REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO.                  OF 2009 [Arising out of SLP (C) No. 7853 of 2009]

State of Maharashtra & Ors. …Appellants

Versus

Swanstone Multiplex Cinema (P) Ltd. …Respondent

J U D G M E N T  

S.B. SINHA, J :   

1. Leave granted.

Introduction:

2. Doctrine of unjust enrichment, as opposed to doctrine of retention, is  

the core question involved herein.   It  arises out of a judgment and order  

dated 21.10.2008 passed by a Division Bench of the Bombay High Court in  

Writ Petition No. 22 of 2006.  

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Background facts:

3. Respondent  is  a  company  registered  and  incorporated  under  the  

Companies  Act.   It  inter  alia  is  engaged  in  the  business  of  operating  a  

multiplex theatre, commonly known as Fame Adlabs in the town of Mumbai  

for screening  of films in the said theatre.  Indisputably, the provisions of the  

Bombay Entertainments Duty Act, 1923 (for short “the Act”) are applicable  

to the said multiplex theatre.  The State of Maharashtra, however, adopted a  

policy decision to provide certain exemptions in the matter of payment of  

entertainment duties. Entertainment duty is payable at the rate of 45% on  

payment for admission by the proprietors so far as the multiplex theatres  

constituted within the limits of the Brihan Mumbai Municipal Corporation  

are concerned.

4. Respondent availed the said exemption.  It, however, even during the  

period for which it was not liable to pay any duty or duty at the rate of 25%  

only realized the entire duty.  Appellants issued a notice dated 5.12.2005  

demanding 75% of the entertainment tax reflected by the respondent on its  

tickets  for  the  period  between  24.06.2005  and  22.09.2005,  i.e.,  Rs.

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1,16,95,846/-.  On or about 30.12.2005, the appellant issued another notice  

demanding Rs. 1,16,95,846/- within 48 hours.  Further on 21.01.2006 issued  

a further demand notice to the respondent for a sum of Rs. 70,39,529/- for  

the period between 23.09.2005 and 5.01.2006.  

5. The writ petition having been filed questioning the legality and/ or  

validity  of  the  said notices  of  demand,  the  High Court  by  reason of  the  

impugned judgment directed:

“To  conclude,  it  cannot  be  said  that  merely  because the proprietors printed full  entertainment  tax duty on the admission ticket though they were  only  liable  to  pay  25% of  the  entertainment  tax  duty for a period of 2 years for which they were  eligible  for  75% exemption of  the  entertainment  tax, they are liable to pay 100% entertainment tax  without there being any express authority of law  created by the Statute.  On the other hand, it would  deprive  them  of  the  incentive  which  has  been  specifically  offered  under  the  scheme  for  which  the Act came to be amended and would be in total  conflict with the object and reasons with which the  Government sought amendment of the Act nor this  can be considered as a case of unjust enrichment as  even, otherwise, the gross admission fee which the  patron is supposed to pay minus the entertainment  tax  and  other  taxes  (direct  or  indirect)  would  ultimately go in the pocket of the proprietors of the  multiplex theaters.

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63. Therefore,  we  find  that  the  State  was  not  entitled to claim more than what could be levied as  entertainment  duty  during  the  two  years  period  irrespective  of  the  fact  that  the  Exhibitors  have  shown on admission tickets issued to patrons 45%  of  the  duty  though they  were  liable  to  pay  only  25% of 45% during the incentive period which was  of 2 years.  The impugned notices and order Exh  A-1  and  A-2  and  H  are  quashed  and  set  aside.  Rule made absolute with no order as to costs.”

Contentions

6. Mr. Shekhar Naphade, learned senior counsel appearing on behalf of  

the appellants, in support of this appeal, urged:

(i) Having regard  to  the  provisions  of  the  Act  and the  Bombay  

Entertainments  Duty  Rules,  1958  (for  short  “the  Rules”)  in  

terms  whereof  entertainment  duties  were  to  be  levied  and  

collected, the High Court committed a serious error in opining  

that the State had not granted any exemption to the owners of  

the multiplex theatre, but the same were by way of retention  

benefit.

(ii) As  admittedly  from  the  tickets  issued  by  the  respondent,  it  

would appear that they had realized full duties from the cinema-

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goers  payable  in  terms  of  the  Act  for  which  they  had  no  

authority, the impugned judgment is wholly unsustainable.

(iii) Any amount of tax illegally realized by the assessee from the  

cinema-goers would be hit by Section 72 of the Indian Contract  

Act and, thus, the State would have right to recover the same in  

exercise of its power conferred on it under Article 296 of the  

Constitution of India.

