Full Judgment Text
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PETITIONER:
SRINIVASA THEATRE AND ORS. ETC. ETC.
Vs.
RESPONDENT:
GOVERNMENT OF TAMIL NADU AND ORS. ETC. ETC.
DATE OF JUDGMENT12/03/1992
BENCH:
JEEVAN REDDY, B.P. (J)
BENCH:
JEEVAN REDDY, B.P. (J)
VENKATACHALLIAH, M.N. (J)
CITATION:
1992 AIR 999 1992 SCR (2) 164
1992 SCC (2) 643 JT 1992 (2) 312
1992 SCALE (1)643
ACT:
Tamil Nadu Entertainment Tax Act, 1939 : Section 5A(1)
(As amended by Act 40 of 1989)-Constitutional validity of.
Cinema Theatres-Entertainment Tax-Levy on the basis of
’admission system’ and ’compositionsystem’-Classification of
theatres for the purpose of levy-Theatres situated within
the Municipal Corporations and Special Grade Municipalities
governed by ’admission system’-Theatres situated in other
local areas of Stage governed by ’composition system’-
Theatres situated within the radius of the five kilometers
of Municipal Corporation and Special Grade Municipalities
brought over from ’composition system’ to ’admission
system’-But temporary and open theatres exempted from
’admission system’-Held classification of theatres was
reasonable and has nexus with the object of enactment-Held
change-over to ’admission system’ from ’composition system’
is not an unreasonable restriction-Exemption to open and
temporary theatres held not discriminatory-Section 5A(1)
held not violative of Articles 14 and 19(1)(g).
Constitution of India, 1950 : Articles 14 and 38.
Expression ’Equality before law’ and ’equal protection
of laws’-Meaning of-Relevance of State’s obligation to bring
equality as contemplated by Article 38-Discussed.
Doctrine of legitimate-Legitimate expectation based on
legislative practice cannot be invoked for invalidating a
legislation.
Doctrine of legitimate expectation-Legitimate
expectation based on legislative practice cannot be invoked
for invalidating a legislation.
HEADNOTE:
The Tamil Nadu Entertainment Tax Act, 1939 provides for
levy of entertainment tax on admission to cinema theatres in
the State of Tamil Nadu. Until 1978 the entertainment tax
was levied on the basis of ’admission system’ i.e. on the
actual number of tickets sold. In 1978 the Act was amended
and section 5(A) and 5(B) were introduced. These sections
introduced the ’composition system’ of collection of
entertainment tax
165
under which tax was levied based upon the gross collection
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capacity of cinema theatres irrespective of the actual
number of tickets sold. However, the newly introduced
’composition system’ was not made applicable to the entire
State. While the theatres situated within the Municipal
Corporations of Madras, Madurai, Coimbatore and the Special
grade municipalities continued to be governed by the
original system of taxation i.e. ’admission system’ the
theatres situated in all other local areas of the State were
governed by the composition system.
In 1989 the Act was further amended and Sub-section (1)
of Section 5(A) of the Act was substituted. By this
amendment, the percentage of entertainment tax via-a-vis the
rates of admission in force in corporation and special grade
municipality areas was reduced from 53% to 40%. At the same
time all the theatres situated within the radius of five
kilometers from the peripheral limits of such areas (belt)
which were hitherto governed by the composition system were
brought over to the admission system. However, the
temporary and open air theatres even though located in the
belt of five kilometers were excluded from this switch-over.
The appellants challenged the validity of section
5(A)(1) by filing various writ petitions which were
dismissed by a Division Bench of the Madras High Court.
In appeals to this Court, it was contended on behalf of
the appellants (1) that the Amendment Act is arbitrary and
violative of Article 14 inasmuch as (a) it classifies
theatres situated in a local area into two categories
subjecting one such category to a hostile treatment; (b) it
equates the theatres situated in village panchayats and
village townships and other lesser grade municipalities with
the theatres in corporation areas and special grade
municipalities area and that such a classification has no
relation to the object of the enactment; (2) exemption of
temporary and open theatres from the ’admission system’ of
taxation is discriminatory; (3) the impugned provisions are
confiscatory in nature and they constitute an unreasonable
restriction upon the petitioners’ fundamental right to trade
guaranteed by Article 19(1)(g); (4) The petitioners had come
to entertain a legitimate expectation, based on legislative
practice, that they would not be brought over to
’admission system’ of taxation.
