ition No 1395 of 1987
Under Article 32 of the Constitution of India
NA Palkhiwala TR Andhyarujina Soli J Sorabjee R Dada section Ganesh JR Gagrat RB Aggarwala PG Gokhale VB Aggarwala RJ Gagrat RB Hathikhanawala RF Nariman PH Parekh Sanjay Bhartari MK Menon RK Dhillon Ms Rohini Chhabra Ms Sunita Sharma and Ms Ayesha Misra for the Petitioners
K Parasaran Attorney General B Datta Addl
Solici tor General Dr V Gauri Shankar SK Dholakia PS Poti GA Shah V Jaganatha Rao K Sudhakaran Ms A Subha shini BB Ahuja HK Puri A Subba Rao ASBhasme KR Nambiar MN Shroff M Veerappa R Mohan R Ayyamperumal and JP Mishra for the Respondents
The following judgments of the Court were delivered 927 VENKATACHALIAH J
In these writ petitions under Article 32 of the Constitution of India petitioners who are engaged in or associated with the Hotel Industry in India chal lenge the constitutional validity of the Expenditure Tax Act 1987 Central Act 35 of 1987
The Act envisages a tax at 10 per cent ad valorem on chargeable expenditure  in curred in the class of Hotels wherein room charges for any unit of residential accommodation are Rupees Four Hundred per day per individual
The Chargeable expenditure  as defined in Section 5 of the Act include expenditure incurred in or payments made in such class of hotels in connection with the provision of any accommodation residential or otherwise food or drink whether at or outside the hotel or for any accommodation in such hotel on hire or lease or any other services envisaged in that Section
However any expenditure incurred in or paid for in foreign exchange or by persons who enjoy certain diplomatic privileges and immunities are exempt
The challenge to the vires of the Act  is on grounds of lack of legislative competence and of violation of the rights under Article 14 and 191g
Union of India seeks to sustain the legislative competence to enact the impugned law under Article 248 read with Entry 97 of List I of the Seventh Schedule
Writ Petition No 1395 of 1987 is quite comprehensive as to the array of parties and may generally be regarded as representative of the contentions urged in support of the challenge
The first petitioner therein is The Federation of Hotel  Restaurant Association of India which is said to be a representative body of over 1000 member petitioners in India
Petitioners 2 to 5 are said to be the Regional Associations of the Federation and Petitioners 6 and 7 are two Hotel companies which own several hotels in India
Petitioners 8 and 9 are Indian citizens who are the direc tors and shareholders of petitioners 6 and 7 respectively
Petitioner 10 is a practising chartered accountant who claims to use the services in the several Hotels in India owned by the members of the Federation
The array of peti tioners is quite comprehensive so as to include all inter ests affected so as to satisfy the requisite standing to sue from all points of view
The Expenditure Tax Bill No 90 of 1987 preceding the impugned Act was introduced in the Union Legislature on 2181987
It became an Act on 1491987
It extends to the whole of India except the State of Jammu and Kashmir
The requisite notification under Section 13 of the Act was issued on 14101987 appointing 1111987 928 as the date on which the Act shall come into force
The Expenditure Tax Bill No 90 of 1987 states the following as its objects and reasons The Bill seeks to impose a tax on expenditure incurred in hotels were the room charges for any Unit of residential accommodation are four hundred rupees or more per day per individual
This tax will be levied at the rate of ten per cent of the expenditure incurred in connection with provi sion of any accommodation food drinks and certain other categories of services
This tax will not apply to expendi ture incurred in foreign exchange or in the case of person enjoying diplomatic privileges Emphasis supplied 4
A brief survey of the provisions of the Act is perhaps necessary to apprehend and assess the grounds of challenge in their true perspective
Section 4 is the charg ing section which says Subject to the provisions of this Act there shall be charged on and from the commencement of this Act a tax at the rate of ten per cent of the chargeable expenditure
 The expression chargeable expenditure  is defined in clauses a b c and d of Section 5 which read For the purposes of this Act chargeable expend iture means any expenditure incurred in or payments made to a hotel to which this Act applies in connection with the provision of a any accommodation residential or otherwise or b food or drink by the hotel whether at the hotel or outside or by any other person at the hotel or c any accommodation in such hotel on hire or lease or d any other services at the hotel either by the hotel or by any other person by way of beauty parlour health 929 club swimming pool or other similar services Rest of the provisions of Section 5 are omitted as unnecessary for the present The expression Assessee  Hotel  Room charges  are some of the material expressions defined in the interpreta tion clause
21 assessee means a person responsible for collecting the expenditure tax payable under the provisions of this Act
26 Hotel includes a building or part of a building where residential accommodation is by way of business provided for a monetary consideration
210 room charges means the charges for a unit of residential accommodation in a hotel and includes the charges for a furniture air conditioner refrigerator radio music telephone television and b such other services as are normally included by a hotel in room rent but does not include charges for food drinks and any services other than those referred to in sub clauses a and b
Section 3 is the crucial provision which lays down the differentia for the classification of the Hotel to which the Act  applies
Section 3 is the crucial provision which lays down the differentia for the classification of the Hotel to which the Act  applies
That section provides that the Act  shall apply in relation to any chargeableexpenditure  incurred in a hotel wherein the room charges for any unit of resi dential accommodation at the time of incurring of such expenditure are Rs400 or more per day per individual
The levy of tax is confined to such class of Hotels which satis fy that statutory standard
Where however composite charges are payable in respect of both residential accommo dation and food then the room charges for purposes of determination of the criteria attracting the Act shall have to be apportioned in the manner to be prescribed
Section 3 930 enables the assessing officer to determine the room charges  on such reasonable basis as he may deem fit where lm60 i a composite charge is payable in respect of residential accommodation food drinks and other services or any of them and the case is not covered by the provi sions of sub section 2 or ii it appears to the Income tax Officer that the charges for residential accommodation food drinks or other services are so arranged that the room charges are under stated and other charges are overstated Sections 6 and 24 envisage and provide for the authori ties to administer Act and engrafts the machinery and proce dure of the Income tax Act
Section 61 says Every Director of Inspection Commissioner of Incometax Commissioner of Income tax Appeals Inspecting Assistant Commissioner of Income tax Income tax Officer and Inspector of Income tax shall have the like powers and perform the like functions under this Act as he has and performs under the Income tax Act and for the exercise of his power and the performance of his functions his jurisdiction under this Act shall be the same as he has under the Income tax Act Section 24 provides The provisions of the following sections and Schedules of the Income tax Act the Income tax Certificate Proceedings Rules 1962 as in force from time to time shall apply with necessary modifications as if the said provisions and the rules referred to expenditure tax instead of to income tax 243B and 44 118 125 125A 128 to 136 both inclusive 138 140 144A 159 to 163 both inclusive 166 167 170 171 173 to 179 both inclusive 187 188 189 220 to 227 both inclusive 229 231 232 237 to 245 both inclusive 254 to 262 both inclusive 265 266 268 269 278B 278C 278D 278E 281 281B 282 283 284 287 288 288A 288B 289 to 293 both inclusive the Second 931 Schedule and the Third Schedule Provided that references in the said provisions and rules to the assessee shall be construed as references to an assessee as defined in this Act Section 81 provides that every person responsible for collecting the tax as defined in Section 28 shall before the expiry of four months from the 31st day of March in each year furnish or caused to be furnished to the Income tax Officer in the prescribed form and varified in the pre scribed manner a return in respect of the immediately pre ceding financial year showing a the aggregate of the payments received in respect of chargeable expenditure b the amount of the tax collected c the amount of the tax paid to the credit of the Central Government and d such other particulars as may be prescribed
The incidence of the tax is on the persons who incur the chargeable expenditure in the class of hotels to which the Act applies
Section 7 enjoins upon the person responsible for collecting the duty to collect the taxes and pay the same to the credit of the Central Government
The room charges of Rs400 per day per individual stipulated in Section 3 is the differentium which keeps apart the class of hotels to which the Act applies
Petitioners say that Sec tion 3 merely defines the place viz the Hotel where a room carries a charge of Rs400 per day marked on it and the rest of the incidents and consequences of the provisions of the Act  envisage the levy of a tax on the luxuries  provided at such a place
The legislation it is urged is squarely within Entry 62 of List II within the State power
The Act it is contended does not impose an Expenditure Tax but taxes Luxuries 
Even if the legislation has an expenditure dampening objective and seeks to inhibit by creation of disincentives ostentatious and wasteful expend iture the classification it is said has no rational basis
Persons similarly situated and who incur the same extent and degree of expenditure on the same luxuries are differentiated on the sole basis that in one case the ex penditure is incurred in a Hotel where one of the rooms has a charge of Rs400 per day per individual marked for it while in the other though equally wasteful expenditure is incurred in a more luxurious Restaurant the latter expendi ture is exempt
It is urged that even if more sophisticated and expensive food and drinks and other services envisaged in clauses a to d of Section 5 are provided in a hotel or catering establishment which falls out side the class the expenditure incurred thereon is unaffected by the law
932 This aspect of under inclusiveness is assailed as violative of Article 14
Petitioners further contend that the several provi sions of the Act which impose certain statutory obligations of an onerous nature the breach of which are visited with penal consequences render the law an unreasonable restric tion on the petitioners  fundamental rights under Article 191g
The contentions urged in support of the petitions admit of being noticed and formulated in the following terms a The Act  in its true nature and character is not one imposing an Expenditure Tax  as known to Law accepted notions of Public Finance and to legislative practice but is in pith and substance either a tax on Luxuries falling within Entry 62 of List II of the Seventh Schedule or a tax on the consideration paid for the purchase of goods consti tuting an impost of the nature envisaged in entry 54 of List II and clearly outside the legislative competence of the Union Parliament b that even if the Act  is held to impose a tax which is sui generis or a non discript tax with respect to which the Union Parliament is competent to make a law under Arti cle 248 and Entry 97 of List I then at all events the Act  is violative of Article 14 in as much as the differen tium on which the Hotels are classified is arbitrary and unintelligible has no rational nexus with the taxing policy under the Act 
c that the Act  is violative of Petitioners  fundamental right under Article 191g as it imposes unreasonable onerous restrictions on their freedom of busi ness
