Rajasthan HC Directs Tax Commissioner To Recall 'Contemptuous Order' Denying Benefit Of Entertainment Tax Scheme To Cinema Theatre

The Jodhpur bench of Rajasthan High Court recently directed the Deputy Commissioner Commercial Taxes, Bikaner to recall its order denying benefit of an amended scheme on entertainment tax to a cinema theatre, terming it contemptuous since it affirmed an earlier order which had already been annulled by the high court in 2014.

The petitioner–Alok Chitra Mandir had opted for a composition of entertainment scheme in which an amendment came that reduced the composition of entertainment tax. However, the Commissioner ordered that the petitioner shall be governed under the old-unamended scheme.This order was annulled by the high court in 2014 directing that the matter be decided afresh. Based on this, a rectification application was filed by the Petitioner however the Deputy Commissioner reaffirmed the annulled order. Pursuant to this the Petitioner moved the high court in a contempt plea.

After hearing the contentions and perusing the 2014 order Justice Rekha Borana observed that the high court had then held in specific terms that the petitioner could not be deprived of the benefit of the amended scheme which came into effect from February 23, 1995 and further, the contention of the department that the petitioner would be governed by the old unamended scheme could not be accepted.

The court said, "However, a bare perusal of the order impugned dated 08.09.2016 makes it clear that the Deputy Commissioner, in total contravention to the finding as recorded by the Court in judgment dated 04.04.2014, again held that the petitioner would not be entitled to the benefit of the amended scheme and therefore, affirmed the order dated 05.04.1995. In the specific opinion of this Court, the said approach of the Deputy Commissioner clearly amounts to the defiance of the judgment dated 04.04.2014. It is not that the judgment dated 04.04.2014 was not placed before the authority or that he was not aware of the findings as recorded in the said judgment. Despite the specific findings having been recorded and the order impugned dated 05.04.1995 having been annulled and set aside, the Deputy Commissioner proceeded on to affirm the same order dated 05.04.1995 which is on the face of it, contemptuous".

The court further underscored that the Deputy Commissioner in the 2014 order was only directed to decide whether the petitioner asessee would be entitled to any refund of the amount of compensation of Entertainment Tax already paid by it in excess. The official was directed to examine the application of the petitioner for rectification of the mistake as per the relevant rules.

"The same was to be done keeping into consideration the fact whether the petitioner had realized tax in terms of the old un-amended scheme or not, that is, whether the doctrine of unjust enrichment would come into play because of which the petitioner would not be entitled for refund of the compensation amount as paid in excess. However, a perusal of the order dated 08.09.2016 makes it clear that no such consideration has been made by the authority," the court underscored.

It also observed that even though, in contempt jurisdiction, the Court was not required to consider what the judgment should have contained, it had to consider the issued directions.

The Court was hearing a contempt petition filed by the petitioner in relation to the order of the Deputy Commissioner. The Petitioner argued that the issue of applicability of amended scheme on the Petitioner was settled by the Court in its favour and the Deputy Commissioner had to only decide whether the Petitioner had realized the tax in terms of old scheme or not. This required adjudication because if it was decided in affirmative, the doctrine of unjust enrichment would come into play but if not so, then Petitioner would be justified in claiming refund.

Hence, once the matter of applicability of amended scheme was decided in favour of the Petitioner, the Deputy Commissioner could not have re-adjudicated it to the contrary, it was contended.

Opposite to this, the counsel for the respondent submitted that the Court had directed to decide the matter de novice i.e. to decide it afresh. Furthermore, it was argued that while exercising contempt jurisdiction, the Court was not functioning to determine the dispute between the parties but only the question of whether there was any deliberate disobedience of the orders.

The Court further referred to the Supreme Court's decision in Jhareswar Prasad Paul & Ors. Vs. Tarak Nath Ganguly & Ors. and held that the purpose of contempt jurisdiction was to uphold the majesty and dignity of the Courts of law and in case the respect for judiciary was undermined, the democratic fabric of the society shall suffer.

In the background of this analysis, the Court ruled that it was clear that the decision of the Deputy Commissioner was in clear defiance of the judgment of the Court, however, taking a liberal view and considering that the contempt might not be wilful but owing to some misunderstanding, the Court granted a chance to the commissioner to rectify the order.

Accordingly, the Deputy Commissioner was directed to recall the contemptuous order and pass a fresh order in accordance with the high court's 2014 judgment within 4 weeks.

Case Title: Alok Chitra Mandir v Hemant Jain, Deputy Commissioner (Administration), Commercial Taxes, Bikaner

Citation: 2025 LiveLaw (Raj) 9

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