Dismissing the appeals, this Court,
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HELD: 1. The Tamil Nadu Legislature is competent to
declare that the theatres situated within the five kilometer
radius (belt) of the municipal corporation areas and the
areas of special grade municipalities shall be subjected to
the same method of taxation as the theatres situated within
the said areas. The Act no doubt adopt the local areas
declared under the Tamil Nadu Municipal Corporation Act,
Tamil Nadu Municipalities Act and Tamil Nadu Gram Panchayats
Act as the basis for prescribing the rate of taxation. But
it must be remembered that it was not obligatory upon the
legislature to do so. It could have adopted any other
basis. It is only for the sake of convenience that the
existing local areas - convenient existing units of
references - were adopted, it is not a question of power
but one of convenience. [177C-D]
1.1 The theatres situated within the belt are proximate
to the corporation and special grade municipality areas and
thus enjoy a certain advantage which the theatres beyond the
belt do not. They draw custom from within the corporation
areas by virtue of their proximity. The corporation areas
have a larger percentage of affluent persons than other
areas, who have more money at their disposal. They spend
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more on entertainment. The municipal boundary has no
significance for them. If there is a good picture in a
theatre situated beyond the municipal corporation limits
they would go and see it. [177H, 178A-B]
1.2 The classification or the distinction made between
theatres situated within the belt and the theatres outside
the belt is not an unreasonable one. The material placed
before the Court shows that theatres situated within the
belt are substantially in the same position as those within
the corporation or special grade municipality areas, if not
better. The theatres within the belt are akin to and
comparable to the theatres situated within the areas of
corporations and Special Grade Municipalities. Further it
is not disputed that the admission system fetches more
revenue to the State. It is precisely for this reason that
the said system is continued in the major cities. It cannot
be said that the classification has no nexus to the object.
[178H, 179A-C]
2. The argument that if the theatres situated within a
gram panchayat or a lesser grade municipality are to be
equated with the theatres within the corporation and other
areas they should also be allowed to charge the rates of
admission prevalent in corporation areas
167
cannot be accepted. Firstly, rates of admission do not
merely depend upon the category of local areas but also upon
the amenities provided in the theatres. Secondly, the very
system of levy in both areas is different. Under section 4
i.e., admission system the rate of tax was 53% of the
admission charge, which is now brought down to 40% by the
impugned Amendment Act on the actual number of tickets sold
whereas in respect of theatres governed by composition
system, the rate of levy is upon the gross collection
capacity irrespective of the actual number of tickets sold
for a show or over a week. Thirdly, the rates of admission
are prescribed under a different enactment. [179F-H, 180A]
Moreover, the petitioners are not suffering any real
prejudice. Whichever the system of taxation, the amount
collected by way of entertainment tax is to be made over to
the State. Even under the composition system, the formula
evolved is supposed to represent the amount really collected
by way of entertainment tax. It may be that in a given case
or probably in many cases - the exhibitors may be saving a
part of the amount collected by way of entertainment tax by
paying only the compounded amount. But it may not
necessarily be so. There may be theatres where the formula
may work to their prejudice because of their low occupancy
rate. In any event, the mere fact that an exhibitor is able
to save a part of the tax by paying the compounded amount
cannot be treated as a benefit in law which he is deprived
by following the admission system. [180B-D]
3.Open-air theatres and temporary theatres stand on a
different footing from permanent theatres. They suffer from
several disadvantages which the others do not. They are a
class apart. If the impugned provision has treated them as
a separate class, no objection can be taken thereto. [181B]
4. The theory of legitimate expectation based upon
legislative practice cannot be brought in to defeat or
invalidate a legislation. It may at the most be used
against an administrative action, and even there it may not
be an indefeasible right. No case has been brought to the
notice of the Court where a legislation has been invalidated
on the basis that it offends the legitimate expectation of
the persons affected thereby. [181C-F]
Council of Civil Service Unions and Ors. v. Minister
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for the Civil Service, (1985) A.C, 374, referred to.
5. The impugned change-over to the ’admission system’
does not
168
amount to unreasonable restriction upon the petitioners’
fundamental right to trade. [182A]
6. Article 14 of the Constitution enjoins upon the
State not to deny any persons ’Equality before law’ or ’the
equal protection of law’ within the territory of India. The
two expressions do not mean the same thing even if there may
be much in common. Their meaning and content has to be
found and determined having regard to the context and scheme
of our Constitution. The word "law" in the former
expression is used in a generic sense - a philosophical
sense - whereas the word "laws" in the latter expression
denotes specific laws in force. [173C-E]
7. Equality before law is a dynamic concept having
many facets. One facet - the most commonly acknowledge - is
that there shall be no privileged person or class and that
none shall be above law. A facet which is of immediate
relevance herein is the obligation upon the State to bring
about, through the machinery of law, a more equal society
envisaged by the preamble and part IV of our Constitution.
