The Constitutional petitions listed hereunder involve identical questions of law and facts and are decided through this single judgment:-- Writ Petition Messrs Metropole Cinema Pvt. Ltd. v.No,5954 of 2003 Government of the Punjab and others.
Writ Petition Messrs Naghma Cinema v. Government of No,6050 of 2003 the Punjab and others.
Writ Petition Messrs Mubarik Cinema Pvt. Ltd. v.No,6051 of 2003 Government of the Punjab and others.
Writ Petition Messrs Gulistan Cinema Pvt. Ltd.No,6052 of 2003 Government of the Punjab and others.
Writ Petition Messrs Prince Cinema Pvt. Ltd. v.No,6091 of 2003 Government of the Punjab and others.
Writ Petition Messrs Shabistan. Cinema Pvt. Ltd.No,6092 of 2003 Government of the Punjab and others.
Writ Petition Regal Cinema v. Government of the PunjabNo,8172 of 2003 and others.
Writ Petition Messrs Plaza Cinema Pvt. Ltd. v.No,8173 of 2003 Government of the Punjab and others.
Writ Petition Messrs Capital Cinema v. Government ofNo,8191 of 2003 the Punjab and others. And Writ Petition Messrs Nagina Cinema and others v.No,8515 of 2003 Government of the Punjab and others.
2. For revival of the Film Industry in Pakistan and to check its constant decline, National Film Development Corporation Limited (NEFDEC) prepared a Master Plan. Upon consideration of the Plan, the. Government of the Punjab through its Cabinet Meeting dated 26-2-2001, made the following decisions effective from July 1, 2001:--
(1) Entertainment Duty on Cinemas in Punjab would be brought down from 65% to 30% but converted to a fixed charge per day in respect of different categories to be determined by the Excise and Taxation Department. The rate would be frozen for a period of five years.
(2) Annual Cinema Tax paid to the District Magistrate would not be levied for a period of 5 years.
(3) Annual Licence Fee paid to Punjab Government would not be levied for a period of 5 years.
(4) Weekly Municipal Show Tax shall be abolished.
(5) Annual Fee paid to PWD should not be levied for a period of 5 years.
(6) Fee/Tax levied on electrical inspection and miscellaneous expenses with regard to such inspections would not be levied for a period of 5 years.
(7) Professional tax on Cinema and Proprietor shall be abolished.
(8) Government would not impose any restriction on number of daily shows.
(9) Ticket prices for cinema-goers would not be fixed by the Government.
(10) Air-conditioning surcharge should be abolished.
(11) Government would fix a date for annual inspection of all the cinemas between 1st and 31st of March every year.
(12) The concept of multiplexes would be further explored by a Committee comprising Secretary Housing, Director-General, LDA and Administrator, MCL, Lahore.
3. Punjab Entertainments Duty Act, 1958, was consequently amended through Finance Ordinance, 2001 and a proviso was added providing for conversion of the Entertainments Duty rate into a fixed charge per day upon categorization of cinema-houses in Punjab.
4. The Government of the Punjab in Taxation Department then issued Notification No,S.0.(Tax)(E&T)
1-5/89 (P-II) dated 18-7-2001, categorizing the cinema-houses and fixing per day Entertainments Duty for each category with effect from 1-7-2001, as under:-- Category Entertainment Duty Fixed per day A Rs.2,500 B Rs.2,000 C Rs.1,500 D Rs.1,000 E Rs.500 F Rs.200 This Notification also prescribed the following conditions; some of which are the subject-matter of the cases under consideration:- "(1) The proprietor of cinema-house shall pay the Entertainment Duty in advance by 5th of each month, except for the month of July, 2001 for which the payment shall be deposited by 25th July, 2001. In case of default the proprietor shall pay additional Entertainment Duty per day at the rate of 25% of the duty otherwise payable.
(2) No rebate on account of closure of cinema will be allowed except due to natural calamities notified by the District Administration.