Re  Contention a Sri Palkhivala learned Senior Counsel for the petition ers contended that the appellation of Expenditure Tax  given to the impost is a misnomer as the concept of Expend i ture Tax as known to law and recognised by the theorists of public finance is not a tax on a few stray items of expendi ture but is a term of Art which has acquired a technical import as nomen juris  and that the import envisaged by the Act in its true nature and character is no more and no less than a tax on Luxuries under Entry 62 list II within the State s exclusive power
Learned Counsel urged that the delicate balance in the demarcation in 933 a federal polity of legislative powers between the Union and the States would impose on the Union the repository of the residuary power the sensitive task of recognising both the line of demarcation as well as the constitutional mandate and a disciplined reluctance not to cross it
The contention as to lack of legislative competence emphasises two aspects one with a negative implication and the other of a positive import
Negatively it is urged that the impost is not and does not satisfy the concept of an Expenditure tax which has a technical connotation both in law and in public finance
A tax on certain stray items of expenditure is not it is contended a general expenditure tax
The nomenclature of the levy is really a mere iII fitting legal mask for what is really a tax under Entry 62 list I The nomenclature of the tax it is urged is irrele vant in deciding its true nature and character
It belongs to the rudiments of the subject says the learned counsel that a constitutional grantee of a power cannot enlarge its own by choosing for the legislation enacted in exertion of that power a nomenclature that corresponds to and semanti cally subsumes with the grant
Shri Palkhivala submitted that the true nature and concept of expenditure tax as known to the theories of public finance has a specific well accepted legal connotation and is a tax levied on income or capital spent or consumed in distinguishment of income or capital saved
It is this concept of expenditure tax  as a fiscal tool which has certain social and economic objec tives informing its policy
The present impost and its incidents it is urged have no rational connection with the concept of expenditure tax known to and accepted by the principles of public finance and recognised by established Legislative practice
Referring to the economists  concept of expenditure tax learned counsel referred us to the report of the Study Group On taxation of Expenditure Government of India Ministry of Finance April 1987 An expenditure tax is generally taken to mean a direct tax on personal con sumption ie the total annual consumption minus an exemption if any of an individual tax payer or family
This implies that the tax will be payable in the year in which consump tion takes place
One can conceive of the tax base being computed by adding up all items of expenditure which are by law defined as consumption e x p e nditure          or alternatively by summing up all the receipts and substracting therefrom expenses of earning 934 income as well as outflows in the form of savings going into different types of invest ments including repayment of past loans
In practice the latter method would be prefera ble Emphasis Supplied India has the distinction shared with Sri Lanka of having actually experimented with a direct tax on consumption expenditure though the idea itself had caught the imagination of many tax theorists in developed countries some of whom had developed practical systems for implementation
In both India and Sri Lanka the tax was introduced on the basis of the recommendations of Prof Nicholas Kaldor
Prof Kaldor had been invited to come to India by the Indian Statistical Institute to make an investigation of the Indian tax system in the light of the revenue requirements of the Second Five Year Plan
In his report he recommended the introduction of a direct tax on personal consumption expenditure as a limb of a comprehensive and self checking system comprising the income tax which was already in operation in India a tax on capital gains which had been tried for two years in the post war period and then withdrawn an annual tax on net wealth a general gift tax and a tax on personal expenditure
He envisaged that these five levies would be assessed simultane ously on the basis of a single comprehensive return    Emphasis Supplied Under the scheme of expenditure taxation suggested by Prof Kaldor a taxpayer would not be required to give any detailed account of his outlays on consumption but only a statement of his total outlay as part of a comprehensive tax return showing all his receipts investments etc and all the items for which he claimed exemption   In India too although the expendi ture tax was tried twice and was given up there has been a revival of interest in making expenditure the base for personal taxation
In particular it has been maintained that India should seriously consider moving towards a progressive expenditure tax for three impor tant reasons 935 a it will promote savings b it would be on the whole more equitable than the present or any practicable form of income tax and c it will significantly reduce the inducement for direct tax evasion In Musgrave on Public Finance  referring to the concept of Personal Expenditure Tax it is stated  
In analogy to the income tax the taxpayer would determine his total consumption for the year subtract whatever personal exemptions or deductions were allowed and apply a progressive rate schedule to the remaining amount of taxable consumption
Emphasis Supplied Sri Palkhivala also referred to certain passages of Nicholas Kaldor On Expenditure Tax and the same eminent economists report on Indian Tax Reform to reinforce the submission that the conceptualisation of Expenditure Tax  as a fiscal tool for economic regulation has a specific and definite connotation and the Tax so conceptualised by experts on public finance is an entirely different idea from the one built into the present legislation
The very concept of Expenditure Tax  envisaged in the impunged legislation it is urged is unknown to accepted principles of public fi nance and is the result of a grave misconception as to the essential nature and incidents of what in law and legisla tive practice is recognised as Expenditure Tax 
The whole exercise learned counsel said is a draft on credibility and that the Finance Minister s speech on the Bill leaves no doubt that what the Government wanted from the law was really a tax on Luxuries
The impost it is urged is not susceptible of any other legitimate understanding than that it is in substance and effect a tax on Luxuries within the States  power
Sri Palkhivala emphasised the relevance of what was implicit in the observations of this court in Azam Jha Bahadur vs Expenditure Tax Officer  made while upholding the legislative competence of the Union Parliament to enact the Expenditure Tax Act 1957 as referable to the residuary Entry 97 of List I The implica tion of the observations of this Court at page 479 of the report according to learned counsel is that what distin guished 936 an expenditure tax from a levy under Entry 62 of List II was that the scheme of taxation took into account the total ity of expenditure over a unit of time as distinct from sums laid out on stray purchases of luxuries
Shri Palkhivala then submitted that the notion of expenditure tax as recognised by legislative practice is a relevant factor
In Croft vs Dunphy Lord Mc Millan held that when power is conferred on the legislature on a particular topic it is important in determining the scope of the power to have regard to what in legislative practice is ordinarily treated as embraced within the topic and particularly in legislative practice of the State which has conferred the power
In Wallace Brothers  Co Ltd vs CIT Bombay City 1948 LR 75 IA 86 Lord Uthwatt re ferred to the permissibility and indeed the importance to refer to the legislative practice as to what is ordinarily treated as within the topic of legislation in understanding the scope of a legislative power
The notion of expendi ture tax in the scheme of the Expenditure Tax Act 1957 would it is urged detract from such legislative practice
The second limb of the argument is that the impost is clearly of the nature of a tax on luxuries within Entry 62 of List I
The simple test according to the argument is whether if a State legislature had enacted a similar law it would not have been held to be within its competence under Entry 62 of List II The answer would according to the submission be in emphatic affirmation Referring to the concept of a luxury tax learned counsel referred to the New Encyclopaedia Britanica Vol 7 which referring to luxury tax says Luxury tax excise levy on goods or services considered to be luxuries rather than necessities
Modern examples are taxes on jewellery and perfume
Luxury taxes may be levied with the intent of taxing the rich as in the case of the late 18th and early 19th century British taxes on carriages and man servants or they may be imposed in a deliber ate effort to alter consumption patterns either for moral reasons or because of some national emergency
In modern times the revenue production of luxury taxes has proba bly overshadowed the moral argument for them
Furthermore the progressive nature of the early taxes began to be lost as more lower income people s luxuries were taxed in the interest of generating additional revenue an example is the amusement tax
 937 On the analogy of the wealth tax envisaged by Entry 86 of List I it was urged that even as the concept of wealth for the imposition of a tax thereon is not the individual components of the assets of the assessee but a totality of all assets which the assessee owns so is the concept of expenditure which does not consist of a few stray items of expenditure but a systematised reckoning of expenditure for and during a particular unit of time
It was then urged that recourse to the residuary power under Article 248 read with Entry 97 of List I should be the very last refuge and would be available if and only if the other entries in the State and concurrent lists do not cover the topic
Reliance was also placed on the observations of the Federal Court in Subrahmanyan Chettiar vs Muttuswami Goun dan AIR 1941 FC 47 where it was held But resort to that residual power should be the very last refuge
It is only when all the categories in the three Lists are absolutely exhausted that one can think of falling back upon a nondescript Shri Palkhivala recalled the following words of caution sounded by Chinnappa Reddy J in International Tourist Corporation vs State of Haryana    
Before exclusive legisla tive competence can be claimed for Parliament by resort to the residuary power the legisla tive incompetence of the State legislature must be clearly established
Entry 97 itself is specific that a matter can be brought under that entry only if it is not enumerated in List II or List III and in the case of a tax if it is not mentioned in either of those lists
In a Federal Constitution like ours where there is a division of legislative subjects but the residuary power is vested in Parliament such residuary power cannot be so expansively interpreted as to whittle down the power of the State legislature
That might affect and jeopardise the very federal princi ple
The federal nature of the constitution demands that an interpretation which would allow the exercise of legislative power by Parliament pursuant to the residuary powers vested in it to trench upon State legislation and which would thereby destroy or belittle state autonomy must be rejected   938 Sri Palkhivala also sought to demonstrate how looked at from another angle the levy presents an anomalous situation by splitting up a transaction which would otherwise be one of sale of goods and isolating the price of the goods for separate treatment as a distinct subject matter for levy of expenditure tax thus robbing the State power of its sub stance
Learned Advocate General for the State of Kerala who intervened made submissions which while being substantially on the lines of the petitioners  contentions however sought to qualify that legislative competence to the extent of operation of the Act  in the Union territories could be sustained
Learned Attorney General on the contrary submitted that the law in pith and substance is not one with re spect to Luxuries under Entry 62 List I and the tax on expenditure as the legislature has chosen to conceive it is referrable to residuary power