For equality before law can be predicate meaningfully only
in an equal society i.e., in a society contemplated by
Article 38 of the Constitution. [173F-G]
8. The instrument of taxation is not merely a means to
raise revenue in in India; it is, and ought to be, a means
to reduce inequalities. It is for this reason that while
applying the doctrine of classifications - developed mainly
with reference to and under the concept of "equal
protection of law" - Parliament is allowed more freedom of
choice in the matter of taxation vis-a-vis other laws. If
this be the situation in the case of direct taxes, it should
be more so in the case of indirect taxes, since in the case
of such taxes the real incidence is upon some other than
upon the person who actually makes it over to the State,
though, it is true, he cannot avoid the liability on the
ground that he has not passed it on. In the matter of
taxation it is, thus, not a question of power but one of
constraints of policy- the interest of economy, of trade,
profession and industry, the justness of the burden, its
’acceptability’ and other similar consideration. But this
does not mean that taxation laws are immune from attack
based upon Article 14.It is only that parliament and
legislatures are accorded a greater freedom and latitude in
choosing the persons upon whom and the situations and stage
at which it can levy tax. Under the Constitution, there is
an added obligation upon he State to employ the power of
taxation-nay, all its powers - to achieve the goal
169
adumbrated in Article 38. [174C-H, 175A]
Gorantia Butchayya Chowdary & Ors. v. The State of A.P.
JUDGMENT:
Kerala, [1961] 3 S.C.R. 77; Spences Hostel Pvt. Ltd. v.
State of West Bengal, [1991] 2 S.C.C. 154; S.K. Datta, I.T.O
v. Lawrence Singh Ingty, [1968] 2 S.C.R. 165 and Elel Hostel
and Investments Ltd. v. Union of India, [1991] 2 S.C.C. 166,
referred to.
East India Tobacco Co. v. State of A.P., [1963] 1
S.C.R. 404 and Sanjeev Coke Mfg. Co. v. Bharat Coking Coal
Ltd & Anr., [1983] 1 S.C.R. 1000 cited.
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&
CIVIL APPELLATE JURISDICTION : Civil Appeal Nos. 2004
to 2012 o 1992.
From the Judgment and order dated 8.10.90 of Madras
High Court in W.P. Nos. 8710/89, 8734/89, 8736/89, 8751/89,
8748/89, 8735/89, 8749/89, 8727/89 and 8737/89.
WITH
Civil Appeal Nos. 2013 to 2021/92, 2022 to 2024/92,
2025, 2026, 2027-2028 and 1029 of 1992.
A.K.Ganguli, K. Parasaran, B.R.L Iyenger, Mrs. Nalini
Chidambaram, A.V. Rangam, A.T.M. Sampath, Probir Choudhary,
M.N. Krishnamani, K.P. Sunder Rao and G. Srinivasan for the
Appellants.
R. Mohan and V. Krishnamoorthy for the Respondents.
The following Judgment of the Court was delivered by
B.P. JEEVAN REDDY, J. Heard learned counsel for the
petitioners and the respondents.
Leave granted.
These appeals are preferred by the Writ petitioners in
a batch of writ petitions which were dismissed by a Division
Bench of Madras High Court by its common judgment and order
dated 8th October, 1990. Questions arising in these appeals
are common. So are the relevant facts. For the sake of
convenience, we shall take the facts in Civil Appeal No.
2008
170
of 1992 arising from writ petition No. 8748 of 1989 (filed
by Raja Theatre, represented by it licencee-Parasuram Petty.
village, Madurai).
Tamil Nadu Entertainment Tax Act, 1939 provides for
levy of entertainment tax on admission to cinema theatres,
among others. The rates of admission to cinema theatres in
the State of Tamil Nadu are prescribed under the Tamil Nadu
Cinema (Regulation) Act and the rules made thereunder.
Different rates of admission are prescribed depending upon
the locality in which the theatre is situated and the
amenities provided therein. Entertainment Tax is prescribed
at a particular percentage of the rate of admission, which
percentage again differs from locality to locality.
Entertainment Tax, thus, constitutes a component of the
total amount charged for admission to a cinema theatre.
Until the year 1978, entertainment tax was collected on
the actual number of tickets sold. The owners/exhibitors of
cinema theatres were required to make over the actual amount
of entertainment tax collected by them for each shoe to the
Government. With a view to simplify the collection of tax,
Section 5(A) and 5(B) were introduced by the 1978 Amendment
Act. These Sections, introduced a new and substitute method
of collection of entertainment tax based upon the gross
collection capacity of a cinema theatre. A formula was
devised to determine the tax payable per show or per week as
the case may be. Gross collection capacity meant the total
amount that would be collected by a cinema theatre if all
the seats therein are filled. But inasmuch as no cinema
theatre can expect to have its full capacity filled for each
show on each show on each day of the month, a reasonable
figure was adopted and the tax payable per show determined.
