THE ENTERTAINMENT TAX OFFICER versus AMBAE PICTURE PALACE

Citation: [1993] SUPP. 3 S.C.R. 453 · Decided: 28-10-1993 · Supreme Court of India · Bench: KULDIP SINGH, YOGESHWAR DAYAL
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Judgment (excerpt)

THE ENTERTAINMENT TAX OFFICER 
A 
v. 
AMBAE PICTURE PALACE 
OCTOBER 28, 1993 
B 
[KULDIP SINGH AND YOGESHWAR DAYAL, JJ.] 
Andhra Pradesh Entertainments Tax Act, 1939: Tax on the basis of 
gross collection capacity pa show-Repeated Amendments-Retrospectivity 
given to the Amending Act 16 of 1985-Explanation from the State providing C 
for retrospectivity-Not required-Competence to enact laws prospectively as 
also retrospectively. 
The Andhra Pradesh Entertainments Tax Act, 1939 provided for levy 
of tax at the fixed rate on the basis of percentage of payment made by a 
person for admission to any entertainment. By an Ordinance in 1983 cer-
D 
tain amendments were brought about. This Amendment Ordinance 
amended Section 4 and increased the rate of tax on the admission rate and 
Se1.:tion 5 was substituted, which categorised theaters and the area in which 
the threater was situated. By another Ordinance issued on 21st March, 
1984, to be effective from 23rd March, 1984, the measure of !aX payable E 
under Section 4 was altered and the proprietors of theaters became liable 
to pay tax at the gross collection capacity per show at certain percentage. 
The percentage of taxation again differed depending upon the location and 
type of the theater. This Ordinance was replaced by Act No. 24 of1984 and 
its validity was upheld by this Court. 
Consequent upon change of Government in the State, the new 
Government promulgated an Ordinance with effect from 7th September, 
1984, restoring the position as it stood prior to 23rd March, 1984. However, 
.F 
on the reinstatement of the old Government, an Ordin~nce was issued on 
25th October, 1984 with retrospective effect from 7th September, 1984, 
reintroducing payment of entertainment tax on the basis of gross collection G 
capacity of the show. This Ordinance was replaced by Act No. 16 of 1985. 
The retrospectivity given to it was challenged before the High Court by way 
of Writ Petitions. The High Court upheld the challenge on the ground that 
no explanation had been given in the Act providing for retrospectivity of 
the Amendment Act. 
H 
453 
454 
SUPREME COURT REPORTS [1993] SUPP. 3 S.C.R. 
A 
Being aggrieved by the Judgment of the High Court, the State 
preferred an appeal before this Court. 
Allowing the appeal, this Court 
HELD : 1. If the Parliament or the State Legislatures have com-
B petence to legislate, they can do so prospectively as well as retrospectively 
and taxation laws are no exception to this power. [457-E] 
The Union of India v. Madan Gopal Kabra, [1954) S.C.R. 541; Mis 
Klishnamurthi & Co. etc. v.State Madras andAnr., [1973) 2 S.C.R. 54 andRai 
C Ram Klis/ma & Ors. v. The State of Bihar, [1964] 1S.C.R.897, relied on. 
2. Though it is not for the State to justify or explain the necessity for 
the amendment even in relation to retrospectivity of the Act but obviously, 
on the face of it, there appeared to be a change of policy by a succeeding 
Government on the policy pursued by its predecessor. Surely, the succes-· 
D sor Government can have different rules from their predecessor in includ-
ing the matters relating to taxation or mode of taxation or basis of taxation 
or objects of taxation etc. No explanation was required from the state for 
the Amending Act having retrospective effect. [459-C-D] 
D. Cawasji and Company v. State of Mysore an4 Ors., 58 S.T.C. 1 
E 
(S.C.), distinguished. 
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 90 of 
1987. 
F 
From the Judgment and Order dated 3.4.86 of the Andhra Pradesh 
High Court in W.P. No. 15363/84. 
G 
C. Sitaramaiah, T.V.S.N. Chari, Nikhil Nayyar, Ms. Promila and Ms. 
Bharati Reddy for the Appellant. 
The Judgment of the Court was delivered by 
YOGESHWAR DAYAL, J. This is an appeal on behalf of the Enter-
tainment Tax Officer-I, Khammam and the State of Andhra Pradesh 
against the judgment and decree of the High Court of Andhra Pradesh 
dated 3rd April, 1986 whereby a Division Bench of the High Court struck 
H down Section 1 of Act No. 16of1985 (the Andhra Prade_sh Entertainments 
TAX OFFICER v. P. PALACE [DAYAL, J.) 
455 
Tax (Amendment) Act, 1985) to the extent of its applicability retrospec-
A 
tively between 7th September, 1984 to 24th October, 1984. 
;ro appreciate the point it is necessary to deal with the history of the 
Entertainments Tax Acts in Andhra Pradesh. 
The Andhra Pradesh Entertainments Tax Act, 1939 (Act No. X of B 
1939) provided for levy of tax at the fixed rate on the basis of percentage
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