Learned Attorney General said that the economists  concept of such a expenditure tax is at best an idea of the manner of effectuation of fiscal programme and is no limitation on the legislative power
Indeed if a topic is not shown to fall within the fields of legislation in Lists II or III no further inquiry is neces sary in order to support the legislative competence of the Union to legislate on the topic
The purpose of incorporat ing a separate List for the Union as observed in Union of India vs HS Dhillon  at 671 is   there is some merit and legal effect in having included specific items of List I for when there are three lists it is easier to construe List II in the light of Lists I and II
If there had been no List 1 many items in List 11 would perhaps have been given much wider interpretation than can be given under the present scheme
Be that as it may we have the three lists and a residuary power and therefore it seems to us that in this context ira Central Act is challenged as being beyond the legislative competence of Parliament it is enough to enquire if it is a law with respect to matters or taxes enumerat ed in List II
If it is not no further ques tion arises
 Emphasis Supplied Learned Attorney General characterised the petitioners  contention that the impugned impost is really a tax on luxuries or that one 939 aspect of the taxable event in the sale of goods had imper missibly been isolated for the creation of an artificial idea expenditure  suffers from certain basic fallacies
The legislative powers it is urged recognise the demarca tion of distinct aspects of the same matter as distinct topics of legislation and that the present challenge to legislative competence overlooks the dichotomy of distinct aspects of the same matter constituting distinct fields of legislation the line of demarcation though sometimes thin and subtle being real
Learned Attorney General further contended that the measure adopted for the levy of the tax does not necessarily determine its essential character and that the object on which the expenditure is laid out might be an item of luxury or it might not be one or the expend iture might constitute the price of the goods but what is taxed is the expenditure aspect which in itself is susceptible of recognition as a distinct topic of legisla tion
We have bestowed our careful consideration to these rival contentions
The principal question is whether the tax envisaged by the impugned law is within the legislative competence of the Union Parliament
In that sense the constitutionality of the law becomes essentially a question of power which in a federal constitution unlike a legally omnipotent legislature like the British Parliament turns upon the construction of the entries in the legislative lists
If a legislature with limited or qualified jurisdic tion transgresses its powers such transgression may be open direct and overt or disguised indirect and covert
The latter kind of trespass is figuratively referred to as colourable legislation connoting that although apparently the legislature purports to act within the limits of its own powers yet in substance and in reality
it encroaches upon a field prohibited to it requiring an examination with some strictness the substance of the legislation for the purpose of determining what is that the legislature was really doing
Wherever legislative powers are distributed between the Union and the States situations may arise where the two legislative fields might apparently overlap
It is the duty of the Courts however difficult it may be to ascertain to what degree and to what extent the authority to deal with matters falling within these classes of sub jects exists in each legislature and to define in the particular case before them the limits of the respective powers
It could not have been the intention that a conflict should exist and in order to prevent such a result the two provisions must be read together and the language of one interpreted and where necessary modified by that of the other
The Judicial Committee in Prafulla Kumar Mukherjee and Ors
vs Bank of Commerce referred to with approval the 940 following observations of Sir Maurice Gwyer CJ
in Subrah manyan Chettiar s case It must inevitably happen from time to time that legislation though purporting to deal with a subject in one list touches also on a subject in another list and the different provisions of the enactment may be so closely intertwined that blind observance to a strict ly verbal interpretation would result in a large number of statutes being declared in valid because the legislature enacting them may appear to have legislated in a forbidden sphere
Hence the rule which has been evolved by the Judicial Committee whereby the im pugned statute is examined to ascertain its pith and substance  or its true nature and character  for the purpose of determining whether it is legislation with respect to matters in this list or in that
 This necessitates as an essential of federal Government the role of an impartial body independent of general and regional Governments to decide upon the meaning of deci sion of powers
The Court is this body
The position in the present case assumes a slightly different complexion
It is not any part of the petitioners  case that expenditure tax  is one of the taxes within the States  power or that it is a forbidden field for the Union Parliament
On the contrary it is not disputed that a law imposing expenditure tax  is well within the legislative competence of Union Parliament under Article 248 read with Entry 97 of List I
But the specific contention is that the particular impost under the impugned law having regard to its nature and incidents is really not an expenditure tax at all as it does not accord with the economists  notion of such a tax
That is one limb of the argument
The other is that the law is in pith and substance really one imposing a tax on luxuries or on the price paid for the sale of goods
The crucial questions therefore are whether the economists  concept of such a tax qualifies and conditions the legislative power and more importantly whether ex penditure laid out on what may be assumed to be luxuries or on the purchase of goods admits of being isolated and identified as a distinct aspect susceptible of recognition as a distinct field of tax legislation
In Lefroy s Canada s Federal System  the learned author referring to the aspects of legislation under Sections 91 and 92 of the 941 Canadian Constitution ie British North America Act 1867 observed that one of the most interesting and important principles which have been evolved by judicial decisions in connection with the distribution of Legislative Power is that subjects which in one aspect and for one purpose fall within the power of a particular legislature may in another aspect and for another purpose fall within another legisla tive power
Learned author says   that by aspect  must be understood the aspect or point of view of the legislator in legislating the object purpose and scope of the legislation that the word is used subjectively of the legislator rather than objectively of the matter legislated upon In Union Colliery Co of British Columbia vs Bryden See
at 587 Lord Haldane said It is remarkable the way this Board has reconciled the provisions of section 91 and section 92 by recognizing that the subjects which fall within section 91 in one aspect may under another aspect fall under section 92 Indeed the law with respect to  a subject might inci dentally affect  another subject in some way but that is not the same thing as the law being on the latter subject
There might be overlapping but the overlapping must be in law
The same transaction may involve two or more taxable events in its different aspects But the fact that there is an overlapping does not detract from the distinctiveness of the aspects
Lord Simonds in Governor General in Council vs Province of Madras PC at 193 in the con text of concepts of Duties of Excise and Tax on Sale of Goods said   
The two taxes the one levied on a manufacturer in respect of his goods the other on a vendor in respect of his sales may as is there pointed out in one sense overlap
But in law there is no overlapping
The taxes are separate and distinct imposts
If in fact they overlap that may be because the taxing authority imposing a duty of excise finds it convenient to impose that duty at the moment when the excisable article leaves the factory or workshop for the first time on the occasion of its sale   15
Referring to the aspect doctrine Laskin s Canadian Constitutional Law states 942 The aspect  doctrine bears some resemblance to those lust noted but unlike them deals not with what the mat ter  is but with what it comes within     p 115    it applies where some of the consti tutive elements about whose combination the statute is concerned that is they are its matter  are a kind most often met with in connection with one class of subjects and others are of a kind mostly dealt with in connection with another
As in the case of a pocket gadget compactly assembling knife blade screwdriver fishscaler nailfile etc a description of it must mention every thing but in characterizing it the particular use proposed to be made of it determines what it is p1 16   
I pause to comment on certain correlations of operative incompatibility and the aspect  doctrine
Both grapple with the issues arising from the composite nature of a statute one as regards the preclusory impact of federal law on provincial measures bearing on constituents of federally regulated con duct the other to identify what parts of the whole making up a matter  bring it within a class of subjects    p 117 The distinction between what is ancil lariness and what incidentally affecting the treatise says  
There is one big difference though it is little mentioned
Ancillariness is usually associated with an explicit statu tory provision of a peripheral nature talk about incidentally affecting  crops up in connection with the potential of a non differ entiating statute to affect indiscriminately m its application matters assertedly immune from control and others
But it seems immaterial really whether it is its words or its works which draw the flotsam within the statute s wake lmo p115 16 Referring to the flexibility in the modes of effec tuating a tax in view of innate complexities in the fiscal adjustment of diverse 943 economic factors inherent in the formulation of a policy of taxation and the variety of policy options open to the State J Rauls in Modern Trends in Analytical and Normative Jurisprudence Introduction to Jurisprudence by Lord Lloyd of Hampstead  Freeman 5th Edn observed   
In practice we must usually choose between several unjust or second best arrangements and then we look to nonideal theory to find the least unjust scheme
Some times this scheme will include measures and policies that a perfectly just system would reject
Two wrongs can make a right in the sense that the best available arrangement may contain a balance of imperfections an adjust ment of compensating injustices
 Adverting to Expenditure dampening policies and the choice of measures designed to reduce the aggregate demand for goods and services the Dictionary of Economic Terms by Allan Gilpin says Expenditure dampening Policies Government measures designed to reduce the aggregate demand for goods and services in the communi ty
The measures may consist of raising taxes qv lowering government expenditure or curtailing hire purchase or other credit facilities
EXPENDITURE SWITCHING POLICIES
Expenditure switching Policies Government measures designed to influence the pattern of expenditure by the community
For example the taxing of imported goods may effect a switch of expenditure from imported to homeproduced goods devaluation of the nation s currency may have the same effect as imports become more expensive
See EXPENDITURE DSAMPENING POLICIES Learned Attorney General also referred to the following observations in The British Tax System by JA Kay MA King to indicate that a tax on expenditure need not neces sarily be an expenditure tax in the economists  reckoning of things An annual expenditure tax which seeks to measure an individual s spending in each separate year of assessment poses very serious administrative problems because 944 it requires that his assets be assessed annu ally     