If the exhibitor opted to pay the tax every week, he was
entitled to exhibit any number of shows in the week not
exceeding 28 shows. This system, which may be called
’composition system’, for the sake of convenience, dispensed
with the requirement of verification of the number of ticket
sold for each show in each cinema theatre. It appears to be
convenient to theatre-owners as well since they are relieved
of the botheration of submitting returns and establishing
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their correctness. However, this method was not made
applicable to the entire State. The theatres situated
within the Municipal Corporations of Madras, Coimbatore and
the special grade municipalities continued to be governed by
the original system of taxation, which may for the sake of
convenience be called ’admission system’. Theatres situated
in all other local areas of the State are governed by the
171
composition system.
In 1989, the Act was further amended by Tamil Nadu Act
40 of 1989, the Act impugned herein. By virtue of this Act,
the percentage of entertainment tax vis-a-vis the rates of
admission in force in corporation and special grade
municipality areas was brought down from 53% to 40%. At the
same time, all the theatres situated within the radius of
five kilometers from the peripheral limits of such areas
were brought within the purview of the admission system. In
other words, the theatres situated within the five kilometer
’belt’ abutting the said areas, which were hitherto governed
by the composition system were brought over to the admission
system. The several theatres concerned in this batch of
appeals are all situated within one or the other such
’belt’. The theatre concerned in writ petition No. 8748 to
1989 is situated in village Parasuram Petty and was governed
by composition system but since it falls within the five
kilometer belt abutting Madurai Corporation area, it is
brought over to admission system. This change is brought
about by substitution of Sub-Section (1) of Section 5(A),
and in particular, by virtue of the two provisos appended to
Sub-section 5(A) (i). However, the temporary (tourist) and
open air theatres even though located in the belt are
excluded from this switch-over.
Petitioner-appellants impugned the validity of Section
5(A)(i) on several grounds all of which have been negatived
by the High Court.
S/Sri B.R.L Iyengar, K. Parasarn and Sampath urged the
following contentions before us;
1. The Act classifies the theaters in the State with
reference to their location i.e., with reference to the
local area wherein they are situated. The theatres situated
within the municipal corporation limits are subjected to a
higher rate of tax than the theatres situated in the
selection grade municipalities. Similarly, the theaters
situated within the area of selection grade municipalities
are subjected to a higher rate of tax than the theatres
situated in the first grade municipalities and so on. This
classification is an eminently reasonable one. Even the
rates of admission prescribed under Tamil Nadu Cinema
(Regulation) Act and rules recognize this distinction. By
virtue of the impugned amendment, however, several theatres
situated within panchayat towns, village panchayats and
other lesser grade municipalities, which theatres were
hitherto enjoying the benefit of composition system are
suddenly deprived of the said beneficial system and
172
placed on par with the theatres situated in corporation
areas and special grades municipalities for no other reason
than that they happen to fall within the five kilometer
radius of such areas. The result is that in a
village/municipality abutting a municipal corporation area,
while some theatres are governed by the composition systems,
the other theatres (which happen to fall within the ’belt’)
are governed by a different systems, namely admission
system. This invidious distinction, amounting to hostile
discrimination, has been brought about for no valid reason.
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Having adopted the gradation of the local area as the basis
for method of taxation, rate of tax and all other purposes,
there is no justification to treat some of the theatres
situated in some of these areas differently. Indeed, the
very creation and concept of ’belt’ is impermissible.
2. The Amendment Act is arbitrary, unreasonable and
violative of Article 14 inasmuch as (a) it classifies
theatres situated in a local area into two categories
subjecting one such situated in a category to a hostile
treatment;
(b) it equates the theatres situated in village
panchayats and village town-ships and other lesser grade
municipalities with the theatres in corporation areas and
special grade municipalities areas; in short, it seeks to
treat unequals equally, which itself is a negation of the
guarantee of equal protection of laws.
There is absolutely no basis for the above two war
classification nor such classification has any relation to
the object of the enactment. The respondents failed to
place before the court any material justifying such
classification and discrimination.
3. The unreasonableness of the impugned provision is
evident from the fact that the appellant-theatres continue
to be governed by the rates of admission prescribed for
their respective local areas. For example, the theatre
concerned in writ petition No. 8748 of 1989 is governed by
and permitted to charge rates of admission prescribed for
similar theatres situated in Madurai corporation area-while
in the matter of method of taxation it is equated with the
theatres in the said corporation area. This is a clear case
of hostile discrimination.