7. Mr.  H.N.  Salve,  learned senior counsel  appearing on behalf  of  the  

respondent, on the other hand, would contend:

(i) Under Section 3(13) of the Act read with Rule 15 of the Rules  

which is applicable in this case, the respondent was entitled to  

exemption from payment of the entire duty for a period of three  

years and duty at the rate of 25% for the next two years inter  

alia in the event it charged the same amount of duty which was  

being charged in the neighbouring theatres for which it used to  

issue computerized tickets.   

(ii) Having  regard  to  the  change  in  economic  scenario,  the  

respondent was entitled and, thus, charged the entire amount;

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the total  whereof came to Rs.  135/- at  all  stages.   The State  

having granted exemption to the respondent for the first three  

years although it had charged a total sum of Rs. 135/- from the  

cinema-goers, it is estopped and precluded from demanding any  

sum when the respondent was required to pay only 25% of the  

duties.

(iii) The  admission  charges  collected  by  the  respondent  being  a  

matter of contract by and between it and the cinema-goers and  

the  Act  having  not  provided  for  any  forfeiture  clause,  the  

question of the respondent’s being unjustly enriched does not  

arise, particularly, when it is not a case where the amount of tax  

had been deposited which the State was entitled to keep with it  

having regard to the statutory provisions in this behalf.

Statutes

8. The State of Bombay enacted the Act to impose a duty in respect of  

admission to entertainment.

Section  2  of  the  Act  is  the  interpretation  section.   “Payment  for  

admission” has been defined in Section 2(b) to mean:

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“(b)  “payment  for  admission”  in  relation  to  the  levy of entertainments duty, includes-

(i)  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 duty or more duty is required,

(ii) any payment for seats or other accommodation  in a place of entertainment.

(iii) any payment for a programme or synopsis of  an entertainment.

(iii-a) 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, 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  admissions;

(v) any payment made by a person for admission  to a video exhibition irrespective of whether any  eatables  or  beverages  or  both  are  or  are  not  provided to him against such payment;

(vi)  any  payment  made  by  a  person  by  way  of  contribution  or  subscription  or  installation  connection charges or any other charges collected  in any manner whatsoever for television exhibition  with the aid of any type of antenna with a cable  network attached to it or cable television;

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(vii)  any  payment  made  by  a  person  to  the  proprietor  of  a  Direct-to-Home  (DTH)  Broadcasting  service  by  way  of  contribution,  subscription, installation or connection charges, or  any  other  charges  collected  in  any  manner  whatsoever  for  Direct-to-Home  (DTH)  Broadcasting service with the aid of any type of set  top  box  or  any  other  instrument  of  like  nature  which  connects  television  set  at  a  residential  or  non-residential place of connection-holder directly  to the Satellite; and

(viii)  any payment  made  by way of  sponsorship  amount for a programme which is organised only  for invitees, without selling tickets.”

Section  2(d)  defines  “admission  to  an  entertainment”  to  include  

admission to any place in which the entertainment is  held.   Section 2(f)  

defines “entertainment duty” in respect of any entertainment to mean the  

entertainment duty levied under Section 3.   

The Act distinguishes a multiplex theatre complex, on the one hand,  

and a permanent cinema, quasi-permanent cinema, on the other.  “Multiplex  

Theatre Complex” has been defined in Section 2(f-a) of the Act to mean an  

entertainment – cum – cultural centre which provides:

“(i) within the limits of Municipal Corporation of  Brihan  Mumbai  not  less  than  four  theatres  in  a

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complex with minimum total  seating capacity  of  1250; and

(ii) anywhere else in the State, not less than three  theatres in a complex with minimum total seating  capacity of 1000,…”

“Permanent cinema” or “quasi-permanent cinema” has been defined  

in Section 2(f-1) to mean a cinema which is licensed as a permanent cinema  

or a quasi-permanent cinema, as the case may be, under the Maharashtra  

Cinemas (Regulation) Rules, 1966.

The charging section is Section 3 of the Act in terms whereof “there  

shall be levied and paid to the State Government all payments for admission  

to any entertainment” subject  to the exceptions contained therein and the  

rates specified therefor.