But there is a much easier way of reaching a more accurate answer
You simply measure how much foreign currency you took with you add the amount of currency you bought while abroad and substract what was left when you got back
You measure not the expenditure itself but the sources of the expenditure and can thus achieve a simple and reliable measure on the basis of a small number of recorded and readily verifiable transactions
 It is trite that the true nature and character of the legislation must be determined with reference to a question of the power of the legislature
The consequences and effect of the legislation are not the same thing as the legislative subject matter
It is the true nature and character of the legislation and not its ultimate economic results that matters
Indeed as an instance of different aspects of the same matter being the topic of legislation under different legislative powers reference may be made to the annual letting value of a property in the occupation of a person for his own residence being in one aspect the measure for levy of property tax under State law and in another aspect constitute the notional or presumed income for purpose of income tax
Petitioners  reference to legislative practice as determining the scope of the present legislation does not assist them
There are two infirmities in the contention
The first is that the question of legislative practice as to what a particular legislative entry could be held to embrace is inapposite while dealing with a tax which is sui generis or non descript imposed in exercise of the residuary powers so long as such tax is not specifically enumerated in Lists II  III
Secondly there is no conclusive material indicat ing that the appropriate legislature had limited the notion of a tax of this kind within any confines
It is relevant to recall the words of Lord Uthwatt in Walace Brothers case in  at 402 The point of the reference is emphatically not to seek a pattern to which a due exercise of the power must conform
The object is to ascertain the general conception involved in the words in the enabling Act
 But as observed in Navinchandra Mafatlal vs CIT Bombay City 945 1955 1 SCR 829 the meaning the word income is given in the Income tax Act is not determinative of its content as an entry in a legislative list
Das J observed   
It is therefore clear that none of the authorities relied on by Mr Kolah estab lish what may be called a legislative practice indicating the connotation of the term in come apart from the Income tax statute
In our view it will be wrong to interpret the word income in entry 54 in the light of any supposed English legislative practice as contended for by Mr Kolah    p 835 17
In Union of India vs HS Dhillion  at 61 this Court dealt with the scope of the Residuary power under Entry 97 List I Referring to following observations of Lord Loreburn in AttorneyGeneral for Ontario vs Attorney General for Canada See at 581 Now there can be no doubt that under this organic instrument the powers distributed between the Dominion on the one hand and the provinces on the other hand cover the whole area of self government within the whole area of Canada
It would be subver sive of the entire scheme and policy of the Act to assume that any point of internal selfgovernment was withheld from Canada Emphasis Supplied It was held that the last portion of the above excerpt applied a fortiori to the Constitution of the Sovereign Democratic Republic
Sikri CJ
proceeded to observe See  at 61  
If this is the true scope of residu ary powers of Parliament then we are unable to see why we should not when dealing with a Central Act enquire whether it is legislation in respect of any matter in List II for this is the only field regarding which there is a prohibition against Parliament
If a Central Act does not enter or invade these prohibited fields there is no point in trying to decide as to under which entry or entries of List I or List III a Central Act would rightly fit in
 Then considering the includibility of the value of agricul tural 946 property in the wealth of the assessee under the Wealth Tax Act despite the exclusionary words in Entry 86 List I the learned Chief Justice said   
We are definitely of the opinion as explained a little later that the scheme of our Constitution and the actual terms of the relevant articles namely article 246 article 248 and Entry 97 List I show that any matter including tax which has not been allotted exclusively to the State Legislatures under List II or concurrently with Parliament under List III falls within List I including Entry 97 of that list read with article 248
 It was held that the subject did not fall under Entry 49 List II and that despite the exclusion in Entry 86 List I the Union as the repository of the residuary power had the competence to legislate as long as the topic was not allot ted to or within the State power
It was further observed It seems to us unthinkable that the Constitutionmakers while creating a sovereign democratic republic withheld certain matters or taxes beyond the legislative competency of the legislatures in this country either legis lating singly or jointly      
There is no principle that we know of which debars Parliament from relying on the powers under specified entries 1 to 96 List I and supplement them with the powers under Entry 97 List I and article 248 and for that matter powers under entries in the Concurrent List p 74 18
The subject of a tax is different from the measure of the levy
The measure of the tax is not determinative of its essential character or of the competence of the legisla ture
In Ms Sainik Motors vs State of Rajasthan 17 the provisions of a State law levying a tax on passengers and goods under Entry 56 of List I were assailed on the ground that the State was in the guise of taxing passengers and goods in substance and reality taxing the income of the stage carriage operators or at any rate was taxing the fares and freights both outside of its powers
It was pointed out that the operators were required to pay the tax calculated at a rate related to the value of the fare and freight
Repelling the contention Hidayatullah J speaking for the Court said 947  
We do not agree that the Act in its pith and substance lays the tax upon income and not upon passengers and goods
Section 3 in terms speaks of the charge of the tax in respect of all passengers carried and goods trans ported by motor vehicles and though the measure of the tax is furnished by the amount of fare and freight charged it does not cease to be a tax on passengers and goods    Indeed reference may be made to the following statement in Encyclopaedia Britannica Vol
14 page 459 on Luxury Tax  A different approach to luxury taxation much less frequently found seeks to single out the luxury component of spending on a given object rather than taxing specified goods and services as luxuries
One example of this is the Massachusetts 5 tax on restaurant meal of 1 or more   Emphasis supplied 19
The submissions of the learned Attorney General that the tax is essentially a tax on expenditure and not on Luxuries or sale of goods falling within the State power must in our opinion be accepted
As contended by the learned Attorney General the distinct aspect namely the expenditure  aspect of the transaction falling with the Union power must be distinguished and the legislative compe tence to impose a tax thereon sustained
Contention a is in our opinion unsubstantial and accordingly fails
Re Contention b It is urged that the application of the Act is confined to hotels where the room charges for any unit of residen tial accommodation are Rs400 or more per day per individu al while expenditure of greater magnitude and quantum incurred in other hotels is not exigible to the tax either because such room charges are less than Rs400 or because the establishment which though providing food and drink and other services envisaged by Section 5 may not provide residential accommodation
This distinction it is said is violative of the constitutional pledge of equality
The averments in this behalf in the memorandum of writ petition are these There is no basis or intelligible differentia for discriminating between the levy of the tax on expenditure over food or drink provided by a hotel and the food or drink provided by 948 a restaurant or eating house not situated in a hotel or in a hotel to which the Act does not apply even though the cost of food or bever age is higher than that on similar items in an applicable Hotel
There is also no intelligi ble differentia for discriminating between levying of tax on expenditure on food and drinks outside the hotel which is provided by the hotel and not levying tax on expenditure on food and drinks incurred outside the hotel but which is not provided by the hotel even though the latter expenditure may be more greater than the former   The arbitrariness and lack of intelligible differentia is even more apparent in respect of clause 5d read with Exception c
To give an example if a shop or office is owned by the hotel in the hotel any expenditure incurred in such a shop or office would at tract expenditure tax but if such a shop or office is not owned or managed by the hotel even though situated in the hotel premises such expenditure in by the hotel would not be liable to the impugned expenditure tax By way of illustration it may be pointed out that in the City of Bombay there are numerous restaurants like Talk of the Town China Garden Gazebo and Gaylord which are similarly situated in every way to restau rants located in applicable hotels from the point of view of their decor furnishing the range of the menu the pricing of the items the standards of service
The clientele of such restaurants are also as affluent as the class of people who patronise restaurants which are located in applicable hotels
Fur ther more many of the said independent res taurants are far more luxurious and expensive than restaurants andor dining rooms attached to applicable hotels in the City of Bombay which have one or more rooms charging a daily tariff of rupees 400 or more per person
 It is now well settled though taxing laws are not out side Article 14 however having regard to the wide variety of diverse economic criteria that go into the formulation of a fiscal policy legislature enjoys a wide latitude in the matter of selection of persons subject matter events etc for taxation
The tests of the vice of discrimination in a taxing law are accordingly less rigorous
In examin ing the allegations 949 of a hostile discriminatory treatment what is looked into is not its phraseology but the real effect of its provi sions
A legislature does not as an old saying goes have to tax everything in order to be able to tax something
If there is equality and uniformity within each group the law would not be discriminatory
Decisions of this Court on the matter have permitted the legislatures to exercise an ex tremely wide discretion in classifying items for tax pur poses so long as it refrains from clear and hostile dis crimination against particular persons or classes
But with all this latitude certain irreducible desid erata of equality shall govern classifications for differen tial treatment in taxation laws as well
The classification must be rational and based on some qualities and character istics which are to be found in all the persons grouped together and absent in the others left out of the class
But this alone is not sufficient
Differentia must have a ra tional nexus with the object sought to be achieved by the law
The State in the exercise of its Governmental power has of necessity to make laws operating differently in relation to different groups or class of persons to attain certain ends and must therefore possess the power to distinguish and classify persons or things
It is also recognised that no precise or set formulae or doctrinaire tests or precise scientific principles of exclusion or inclusion are to be applied
The test could only be one of palpable arbitrariness applied in the context of the felt needs of the times and societal exigencies informed by experience
Classifications based on differences in the value of articles or the economic superiority of the persons of incidence are well recognised
A reasonable classification is one which includes all who are similarly situated and none who are not