4 The petitioners had come to entertain a legitimate
expectation,
173
based on legislative practice, that they would not be
treated on par with the theatres situates in municipal
corporation and special grade municipality areas and had
adjusted their affairs accordingly. The sudden change
brought about by the impugned Act has dealt a severe blow to
them and has put their vary continued existence in peril.
5. The impugned provisions are confiscatory in nature.
They constitute an unreasonable restriction upon the
fundamental right to trade guaranteed to them by Article
19(1)(g) of the Constitution of India.
Article 14 of the Constitution enjoin upon the State
not to deny to any person ’Equality before law’ or ’the
equal protection of laws’ within the territory of India.
The two expressions do not mean the same thing even if there
may be much in common. Section 1 of the XIV Amendment to
U.S. Constitution uses only the latter expression whereas
the Irish Constitution (1937) and the West German
Constitution (1949) use the expression "equal before law"
alone. Both these expressions are used together in the
Universal Declaration of Human Rights, 1948, Article 7
whereof says "All are equal before the law and are entitled
without any discrimination to equal protection of the law."
While ascertaining the meaning and content of these
expression, however, we need not be constrained by the
interpretation placed upon them in those countries though
their relevance is undoubtedly great. It has to be found
and determined having regard to the context and scheme of
our Constitution. It appears to us that the word "law" in
the former expression is used in a generic sense-a
philosophical sense-whereas the word "law" in the latter
expression denotes specific laws in force.
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Equality before law is a dynamic concept having many
facets. One facet-the most commonly acknowledged-is that
there shall be no previleged person or class and that none
shall be above law. A facet which is of immediate relevance
herein is the obligation upon the State to bring about,
through the machinery of law, a more equal society envisaged
by the preamble and part IV of our Constitution. For
equality before law can be predicated meaningfully only in
an equal society i.e., in a society contemplated by Article
38 of the Constitution, which reads;
"38 State to secure a social order for the
promotion of welfare of the people. (1) The state
shall strive to promote the welfare of the people
by securing and protecting as effectively as it may
174
a social, economic and political, shall inform all
the institutions of the national life.
(2) The State shall, in particular strive to
minimise the inequalities in income, and endeavour
to eliminate inequalities, in status, facilities
and opportunities, not only amongst individuals but
also amongst groups of people residing in different
areas or engaged in different vocations."
The instrument of taxation is not merely a means to
raise revenue in India; it is, and ought to be, a means to
reduce inequalities. You don’t tax a poor man. You tax the
rich and the richer one gets, proportionately greater burden
he has to bear. Indeed, a few years ago, the Income Tax Act
taxed 94p out of every rupee earned by an individual over
and above Rupees one Lakh. The Estate Duty Act, no doubt
since repealed, Wealth Tax Act and Gift Tax Act are all
measures in the same direction. It is for the reason that
while applying the doctrine of classification-developed
mainly with reference to and under the concept of "equal
protection of laws"-Parliament is allowed more freedom of
choice in the matter of taxation vis-a-vis other laws. If
this be the situation in the case of direct taxes, it should
be more so in the case of indirect taxes, since in the case
of such taxes the real incidence is upon some other than
upon the person who actually makes it over to the State,
though, it is true, he cannot avoid the liability on the
ground that he has not passed it on. In the matter of
taxation it is, thus, not a question of power but one of
constraints of policy-the interests of economy, of trade,
profession and industry, the justness of the burden, its
’acceptability’ and other similar considerations. We do not
mean to say that taxation laws are immune from attack
based upon Article 14. It is only that parliament and
legislatures are accorded a greater freedom and latitude in
choosing the persons upon whom and the situation and stags
at which it can levy tax. We are not unaware that this
greater latiude has been recognised in USA and UK even
without resorting to the concepts of ’equality before law’
or "the equal protection of laws" -as something that is
inherent in the very power of taxation and it has been
accepted in this country as well. (See in this connection
the decision of Subba Rao, CJ., (as he then was) in Gorantia
Butchavva Chowdary & Ors., v. The State of A.P. & Ors., 1958
A.P. 294, where the several US and English decisions have
been carefully analysed and explained). In the context of
our Constitution, however, there is an added obligation upon
the
175
State to employ the power of taxation-nay, all its powers-to
achieve the goal adumbrated in Article 38.
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The decisions of this court on the above aspect are
legion, starting from Moopil Nair v. State of Kerala, [1961]
3 SCR 77. One of the latest decisions is in Spences Hotel
Pvt. Ltd. v. State of West Bengal, [1991] 2 S.C.C. 154
wherein almost all the earlier decisions of this court on
this aspect have been referred to and discussed. To bring
out the principle, it would be sufficient if we refer to two
of them namely S.K. Datta, I.T.O v. Lawrence Singh Ingty,
[1968] 2 S.C.R. 165 and Elel Hotel and Investments Ltd. v.
