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CASE NO.: Appeal (civil)  4491 of 2007

PETITIONER: Entertainment Tax Officer,Madhapur Circle,Hyderabad

RESPONDENT: M/s Hi Tech Theatre, Madhapur,Hyderabad

DATE OF JUDGMENT: 24/09/2007

BENCH: S.B. SINHA & H.S. BEDI

JUDGMENT: JUDGMENT

CIVIL APPEAL NO.  4491/2007 (Arising out of SLP(C) No.18792/2006)

S.B. Sinha, J        

               Delay condoned.

               Leave granted.         (1)     Interpretation of Sub-section(6) of Section (5) of the Andhra  Pradesh Entertainments Tax Act, 1939 in the facts and circumstances as obtaining  herein falls for our consideration in this appeal which arises out of a judgment and   order dated 6.1.2006 passed by a Division Bench of the Andhra Pradesh High Court  in Writ Petition No.20087 of 2005 allowing the writ petition filed by the respondent  herein.         (2)       The basic fact of the matter is not in dispute.

       (3)     Respondent owns a cinema theatre. It is exigible to payment of  entertainment tax. Section 4 of the Andhra Pradesh Entertainment Tax Act provides  for the mode and manner for calculating the  quantum of  tax payable. Section (5) of  the said Act, however, provides for computation of tax on the basis of an option to be  exercised by the owner of the theatre subject to the conditions as may be prescribed  therefor. Indisputably, the State has made rules for calculation of the tax in lieu of  such an option exercised by the owner of the cinema theatre. The scheme for exercise  of such an option is that;(i) a proprietor shall file an application in the prescribed  form before the prescribed authority;(ii) the authority would  pass an order upon  giving an opportunity of hearing to the owner of the theatre for correct determination  of the amount and the nature of security to be furnished by the proprietor for  proper  payment of tax and the time within which such security to be furnished;(iii) once such  security is furnished the Entertainment Tax Officer is required to grant a permit in  the prescribed form, namely, Form IV wherafter, the proprietor of the cinema theatre  is to pay tax in the manner indicated therein.         (4)     Sub-Section (6) of Section (5), however, entitles the prescribed  authority to vary the amount of tax payable if one or the other conditions contained  therein is satisfied.         (5) In this case the respondent filed an application in the prescribed ’Form’  exercising an option under Section 5 of the Act. The cinema theatre in question is  situated within Serilingampally Municipality. It is now not in dispute that in terms of  a Notification dated 18.5.2001  the Municipality was upgraded to Grade II from  Grade III.         (6)     Form IV was issued to the respondent on 25.5.2001. Although, the  correct date of the filing of the application is not available on records but the  respondent must have filed the said application prior to 18.5.2001.         (7)     It is possible that during assessment of tax proceedings in terms of  the option exercised by the respondent, the Entertainment Tax Officer was not aware  of the factum of upgradation of the Municipality in terms of the said Notification  dated 18.5.2001. The mistake was pointed out only by the Office of the Accountant  General. A show cause notice in terms of Sectin 5(6) of the Act was, therefore, issued

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on the respondent on or about 24.6.2005.         (8)     The question which arose for consideration before the Appellant  and, consequently, before the High Court was as to whether in terms of Sub-section  (6) of Section (5) of the Act read with Sub-Rule 13 of Rule 27, the words "during the  period of option"  referred to the power of the prescribed authority to vary the  amount of tax payable or only the amount of  tax payable.         (9)     Respondent in support of its plea that an order of  varying the  quantum  of tax could be passed only during the currency of the period for which  such tax is to be paid submitted that the said words restrict the power of the assessing  authority to vary the amount of tax payable which would mean that on the expiry of  the said period, the power to vary the amount of tax also comes to an end. Such a  construction appears to have found favour by the Andhra Pradesh High Court in  Swamy Theatre, Sanatnagar Vs. Deputy Commercial Tax Officer, Sanatnagar,  Hyderabad (1992 Vol. 15 A.P. Sales Tax Journal  63).         (10)    Having heard learned counsel for the parties, we are of the opinion  that it is not necessary for us to go into the aforementioned question. In the fact  situation obtaining herein, we are satisfied that attention of the assessing authority  might not have been drawn to the Notification dated 18.5.2001 in terms whereof the  Municipality was upgraded from Grade III to Grade II, a mistake was committed in  the matter of computation of tax. If a genuine mistake has been committed not only  by the assessing authority in the said matter and furthermore as the respondent also  did not bring the same to the notice of the said authority, in our opinion, interest of  justice would be subserved if the said mistake be allowed to be rectified.         (11)    In Union of India & Ors. Vs. Bikash Kuanar(2006(10) SCALE 86)  this Court held:         " It is now trite that if a mistake is committed in passing an administrative  order, the same may be rectified. Rectification of a mistake, however, may in a given  situation require compliance of the principles of natural justice. It is only in a case  where the mistake is apparent on the face of the records, a rectification thereof is  permissible without giving any hearing to the aggrieved party."