In order to ascertain whether persons are similarly placed one must look beyond the classification and to the purposes of the law
In Jaipur Hosiery Mills Ltd vs State of Rajasthan a notification under the Rajasthan Sales tax Act 1950 exempting from tax the sale of garments which did not exceed Rs4 per piece was assailed
This court found the classification permissible
It was held   
It has to be borne in mind that in matters of taxation the Legislature possesses the large freedom in the matter of classifica tion
Thus wide discretion can be exercised in selecting persons or objects which will be taxed and the statute is not open to attack on the mere ground that it 950 takes some persons or objects and not others
it is only when within the range of its selec tion the law operates unequally and cannot be justified on the basis of a valid classifica tion that there would be a violation of Arti cle 14
 In Hiralal vs State of UP  this Court said   it is open to the legislature to define the nature of the goods the sale or purchase of which should be brought to tax
Legislature was not incompetent to separate the processed or split pulses from the unsplit or unprocessed pulses and treat the two as separate and independent goods   
But the legislature has wide powers of classification in the case of taxing stat utes p 510   
The classification between the processed or split pulses and unprocessed or unsplit pulses is a reasonable classifica tion
It is based on the use to which those goods can be put
Hence in our opinion the impugned classification is not violative of article 14 p 511 In State of Gujarat vs Sri Ambika Mills Ltd  Mathew J said Statutes are directed to less than universal situations
Law reflects distinction that exist in fact or at least appear to exist in the judgment of legislations those who have the responsibility for making law fit fact
Legislation is essentially empiric
It ad dresses itself to the more or less crude outside world and not to the neat logical models of the mind
Classification is inherent in legislation
To recognize marked differ ences that exist in fact is living law to disregard practical differences and concen trate on some abstract identities is lifeless logic In the utilities tax and economic regulation cases there are good reasons for judicial self restraint if not judicial deference to legislative judgment
The legislature after all has the affirmative responsibility
The Courts have only the 951 power to destroy not to reconstruct
When these are added to the complexity of economic regulation the uncertainty the liability to error the bewildering conflict of the ex perts and the number of times the judges have been overruled by events self limitation can be seen to be the path to judicial wisdom and institutional prestige and stability p 784 In GK Krishnan vs Tamil Nadu 1975 2 SCR 715 Mathew J referred to the following observations of the Supreme Court of USA in San Antonio School District vs Bodrigues Thus we stand on familiar ground when we continue to acknowledge that the Justices of this Court lack both the expertise and the familiarity with local problems so necessary to the making of wise decisions with respect to the raising and disposition of public revenues
Yet we are urged to direct the States either to alter drastically the present system or to throw out the property tax altogether in favour of some other form of taxation
No scheme of taxation whether the tax is imposed on property income or pur chases of goods and services has yet been devised which is free of all discriminatory impact
In such a complex arena in which no perfect alternatives exist the Court does well not to impose too rigorous a standard of scrutiny lest all local fiscal schemes become subjects of criticism under the Equal Protec tion Clause p 729 In ITO vs N Takim Roy Limbe  it was held   
Given legislative competence the legislature has ample freedom to select and classify persons districts goods proper ties incomes and objects which it would tax and which it would not tax
So long as the classification made within this wide and flexible range by a taxing statute does not transgress the fundamental principles underly ing the doctrine of equality it is not vul nerable on the ground of discrimination merely because it taxes or exempts from tax some incomes or objects and not others
Nor the mere fact that tax falls more heavily on some in the same category is by itself a ground to render the law invalid
It is only 952 when within the range of its selection the law operates unequally and cannot be justified on the basis of a valid classification that there would be a violation of Article 14 In the present case the bases of classification cannot be said to be arbitrary or unintelligible nor as being without a rational nexus with the object of the law
A hotel where a unit of residential accommodation is priced at over Rs400 per day per individual is in the legislative wisdom considered a class apart by virtue of the economic superior ity of those who might enjoy its custom comforts and serv ices
This legislative assumption cannot be condemned as irrational
It is equally well recognised that judicial veto is to be exercised only in cases that leave no room for reasonable doubt
Constitutionally is presumed
These words of James Bradley Thayer may be recalled This rule recognizes that having regard to the great complex ever unfolding exigencies of government much which will seem unconsti tutional to one man or body of men may reasonably not seem so to another that the constitution often admits of different inter pretations that there is often a range of choice and judgment that in such cases the constitution does not impose upon the legisla ture any one specific opinion but leaves open this range of choice and that whatever choice is rational is constitutional Emphasis Supplied See Supreme Court Statecraft The Rule of Law and Men Wallace Mendelson p 4  Thayer also referred to the words of a Chief Justice of Pennsylvania way back in 1811 which are also worth recall ing For weighty reasons it has been assumed as a principle in constitutional construction by the Supreme Court of the United States by this court and every other court of reputa tion in the United States that an Act of the legislature is not be declared void unless the violation of the constitutional is so manifest as to leave no room for reasonable doubt
 In Secretary of Agriculture vs Central Roig Refining Co  the Supreme Court of USA said 953   
This court is not a tribunal for relief for crudities and inequities of compli cated experimental economic Legislation
 In Ms Hoechst Pharmaceuticals Ltd vs State of Bihar  it was observed   
On questions of economic regulations and related matters the court must defer to the legislative judgment
When the power to tax exists the extent of burden is a matter for the discretion of the law makers
It is not the function of the Court to consider the propriety or justness of the tax or enter upon the reality of Legislative policy
If the evident intent and general operations of the tax legislation is to adjust the burden with a fair reasonable degree of equality the con stitutional requirement is satisfied    22
It is contended that the standards and measures for the computation of the chargeable expenditure under the Act is vague and arbitrary
It is pointed out that the expression or other similar services in clauses d of Section 5 is non specific and vague
This argument does not commend itself to us
It is true that when the statute says other similar services it does not contemplate that the other services shall in all respects be the same
If they were the same then words would indeed be unnecessary
These were intended to embrace services like but not iden tical with those described in the preceding words
The content of the expression other similar services following as it does the preceding expressions by way of beauty parlour health club swimming pool or   has a definite connotation in the interpretation of such words in such statutory contexts
The matter is one of construction whether any particular service falls within the section and not one of constitutionality
We find contention b also not acceptable either
Re Contention c It is urged that the provisions of the Act impose an unreasonable restriction on the petitioners  fundamental right under Article 191g
It is averred in the petition 954 
The various taxes to which the hotel industry is subject to are mentioned in the earlier part of this Petition
Thus in respect of food and beverages consumed in a hotel the element of taxes representing sales tax and the present Expenditure Tax works out for example in Maharashtra to as much as thirty five per cent
Likewise in respect of the room tariff element of tax works out for example in Gujarat to as much as thirty seven per cent
The details of the said calculations are given in Exhibit D  annexed to this Petition
The hotel industry today is subject to an extremely heavy dose of taxation in the shape of incometax and even the recent tax on works contracts
The Petitioners say that the tourism industry is now not in a position to sustain any additional burden and the impugned tax is literally the last straw on the camel s back    It is also contended   
Several of the hotels belonging to members of Petitioners Associations have entered into long term contracts for supply of food and beverages and for providing accommo dation
The execution of such contracts would become onerous and even impossible in view of the levy of the present Expenditure Tax
There is no provision in the Act or any separate legislation whereby hotels can pass on such a tax to persons who have contractually agreed to avail of any services at contracted rates    24
A taxing statute is not per se a restriction of the freedom under Article 191g
The policy of a tax in its effectuation might of course bring in some hardship in some individual cases
But that is inevitable so long as law represents a process of abstraction from the generality of cases and reflects the highest common factor
Every cause it is said has its martyrs
Then again the mere excessiveness of a tax or even the circumstances that its imposition might tend towards the diminution of the earnings or profits of the persons of incidence does not per se and without more constitute violation of the rights under Article 191g
Fazal Ali J though in a different con text in Sonia Bhatia vs State of UP  Ors at 258 observed   
The Act seems to implement one of the most important constitutional directives contained in Part IV of 955 the Constitution of India
If in this process a few individuals suffer severe hardship that cannot be helped for individual interests must yield to the larger interests of the community or the country as indeed every noble cause claims its martyr
 Contention c is also insubstantial
In the result for the foregoings reasons these petitions fail and are dismissed
However in the circum stances of the case there will be no order as to costs
RANGANATHAN J 1
I have perused the judgment of my learned brother Venkatachaliah J in this batch of writ petitions as well as in the two connected batches of matters viz CA Nos 338 and 339 of 1981 and WP Nos
254 261 of 1981
I respectfully agree with his conclusions in all these matters but wish to add a few words primarily in so far as the constitutional validity of the Expenditure Act 1987 is concerned
As my learned brother has set out analysed and discussed in detail the provisions of the various statutes the validity of which is in question I shall avoid a repe tition of the same and confine myself only to the considera tion of the crucial issues for determination
The contentions of the assessees in the three batches of cases above referred to prima facie sought to make out a state of direct collision between a group of State enact ments on the one hand and a couple of Central enactments on the other which cannot be averted save by declaring one set of the enactments to be invalid
The powerful if also diplomatic endeavour of the learned Attorney General appearing for the Union of India was to show that these sets of enactments are not really on a collision course at all but on the contrary are proceeding on parallel lines and that each of the sets of legislations is quite safe from attack on the ground of legislative incompetence
Whether this contention is acceptable and both sets of enactments can be saved or whether one of the two has to give way to the other is the question for consideration in these batches of cases