(3) The amount of Entertainment Duty shall be recovered by Excise and Taxation Officer concerned."
5. The above reproduced condition No,1 of the Notification was, however, substituted through Notification No,S.0.(Tax) (E&T) 1-5/89 (PI) dated 15-8-2001 as under:-- "(i) The proprietor of cinema-house shall pay the Entertainment Duty in advance fortnightly by 3rd and 18th of the respective month, except for the month of July, 2001 for which the payment shall be deposited by 31st July, 2001. In case of default the proprietor shall pay Entertainment Duty per day at the rate of 10% of the duty otherwise payable."
6. Notification No,S.O. (Tax) (E&T) 1-5/89 (P1I) dated 18-7-2001 granting exemption to the cinemas and proprietors from payment of Professional Tax with effect from 1-7-2001, was also issued.
7. The respondent-Department however demanded arrears of the Entertainment Duty for years 2000-2001 under an earlier Notification. i,e, S.O. Tax (E&T) 1-11/98, dated 16-4-2001 from Syed Israr Hussain Sehrai of Pak International Circus. This demand was challenged through Writ Petition No,3239 of 2002 on the legal ground that the Circus remained closed during 2000-2001, therefore, Entertainment Duty for the period of closure even under the above Notification dated 16-4-2001 could not be levied and demanded. This Writ Petition No,3239 of 2002 was accepted through judgment dated 7-3-2002 wherein in reference to section 3 of the Punjab Entertainments Duty Act, 1958, the legal principle was adjudged that:-- "5... ...Entertainment duty is leviable only on theoccurrence of an entertainment and not otherwise." and "7... ..Section 5(2) merely specifies a mode- ofpayment of entertainment duty. It cannot, by any stretch of reasoning, be treated as empowering the respondent-Department to levy and demand entertainment duty when in fact no entertainment has taken place and there has been no admission to any entertainment."
8. On the basis of above judgment, Writ Petition No,9735 of 2002, filed by Messrs Empire Cinema was also accepted with the following observations:-- "The respondent-Department confirms that the cinemas of the petitioners were closed on the date mentioned in the petition. After that date no entertainment actually took place in the petitioner's cinemas. In these circumstances, in view of the judgment dated 7-3-2002 passed in Writ Petition No,3239 of2002 the respondent-Department is not entitled to levy and recover entertainment duty from the petitioners in respect of theperiod during which the cinema halls remained closed."
9. Intra-Court Appeal No,781 of 2002 and Intra-Court Appeal No,557 of 2002 against the above judgments were dismissed by an Honourable Division Bench of this Court as time-barred through judgment dated 7-10-2003. Respondents claim to have filed Civil Petition for Leave to Appeal No,2934-L of 2003 and Civil Petition for Leave to Appeal No,2935-L of 2003 thereagainst, but it is admitted that the above judgments have neither been set aside nor any interim order of suspension of the operation thereof has been granted to them by the Honourable Supreme Court of Pakistan.
10. In the above perspective, the present Constitutional petitions were filed by the petitioners upon demands raised against them by the respondent-Department:--
(i) Writ Petition 6050 of 2003 Messrs Naghma Cinema v. Government of the Punjab and others Naghma Cinema, Lahore, on 2-11-2002, informed DCO that the cinema would remain closed during the month of Ramadan in respect of Ramadan Sharif and also to carry out repairs. It, however, received notices dated 25-2-2003 and 4-3-2003 demanding entertainment duty up to 31-12-2002 as well as Additional Entertainment Duty for the non-deposit of the Fixed Entertainment Duty within the prescribed period.
(ii) Writ Petition No,6051 of 2003 Messrs Mubarik Cinema Pvt. Ltd. v. Government of the Punjab and others Mubarik Cinema claims that it remained closed owing to unprecedented decline in the business of Cinema Industry and then due to non-renewal of its licence. The respondents were repeatedly informed of such closure. The applications for closure were not received favourably and through various impugned demand notices, an amount of Rs,1,36,68,200,00 for the Entertainment Duty as well as Additional Entertainment Duty was raised.