Union of India, [1991] 2 S.C.C. 166. In the former case,
this court observed:-
"It is not in dispute that taxation laws must also
pass the test of Art. 14. That has been laid down
by this Court in Moopil Nair v. State of Kerala,
[1961] 3 S.C.R. 77. But as observed by this Court
in East India Tobacco Co. v. State of Andhra
Pradesh, [1963] 1 S.C.R. 4040, in deciding whether
a taxation law is discriminatory or not it is
necessary to bear in mind that the State has a wide
discretion in selecting persons or objects it will
tax, and that a statute is not open to attach on
the ground that it taxes some persons or objects
and not others; it is only when within the range of
its selection, the law operates unequally, and that
cannot be justified on the basis of any valid
classification, that it would be violative of
Article 14. It is well settled that a State does
not have to tax everything in order to tax
something. It is allowed to pick and choose
district, objects, persons, methods and even rates
for taxation if it does so reasonable."
Similarly, it was observed in the other case by one of
us (Venkatachaliah, J.):
"It is now well settled that a very wide latitude
is available to the legislature in the matter of
classification of objects, persons and things for
purposes of taxation. It must need to be so,
having regard to the complexities involved in the
formulation of a taxation policy. Taxation is not
now a mere source of raising money to defray
expenses of government. It is a recognised fiscal
tool to achieve fiscal and social objectives. The
differentia of
176
classification presupposes and proceeds on the
premise that it distinguishes and keeps apart as a
distinct class hotels with higher economic class
hotels with higher economic status reflected in one
of the indicia of such economic superiority. The
presumption of constitutionality has not been
dislodged by the petitioners by demonstrating how
even hotels, not brought into the class, have also
equal or higher chargeable receipts and how the
assumption of economic superiority of hotels to
which the Act is applied is erroneous or
irrelevant."
We shall now proceed to examine the contentions before
us in the light of the above principles, but before we do
that we think it appropriate to remind ourselves of the
following dictum :
"...in the ultimate analysis, we are not really to
concern our selves with the hollowness or the self-
condemnatory nature of the statements made in the
affidavits filed by the respondents to justify and
sustain the legislation. The deponents of the
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affidavits filed into court may speak for the
parties on whose behalf they swear to the
statement. They do not speak for the Parliament.
No one may speak for the Parliament and Parliament
is never before the Court. After Parliament has
said what is intends to say, only the Court may say
what the Parliament to say. None else. Once a
statute leaves Parliament House, the Court’s is the
only authentic voice which may echo (interpret) the
Parliament. This the Court will do with reference
to the language of the statute and other
permissible aids. The executive Government may
place before the court their understanding of what
Parliament has said or intended to say or what they
think was Parliament’s object and all the facts and
circumstances which in their view led to the
legislation. When they do so, they do not speak
for Parliament. No Act of Parliament may be struck
down because of the understanding or
misunderstanding of Parliamentary intention by the
executive government or because their (the
Government’s) spokesmen do not bring out relevant
circumstances but indulge in empty and self-
defeating affidavits. They do not and they cannot
bind Parliament. Validity of Legislation is not to
be judged merely judged merely by affidavits filed
on behalf of the State, but by all the relevant
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circumstances which the court may ultimately find
and more especially by what may be gathered from
what the legislature has itself said. We have
mentioned the facts as found by us and we do not
think that there has been any infringement of the
right guarantee by Article 14." (Sanjeev Coke
Manufacturing Company v. Bharat Cooking Coal Ltd. &
Anr., [1983] 1 S.C.R. 1000 at 1029).
We shall first examine whether it was not competent for
the Tamil Nadu Legislature to declare that the theatres
situated within the five kilometer radius (belt) of the
municipal corporation areas and the areas of special grade
municipalities shall be subjected to the same method of
taxation as the theatres situated within the said area ? It
is true that the Act adopts the local areas declared under
the Tamil Nadu Municipal Corporation Act, Tamil Nadu
Municipalities Act and Tamil Nadu Gram Panchayats Act as the
basis or prescribing the rate of taxation. But it must be
remembered that it was not obligatory upon the legislature
to do so. It could have adopted any other basis. It is
only for the sake of convenience that the existing local
areas, convenient existing units of reference, were adopted.
It is not a question of power but one of the convenience.
There was nothing precluding the legislature to have
declared in the very first instance (i.e. at the time of
1978 Amendment Act) that the admission system was to
continue in force now only in the corporation areas but also
in five kilometer radius (belt) abutting each of those
areas. The only question then would have been, as not it
is, whether such a course brings about an unreasonable
classification or whether it amounts to treating unequals on
a uniform basis.