The set of State enactments which blazed the trial to be followed up by others and hence are prior inpoint of time is that comprising of various statutes passed by several States in India
The specific State legislation which are in challenge in the petitions and appeals before us as indicated in the brackets at the end are 956 a Gujarat Tax on Luxuries Hotels and Lodging Houses Act No 24 of 1977
CA 3383391981 WP Nos 7990 8338 8339 9110of 1981 b Tamil Nadu Tax on Luxuries in Hotels and Lodging Houses Ordinance 1980 followed by an act Act No 6 of 1981 WP 16282 c Karnataka Tax on Luxuries Hotels and Lodging Houses Act No 22 of 1979
WP 1271 282 d West Bengal Entertainments and Luxuries Hotels and Restaurants Tax Act No 21 of 1972
WP 532185 The States of Uttar Pradesh Maharashtra and Kerala have also passed similar enactments being the a Uttar Pradesh Taxation and Land Revenue Laws Act No 8 of 1975 b Maharashtra Tax on Luxuries Hotels  Lodging Houses Act XLI of 1987 and c Kerala Tax on Luxuries in Hotels and Lodging Houses Act No 32 of 1976 repealing Kerala Ordinance No 5 of 1976
The above statutes have apparently been enacted by the various State Legislatures in exercise of the legisla tive powers conferred on them under article 2463 of the Constitution read with Entry 62 of List II in the Seventh Schedule to the Constitution of India which runs 62
Taxes on luxuries including taxes on entertainments amusements betting and gambling Some aspects thereof are also sought to be related to Entry 54 of List II but as this stands on the same footing as Entry 62 for the purposes of the present case no separate reference is made to Entry 54 hereinafter
This is clear because the short title to each of the above 957 enactments describes it as an Act to provide for the impo sition or the levy and collection of a tax on luxuries or entertainment and luxuries in or provided in hotels or hotels and restaurants or hotels and lodging houses
Although luxuries and entertainments may be provided or availed of in various ways and could all be made the subject matter of a tax by virtue of the entry above referred to these enactments are confined only to one type of such entertainments and luxuries viz those provided in hotels restaurants or lodging houses as defined under the relevant enactments
Also only certain specified classes of enter tainments or luxuries provided in such places are brought to tax
The details of the imposition levy and collection of the taxes vary with the enactments and need not be repeated here
It is quite clear from the scheme of the legislations that they all fall within the scope of Entry 62 of List II set out earlier
My learned brother has held so and I agree
Indeed their validity would perhaps have gone unchal lenged but for the enactment of Parliament of the Hotel Receipts Tax 1980 hereinafter referred to as the 1980 Act 
When in pursuance of the 1980 Act a tax on some of the receipts of a hotelier was sought to be charged wef
1st February 1981 it was but natural for some of the affected hoteliers to rush to Court for relief against this two pronged taxation of their receipts
Writ petitions were filed challenging the competence of both sets of enactments and these have now come up for final hearing
It must however be mentioned here that the levy of the Hotel Re ceipts Tax was withdrawn after a year nevertheless it was in operation for one assessment year and hence the challenge to its validity is not purely academic
The validity of the 1980 Act has been upheld by my learned brother as traceable to Entry 82 of List I in the Seventh Schedule to the Consti tution
Taxes on income other than agricultural income
I respectfully agree
The relief conferred by the withdrawal of the 1980 Act was however short lived it was only a lull before the storm which descended on all hoteliers in the form of the Expenditure Tax Act 1987 hereinafter referred to as the 1987 Act 
Before referring to this enactment the validity of which has been challenged in writ petition No 1393 of 1987 it will be convenient to run back on the time machine by a period of three decades
Mr Nicholas Kaldor Reader in Economics in the University of Cambridge was the proponent of a levy styled as Expenditure Tax
When the Government of India requested him sometime in the firties 10 have a look at the system of direct taxation prevailing in this country and make his recommendations for a comprehensive scheme 958 of tax reform he suggested inter alia the levy of an expenditure tax
His opinion was that such a levy supple menting an income tax levy at rates lower than those preva lent then would enable the Government to more effectively harness its resources
In the course of arguments before us copious references have been made to passages from Nicholas Kaldor s book  An Expenditure Tax  published by George Allen  Unwin Ltd of UK and his Survey Report on Indian Tax Reform  published by the Government of India out it will be sufficient to mention here that Prof Kaldor s report was implemented by Parliament by enacting the Expend iture Tax Act 1957 hereinafter referred to as the 1957 Act 
The validity of the above Act was challenged before this Court but unsuccessfully
The decision of this Court is reported as Azarnjah vs ETO  The nature and scope of the Act have been dealt with in the above decision and it is unnecessary to repeat the same here
The 1957 Act was withdrawn after a few years to be precise with effect from assessment year 1965 66
It was given up both because it was found to be too cumbersome and difficult to administer and also because the yield of reve nue therefrom was not substantial due to the limited number of assessees it covered
After it was given up as already mentioned the 1980 Act occupied the field for a very short time the pendency of writ petitions challenging its validi ty having perhaps largely contributed to its withdrawal
After some interval now Parliament has come in with the 1987 Act
The ambit and scope of this Act along with on the one hand its distinguishing features as contrasted with the 1957 and 1980 Acts and its similarities when compared to the State legislations on the other have been brought out in the judgments of brother Venkatachaliah J and do not need repetition here
It is in this background that we have to determine the pith and substance of the 1987 Act and decide whether Parliament had the legislative competence to enact the same or not
The short question that one has to answer in these cases is whether the levies in question by the States and the Union can both stand or whether we have to treat the levies as either tax on luxuries  or as tax on income  or expenditure  and thus uphold one of them but not both
I do not think there can by any doubt at all that in the context of the social and economic conditions that prevailed in India it was a luxury for any person to stay in hotels charging high rents and providing various types of facili ties amenities and conveniences such as telephone televi sion air conditioner etc
The decision of this Court in Abdul Kadir  Sons vs State of Kerala   and 959 in particular the discussion at pages 699 to 701 places this beyond all doubt
This aspect has also been discussed by Thakkar J of the Gujarat High Court as His Lordship then was in the judgment under appeal and I am in agreement with his reasonings and conclusion that the Gujarat statute has been validly enacted in exercise of the powers available to the State legislatures under Entry 62 of List I1
This applies equally to the other impugned State enactments as well 9
It has been argued that the monetary ceilings for the rents have been fixed at such low figures that even tempo rary stay at a not so comfortable hotel or lodging house when a person is constrained to go outside his hometown will become a luxury according to these standards
Indeed some statistics have been supplied by the Gujarat petition ers in support of such a contention
But this I think is a matter which must be left to legislative determination
As is well known the legislature has particularly in a taxing statute a considerable amount of latitude and there is nO material to hold that in fixing the standards of indication of luxury the legislature has not applied its mind
In fact the figures have been amended from time to time and one has to presume that the legislature had good reason for fixing these standards
The State legislations are there fore clearly within the competence of the State legisla tures and are not liable to be challenged
It seems equally cleat that the pith and legislation of the 1980 Act is as held by Venkatachaliah J traceable to Entry 82 of List I
In interpreting the scope of the legislative entries in the three lists we have to keep in mind that while on the one hand it is desirable that each entry in each of the lists should receive the broadest interpretation it is equally important on the other that the three lists should be read together and harmoniously
Our attention was drawn to some of the entries in List II which show that the legislative power in respect thereof are to be exercised subject to the powers of Parliament envis aged under List I vide entry Nos 2 17 22 23 24 26 27 32 33 and 50
There is no doubt that these entries have to be read subject to the entries of List I which have been mentioned or the powers of Parliament referred to therein
These however are instances of entries which on their very language are controlled by entries in List I
But even apart from these instances the language of clause 1 and 3 of article makes it clear that the power of the State legislature to make laws with respect to any of the matters enumerated in List II is subject to the exclusive power of Parliament to make laws with respect to any of the matters enumerated in List I Hence if a matter is 960 covered by an entry in the Union List no restrictions can be read into the power of Parliament to make laws in regard thereto
This is so far as the general power of legislation is concerned
As pointed out by this Court in Sundararami er s case  at pp
1479 and 1490 the legislative entries are so arranged that the power to enact laws in general and the power to impose taxes are separately dealt with
The subject matters of taxation available to Parliament are
enumerated in entries 82 to 97 of List I those available to the State legislatures in entries 45 to 63 of List II and those available to both in entry 44 of List III
Under section 2461 Parliament has exclusive power to make laws with respect to any of the matters and this includes the power to impose taxes enumerated in List I
In this situation and in view of the fact that the 1980 Act is in pith and substance a tax on income its constitutional validity can be in no doubt at all
But can the Union enactment of 1987 also be support ed for the same reasons as imposing an expenditure tax which as held in Azam Jha s case   falls within the scope of Entry 97 of List I Sri Palkiwala says it cannot be
His first contention is that the tax levied by the 1987 Act is not in fact and in truth an expenditure tax
He says that it is not sufficient for the legislature to give such a description or label to a tax proposed to be levied by it as does not fall under List II and claim that it should be upheld under Entry 97
The tax sought to be imposed should be one which has real existence and recogni tion in the world of economics
According to him the eco nomic concept of an expenditure tax is of a tax that is levied not on isolated items of expenditure but one on the totality of the expenditure incurred by an assessable enti ty just as income tax has gained recognition as a tax on the total income of a taxable entity
That was the concept of the expenditure tax which Nicholas Kaldor had in mind which was embodied in the 1957 Act and which hence was endorsed with approval by this Court
A tax on a few items of expenditure it is said is not necessarily the same as an expenditure tax
Referring to the decisions of this Court upholding the levy of Wealth Tax and Gift Tax in as far as it affected agricultural lands Gift Tax Officer vs DH Nazareth etc  and Union of India vs HS Dhillon   it is submitted that the decisions may well have been different had they been concerned with an imposition only on lands and buildings by reference to their capital value or only on agricultural lands on the occasion of a gift