The relevant portion of Section 3(13) of the Act reads as under:

“(13)  (a)  Notwithstanding  anything  contained  in  any other provisions of this Act, but subject to the  terms  and  conditions  specified  in  clause  (b),  on  and with effect from the date of coming into force  of the Bombay Entertainments Duty (Amendment)  Act, 2001 (Mah. II of 2002), there shall be levied  and collected by the  State  Government from the

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proprietor  of  a  Multiplex  Theatre  Complex  the  duty in  respect  of  any such complex as follows,  namely:-

(i)  for  the  first  three  years  from  the  date  of  commencement of the Multiplex Theatre Complex,  no duty;

(ii)  for  the  subsequent  two  years,  at  the  rate  of  twenty-five per  cent,  of the rate  of duty leviable  under clause (b) and clause (c) of sub-section (1)  or, as the case may be, sub-section (3);

(iii)  from  the  sixth  year,  full  amount  of  duty  leviable  at  the  rate  specified  in  clause  (b)  and  clause (c) of sub-section (1) or, as the case may be,  subsection (3):

*** *** ***

(b)  The  concession  in  duty  as  provided  under  clause (a) shall be available to the proprietor of the  Multiplex  Theatre  Complex  subject  to  following  terms and conditions, namely:-

(iii)  during  the  period  of  concession  covered  by  clause (a) above, the minimum rates of admission  in  a  multiplex  shall  be  determined  by  the  Collector. Such minimum rates of admission shall  not  be  less  than  the  prevailing  highest  rate,  excluding the rates of the highest priced fifty seats,  in  any  of  the  cinemas  theatres  in  the  district  in  which multiplex is situated and accordingly such  minimum rates of admission may be different for  morning, matinee and other shows;

*** *** ***”

Section 4 of the Act reads as under:

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“4 - Method of levy  

(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 valid  printed ticket or complimentary ticket.

(2)  Every  proprietor  of  any  entertainment  in  respect of which the entertainment duty is payable  under  section  3,  shall  apply  to  the  prescribed  officer  by the fifteenth days of January of every  calendar  year,  to  allow  him  to  pay  the  entertainment  duty  due  and  payable,  and  the  prescribed  officer  may,  on  receipt  of  such  application,  allow  the  proprietor,  on  such  conditions  as  the  State  Government  may  specify  by general or special order issued in that behalf, to  pay the amount of entertainment duty due.

(a) by a consolidated payment of 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 accordance 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  automatically  registers the number of persons admitted:

Provided  that,  the  State  Government  may  suo  motu,  by general  or  special  order  in the Official  Gazette, direct the proprietor of any entertainment  or class of entertainment to pay the amount of duty  due, in accordance with the returns of the results  recorded by any mechanical  contrivance  referred  to in clause (b) and (c), as the case may be.

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Provided further that, the prescribed officer may,  within fifteen days from the date of receipt of the  application as aforesaid, reject the application after  giving  an  opportunity  of  being  heard  to  the  applicant and recording reasons for such rejection.

(3) The provisions of sub-section (1) of this section  and  of  section  5  shall  not  apply  to  any  entertainment in respect of which the duty due is  payable in accordance with the provisions of sub- section (2).”

Section  6  of  the  Act  provides  for  entertainments  for  charitable  or  

educational purposes exempted.  Section 9 of the Act deals with recoveries.

9. The Rules framed by the State under the said Act, which are relevant  

for our purpose, are as under:

“7.  Price  of  admission,  date  and  show  to  be  shown on, and stamps affixed to ticket:—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  issued  to  the  purchaser.   Every  dutiable ticket shall have each 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 (being such  series  and numbers in respect  of  the  ticket  book  and tickets as may be previously approved by the  prescribed  officer)  and  shall  also  have  securely

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affixed  to  it  a  stamp  of  the  value  of  the  duty  payable out of the said price of admission :

Provided  that  the  prescribed  officer  may,  upon  such conditions and for such period as he thinks  fit,  exempt  any  proprietor  from the  operation  of  this rule or any part thereof.

XXX XXX XXX

15.  Unstamped  tickets  issued  under  Section  4(2)(a)  and  (b):—(1)Every  ticket,  not  being  a  complimentary ticket, issued by a proprietor who  has  been  allowed  to  pay  the  duty  under  the  provisions of clause (a) or clause (b) of sub-section  (2) of Section 4, shall consist of three parts.  One  part  shall  remain  on  the  ticket  book  and  the  remaining  two parts  shall  be detached therefrom  and issued to the purchaser; and shall bear on each  part of such ticket the price of admission, the book  number and the serial  number (being such series  and  numbers  in  respect  of  the  ticket  book  and  tickets  as  may  be  previously  approved  by  the  prescribed officer) and the date on which, and the  show for which it is issued.

(2) On  admission  of  the  purchaser,  the  proprietor  shall  cause  to  be  collected  one of  the  two parts sold to the purchaser and the other to be  returned to him.

(3) The  purchaser  shall  retain  his  part  of  the  ticket till he leaves the place of entertainment, and  the part retained by the proprietor shall be retained  by him till the entertainment is over :

Provided  that  the  prescribed  officer  may,  upon  such conditions and for such period as he thinks  fit,  exempt  any  proprietor  from the  operation  of  this rule or any part thereof.”