       (12)    In Shri Shekhar Ghosh Vs. Union of India and Anr.( 2006 11  SCALE 363) , it was held:

       " It is not denied or disputed that even when a mistake is sought to be  rectified, if by reason thereof, an employee has to suffer civil consequences ordinarily  the principles of natural justice are required to be complied with..."

       It was further held:

       " If a mistake is to be rectified the same should be done as expeditiously as  possible. ( See:  Board of Secondary Education, Assam Vs. Mohd. Sarjumma \026 2003  12 SCC 408)

        We are not oblivious that in Ram Chandra Tripathi Vs. U.P. Public Services  Tribunal IV and Ors. - 1994 5 SCC 180, an order passed by way of a mistake was  permitted to be corrected as the same was done in violation of the order of injunction.  In such a situation only, this Court held that an opportunity of being heard for  correcting such mistake would not arise because there would not have been any  occasion to take one view or the other in the matter on the basis of representation to  be made by the affected employee.

       It is also not a case where a mistake was apparent on the face of the records  and, thus, compliance of the principles of natural justice would not have been made  any difference as was in the case of Smt.Ratna Sen nee Roy Vs. The State of West  Bengal and Ors. (1995 (1) Cal. LT 462).

       Requirements to comply with the principles of natural justice would,  therefore, vary from case to case. if upon giving an opportunity of hearing to an  affected employee, it is possible to arrive at a different finding, the principles of  natural justice must be complied with. We may notice that recently in Union of India  and Ors. Vs. Bikash Kuanar -2006(10) SCALE 86, a Division Bench of this Court  opined:

       " ....It is now trite that if a mistake is committed in passing an administrative

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order, the same may be rectified. Rectification of a mistake, however, may in a given  situation require compliance of the principles of natural justice. It is only in a case  where the mistake is apparent on the face of the records, a rectification thereof is  permissible without giving any hearing to the aggrieved party."          (13)    We may, however, notice that whereas according to the respondent  the difference in the quantum of tax was as  under: 1)      From 18-5-2001 to 25-5-2001 -Rs.16,724/-.

2)      From 26-5-2001 to 14-6-2001 is Rs.27,624/- (GCC increased due to enhancement of rates of admission)

3)      From 15-6-2001 to 31-3-2001 is Rs.16,724/-(GCC restored to  Rs.16,724/-because the licensing authority refused to grant  permission for enhancement);

    according to the appellant the said difference would be:

1.GCC Rs.18,562.00 18-5-2001 to 25-5-2001 E.Tax  Rs.89,840.00 2.GCC Rs.27,624.00 26.5.2001 to 14.6.2001 E.Tax Rs.1,33,700.00 3.GCC Rs.18,562.00 15.6.2001 to 2.9.2001  E.Tax Rs.89,840.00 4.GCC Rs.19,549.00  3.9.2001 to 31.3.2002 E.Tax Rs.94,617.00         (14) We are, therefore, of the opinion that the question in regard to the  quantum of difference may be determined by an appropriate authority  after giving  an opportunity of hearing to the respondent. We, however, make it clear that the  respondent shall neither be  liable to pay any  interest on the said amount nor shall  not be exigible to any penalty . We also make it clear that computation of the  difference in the amount of tax shall be confined  only to the matter of upgradation of  Municipality and no other.         (15)    The appeal is allowed to the aforementioned extent. No costs.