It is urged for the appellants that as a result of
creation of such belts, theatres situated in a given local
areas, be it a gram panchayat or a lesser grade
municipality, are getting categorised into two classes-those
which happen to fall within the belt and those outside. The
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former are obliged to follow the admission system whereas
the latter continue to enjoy the facility of composition
system. This is undoubtedly true as a fact but the question
is whether such a classification, brought about by the
impugned provisions of the Act, is unreasonable and un-
related to the object underlying the enactment? It cannot be
denied that the theatres situated within the belt are
proximate to the corporation and special grade municipality
areas and thus enjoy a certain advantage which the theatres
beyond the belt do not.
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They draw custom from within the corporation areas by virtue
of their proximity. The corporation areas have a larger
percentage of affluent persons than other areas, who have
more money at their disposal. They spend more on
entertainment. The municipal boundary has no significance
from them. If there is a good picture in a theatre situated
beyond the municipal corporation limits they would go and
see it. This is not a mere surmise. The respondents have
given a concrete instance which is also referred to in the
judgment of the High Court. A sketch drawn in respect of
Erode town alongwith the daily collection particulars of a
theatre, Bharati theatre, situated in the belt abutting the
said town was placed before the High Court. On a
consideration of the same, the High Court has observed:
"The sketch produced by the respondents shows the
mushroom growth of theatres just outside the limits
of the Erode Special Grade Municipality which lie
within the five kilometer belt. The daily
collection of Bharati theatre which is in the five
kilometer belt shows that the theatres within the
Special Grade Municipality are mostly showing old
pictures whereas Bharati theatre was exhibiting a
comparatively new picture. We are, therefore,
satisfied that the theatres in the five kilometer
belt can be no stretch of imagination be said to be
not on par with the theatres in the respective
corporation of the Special Grade Municipalities."
It is further stated in the counter-affidavit that the
distributors are preferring the theatres in the periphery of
cooperation and Special Grade Municipality areas for
exhibiting first run pictures over the theatres within those
areas. It is also averred that in the interior areas of
such abutting panchayats, (i.e., outside the five kilometer
radius) the theatres exhibit only second run pictures and
there is definitely less population in and around such
theatres. In those areas, it is stated, there is
practically no floating population, whereas in the theatres
within the five kilometer belt, mostly first run pictures
are exhibited and there is considerable floating population.
It is also submitted by the respondents that a number of
housing colonies have sprung up just outside the corporation
limits and the limits of Special Grade Municipalities, the
inhabitants whereof partronise theatres within the belt.
All this shows that the classification or the distinction
made between theatres situated within the belt and the
theatres outside the belt
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is not an unreasonable one. It also establishes that the
theatres within the belt are akin to and comparable to the
theatres situated within the areas of corporation and
Special Grade Municipalities. It is not disputed that the
admission system fetches more revenue to the State. It is
precisely for this reason that the said system is continued
in the major cities. It cannot be said that the
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classification has no nexus to the object.
It is then argued that the theatres situated within a
village panchayat or a lesser Grade Municipality cannot be
equated with the theatres situated within the corporation
areas or for that matter those situated within the areas of
Special Grade Municipalities merely by virtue of the fact
that they abut the latter areas. The material referred to
above does, however, establish that the theatres situated
within the belt are substantially in the same position as
those within the corporation/special grade municipality
areas, if not better. We may also mention that the concept
of belt is not a novel one. In adjoining Andhra Pradesh,
this concept has been in force since quite a few years
earlier to its introduction in Tamil Nadu.
It is then argued that while equating the theatres
situated within the belt with the theatres situated within
the corporation areas, the rates of admission for the
theatres in the belt are retained at the original level.
(As stated hereinabove, rates of admission are prescribed
under the Tamil Nadu Cinema (Regulation) Act and the rules
and orders made thereunder. Different rates of admission
are prescribed for theatres situated in different categories
of local areas and also having regard to the amenities
provided therein). The petitioners grievance is that
theatres situated within a gram panchayat or a lesser grade
municipality, as the case may be, are permitted only the
rates of admissible for that local areas, they are still not
allowed to charge the higher rates of admission in force in
such areas. The argument is that if they are to be equated
with the theatres within the corporation and other areas
they should also be allowed to charge the rates of admission
prevalent in corporation areas. We are not impressed,
Firstly, rates of admission do not merely depend upon the
category of local area but also upon the amenities provided
in the theatre. Secondly, the very system of levy in both
areas is different. Under section 4(i.e., admission system)
the rate of tax was 53% of the admission charge, which is
now brought down to 40% by the impugned Amendment Act on the
actual number of tickets sold whereas in respect of theatres
governed by composition
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system, the rate of levy-whether it is 27% or any other
percentage is upon the gross collection capacity
irrespective of the actual number of tickets sold for a show
or over a week. Thirdly, the rates of admission are
prescribed under a different enactment. If the petitioners
are so advised they can always apply to the appropriate
authority for revision of rates of admission. It is not
submitted by the petitioners that any of them has applied
and have been refused. The contention, therefore, is
unacceptable. We may also mention in this connection that
the petitioners are not suffering any real prejudice.