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16. Returns required under Section 4(2) (a) and  (b):—Every  proprietor  making  a  consolidated  payment  under  clause  (a)  of  sub-section  (2)  of  Section 4 or making payment in accordance with  return of the payments for admission undr clause  (b) of sub-section (2) of Section 4, shall, within ten  days  of  the  date  of  entertainment,  submit  to  the  prescribed officer a return in Form ‘B’,  showing  the  number  of  tickets  (not  being  complimentary  tickets)  issued at  each rate,  the  serial  number of  tickets issued, the gross amount received from the  sale of tickets and the amount of duty payable to  the State Government.  He shall, if so required by  the  prescribed  officer,  also  submit  to  the  said  officer,  within  ten  days  of  the  date  of  entertainment, a return in Form ‘C’, showing the  price of programme or synopsis including duty, the  number  of  programme  or  synopsis  issued,  the  gross amount received from the sale thereof and  the  amount  of  duty  payable  to  the  State  Government.”

Form ‘B’ attached to the Rules read as under:

FORM ‘B’

(SEE RULE 16)

Statement of tickets not being complimentary tickets issued when duty is  payable under clause (a) or (b) of sub-section (2) of Section 4

Name and place of entertainment:………….. Date of performance:…………

Number  and  time  of  show

Price  of  tickets  including  Duty

Number  of  tickets  issued  

Serial  numbers  of tickets

Gross  receipts

Amount  of  duty  payable  to  Government

Remarks

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subject  to duty

From to Rs. Rs.

10. We may for the sake of completeness also place on record that the  

State had adopted two resolutions, viz., dated 21.09.2000 and 4.01.2003

The  relevant  portion  of  annexure  attached  to  the  resolution  dated  

21.09.2000 is as under:

“1) The three parts of the ticket should be in the following order.

Portion  remaining  with  the  theatre owner

Portion  remaining  with  the door keeper

Portion  to  be  retained  by  the spectators

(A Counter) (D Counter) (P Counter)

*** *** ***

8) Sale  of  tickets  of  the  Movie  which  is  exempted  from  Entertainment  Tax,  the  tickets  should  have  printed  on  it  “Tax  Free”.   And  of  ticket after deduction of tax should be printed on  the ticket.

XXX XXX XXX

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11. Each ticket should be printed in the format  shown below :

Alphabet of series         Roll No.    Six digit Ticket Code No. of      Number Theatre  Sale Centre

Name of Theatre

      Address

Show Time Entrance Fee Show Date/day Entertainment Tax Seat Group Service Charges Row No. Seat No.  A/D/P Counter  Total Entrance

Fee Rs.”

Clause 3 of the resolution dated 4.01.2003 reads as under:

“3. It was declared by the Government Resolution  dated  the  20th September,  2000  that  the  concessions to be granted in the Entertainment Tax  to the Multi purpose Cinema Theatres complexes  would be implemented during the period from the  17th August, 2001 to 16th August, 2002.  There was  very good response to the said scheme in the State.  Total  221  applications  were  received  by  Government  in  the  State  for  grant  of  availing  concession in the entertainment tax available to the  Multi  purpose  cinema  theaters  complexes  Government had decided that all the applications  should be properly  scrutinized from the point  of  view of getting concessions in the Entertainment  Tax only to the appropriate Multi purpose Cinema  Theatre  and  all  the  facilities  will  be  definitely  reached  upto  the  public/audience  as  expected  by

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Government  and  the  Cinema  industry  will  be  developed healthy.”

In the said resolution, it was further stated:

“(i) The  applicant  will  be  eligible  to  get  the  exemption from paying entire Entertainment  Tax for period of first  3 initial  years from  the date of commencement of the Complex,  whereas,  he  will  be  admissible  exemption  (sic)  from  paying  75  per  cent  of  the  Entertainment  Tax  due  for  the  fourth  and  fifth  years.   The  applicant  must  pay  the  Entertainment  Tax  at  the  prescribed  rate  from the sixth year.”

11. Section 72 of the Indian Contract Act, 1872 reads as under:

“72 - Liability of person to whom money is paid or  thing delivered by mistake or under coercion     A  person  to  whom  money  has  been  paid,  or  anything delivered, by mistake or under coercion,  must repay or return it.”