It is difficult to accept the contention that the tax cannot be considered to be an expenditure tax because it is not on expenditure 961 generally but is restricted to specific types of expendi ture
There is no legal judicial economic or other con cept of expenditure tax that would justify any such restric tive meaning
If conceptually the expenditure incurred by a person can be a subject matter with reference to which a tax can be levied there is no reason why such taxation should not be restricted only to certain items or categories of expenditure and why its base should necessarily be so wide as to cover all expenditure incurred by an assessable entity
After all even under the 1957 Act all expenditure of all persons was not liable to tax
It substantially covered only certain types of assessees and certain types of expenditure for several types of expenditure were exempted and that too only when it exceeded certain limits
The analogy of the Income tax or Wealth Tax or Gift Tax Acts also does not really help us
Though they are enactments which cover a larger area of the subject matter taxed that was because the legislature found it expedient to do so and not because they were obliged to cover the entire area of income wealth or gift
An Act imposing a tax for example on hotel receipts alone or dividends alone or on capital gains alone will not be any the less a tax on income within the scope of Entry 82 of List I
Likewise even if the legis lature had confined its levy of wealth tax only to certain assets such as lands and buildings or the Gift Tax Act had levied a tax only on gifts of agricultural land they would not have ceased to fall within the scope of the relevant entries of the Union List so long as in pith and sub stance they are found respectively to be taxes on the capital value of the assets in question or on the transac tion of gift
The Central Excise Act for example does not levy excise duty on the manufacture and production of all goods and additional excise duty is levied only in respect of certain goods
So also in regard to sales tax
It is indeed even possible to say that no tax levy in respect of any subject matter can or does operate universally without any exceptions or exemptions
Selection of objects and goods for taxation is the essence of any tax legislation and any limitation of the nature suggested is an unwarranted cur tailment of this selective power of taxation of Parliament
There is also no established legislative practice which would enable one to limit the concept of an expendi ture tax in the manner suggested
So far as expenditure tax is concerned the only legislation earlier in force was the 1957 Act which was in force for a period of eight years
Such short lived legislation can hardly furnish the founda tion of an argument to limit the scope of legislative power to the manner in which it was exercised under that enact ment
If after withdrawing this legislation Parliament considered that it was not worthwhile or possible to impose a tax on all expenditure and that it would 962 be sufficient expedient or necessary to impose such a levy only on lavish spending in certain directions that cannot certainly be precluded on any theory of established legisla tive practice as was done in State of Madras vs Gannon Dunkerley Co  in respect of sales tax
In that case the legislative trend prevalent over decades was relied upon in interpreting the expression sale of goods used in the Constitution
But there the Court was concerned with a legal term sale which had acquired a definite connotation in law and in legislative instruments and that analogy cannot be availed of to interpret the scope of Entry 97
On the other hand even a fairly long established legis lative practice under which income tax levy by the Centre was restricted to items of income stricto sensu as con trasted with capital gains was not considered sufficient to place that type of restriction on the interpretation of the expression taxes on income used in the Central Legislative List vide Navinchanda Mafat Lal vs CIT 1955 1 SCR 829
Not only that the validity of later definitions of income under the Income tax Act which have a much wider ambit has been upheld as covered by the above legislative entry
See in this context the decisions in Naynit Lal vs AAC   Bhargava vs Union  and Bhag wandas vs Union  There is not even that much of legislative practice so far as expenditure tax is concerned which would justify our importing any limitation on the concept of a tax on expenditure under Entry 97 of List I A perusal of the decision of this Court upholding the validity of the 1957 Act Azam Jha s case  does not also justify the reading in of any such limita tion
The wider coverage of the tax made it easier for the Court to pin point its subject matter as expenditure and to treat it as a matter falling under the residuary entry but it does not justify the inference sought to be drawn that a tax cannot be said to be a tax with reference to expenditure because it does not tax expenditure in general but confines itself to certain types or categories of ex penditure
Once it is granted that the tax need not exhaust the entire universe of the subject matter the extent of the subject matter that should be covered or selected for impos ing tax should be entirely left to Parliament
subject only to any criteria of discrimination or unreasonableness that may attract the provisions of Part III of the Constitution
The fact that the 1987 Act seeks to tax only the expenditure on items which can be described as luxuries is however used by Sri Palkiwala to support his other conten tion which has really troubled me considerably that the pith and substance of both sets of legislations is the same that they both impose a tax only on luxuries or 963 entertainments and that the distinction sought to be made on behalf of the Revenue that one is a tax on luxuries  while the other is a tax on the expenditure incurred by a person on luxuries is only a distinction between Tweedledum and Tweedledee
The object and effect of a tax on luxuries is only to curb expenditure on luxuries and such a tax may be imposed levied or collected either from the provider of luxuries or the person who enjoys them
The object of an expenditure tax is also similar and that can also be levied either on the person who spends the moneys directly or through some other person or even from the person who benefits by the incurring of such expenditure
The provision of a luxury and the payment for it are only obverse sides of the same coin and cannot from any practical point of view be considered as two separate and independent subject mat ters of taxation
It is a well settled proposition that the entries in the legislative lists should be given the broad est of connotation and hence a tax on luxuries by refer ence to the expenditure thereon will fall clearly under the entry in the State List
The pith and substance of both sets of legislation therefore fails only under entry No 62 of the State List
This being so Entry 97 of List I will have no applicability at all that can be called in aid only to cover matters not specifically enumerated or taxes not mentioned in List II or III
It is therefore not possible
it is urged to sustain the validity of the 1987 Act by reference to Entry 97 of List I 15
The learned Attorney General sought to meet this contention in two ways
He first urged that the pith and substance of the two legislations are different
A tax on luxuries  measured by reference to the amount charged or paid therefore is totally different from a tax to curb opu lent or ostentatious expenditure even though the categories of expenditure brought in for taxation by a particular statute may be restricted
The latter cannot be described as a tax on luxuries  and does not fall within the scope of Entry 62 of the State List and in the absence of any refer ability to any other entry of List II  it is safe from attack under Article 2482 and will also be covered if need be by Entry 97 of List I
The second argument is that after the decision in Azatn Jha s case  holding that a tax on expenditure will be legislation covered by Entry 97 in List I the constitutional position is the same as if before item 97 a specific entry had been inserted in List I say Entry No 96A which reads Taxes on expenditure
The result he says is that the Central legislation will be squarely covered by an entry in List I and so we need not embark on any investigation as to whether it falls or does not fall under any entry in List II or List III
964 16
It seems to me that there is a fallacy in the second line of argument addressed by the learned Attorney General
I do not think that the legislative lists can be interpret ed as suggested by him on the assumption that there is a deemed entry Taxes on Expenditure
added to List I as a result of the decision in Azam Jha s case  One cannot add entries to the legislative lists on the basis of decisions of this Court
In Azam Jha s case the pith and substance of the Act considered did not fall under any of the entries in List II or III
That being so this Court upheld it by reference to Entry No 97 describing the tax having regard to its pith and substance as a tax on expend iture
Here however we have a legislation which covers only certain types of expenditure and the contention of the petitioners is that these are all items of expenditure pertaining to luxuries
The decision in Azam Jha s case cannot help us to determine whether the legislation before us should be construed as imposing a tax on expenditure or one on luxuries
If in spite of its dealing with only certain types of expenditure relatable to luxuries it can be said to be in pith and substance not a tax on luxuries then we may hold that parliament can legislate with refer ence to it and for purposes of convenience take advantage of its description as a tax on expenditure to rest it on Entry 97 of List I
In other words Entry 97 of List I cannot come to our rescue unless we are in a position to say that the substance of the Central legislation in question is not a tax on luxuries entertainments or amusements
This takes us to the first part of the argument of the learned Attorney General
Is there a tenable and true distinction between the tax on expenditure levied by the Act and a tax on luxuries Are Parliament and the State Legislatures dealing with the same matter  and taxing one and the same thing though describing it differently or are they taxing two different matters or things Sri Palkiwala says that the subject matter of taxation is luxury  and that it is meaningless to consider the expenditure incurred on it as a separate and distinct subject matter
The acceptance of such an argument he says will lead to double taxation in respect of almost every matter on earth
For instance A may be taxed on the salary or interest or dividend paid to him by B as his income and at the same time B can be asked to pay a tax on the expenditure incurred by him by way of such salary interest or dividend payment
A can be asked to pay a wealth tax on the capital value of the assets acquired by him and also asked to pay an expenditure tax on the money spent on such acquisition
A can be asked to pay a sales tax on the goods sold by him to B and also asked to pay or collect a tax on the expenditure incurred by B to purchase the same
965 Such instances he says can be multiplied and will reduce the argument to an absurdity
The Attorney General on the other hand submits that the question whether both legislation relate to the same matter does not bring out correctly the controversy in issue
He says that if the expression matter in this context is understood in its widest sense
it will create chaos in the matter of interpretation of the lists
Accord ing to him for applying the doctrine of pith and substance we have to understand the expression matter  not in a gross  but in a rare  sense
He develops this contention by invoking to his aid what may be called the aspect  rule as explained in certain text books and judicial deci sions
AHP Lefroy in his Canadian Constitution  observes at p 98 Sec
Aspect of legislation Subjects which in one aspect and one purpose fall within section 92 of the Federation Act and so are proper for provincial legislation may
in another aspect and for another purpose fall within section 97 and so be proper for Dominion legislation