Whichever the system of taxation, the amount collected by
way of entertainment tax is to be made over to the State.
Even under the composition systems, the formula evolved is
supposed to represent the amount really collected by way of
entertainment tax. It may be that in a given case or
probably in many cases-the exhibitors may be saving a part
of the amount collected by way of entertainment tax by
paying only the compounded amount. But it may not
necessarily be so. There may be theatres where the formula
may work to their prejudice because of their low occupancy
rate. In any event, the mere fact that an exhibitor is able
save a part of the tax by paying the compounded amount
cannot be treated as a benefit in law which he is deprived
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of by following the admission system.
Reference in this connection may also be made to the
position obtaining in Andhra Pradesh as is evidenced by the
Judgement in writ petition No. 6404 of 1986 and batch dated
19th July, 1984 which is now pending appeal in this court.
In that State, the exhibitors are opposing the composition
system. They want the admission system to continue. We
need not go into the precise reason why the exhibitors in
Andhra Pradesh are opposing the composition system or why
the Tamil Nadu exhibits are opposing the admission system.
Suffice it to say, that composition system is only a
substitute system and the formula evolved thereunder is
supposed to represent approximately the true amount
collected by an exhibitors by way of entertainment tax.
Under both the systems, the entertainment tax collected from
the cinegoer has to be made over to he State. May be that
the composition system is more convenient in the sense that
it obviates keeping of records. establishing their
correctness and so on and so forth.
Yet another argument urged is that while bringing all
the theatres located in the belt to the admission system,
the impugned provision has exempted the open-air theatres
and temporary theatres from such changeover.
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This is said to be a discriminatory action. We cannot
agree. So fat as open air theatres are concerned, it is
stated by the respondents that there are only two such
theatres in the entire state. It is not the case of the
petitioners’ that any such theatre is located in any of the
belts concerned herein. Even otherwise, open-air theatres
and temporary theatres stand on a different footing from
permanent theatres. They are a class apart. If the
impugned provisions has treated them as a separate class, no
objection can be taken thereto.
Another argument urged by Sri Parasaran is that the
petitioners’ had come to entertain a legitimate expectation
based upon legislative practice that they would not be
brought over to admission system. Factually speaking, we
must say that no such legislative practice has been brought
to our notice. Prior to 1978, all the theatres all over the
State were governed by admission system alone. Even after
introduction of Section 5(A) and 5(B) it was made applicable
to several local areas in two stages i.e., in 1978 and 1982.
Indeed by Amendment Act 20/83 and 48/86 certain local areas
governed by Section 5(A) and 5(B) were removed from their
purview and brought back to admission system. The entire
experiment has been spread over a period of only about 14
years. We cannot say that this period is sufficient to
establish, what may be called, a ’legislative practice’.
Even otherwise, we are not satisfied that the said theory
can be brought in to defeat or invalidate a legislation. It
may at the most be used against an administrative action,
and even there it may not be an indefeasible right. No case
has been brought to our notice where a legislation has been
invalidated on the basis that it offends of legitimate
expectation of the persons affected thereby. We may in this
connection refer to the decision of the House of ords in
Council of civil Service Unions and Ors. v. Minister for the
Civil Service, (1985) A.C. 374, wherein this theory is
referred to. In this case, the staff of Government
Communications Headquarters (G.C.H.Q) had the right to
unionisation. By an order made by the Government this right
to unionisation was taken away insofar as the employees of
G.C.H.Q. are concerned. The Union questioned the same. It
was held by the House of Lords that though the Unions had a
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legitimate expectation that before barring them for
unionisation they would be consulted, the security
consideration put forward by the Government, over-ride the
right of the petitioner’s to prior consultation.
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We are also not impressed by the argument that the
impugned change-over amounts to unreasonable restriction
upon the petitioners’ fundamental right to trade. Whichever
the system, the exhibitor’s liability is only to make over
the tax collected by him to the State. We have referred
hereinbefore to material placed before the court, which
shows that the theatres situated within the belts are in no
way differently situated that the theatres located within
the corporation areas. It may also be noted that all has
been done by the impugned provision is to bring back these
theatres to admission system, by which they were governed
prior to 1978 Amendment.
For all the above reasons, these appeals fail and are
dismissed. No order as to costs.
T.N.A Appeals dismissed.
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