•
•
•
( b) in any other case--
•
•
•
•
•
IL in any other area-
(i) out of the first 100 naye paise of payment for ad30 per cent of such
mission
payment.
(ii) out of the next 100 naye paise of payment for ad45 per cent of such
n1ission
payment.
(iii) out Or the balance of the total payment for ad60 per cent of such
n1ission
payment.
(IA)
•
*
•
•
*
( 2) Where the payment for admission to an entertainment is made by means of a lump sum paid as a
subscription or contribution to any society, or for a
E
F
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H
,·_ ..
' •
~
.;JI
,,
~
A
B
LIBERTY TALKIES V. GUJARAT (Shah, C.J.)
401
season ticket or. for the right of admission to a series of
entertainments or to any entertainment during a certain
period of time, or for any privilege, righ~. facility or
thing combined with the right of admission to any entertainment or involving such right of admission without
further payment or at a reduced charge, the entertainments duty shall be paid on the amount of the lump
sum.
Section 3A provides for payment of duty at the appropriate rates
on complimentary tickets.
By that section entertainment duty at
the appropriate rates prescribed under s. 3 is payable as if full
c payment had been made for admissioo to the entertainment according to the class of seat or accommodation which the holder of such
ticket shall be deemed to t.ave been admitted for payment for the
purpose of the Act.
Section 4 provides for the method of levy
of duty. It provides, insofar as it is relevant :
D
E
F
G
H
"(1) Save as otherwise provided by this Act, no
person other than a person who has to perform some
duty in connection with an entertainment or a duty imposed upon him by any law, shall be admitted to any
entertainment, except with a ticket stamped with an
impressed, embossed, engraved or adhesive stamp (not
before used) issued by the State Government for the
payments for admission to the entertainment
tainments duty has been paid. -
(2) The State Government may, on the application
of any entertainment in respect of which the entertainment duty is payable under section 3, allow the proprietor on such conditions as the State Government may
prescribe to pay the amount of the duty due-
(a) by a consolidated payment of a percentage to be
fixed by the (State Government) of the gross
sum received by the proprietor on account of
payments for admission to the entertainment
and on account of the duty;
( b) in acCQrdance with returns of the payments for
admission to the entertainment and on account
of the duty;
( c) in accordance with the results recorded by any
mechanical contrivance which automaticafly registers the number of persons admitted.
(3)
14-L807Sup CI/71
•
•
•
.
..
402
SUPREME COURT REPORTS
(1971]3 s.c.R.
Secti~n 6 provides for exemptions from payment of entertainment
A
duty m certam specific classes of cases. Section 7 authorises the
State qovernment to make rules for securing the payment of the
ente~tamment duty and generally for carrying into effect
the
prov1S1ons of t!ie Act. The expression "entertainment" is defined
m s. 2(a) as mcludm.g any exhibition, performance, amusement,
game or sport to which ,persons. are admi~ted for payment.
A
B
cmematograph. show 1s
entertamment" within the meaning of
the :\ct. Sectmn 2(b) defines "payment for admission" as in-
.cJudmg-
(ii) any payment for seats or other accommodation
in a place of entertainment.
(iv) any payment for any purpl'se whatsoever connected with an entertainment which a person is
required to make as a condition of attending or
continuing to attend the entertainment in addition to the payment, if any, for admission to the
entertainn1ent;"
Section 2 ( c) defines "proprietor" in relation to any entertainment as including any person responsible for, 0r for the time being in charge of, the management thereof.
By section 3 the duty is levied at the rates prescribed on all
payments for admission and the method of levy is prescribed by
s. 4(2). The proprietor is enjoined bys. 4(1) not to admit any
person to an entertainment without a ticket. The proprietor pays
the entertainment duty determined in the manner provided
by
clauses (a), (b) & (c) of sub-clause (2) of s. 4.
He is permitted
by the Act to collect entertainment duty on the net amount receivable by him, but he does not on that account become an
agent for the Government.
The charge is by s. 3 on payments
received by the proprietor for admitting visifors to entertainment.
Even where a ticket is not issued for an individual show but payment is received "by means of a lump sum" as subscription or contribution to any society; or by season ticket or for the .righLof
admission to a series of entertainments or during a certain period
of time, or for any privilege,right, facility, thing combined with
the right of admission to any entertainment without further payment or at a reduced charge, the entertainments duty is payable
on the Jump sum : see s. 3 (2). Where a complimentary ticket
is issued the duty is payable by the proprietor at the appropriate
rate prescribed under the Act as if full payment had been made
for admission to· the entertainment.
These provisions leave no
room for doubt that liability for payment of the duty is imposed
upon the proprietor and not upon the
visitors to t.he
theatre.
Under s. 4 ( 1) on the ticket for admission to any entertainment,
c
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t
A
LIBERTY TALKIES v. GUJARAT (Shah, C.J.)