(iii) Writ Petition 6052 of 2003 Messrs Gulistan Cinema Pvt. Ltd. Government of the Punjab and others Gulistan Cinema is aggrieved of the demand by the respondent-Department of Additional Entertainment Duty for Rs,1.46,750 through impugned notice dated 4-3-2003 purportedly for delayed payment of Fixed Entertainment Duty.
(iv) Writ Petition 6091 of 2003 Messrs Prince Cinema Pvt. Ltd. v. Government of the Punjab and others Prince Cinema also assails the demand of Additional Entertainment Duty amounting to Rs,1,51,000 through impugned notices dated 25-2-2003 and 4-3-2003 for purported delayed payment of Fixed Entertainment Duty.
(v) Writ Petition 6092 of 2003 Messrs Shabistan Cinema Pvt. Ltd. v. Government of the Punjab and others Shabistan Cinema also challenges the demand of Additional Entertainment Duty amounting to Rs,2,11,000 through impugned notice dated 25-2-2003 and 4-3-2003 for the delayed payment of Fixed Entertainment Duty.
(vi) Writ Petition 5954 of 2003 Messrs Metropole Cinema Pvt. Ltd. v. Government of the Punjab and others Metro pole Cinema also calls in question the demand of Additional Entertainment Duty of Rs,3,54,875 through the impugned notices dated 25-2-2003 and 4-3-2003 for the delayed payment of Fixed Entertainment Duty.
(vii) Writ Petition 8172 of 2003 Messrs Regal Cinema v.Government of the Punjab and others Regal Cinema also filed this Constitutional petition against the demand of Additional Entertainment Duty amounting to Rs,3,54,875 through impugned notices dated 25-2-2003 and 4- 3-2003 on account of delayed payment of Fixed Entertainment Duty.
(viii) Writ Petition 8173 of 2003 Messrs Plaza Cinema Pvt. Ltd. Cinema v. Government of the Punjab and others Plaza Cinema also raises grievance against the demand of Additional Entertainment Duty amounting to Rs,16,09,750 through impugned notices dated 28-1-2002 and 4-3-2003 on account of delayed payment of Fixed Entertainment Duty.
(ix) Writ Petition 8191 of 2003 Messrs Capital Cinema Pvt. Ltd. v. Government of the Punjab and others Capital Cinema also agitates against the demand of Additional Entertainment Duty amounting to Rs,92,93,500 through notice dated 14-3-2003 on account of delayed payment of Fixed Entertainment Duty.
(x) Writ Petition 8515 of 2003 Messrs Nagina Cinema, Faisalabad through Ch.Akbar Rehman v.
Government of the Punjab and others Nagina Cinema's cause is also against the demand of Additional Entertainment Duty amounting to Rs,39,86,203 and Rs,37,22,800 through impugned notice dated 4-6-2003 for the purported elayed payment of Fixed Entertainment Duty.
11. The petitioners challenging the impugned demands respectively for the period of closure or otherwise for the delayed payment of fixed duty, have prayed for declaration of such demands, notices and resort to coercive measures as illegal and without lawful authority.
12. Upon notices respondents respectively filed their contesting written statements.
13. The learned counsel for the petitioners deleted the prayed for relief sought against levy of Fixed Duty on per day basis in the present petitions to agitate the same separately because the said issue had been the subject-matter of litigation between he parties and pursuant to judgment dated 7-10-2003 passed in number of Intra-Court Appeals by Honourable Division Bench of this Court, the Secretary, Excise and Taxation was seized of the matter.
