THE ASSISTANT COMMERCIAL TAX OFFICER-CUM-ENTERTAINMENT TAX OFFICERversusSHRI NARASIMHAIAH AND ORS.

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                 THE ASSISTANT COMMERCIAL TAX                                    A
            OFFICER-CUM-ENTERTAINMENT TAX OFFICEP
                                       v.
                     SHRI NARASIMHAIAH AND ORS.

                                 APRIL 2, 1997
                                                                                 B
                [K. RAMASWAMY AND D.P. WADHWA, JJ.]

        Kamataka Entertainments Tax Act, 1958: Section 6-B (As inse1ted by
    Kamataka Act 14 of 1996).

          Kamataka Entertainment Tax Rules, 1959: Rule 29-F.
                                                                                 c
          Ente1tainment Ta:t~Escaped tumover---Power to reopen assessment
    and reassess the escaped tum over-Limitation pe1iod f 01~Notification No.
    FD, 194 CEX-76 dated 30th November, 1976-PrcsClibing period of five
    years from the close of the period to which the assessment in question       D
    relates-He'd power relates backward to five years from the date the Rule
    came into 1orce from November 30, 1976-171e authorities are empowered to
    reassess the escaped twnover for the pe1iod, five years preceding November
    30, 1976 as relating to the assessment in question.

          CIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 1780-86                E
    of 1986

         From the Judgment and Order dated 13.9.85 of the Karnataka High
    Court in W.A. Nos. 1640-1646 of 1985.

          M. Veerappa for the Appellant.
                                                                                 F

          The following Order of the Court was delivered :

          These appeals by special leave arise from the common judgment of
    the Division Bench of the Karnataka High Court, made on September 13,        G
    1985 in Writ Appeal Nos. 1640-46/85.

          The admitted position is that the Legislature of Karnataka intro-
    duced Section 6-B in the Karnataka Entertainment TaX Act, 1958 by
    Amendment Act, 1966 (Karnataka Act 14 of 1966) with effect from May
    16, 1966 which reads as under :                                              H
                                      513
    514                  SUPREME COURT REPORTS                   [1997] 3 S.C.R.

A           "6-B Payment for admission, etc., escaping assessment - (1) where,
            for any reasons, (1) any complimentary ticket or any payment for
            admission to any entertainment has escaped assessment to tax
            under Section 3 or Section 3-A or

            (ii) any cinematograph show has escaped assessment to tax under
B           Section 4 or 4-A or

            (iii) such ticket, payment or show has been assessed at a rate lower
            than the rate al which it is assessable under Section 3 or Section
            3-A or Section 4 or Section 4-A.

c           The authority prescribed under sub-section (1) or Sec:tion 6-A may,
            subject tn the provisions of sub-section (2) and at any time within
            such period as may be prescribed, assess or re-assess, to the best
            of its judgment, the rate due on such ticket, payment or show under
            Section 3 or Section 3-A or Section 4 or Section 4-A as the case
D           may be, after service of notice on the proprietor and after making
            such enquiry, as it may consider necessary."

          Reassessment of escaped turn-over Wi!S sought to be made by opera-
    tion of Notification No. FD. 194 CEX-76 dated 30.11.1976 amending and
    framing Rule 29-F of the Rules made under the Act prescribing the period
E   of limitation of five years. It reads as under:

            "29-F. The time within which the power under Section 6B is
            exercisable shall be five years from the close of the period to which
            the assessment in question relates.''

f         The respondents contend that the appdlants have no power to re-
    open the assessment and reassess the escaped turnover beyond November
    30, 1976. The said contention found favour with the karned single Judge,'
    which was aflirme;;d by the Division Bench dismissing the appeal summarily.
    Thus, these appeals hy special leave.
G       A reading of Section· ti-ti of the Act clearly indicates that where for
  any reasons, any complimentary ticket or any payment for admission to any
  entertainment has escaped assessment to tax under Section 3 or Section
  3-A, or any cinematography show has escaped assessment to tax under
  Section 4 or 4-A, or such ticket, payment or show has been assessed at a
H rate lower than the rate at which it is assessable under Section 3 or 3-A or
      ASSIT. COMMERCIAL TAXOFFICER-CUM-ENTERTAINMENTTAX OFFICER,. NARASJMHAIAH   515

    Section 4 or 4-A, as the case may be, the authority has been given power A
    under sub-section (1) of Section 6A, subject to the provisions of sub-
    section (2) of Section 6-A, to reassess to the best of its judgment, the rate
    due on such ticket, payment or show under Section 3 or 3-A or Section 4
    or 4-A, as the case may be. But it should be done only after service of
    notice on the proprietor and after making such enquiry as it may consider B
    necessary. Since limitation for the period during which the escaped turn-
    over can be reassessed, had not been earlier prescribed, Ruic 29-F was
    made and had come into effect from November 30, 1976. As seen under
    Rule 29-F, the time within which the power under Section 6B is exercisable
    has been prescribed, "shall be five years from the close of the period to
    which the assessment in questicn relates." In other words, it relates back- C

-   ward to five years from the date the Rule came into force from November
    30, 1976. If the interpretation given by the High Court is given effect to,
    the amended Rule 29-F would come into effect five years after the date
    the Amendment came into force, namely, November 30, 1976, five years
    forward. That would not be the intendment of the Rule. As a consequence, D
    the High Court is clearly in error in holding that reassessment of the
    escaped turnover preceding five years from November 30, 1976 is not
    correct.

          The appeals are, therefore, allowed. The authorities are empowered
    to reassess the escaped turnover for the period, five years preceding E
    November 30, 1976 as relating to the assessment in question. No costs.

    T.N.A                                                      Appeals allowed.