And as the cases which illustrate the principle show by aspect  here must be understood the aspect or point of view of the legislator in legislating the object purpose and scope of the legislation
The word is used subjectively of the legislator rather than objectively of the matter legislated upon To similar effect is the passage from Laskin s Canadian Constitutional Law extracted in the judgment of Venkatacha liah J the Federal Court in the CP  Berar Act case also touches upon the aspect  theory at p 49 Here are two separate enactments each in one aspect conferring the power to impose a tax upon goods and it would accord with sound principles of construction to take the more general power that which extends to the whole of India as subject to an exception created by the particular power that which extends to the Province only emphasis added A similar reference to the aspect  of legislation can be seen in Kerala State Electricity Board vs Indian Aluminium Co at p 573 4 966 The argument of the learned Solicitor General appearing on behalf of the Kerala Electricity Board in support of his submission that the legislation falls under Entries 26 and 27 of List II may be summarised as follows Those entries do not enable the State Legislatures to legislate with regard to all conceivable goods like arms ammunition atomic minerals etc
as was argued by Mr Sen A legislature while legislating with regard to matters within its competence should be deed to know its limits and its legislative authority and should not be deemed to be legislating beyond its jurisdiction
One thing that has always got to be kept clear in one s mind is that there may be more than one aspect with regard to a particular subject matter
emphasis added Relying on this principle backed by these observations the learned Attorney General submits that properly understood the pith and substance of the 1987 Act is expenditure  not luxuries 
At first blush the argument of the learned Attorney General may sound a little subtle and somewhat artificial but on some reflection legislative competence will indeed be seen to vary with different aspects of a subject matter as understood in a wide sense
This can be seen from some of the decided cases
The first triumvirate of cases that arose in India under the Government of India Act viz
In re Central provinces  Berar Act XIV of 1953  Province of Madras vs Boddu Paidanna  Sons and GG in Council vs Province of Madras  were concerned with the question whether the impugned tax was one on the sale of goods or an excise duty
Interpreting the word subject matter  in a broad sense it could perhaps be said that both were taxes with respect to goods
But this concept alone was not sufficient to dispose of the case because the relevant legislative entries did not talk of taxes with respect to goods but referred to taxes in respect of two different activities referable to goods conveniently described as the taxable event  one the manufacture and production of goods and the other with sale thereof
In the light of these legislative entries the two different activi ties could properly regarded as two different matters for taxation and the relevant legislation was held to be one concerned with sale  and not with manufacture 
In other words there could be two enactments each in one aspect conferring the power to impose a tax upon goods
The legis lation was held not to be vitiated merely because there was an element of overlapping in that both excise duty and sales tax became 967 leviable on the same assessee in respect of the same goods and by reference to the same sale price when the first sale after manufacture occurs one by reference to the manufac ture  aspect and the other by reference to the sales  aspect
This bifurcation of the two different aspects per taining to goods was justified by the language of the legis lative entries themselves which referred separately to the different sets of activities and put them down in different legislative lists
Again on the same principle the manu facture of electricity may attract excise duty at the point of its captive consumption under Entry 84 of List I and also a tax on the consumption or sale of electricity refer rable to Entry 53 of List II
The power to levy taxes with respect to property  has created similar problems
All States or corporations and municipalities therein levy a property tax on the owner or occupier which is almost universally measured by refer ence to its annual value viz the rent it would fetch if let from year to year
The Income tax Act also charges a tax on the same basis
In other words in a realistic and practical sense the tax was levied by both legislatures on the same amount and with reference to the same matter
But both levies have been upheld under the 1935 Act the former as a tax on lands and buildings hearths and windows  Entry 42 of List II and the latter as a tax on income under Entry 84 of List I Ralla Ram pointed out that they were different types of levies one on the land and buildings generally but not necessarily measurable by reference to the income derived or capable of being derived and the other on the income actually or notionally derived from it
The pith and substance of the former it was said was not income  from the property though the tax was levied on the basis thereof
Expressed differently it could be said that though both were taxes with respect to proper ty they touched different aspects of the above subject matter the first was a tax on the aspect of ownership or occupation of property the second on the aspect of income from property
The decision of this Court in Bhagwan Dass Jain vs Union  is also to the same effect
The Hingir Rampur Coal Co case  was concerned with the validity of an Orissa Act which sought to levy a cess not exceeding 5 of the valuation of the coal stacked at pit s mouth
The question was whether this was in pith and substance a duty of excise Entry 84 of List I or a fee to regulate and control the coal mining industry Entry 66 and 23 of List II
Here again though the method adopted for recovering the impost was the same as that of an 968 excise duty the validity of the tax was upheld as it relat ed to the aspect of control over the industry rather than to the aspect of an impost on production of coal
Sainik Motors case  furnishes an illustration which comes nearer to the question at issue before us
In that case a Rajasthan Act purported to levy a tax on passengers and goods measuring it by reference to the fares and freights charged by operators for carriage of such passengers or goods
If it were to be treated as a tax on fares and freights  it would be a tax on income which the State legislature could not levy
But if treated as a tax on passengers and goods carried by road it was valid under Entry 56 of List II
The validity of the Act was upheld on the latter ground the court pointing out that the tax was on goods and passengers though measured by reference to fares and freights
This dichotomy could perhaps also be justified on the basis of the language of Entry 89 of List I
That entry makes a distinction between the two types of imposts and illustrates that two different aspects of the same matter viz taxes in respect of vehicles carrying passengers or goods can form separate matters for taxation
In the light of the above entries and decisions I think that the learned Attorney General is right in urging that merely because the 1987 Act as well as the State Acts levy taxes which have ultimate impact on persons who enjoy certain luxuries the pith and substance of both cannot be considered to be the same
The object of a tax on luxury is to impose a tax on the enjoyment of certain types of bene fits facilities and advantages on which the legislature wishes to impose a curb
The idea is to encourage society to cater better to the needs of those who cannot afford them
For instance a luxury tax may to cite a catchy example encourage construction of janata hotels rather than five star hotels
Such a tax may be on the person offering the luxury or the person enjoying it
It may be levied on the basis of the amount received for providing or the amount paid for or expended for enjoying the luxury
Conceivably it could be on different bases altogether
The object of an expenditure tax and that conceptually there can be an expenditure tax is borne out by Azam Jha s case supra is to discourage expenditure which the legislature considers lavish or ostentatious
The object of the first would be to discourage certain types of living or enjoyment while that of the second would be to discourage people from incurring expenditure in unproductive or undesirable channels
If a general Expenditure Tax Act like that of 1957 had been enacted no challenge to its validity could have been 969 raised because it incidentally levied the tax on expenditure incurred on luxuries
The fact that there will be some overlapping then or that here there is a good deal of such overlapping because the States have chosen to tax only some types of luxuries and the Centre to tax atleast for the time being only expenditure which results in such luxuries should not be allowed to draw a curtain over the basic difference between the two categories of imposts
For in stance if the conflict alleged had been between the present State Acts and an Act of Parliament taxing expenditure incurred in the construction of theatres or the maintenance of race horse establishments or the like there would have been no overlapping at all and the pith and substance of the central tax could well be described as expenditure and not luxuries
This distinction is not obliterated merely because of the circumstance that both legislatures have chosen to attack the same area of vulnerability one with a view to keep a check on luxuries  and the other with a view to curb undesirable expenditure
For these reasons I agree with my learned brother Venkatachaliah J that the validity of the three impugned enactments has to be upheld and these writ petitions and appeals dismissed
NPV Petitions dismissed


Summary:
The appellants were prosecuted on charges under section 120B read with section 165A of the Indian Penal Code for having conspired to commit the offence of bribing a public servant in connection with the discharge of his public duties
The case against them was that on August 24 1953 when the Inspector of Police who was in charge of the investigation of a case in which the second appellant was involved was on his way to the police station the appellants accosted him on the road and the second appellant asked him to hush up the case for valuable consideration
Some days later on August 31 the first appellant offered to the Inspector at the police station a packet containing Rs 500 in currency notes and told him that the second appellant had sent the money through him in pursuance of the talk that they had with him on August 24 as a consideration for hushing up the case
The courts below accepted the evidence adduced on behalf of the prosecution and convicted the appellants
On appeal by special leave it was contended that the court had no reasonable grounds to believe that the appellants had entered into a conspiracy to commit the offence and that the statement of August 3 I was not admissible against the second appellant because 1 the charge under section 120B had been deliberately added in order that the act or statement of the one would be admissible against the other and 2 the object of the conspiracy namely the payment of the hush money had been accomplished before the statement in question was made Held 1 that the incident of August 24 was evidence that the intention to commit the offence had been entertained by both the appellants on or before that date showing a clear indication of the existence of the conspiracy and that the statement made by the first appellant on August 31 was admissible not only to prove that the second appellant had constituted the first appellant his agent in the perpetration of the crime but also to prove the existence of the conspiracy  the court was therefore justified in drawing up the charge under section 120B along with that under section 165A of the Indian Penal Code
2that the payment of the bribe and the statement of August 31 accompanying it were part of the same transaction having been made in the course of the conspiracy and the 1142 statement in question was therefore admissible under section 10 of the Indian Evidence Act
Mirza Akbar vs The King Emperor 1940 L R 67 I A 336 and R vs Blake   relied on