- (1.) THE writ petitioners are the proprietors of Cinema Theatres in Giridih. They had all chosen to compound their liability to pay tax under the Bihar Entertainments Tax Act, 1948 under Sec.3 -B thereof. They were to pay a fixed sum as per that section in lieu of their liability to tax under the Act. Due to some law and order problem, a curfew was imposed in Giridih during the period 16.03.2003 to 20.03.2003. According to the petitioners, they were asked to close down their theatres, or not to exhibit cinema shows. The order, itself, is not produced by the petitioners. But, they have produced Annexurc -1, an order which refers to the curfew and which permits the theatre owners in general to resume shows from 21.03.2003. The petitioners, who are to pay the compounding fee weekly and in advance, suo moto. deducted the proportionate amounts for the days 16.03.2003. to 20.03.2003 and remitted only the balance sum towards the compounding fee. The authority under the Act, called upon them to pay the full compounding fee as per the order of compounding. It was then that the present writ petition was filed seeking a declaration that the petitioners were not liable to pay tax during the period 16.03.2003 to 20.03.2003 since they could not exhibit cinematographic films in their theaters by virtue of the curfew that was imposed. Pending the writ petition, an order was also passed against them directing them to deposit the amount and imposing a penalty for non -payment of the entire compounding fee in time. By virtue of 1A No. 3 of 2004, the petitioners have sought an amendment of the writ petition so as to include a challenge to the said notices or orders as well.
(2.) ACCORDING to the petitioners, though they had compounded their liability under the Bihar Entertainments Tax Act, 1948 , on applications made by them in that behalf in terms of Sec.3 -B of the Act, they were compelled not to exhibit cinematographic films for the period of the curfew, by the order of the concerned authorities and against their volition. In such a situation, according to them for those days they were not liable to pay tax and hence the amounts calculated for those days proportionately from the compounding fee should be deducted. A decision of the Supreme Court in State of U.P. V/s. Jagjit Singh, (2003) 8 SCC 270, was also relied on in support. That was a case where the question that arose was whether a licencee under the Excise Act was entitled to seek a remission when the shop had to be closed under an order issued under Section 59 of the Uttar Pradesh Excise Act, 1910. The Supreme Court held that when the closure and the inability to sell liquor arose out of an order passed in that behalf by a competent authority, the licencees were entitled to seek a remission for the period during which they could not open the shop notwithstanding a provision in the licence or the rules that there will be no remission on any ground. According to counsel, the same principle must apply to the case on hand. Learned Government counsel on the other hand submitted that the amount payable under Sec. 3 -B of the Act, was an amount in lieu of the tax payable under the Act and the amount had to be paid irrespective of the number of shows. This was a privilege or benefit extended to a licencee and it was done at the volition of the licencee. Once a licencee had compounded the liability under the Act, he had to pay the compounding fee as fixed, irrespective of the number of shows and irrespective of whether the cinema theatre was kept open or not. He also submitted that the licencee was not entitled to deduct amounts from the compounding fee in lieu of the liability to pay the compounding fee arising out of the scheme of the Act and the rules. He, thus, submitted that the liability could not be questioned.
(3.) CONCEPT of compounding is quite common to fiscal statutes like the Act in question. The implication of a person liable under such an Act when he compounds his liability under that Act is that of an undertaking of an obligation to pay the compounding fee irrespective of the income of liability he might incur in carrying out the activity in question. Here, Sec.3 -B of the Act very clearly provides that the State Government may, in lieu of the tax payable under Section 3 -A of the Act, on an application of a proprietor, permit him to pay a fixed amount on such conditions as may be prescribed. This section also emphasises that the liability would be, irrespective of the actual number of shows that may be held during the period in question. Therefore, when on an application by a licencee, the compounding is permitted, it appears to us that the liability to pay the compounding fee in lieu of the tax payable under the Act is absolute. The emphasis on the number of shows held being not relevant, re -emphasises that position in the case before the Supreme Court, relied on by the learned counsel for the petitioner, there was no question of any compounding involved. Therefore, whether in such cases a remission was permissible did not fall for decision in that case. It appears to us that the whole thing depends on the understanding of the scope of the obligation undertaken by a licencee once he asked for the compounding of his liability in terms of Sec.3 -B of the Act. On going through the Sec.3 -B of the Act and considering it in the background of what a compounding implies as far as an assessee is concerned, we are of the view that the assessee cannot claim that he is entitled to get back the amount from the compounding fee once he had opted to come within the scheme of compounding his obligation under the Act. In other words, once the liability has been compounded in terms of Sec.3 -B of the Act, the assessee cannot claim any remission from the compounding fee on the ground that the show or shows could not be held for a day or a particular number of days. We cannot overlook the fact that the compounding confers a number of advantages on an assessee under the Act and possibly a situation like the one obtaining in this case might be one of disadvantage, but he will have to suffer that as well once he has opted for compounding.;