14. The issues thus requiring decision by this Court are:-
(i) Whether Entertainment Duty could be levied, imposed and demanded from the petitioners during the period the cinema houses remained closed and did not provide any entertainment to cinema-goers; and
(ii) Whether Additional Entertainments Duty could be competently claimed by the respondents under the law.
15. Learned counsel for the petitioners relied upon the above reproduced judgments dated 7-3- 2003 and 3-7-2003 respectively, in Writ Petition No,3239 of 2003 and Writ Petition No,9735 of 2002 and submitted that principle of law stood settled and Intra-Court Appeals thereagainst were also dismissed. Neither the learned Assistant Advocate-General appearing for respondents nor the representative of the respondents (present in Court) were able to distinguish the principle laid down in the above judgments. They, however, relied upon Condition No,2 of Notification No,S.0 (Tax)
(E&T) 1-5/89 (P-II) dated 18-7-2001, to claim that the Fixed Entertainment Duty per day was calculated after adjusting the allowed period of closure wherefor the said notification provided that "No rebate on account of closure of cinema will be allowed except due to natural calamities by the District Administration".
16. Having heard the submissions of the learned counsel for the petitioners as well as those of the learned Assistant Advocate-General and the representatives of the respondents, I am of the opinion that Condition No,2 of Notification No,S.O.(Tax)(E&T) 1-5189(P-II) dated 18-7-2001 is ultra vires the provisions of the Statute i,e, Entertainments Duty Act, 1958.
The principle that the respondent-Department cannot levy and demand Entertainment Duty when no entertainment takes place, is inferable by bare reference to some of the definitions and the charging provisions of the Act of 1958.
17. To levy and char.Ge entertainment duty, the Entertainments Duty Act was promulgated in 1958.
The object of the Act was expressed in its preamble as "the law relating to the levy of a duty in respect of admission to entertainments " The intent of this statute was thus clearly and unambiguously expressed as the levy of a duty on admission to entertainments. The Act defines "Admission to an Entertainment".In section 2(a) as "admission to any place in which the entertainment is held". Per section 2(d) "entertainment" in "an exhibition, performance, amusement, game, sport to which persons are admitted on payment". And "Payment for Admission" has been defined in section 2(f) to include--
(ii) 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 additional duty is required;
(iii) any payment for seats or other accommodation in a place of entertainment;
(iv) any payment for any 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 addition to the payment, if any, for admission to the entertainment.
18. The charging section 3 provides for the levy of Entertainment Duty on the payment for admission to an entertainment at the prescribed rate. The proviso to this section also imposes obligation to pay the Entertainments Duty upon the proprietor of an entertainment for admitting a person to any place of entertainment either without payment or upon reduced payment. Under section 4 Entertainments Duty is payable by the proprietor on complimentary tickets. As per the mandate of section 5, no person can be admitted to any entertainment (where the payment is subject to Entertainments Duty) except with a ticket bearing revenue stamps denoting payment of Entertainments Duty.
19. When read together the above charging provisions and the definition clauses clearly and effectively give statutory incorporation to the object of the Act as expressed in the Preamble. These provisions unambiguously unfold the meaning of the Act that Entertainment Duty is leviable only on the payment for admission to an entertainment, which is an exhibition, performance, amusement, game or sport to which persons, on payment, are admitted. The keyword in all these provisions is the entertainment. The magnet attracting Entertainment Duty is the event of the entertainment. It is for the admission to such event that the payment is made by tine-goers for purchase of the admission tickets. The charging and recovery sections of the Act are only set in motion when proprietor of a place ,of entertainment allows interested persons admission to an entertainment upon payment or otherwise through tickets. Whereupon Entertainment Duty becomes chargeable on the payments/tickets. As such when the place of entertainment is closed for providing the entertainment and tickets are not issued for admission therein to the interested persons, the charging sections do not apply and the Entertainment Duty cannot be charged or levied. I am thus in respectful agreement with the ratio of the judgments dated 7-3-2003 and 3-7- 2003 passed respectively in Writ Petitions Nos.3239 of 2003 and 9735 of 2002 that Entertainment Duty is not leviable when place of entertainment is closed.
