NON-REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NOS.  7026-7029 OF 2011  (Arising out of S.L.P.(C) Nos.17158-17161 of 2010)

Indusind Media & Commun. Ltd. & Anr. .....Appellants.

        Versus

Mamlatdar & Ors. …..Respondents

J U D G M E N T

ANIL R. DAVE, J.

1. Leave granted.

2. Being aggrieved by the Judgement and Order dated 13.5.2010, delivered in SCA Nos.  

13586-13589/2009 by the High Court of Gujarat at Ahmedabad, these appeals have  

been filed by the appellants-assessees.  

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3. The facts in a nutshell are that the appellants are engaged in transmitting signals  

from their  ‘Head Ends’ located at Ahmedabad to various cable operators,  who in turn  

receive the same and transmit  by way of cables  to their  subscribers.  According to the  

appellants, they are not liable to pay Entertainment Tax under the provisions of the Gujarat  

Entertainment Tax Act,  1977  (hereinafter  referred to as ‘the Act’).   According to the  

appellants,  they  are  transmitting  signals  to  cable  operators  and  the  cable  operators  

thereafter transmit signals to actual subscribers who are entertained.  In the circumstances,  

according to the appellants, they are neither ‘Proprietors’ nor providing any entertainment  

to anyone and, therefore, they are not liable to pay any tax under the Act.

4. On the other hand, the case of the respondent authorities is that the appellants did  

not  get themselves registered under the Act on the pretext that  they are not providing  

entertainment.   According to the respondent authorities, the appellants are ‘Proprietors’ as  

per the provisions of the Act and, therefore, they are liable to pay Entertainment Tax.

5. According  to  the  appellants,  some  officers  of  the  respondents  visited  the  office  

premises  of  the  appellants  and  switched  off  all  the  equipments  and  removed  the  

connectors.  Under such circumstances, due to threats and coercion, according to the  

appellants,  they  were  constrained  to  deposit  a  cheque  for  Rs.  5,00,000.   A further  

amount  of  Rs.  6,88,000  was  also  paid  by  the  appellants  as  demanded  by  the  

respondents under protest, pending outcome of the legal proceedings. Thereafter,  the  

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appellants applied for registration as required under the Act without prejudice to their  

rights.   

6. Ultimately the Mamlatdar i.e. the Prescribed Officer appointed under the Act, passed an  

Order  dated  18th October,  1999,  whereby  the  appellants  were  made  liable  to  pay  

Rs.6,88,840/-  by way of an Entertainment Tax and Rs.3,62,431/- as interest on the  

aforestated amount, which had not been paid within the prescribed period and a fine of  

Rs.5,000/- was also imposed by virtue of the said order.  The validity of the said order  

was challenged by the appellants but ultimately, the Commissioner of Entertainments  

Tax had confirmed the aforestated order passed by the Mamlatdar.  Being aggrieved by  

the  aforestated  order  passed  by  the  Mamlatdar  which  had  been  confirmed  by  the  

Commissioner  of  Entertainments  Tax,  the  appellants  had  filed  Special  Civil  

Application  Nos.13586-13589  of  2009  in  the  High  Court  of  Gujarat.   The  said  

applications  have  been  rejected  and,  therefore,  the  appellants  have  approached  this  

Court for challenging the validity of the same.

7. The contentions raised on behalf of the appellants  before this Court were to the  

effect that the appellants were not ‘Proprietors’ and they were not providing entertainment  

and, therefore, no tax was to be paid by them.  As  no tax was to be paid, the question of  

paying  penalty  and  interest  on  late  payment  of  tax  would  also  not  arise.   The  same  

submission was made before the High Court, which had not been accepted.  

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8. The leaned counsel for the respondent authorities had justified the order passed by  

the High Court confirming the order dated 18th October, 1999, passed by the Mamlatdar.

9. On hearing the learned counsel and looking to the facts of the case, in our opinion,  

the High Court was justified in confirming the order passed by the Mamlatdar dated 18th  

October, 1999.

10.    Two issues arise for our consideration in the present appeals viz.:

i. Whether the appellants, who are  Multi System Operators, are liable to pay  

Entertainment Tax, and  

ii. Whether the facts and circumstances of the case warrant imposition of penalty  

on the appellants.

The first issue is no longer res integra as this Court, in the case of  STATE OF WEST  

BENGAL v. PURVI COMMUNICATIONS (P) LTD.,   2005 (3) SCC 711 has held that  

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even Multi-System Operators (MSO) would be liable to pay Entertainment Tax.    It is not  

in dispute that the appellants are Multi-System Operators, who transmit the signals to the  

cable operators and in turn, the cable operators transmit signals to the subscribers.  In such  

a way, as the appellants are connected to an organisation of the entertainment, they would  

be ‘Proprietors’  as per the provisions of the Act.  Hence,  this  issue does not need any  

further consideration. With regard to the second issue, it was contended by the appellants  

that penalty under Section 9(3) of the Act can be imposed only if there is any wilfull mis-

statement or suppression of facts.  In the instant case, the appellants were under a genuine  

belief that they would not fall under the definition of ‘Proprietor’ under the Act and hence,  

imposition of penalty is unfair. It was further argued on behalf of the appellants that the  

impugned order imposing the penalty is violative of the principles of natural justice as no  

notice was issued under Section 9 of the Act and also no opportunity of being heard was  

afforded to the appellants.  

11. We do not find any substance in the submission made on behalf of the appellants  

that imposition of penalty is in violation of the principles of natural justice.  We find from  

the orders passed by the authorities that the appellants had given incorrect information  

with regard to total number of connections given by them.  The requisite information was  

not provided by the appellants in spite of issuance of notices and requests made to the  

appellants.  In fact, notice had been issued before imposition of penalty to the appellants as  

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it can be seen from the orders passed by the authorities but in spite of grant of sufficient  

opportunities, the appellants did not give correct information and made an effort to evade  

payment of Entertainment Tax by making wilfull mis-statements and suppression of facts.  

In the circumstances, it cannot be said that the imposition of penalty is in violation of the  

principles of natural justice.

12. For the aforesaid reasons and for the reasons recorded by the High Court in the  

impugned order, we do not find any substance in these appeals and, therefore, the appeals  

are dismissed with no order as to costs.     

………………................................J.                                                                 (Dr. MUKUNDAKAM SHARMA)

                          ……...........................................J.                                                                        (ANIL R. DAVE) New Delhi August  17,  2011.  

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