12. Article 296 of the Constitution of India reads as under:

“296 - Property accruing by escheat or lapse or as  bona vacantia  Subject as hereinafter provided any property in the  territory  of  India  which,  if  this  Constitution  had  not  come into  operation,  would  have  accrued  to  His Majesty or, as the case may be, to the Ruler of

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an  Indian  State  by  escheat  or  lapse,  or  as  bona  vacantia for want of a rightful owner, shall, if it is  property situate in a State, vest in such State, and  shall, in any other case, vest in the Union:  Provided that any property which at the date when  it would have so accrued to His Majesty or to the  Ruler of an Indian State was in the possession or  under the control  of the Government of India or  the Government of a State shall, according as the  purposes for which it was then used or held were  purposes of the Union or a State, vest in the Union  or in that State.  Explanation.--In  the  article,  the  expressions  "Ruler"  and  "Indian  Slate"  have  the  same  meanings as in article 363.”  

Statutory Interpretation

13. A statute, as is well-known, must be read in its entirety, then chapter  

by chapter and section by section.  It is also well-settled that the rules validly  

made forms part of the Act.

14. Entertainment duty is a tax.  Tax, as is well-known, is a compulsory  

exaction.  There is, it is trite, no equity about tax.  It is a common burden.  

The State levied the duty in exercise of its statutory power.  Sub-section (1)  

of  Section  3  of  the  Act  talks  in  imperative  terms.   Sub-section  (13)  of  

Section  3  of  the  Act,  wherewith  we  are  concerned,  provides  for  an  

exemption.  It contains a non-obstante clause.  Such exemption is granted

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wholly or  partly and spread out  over a period of  five years.   It  is  to be  

granted to the owner of the multiplex theatre complexes subject to the terms  

and conditions  specified in Clause (b)  of Section 3(13) of  the Act.   The  

crucial  words  are  “there  shall  be  levied  and  collected  by  the  State  

Government.  Such levy and collection is to be made from the proprietor of a  

multiplex theatre complex.  By reason of the said provision, no duty is to be  

paid.  If no duty is to be paid by the multiplex theatre complex, the question  

of the same being levied and collected would not arise for a period of three  

years.  Similarly, for subsequent period of two years, the levy and collection  

would be at the rate of 25% of the rate of duty leviable under Clauses (b)  

and (c) of Sub-section (1) of Section 3 of the Act.  Indisputably, in terms of  

Clause (c) of Sub-section (1) of Section 3 of the Act, as noted hereinbefore,  

the  rate  of  entertainment  duty  on  payment  of  admission  fixed  by  the  

proprietor within the limits of Brihan Mumbai Municipal Corporation would  

be 45% which amount would become payable from the sixth year.

15. Clause (b) of Sub-section (13) of Section 3 of the Act uses the words  

“concession in duty”.  It becomes available to the proprietor of the multiplex  

theatre complex only in the event the terms and conditions specified therein  

are fulfilled.  Sub-clause (i) of Clause (b) of Sub-section (13) of Section 3

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provides that the proprietor shall not charge less payment for admission than  

the  prevailing  highest  rate  of  admission  at  any given time in  any of  the  

cinema theatres in the district in which the complex is situated till the period  

of concession under Clause (a) is over.  Section 2(b) of the Act provides for  

an inclusive provision.  The provision is not exhaustive although expansive.  

The payment for admission must be in relation to the levy of entertainment  

duty.  The words “in relation to” are of great significance.  The payment for  

admission being in relation to the levy of entertainment duty, there cannot be  

any composite price for the tickets.   

Mr.  Salve  may  be  correct  that  Rule  7  of  the  Rules  would  not  be  

applicable  in  the  instant  case  but  we  are  not  concerned  therewith.   But  

except for complementary tickets, all other tickets are required to be in three  

parts.  They must fulfill the other criteria laid down therein including the  

price for admission, the ticket number, the serial number, the date and the  

show for which it is issued.  Respondent from the very inception had been  

charging Rs. 135/- from each of the cinema-goers.   

We may heretobelow notice  the  method of  computation  which the  

respondent themselves showed vis-à-vis the correct method of computation  

and entertainment duty as per the State:

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Particulars of Tickets Ticket rate as per ticket  issued by the Petitioner

Corrected method of  computation of  

entertainment duty as  per G.R.

A) Net rate of tickets 93.05 93.05 B) Entertainment Duty 41.95 10.46 C) Service Charges Nil Nil D) Gross rate of ticket 135.00 103.51”

16. In view of the aforementioned admitted situation, the State is entitled  

to raise a contention that whether the respondent was entitled to keep the  

entire gross receipt for the first three years and 75% of the tax payable for  

the next two years thereafter is the question.  Respondent itself has shown  

the net  rate  of tickets  which they charged by way of  admission charges,  

entertainment duty separately.  Respondent had indisputably been collecting  

45% of the amount of admission fee by way of entertainment duty, i.e., the  

full duty payable in terms of the provisions of the said Act and the Rules.   

