STATE OF MADHYA PRADESH Vs. HOME DECORATORES AND FINANCE PRIVATE LIMITED
SUPREME COURT OF INDIA (FROM: MADHYA PRADESH)
STATE OF MADHYA PRADESH
HOME DECORATORES AND FINANCE (PRIVATE) LIMITED
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Sawant, J. -
(1.)This is an instance of how a reasonable mind can find ingenious method to circumvent the law. The first respondent in this case is the Home Decorators and Finance (P.) Ltd. of which the second respondent is the Managing Director. The appellant-Government collects entertainment tax under the Entertainment Duty and Advertisement Tax Act, 1936 (hereinafter referred to as the 'Act') from the organisers of the entertainment programmes whenever the entries to such programmes are charged. The entertainment tax is recovered at the rate of 36 per cent of the fee charged. In order to evade this tax, the respondents evolved a stratagem and organised two performances called "Mahendra Kapoor Nite" in a local auditorium, namely. Manas Bhawan Hall Wright Town, Jabalpur, on 7th and 8th July, 1974. Although the Articles and the Memorandum of Association of the 1st respondent did not permit them to do so, with a view both to bring the said programmes within the scope of the Articles of Association and to evade the payment of the tax, the respondents issued advertisements of the programmes in a local newspaper giving out that the programmes were being arranged to encourage savings. The scheme was that all those who wanted to attend the programme will become members of a group which they called "Nav Nirman Group" by paying an admission fee of Rs. 2/- which was non-refundable and a membership subscription of Rs. 10/- which was refundable after 10 years. The advertisements also stated that since there was an overwhelming demand, the performance would be staged on two dates, namely, the 7th and 8th July, 1974 and that the membership forms would be available at the site on the dates concerned and that the entry to the programme would be strictly on the production of the invitation card as well as the membership card. It appears that on July 7, 1974 and July 8, 1974, as many as 3189 and 4649 gullible persons respectively fell victims, and paid both the admission fee as well as the membership subscription. The respondents collected both the membership forms as well as the receipts for payment from the said persons at the time of giving them the entry to the programme. The result was that the persons concerned were left neither with the membership form nor with the receipts for the money they had paid.
(2.)Needless to say that although the promise was that such performances would be repeated for 10 years hence, and the members concerned would have an entry to the programmes on the basis of the membership cards, neither the membership cards were issued, nor the admission fee or the membership subscription were returned to the members, nor the performances were staged. In effect, the respondents made good with the money they had collected obstensibly for promoting savings. Thus both the members of the public were defrauded of their moneys as well the State Government of their tax-revenue.
(3.)The District Excise Officer who was also the Entertainment Tax Collector under the said Act, sensing the ploy had, however, taken precaution to check, on both the said dates, the receipts and the amounts received by the respondents and had dexteriously prepared a panchnama at the spot. He determined the amount of tax recoverable on the said collections, and issued to the respondents two separate notices on July 9, 1974 demanding the tax along with the duty-surcharge thereon for the collections made on 7th and 8th July, 1974 respectively. The total amount so demanded by both the notices was Rupees 35,429.76.
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