2005 PLP 121 (SCMR)

IFTIKHAR MUHAMMAD CHAUDHRY, J.

Petitioners seek leave to appeal against two sets of judgment of the Lahore High Court, Lahore, i.e. first; passed on 7th October, 2003 which has been challenged in Civil Petitions Nos.2934-L and 2035-L of 2003 and; second passed on 23rd December, 2003 which has been challenged in Civil Petition No.1120-L to 1130-L of 2004. As common questions of fact and law are involved in these petitions, therefore, we intend to decide them by instant common judgment.

2. Instant petitions have emerged in realm of facts that allegedly petitioner-Government through its functionaries levied entertainment duty upon the respondents under the West Pakistan Entertainment Duty Act, 1958 [hereinafter referred to as 'the Act'] and the rules/ notifications framed thereunder during the period when entertainment is not provided. Besides it, additional entertainment duty is being recovered contrary to the statutory provisions of the Act as per the Notification No.S.O.(Tax)(E&T)1-5/89(P-II), dated 18th July 2001, when entertainment duty is not paid in advance by 5th of each month and in case of default in payment of entertainment duty, payer shall be liable to pay additional entertainment duty at the rate of 10% per day of the duty otherwise payable. The petitioners' stance is that to provide incentive to film industry in the country on the proposal of National Film Development Corporation (NEFDEC), which was approved by the Provincial Cabinet, a proviso to section 3(1) of the Act was added, in pursuance whereof in the Province of Punjab, on the basis of average of last 3 years, entertainment duty was reduced from 65% to 30% and freezed the rate of per day entertainment duty for a period of five years w.e.f. 1st July, 2001, as a relief package for the revival of film industry vide notification dated 18th July, 2001, subject to certain terms and conditions mentioned therein. Condition No. 1 mentioned in the notification was subsequently amended vide notification dated 15th August, 2001. Petitioner-department, however, demanded the arrears of the entertainment duty for the year 2000-2001 from the respondent in Civil Petition No.2935-L of 2003) who challenged the demand by filing Writ Petition No.3239 of 2002 on the ground that the cinema remained closed during 2000-2001, therefore entertainment duty for the period of closure could not be levied nor demanded. This writ petition was allowed on 7th March, 2002. The respondent in Civil Petition No.2934-L of 2003 also filed to Writ Petition No.9735 of 2002 before the Lahore High Court, Lahore which also accepted with the observation that "the respondent-department (petitioners) is not entitled to levy or recover entertainment duty from the petitioners (respondents) in respect of the period during which the cinemas remained closed. Above judgments were challenged by petitioners-department by filing I.C.As:, which were dismissed on 7th October, 2003. In view of these decisions, remaining respondents also filed writ petitions before the High Court, claiming declaration that the petitioner-department is not entitled to levy and recover entertainment duty from the cinemas in respect of the period during which they remained closed and levy of additional entertainment duty at the rate of 10% in case of default in the payment of entertainment duty, is illegal, harsh and void These editions were also allowed as such instant petitions for leave, to appeal have been filed.

3. Learned counsel appearing for petitioners contended that:

(a) Delay in filing of I.C.As. (in Civil Petitions No.2934-L and 2935-L of 2003) was fully explained by submitting an application for condonation of delay in filing of I.C.As. if any, in view of the fact that pure question of law of public importance is involved but the ground put forward by the petitioner has not been examined/considered and attended to, in the light of the precedent law, by the learned High Court. (b) The Government of Punjab extended the facility of charging flat rate of entertainment duty at the fixed per day rate vide notification dated 18th July, 2001 and as the recovery of entertainment duty at the rate of 30% freezed for a period of five years by granting relief package issued notification with the consent of the respondents on 18th July, 2001, therefore, respondents are bound to pay as they have been exempted to pay entertainment duty as per the rate prescribed in the notification dated 18th July, 2001 by spelling out the categories of the cinemas, as such, legally the respondents are stopped to pay the entertainment duty during the period when no entertainment was provided and the cinemas remained closed. (c) The Government of Punjab as per the decision arrived at in the meeting with the office-bearers of Pakistan Film Exhibitors and Cinema Houses Association issued notification dated 15th August, 2001 in partial modification of earlier notification dated 18th July, 2001 claiming advance monthly payment of entertainment duty on or before 5th of each month which was subsequently substituted by advance by 3rd and 18th of each month and rate of penalty was reduced from 25% to 10% in case of default in the payment of entertainment duty, ,when respondents with consent were held liable to pay penalty at the rate of 10% per day till the expiry of the aforenoted period and so and so forth, therefore, respondents are stopped to challenge the recovery/levied of the additional tax. (d) As some of the respondents have not paid the arrears for the year 2000-2001, therefore, the petitioners had a lawful authority to recover the same vide notification dated 16th April, 2001 but the High Court without any justification struck down such demand of the petitioners. (e) Recovery of fixed entertainment duty per day vide notification dated 18th July, 2001 is in accordance with the provisions of section 3(1) (proviso) of the Act, as it is amended by the Ordinance 2001, therefore, learned High Court had erred in law in declaring the recovery of the duty illegal, during the period when no entertainment was provided by the cinemas.

4. On the other hand learned counsel appearing for caveators contended that:

(i) Petitions for leave to Appeals Nos.2934-L and 2935-L of 2003 are not maintainable because I.C.As. filed by the petitioners before the High Court were dismissed being barred by time. (ii) Civil Petitions Nos.1120-L to 1130-L of 2004 are not maintainable as against the judgment dated 23rd December, 2003, pronounced by the High Court in writ petitions. I.C.As. were competent in view of section 3(2) (proviso) of the Law Reforms Ordinance, 1972 as it has been held in the case of Mst. Karim Bibi and others v. Hussain Bakhsh and another PLD 1984 SC 344. (iii) Imposition/recovery of additional entertainment duty by means of penalty is contrary to the provisions of charging section 3(1) of the Act. (iv) The recovery of fixed entertainment duty per day is not based on equity and has been imposed without conducting the inquiry and taking into consideration that due to introduction of modern electronic media, communication, the film industry had lost its viability, therefore, its owners are not in a position to pay the fixed advance entertainment duty. Leave to appeal is granted, inter alia, to examine the respective, contentions of the parties counsel, noted herein above. M.H./G-25/S Leave granted.