17. The  contention  of  Mr.  Salve  that  the  entire  amount  of  Rs.  135/-  

became chargeable from the cinema-goers as a price is fallacious.  If the sum  

of Rs. 135/- is the amount which the owner of a multiplex theatre complex  

becomes entitled to appropriate,  the rate of admission would come down  

from the sixth year in so far as that, whereas for the first three years, the

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respondent would be entitled to keep a sum of Rs. 135/- with it; for the next  

two years, it would become entitled to Rs. 124.54 only and Rs. 93.05 from  

the sixth year.

18. Section 3(13)(a) of the Act uses two different terms, viz., duty and  

admission.  They must be held to have different meanings.  It is one thing to  

say that in terms of the Rules they were not liable to show the rate of tax  

collected from the cinema-goers but it is another thing to say that although  

they had collected the full rate of tax from the cinema-goers, they would be  

entitled to retain the benefit  thereof.  Whether a statute expressly confers  

power on an assessee to realize the amount of tax payable to the State from  

its customers or not, in our opinion, is wholly immaterial.  The fact remains  

that it has to collect such taxes which are to be collected from the consumers  

and are required to be levied.  Once the taxes are levied, Section 3 of the Act  

entitles the State to collect the same from the owner of the multiplex theatre  

complex,  subject,  of  course,  to  the  concession  which  had been  given  to  

them.   

The term “concession” is a form of privilege.  {See V. Pechimuthu v.  

Gowrammal (2001)  7  SCC  617];  P.  Ramanatha  Aiyar,  Advanced  Law

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Lexican (New Delhi: Wadhwa & Company, Nagpur, 2005) Vol. 1 p. 944].  

The term “exemption” is also a form of privilege.  When a statute confers a  

privilege, the same must be confined only to the extent provided for therein.  

19. A proprietor of a multiplex cinema theatre when collects tax by way  

of entertainment duty from the cinema-goers, it would be entitled to collect  

such tax which is subject to levy and collection by the State.  The authority  

in this behalf is implicit.  For the aforementioned purpose, only the statute  

provides for the mode and manner in which the tax is to be collected.  Once  

it  is  held  that  the  amount  realizable  from  the  cinema-goers  by  way  of  

entertainment duty comes within the purview of the definition of ‘tax’, we  

see  no reason to  justify  the  conclusion  of  the  High Court  that  the  State  

Government for all intent and purport conferred the retention benefit.  If the  

State intended to provide for a grant, the same should have expressly been  

stated.   Respondent  cannot be granted a  huge amount by a welfare  state  

indirectly which it cannot do directly.

20. In  R.S.  Joshi,  Sales  Tax Officer,  Gujarat  and Others v.  Ajit  Mills  

Limited  and Another [(1974)  4  SCC 98],  while  interpreting  the  Bombay  

Sales Tax Act providing for terms “collected” and “shall be forfeited”, this

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court held that the terms “fine”, “forfeiture” and “penalty” are often used  

loosely.  Recourse to forfeiture can be taken by way of breach of prohibitory  

direction.   

Krishna Iyer, J. opined as under:

“38. The apparent apprehension that the financial  burden of forfeiture can be avoided if the dealer is  prosecuted is also not correct. The criminal Court  can punish only to the extent specified in Section  64(1). Section 37(4), properly read forbids penalty  plus  prosecution,  but  permits  forfeiture  plus  prosecution.  The  word  ‘penalty’  in  its  limited  sense in Section 37(1) and Section 37(4) does not  include  forfeiture  which  is  a  different  punitive  category.  Forfeiture  is  a  penalty,  in  its  generic  sense, but not a penalty in the specific signification  in Section 37(1) and (4). After all, the functionary  is  exercising  quasi-judicial  powers  and  not  insisting  on  maximum  exactions.  Every  consideration which is just and relevant must enter  his verdict lest the order itself be vitiated for being  unreasonable  or  perverse  exercise  of  discretion.  The fulfilment of the undertaking must be ensured  by necessary guarantees so that the dealer may not  play  a  double  game  and  the  purchaser  stand  betrayed.  We  are  not  giving  any  hidebound  prescriptions  but  stating  guidelines  for  taxing- authorities  who  exercise  these  quasi-judicial  powers.  There  is  a  tendency  for  valiant  tax  executives  clothed  with  judicial  powers  to  remember their former capacity at the expense of  the latter. In a welfare state and in appreciation of

25

the nature of the judicial process, such an attitude,  motivated  by  various  reasons,  cannot  be  commended. The penalty for deviance from these  norms is the peril to the order passed. The effect of  mala fides on exercise of administrative power is  well-established.”