403
an impressed,-embossed, engraved or adhesive stamp (not before
used) issued by the State Government of the value specified in
s. 3 must be affixed. The price which the visitor pays for a ticket
for admission to an entertainment is the value of the stamp affixed and the net value of the ticket. But the •statutory liability to
pay the entertainment duty is imposed upon the proprietor and
B
not on the visitor. The proprietor it is true passes on a part of
the duty payable by him to the vjsitor, but even in respect of that
amount he does not act as an agent of the Government.
c
The rules framed under the
Bombay Entertainments Duty
Act, 1923 do not also suggest a contrary $cheme. Rule 7, insofar
as 1t is relevant, provides :
"Except as provided in rules 15 and 23, every dutiable ticket, not being a complimentary ticket, issued on
payment for admission to entertainment shall be in three
parts. One part shall remain on the ticket book and the
remaining two parts shall be detached therefrom and
u
issued to the purchaser. Every dutiable ticket shall have
€ach part clearly marked with the price of admission,
and with the date and show for which it is available and
also with the book number and the serial numbers
E
F
H
•
•
•
•
•
and
shall also have securely affixed to it a stamp of the value
of the duty payable out of the said price of admission.
•
•
•
•
*"
A similar provision is made in respect of "plural tickets" where
a number of persons are to be admitted on a single ticket. The
use of the expression "affixed to it a stamp of the value of the
duty payable out of the said9 price of admission" does
not support the view that the amount of entertainment duty represented by the ticket alone is payable by the proprietor.
It onlv
means that the proprietor shall specify on the ticket the amoy·nt
chargeable by him to the visitor and the duty in respect of which
the stamp has been affixed.
Rule 7 cannot operate to modify
the charging section 3, nor section 4 relating to the method of
levy. Rules 15 and 23 which are referred to in r. 7 also do not
support the submission made by counsel for the appellant. Rule
15 deals with unstamped tickets and r. 23 deals with th' fonn· of
exemption granted by the District Magistrate or the Commissioner
of Police.
Rule 16 imposes a duty upon every proprietor either
making a consolidated payment under cl. (a) of sub-s. ('.!! of
s. 4 or making payment in accordance with return of .the payments
for admission under cl. (b) of. sub-s. (~) of s. 4, within ten days
of the date of entertainment and to submit to the prescribed
404
SUPREME COURT REPORTS
[1971 J3 's.C.R.
officer a return in Form "B" showing the number of tickets (not A
being complimentary tickets) issued at each rate the serial number of tickets issued, the gross amount received by sale of tickets
and the amount of duty payable to the State Government. Under
section 4(2) (a) the consolidated payment is a percentage of the
gross sum (not charge and the entertainment duty) received by
the proprietor on account of payments for admission to the enterB
ta!nment. That duty is charged under s. 4 ( 2) (b) in accordance -
With the returns relating to the payments for
admission to the
entertainment, under r. 16 the duty is again chargeable on the
gross amount received by the proprietor. The definition of the
expression "payment for admission" in s. 2(b) of the Act, is an
inclusive definition; it includes by clause (iv) payment for any c
purpose whatsoever "connected with an entertainment which a
person is required to make as a condition of attending or continuing to attend the entertainment''. In our judgment entertainment
duty is a payment which the proprietor is required to make as a
condition for enabling visitors to attend or continue to attend the
entertainment. Without such a payment the visitor cannot be admitted to the entertainment under s. 4 (I) of the Act. That being D
so the expression "payment for admission" includes entertainment
duty.
We agree with the High Court that the appellant was liable
to pay duty computed in the manner provided bys. 3(l)(b)(ii)
on the total amount received by the proprietor. But the method
E
of levy of entertainment duty from the proprietors involves some
hardship. It is implicit in the Act that the proprietor is entitled
"to pass on the liability" for payment of entertainment duty to
the visitors. But the visitor only pays the amount represented by
the stamp affixed on the ticket. A proprietor paying entertainment duty on the total amount, received by him from the visitor F
will never be able to collect Uie full entertainment duty from the
visitor.
A part of the duty payable by him will have to come out
of the amount received by him as net charge for the ticket. But
we are dealing with a taxing statute and questions of hardship
cannot justify us in departing from the provisions of ss. 3 and 4
of the Act. The Legislature must be deemed to have contemplated that only a part of the entertainment duty levied by the GovG
emment may be collected in the manner provided from the
visitors to the theatre and the balance shall be paid by the proprietors. It may be observed that between March, 18, 1960 and
January 11, 1962 the appellant collected and paid the duty which
was actually received from the visitors to the theatre by stamps
affixed on the tickets issued to them according to the notification H
issued by the Collector. It was thereafter when a fresh memorandum dated January 11, 1962 was issued requiring the proprietors of the theatres to pay tax on the aggregate amount of the net
"
1
A
B
c
LIBERTY TALKIES V. GUJARAT (S/zalz, C.J.)
4.05
value of the ticket and the entertainment duty that the proprietor
was called upon to pay the difference.
Till January 11, 1962 the
proprietor acted pursuant to the memorandum dated March 18,
1960 issued by the Collector and collected the duty and paid it
over. The Government of Gujarat later advised that the method
of collection notified by the Collector was not the correct method.
But the Act contains no provision for reopening assessments al·
ready made.
When pursuant to return by the proprietor, payments were made and accepted under s. 4(2) (b), the tax may be
deemed to .be assessed and paid, and the State cannot thereafter
reopen the concluded assessments and seek to levy tax or duty
which has escaped.
The appeals fail except as to the amount claimed to be due
for the period between March 18, 1960 and January 11, 1962.
There will be no order as to costs.
V.P.S.
Appeals dismissed.