20. Furthermore the above adjudged principle also gets reinforcement from the absence of any provision in the Statute that Entertainment Duty shall be levied or charged forever and for each and every day in any case irrespective of whether the entertainment is provided or not in the place of entertainment. Despite absence of such a provision in the Entertainments Duty . Act, Condition
(2) of the Notification No,S.0 (TAX)(E&T)2-5/89(P-II), dated 18-7-2001 prescribed that "no rebate on account of closure of cinema will be allowed except due to natural calamities notified by the District Administration". This notification was issued in purported exercise of provisions under subsection (2) of section 5 read with section 3 of the Act. Neither subsection (2) of section 5 nor section 3 ibid confers upon the respondents power to charge the duty each day of the period of closure of a cinema house when neither entertainment takes place nor is any person admitted therein for such a purpose.
21. It is also fallacious and illogical to contend that all possible periods of closure of the cinema- houses or places of entertainment were adjusted while fixing the rates of entertainment duty on per day basis in terms of Notification No,S.0.(Tax(E&T)1-5/89(P-II) dated 18-7-2001 and that wherefor Condition No,2 denied rebate of duty for closure of a cinema except for closure due to natural calamities notified by the District Administration. I am afraid this is neither rational nor possible.
All situations, exigencies, occasions and eventualities that may lead to the closure of a cinema cannot be visualized or comprehended by the application of ordinary or even extraordinary prudence. All eventualities that may arise in the normal course of events, are not always attributable to the nature to qualify as the "Natural Calamities" in the opinion of the District Administration to notify. The proprietor of a place of entertainment or cinema house may in his wisdom decide to discontinue his business of entertainment by closing the place. He may for his reasons, consider such business not feasible or palatable. The prevailing social, religious, moral, political, legal or law and order conditions and perceptions of such conditions, may bring about temporary or permanent closure. Financial losses, business decline, Governmental impositions, excessive taxation, bureaucratic controls, official interferences, labour demands, strikes technological changes, renovations, repairs, damage, explosions, wars, terrorism and crime could also be the grounds for temporary or permanent closure of the place of entertainment in a Society or a State. None of the above situations and their effects are predictable or calculable or assessable to be adjusted in advance. The Legislature therefore did not impose any embargo, terms or conditions in the Entertainments Duty Act, 1958 for the temporary or permanent closure of a place of entertainment. Condition No,2 of Notification No,S.O.(Tax)(E&T)1/5.89(P-II) thus being beyond the scope of the provisions of the Entertainments Duty Act, 1958, is declared to be ultra vires the law.
22. Adverting to the demands of Additional Entertainment Duty through the respective impugned notices, the source of power for the same could be the second part of Condition No,1 of Notification No, S.0.(Tax)(E&T)1/5.89(P-II) dated 18-7-2001. The original condition introduced through Notification dated 18-7-2001 read as under:-- "The proprietor of cinema-house shall pay the Entertainment Duty in advance by 5th of each month, except for the month of July, 2001 for which the payment shall be deposited by 25th July, 2001. In case of default, the proprietor shall pay additional Entertainment Duty per day at the rate of 25% of the duty otherwise payable."
23. The above condition was substituted through Notification No,S.0.(Tax)(E&T)1/5.89(P-I) dated 15- 8-2001 by the following as Condition 1:-- "The proprietor of cinema-house shall pay the Entertainment Duty in advance fortnightly by 3rd and 18th of the respective month, except for the month of July, 2001 for which the payment shall be deposited by 31st July, 2001. In case of default the proprietor shall pay Entertainment Duty per day at the rate of 10% of the duty otherwise payable."