Kailasam, J. observed as under:

“63…It  was  submitted  that  where  the  assessee  innocently  collected  amounts  on  the  impression  that  tax  was  leviable,  the  amounts  so  collected  were  forfeited  while  his  obligation  to  the  purchasers to refund the amounts continued. If the  assessee by a mistake failed to collect tax, from the  purchasers, tax was levied and collected from the  assessee  making  him suffer  in  any  event.  When  after a costly litigation, the assessee succeeded in  establishing that sales tax cannot be collected on  the railway freight on cement bags or inter-State  sales,  the  Government  promptly  forfeited  such  amounts. We agree these are instances of hardship  to the assessees and deserve Government attention.  But for that reason the Courts cannot say that the  act is beyond the legislative competence. The fact  that in some cases the dealers are prejudiced would  not affect the validity of the legislation which is  the question we are called upon to decide.  On a  careful  consideration  of  the  points  raised,  I  am  satisfied that  the  provisions of  Section 37(1)  are  within the competence of the State Legislature.”

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21. This  Court  in  Mafatlal  Industries  Ltd. v.  Union of  India [(1997) 5  

SCC 536] noticed Ajit Mills (supra) in the following words :

“50.  We  may  at  this  juncture  refer  to  a  very  significant decision in R.S. Joshi v. Ajit Mills Ltd.  rendered  by  a  seven-Judge  Constitution  Bench.  Section  46  of  the  Bombay  Sales  Tax  Act,  1959  provided that no person shall collect any sum by  way of sales tax which is not exigible according to  law. Section 37 provided for penalties in case of  violation of the provisions of Section 46. Not only  the person so collecting was liable to pay a penalty  not exceeding Rupees two thousand but in addition  thereto, any sum collected by the person by way of  tax in contravention of Section 46 was also liable  to be forfeited to the State Government.”

22. The Act also contains a penal clause in Sections 5 and 5A of the Act.  

Section  5  of  the  Act  provides  for  punishment  for  non-compliance  with  

Section 4 and Section 5A provides for punishment for non-compliance with  

other provisions.   

23. The High Court, however, opined that had the State provided for an  

exemption, it  could have invoked Section 6 of the Act but before us Mr.  

Salve conceded that that part of the judgment is not correct as Section 6 has  

no application in a case of this nature.

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24. In absence of any express statutory provision, allowing the proprietors  

of the multiplex theatre to retain the benefit, it is difficult for us to arrive at  

such an inference.  The State has power to impose tax.  The State has a  

power to grant exemption or concession in respect of payment of tax.  It has  

no power in terms of the provisions of the Constitution or otherwise to allow  

an assessee to collect the tax and retain the same.  We will assume that to  

that effect the provisions are not very clear but the superior courts will not  

interpret the statute in such a way which will confer an unjust benefit to any  

of the parties,  i.e.,  either  the taxpayer or  tax collector  or  the State.   The  

statute must be interpreted reasonably.  It must be so interpreted so that it  

becomes workable.  Interpretation of a statute must subserve a constitutional  

goal.

25. A  statue  of  this  nature,  in  our  considered  opinion,  cannot  be  

interpreted in such a manner so as to enable an entrepreneur to get undue  

advantage to the effect that he would collect tax from the cinema-goers and  

appropriate the same.  When a person collects tax illegally, he has to refund  

it to the taxpayers.  If the taxpayers cannot be found, the court would either  

direct the same to be paid and/ or appropriated by the State.  In a given case,  

this Court in exercise of its jurisdiction under Article 142 of the Constitution

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of India may also issue other directions, as has been done in Indian Banks’  

Association,  Bombay  and  Others v.  Devkala  Consultancy  Service  and  

Others [(2004) 11 SCC 1] in a similar situation where it was difficult for the  

court to direct refund of a huge amount to a large number of depositors from  

whom the bank had illegally collected, this Court directed that the amount  

be spent for the benefit  of the disabled in terms of the provisions of the  

Persons with Disabilities (Equal Opportunities, Protection of Rights and Full  

Participation) Act, 1995.   

This Court may take recourse to such a procedure as the State also  

having  granted  exemption was  not  entitled  to  collect  the  duty.   In  other  

words, it having granted an exemption, was not legally entitled thereto.

26. We think that it would be better course, as strict sensu, Article 296 of  

the Constitution is not applicable.

We are passing this order keeping in view the peculiar situation as in  

either event it was cinema-goers who had lost a huge amount.  It would be  

travesty of justice if the owners of the cinema theatre become eligible to  

appropriate such a huge amount for its own benefit.  To the aforementioned  

extent, doctrine of unjust enrichment may be held to be applicable.  A person

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who unjustly enriches himself cannot be permitted to retain the same for its  

benefit except enrichment.  Where it becomes entitled thereto the doctrine of  

unjust enrichment can be invoked irrespective of any statutory provisions.