24. In the case of default in payment of Entertainment Duty in the mode and manner prescribed therein, the original notification imposed on the proprietor Additional Entertainment Duty on per day basis at the rate of 25% of the duty otherwise payable. The substituted condition through notification dated 15-8-2001, however, introduced two changes that:--
(i) The term "Additional Entertainment Duty" per day was changed to "Entertainment Duty" per day: AND
(ii) Rate of 25% for Additional Entertainment Duty was changed to 10% for Entertainment Duty case of a default.
25. By deletion of the term "Additional Entertainment Duty" and its 'substitution by the term "Entertainment Duty", the second part of 'Condition No,1 became incongruous, illogical, incomprehensible and absurd. Unless attributed to a typographical error or a careless drafting mistake this condition upon omission of the word "additional" introduced 'two rates for the Entertainment Duty. One for the advance payment and the other on default for the arrear payment.
Under the first part of Condition-1, Entertainment Duty was payable in advance by the proprietor at the rate shown against the category of his cinema. However, on default in the payment of advance duty, Entertainment Duty was made payable per day under the second part at the rate' of 10% of Duty otherwise payable by the proprietor. This meant that if a cinema of Category "A" was to pay Rs,2,500 in advance, as the fixed Entertainment Duty per day, such cinema on default was made liable to pay only Rs,250 being 10% of the said duty. As such the substituted condition instead of providing for an Additional Entertainment Duty per day for default, was drafted to mean that in case of default the proprietor was to pay Entertainment Duty @ 10% of the fixed duty. Could the defaulting proprietor be thus allowed an incentive to commit a default to avail of concessionary rates of duty. It was a patent absurdity and incongruity. Such could not be the meaning of the Notification or its authors. To remove the absurdity either the notification needs re-issuance or a judicial exercise at a harmonious construction is required.
26. In my opinion,.None of above courses, are adaptable or appropriate. The imposition of Additional Entertainment Duty has not been provided for in the law. There is no provision in the Entertainments Duty Act, 1958, for the levy or charge of Additional Entertainment Duty in case default by the proprietors of the cinema-houses etc. Section 6 of the Act of 1958 does authorize collection and imposition of a penalty not,exceeding a sum of Rs,500 or a sum not greater than five times of the evaded or unpaid Entertainment Duty in case of non-payment of Entertainment Duty or on non-compliance with the provisions of section 4 or section 5 ibid. However, imposition of this penalty is not automatic. The proviso to section 6 mandatorily provides for an opportunity of hearing to the person concerned. The scope of this provision cannot be enlarged or interpreted to include imposition, levy or charge of Additional Entertainment Duty. Imposition of penalty is a punishment for the offence while charge of Additional Entertainment Duty is an additional duty to be recovered in case of delay in payment of the normal entertainment duty. The respondents therefore had no power to impose Additional Entertainment Duty through a notification when the Statute did not confer any such power upon them. Neither sections 3, 4 and 5 nor does section 6 of the Entertainments Duty Act, 1958 permit or authorize the Government to impose Additional Entertainment Duty or any Entertainment Duty in case of a default in payment of the Entertainment Duty by the proprietor. In absence of an express provision providing for the levy of Additional Entertainment Duty as in section 34 of the Sales Tax Act, 1990, the Government of Punjab or any of its functionaries had no authority to levy, charge or demand the same. Accordingly second part of Notification No,S.O. (Tax) (E&T) 1-5/89(P-II) dated 18-7-2001 as amended by Notification No, S.O.
(Tax) (E&T) 1-5/89(P-I) dated 15-8-2001 levying an Entertainment Duty or Additional Entertainment Duty per day at the rate of 10% per day in case of default in payment of Entertainments Duty is also declared repugnant to and ultra vires the provisions of the Entertainments Duty Act, 1958.
27. The writ petitions are thus accepted. The impugned demand notices demanding Entertainment Duty for the period of closure and/or the Additional Entertainment Duty are declared to be without lawful authority and of no legal effect. There shall be no order as to costs.