27. In  Mafatlal  Industries  Ltd. (supra),  Section 72 of  the  Contract  Act  

providing  for  restitution  may  be  taken  recourse  to.   Doctrine  of  ‘unjust  

enrichment’ was resorted to, observing :

“(iii) A claim for refund, whether made under the  provisions  of  the  Act  as  contemplated  in  Proposition (i) above or in a suit or writ petition in  the  situations  contemplated  by  Proposition  (ii)  above, can succeed only if the petitioner/plaintiff  alleges and establishes that he has not passed on  the burden of duty to another person/other persons.  His  refund  claim  shall  be  allowed/decreed  only  when he establishes that he has not passed on the  burden of the duty or to the extent he has not so  passed on, as the case may be. Whether the claim  for  restitution  is  treated  as  a  constitutional  imperative  or  as  a  statutory  requirement,  it  is  neither  an  absolute  right  nor  an  unconditional  obligation but is subject to the above requirement,  as explained in the body of the judgment. Where  the  burden  of  the  duty  has  been  passed  on,  the  claimant cannot say that he has suffered any real  loss  or  prejudice.  The  real  loss  or  prejudice  is  suffered  in  such  a  case  by  the  person  who  has  ultimately  borne  the  burden  and  it  is  only  that  person who can legitimately claim its refund. But  where  such  person  does  not  come  forward  or  where it  is  not  possible to refund the amount to  him  for  one  or  the  other  reason,  it  is  just  and  appropriate  that  that  amount  is  retained  by  the

30

State, i.e., by the people. There is no immorality or  impropriety involved in such a proposition.

The  doctrine  of  unjust  enrichment  is  a  just  and  salutary doctrine. No person can seek to collect the  duty  from both  ends.  In  other  words,  he  cannot  collect the duty from his purchaser at one end and  also collect  the same duty from the State on the  ground that it has been collected from him contrary  to law. The power of the Court is not meant to be  exercised  for  unjustly  enriching  a  person.  The  doctrine  of  unjust  enrichment  is,  however,  inapplicable  to  the  State.  State  represents  the  people  of  the  country.  No one  can  speak of  the  people being unjustly enriched.”

{See Union of India & Ors. v. Solar Pesticides Pvt. Ltd. & Ors. [(2000) 2  

SCC 703]}.

In  Sahakari Khand Udyog Mandal Ltd. v.  Commissioner of Central  

Excise & Customs [(2005) 3 SCC 738], this Court has held:

“45. From the above discussion, it is clear that the  doctrine of “unjust enrichment” is based on equity  and has been accepted and applied in several cases.  In  our  opinion,  therefore,  irrespective  of  applicability  of  Section  11-B  of  the  Act,  the  doctrine  can  be  invoked  to  deny  the  benefit  to  which a person is not otherwise entitled.  Section  11-B of the Act or similar provision merely gives  legislative  recognition  to  this  doctrine.  That,  however,  does  not  mean  that  in  the  absence  of  statutory  provision,  a  person can claim or  retain  undue benefit. Before claiming a relief of refund, it

31

is  necessary  for  the  petitioner-appellant  to  show  that  he  has  paid  the  amount  for  which  relief  is  sought,  he  has  not  passed  on  the  burden  on  consumers  and  if  such  relief  is  not  granted,  he  would suffer loss.”

 28. It may be true that hereat we are not concerned with refund of tax but  

then for  enforcement  of  legal  principles,  this  court  may direct  a party  to  

divest  itself  of  the  money  or  benefits,  which  in  justice,  equity  and good  

conscience belongs to someone else.  It must be directed to restitute that part  

of the benefit to which it was not entitled to.

29. We,  therefore,  direct  that  the  State  shall  realize  the  amount  to  the  

extent  the respondent  had unjustly  enriched itself  and pay the same to a  

voluntary or  a charitable organization,  which according to it  is  a reputed  

civil  society  organization  and  had  been  rendering  good  services  to  any  

section of the disadvantaged people  and in particular women and children.

We would request Hon’ble the Chief Minister of the State to take up  

the responsibility in this behalf so that full, proper and effective utilization  

of the amount in question is ensured.

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30. For  the  reasons  aforementioned,  the  appeal  is  allowed  with  the  

aforementioned directions with costs.  Counsel’s fee assessed at Rs. 50,000/.

……………………………….J. [S.B. Sinha]

..…………………………..…J.     [Deepak Verma]

New Delhi; July 27, 2009