Appeal No 2684 NM 93 etc
From the Judgment and Order dated 24
92 274
92 of the Bombay High Court in WP No 27 of 1990
658 Harish N Salve RP Bhatt AK Ganguli Dr Nitin Kantawala Ms Hemantika Wahi TVSN Chari Ms Tanuja Sheel Mrs Sheela section Rao P Parmeswar and EC Agrawala Ranjit Kumar R Venkataramani Mrs M Qamaruddin Abhijat P Medh for the appearing parties
The Judgment of the Court was delivered by BP JEEVAN REDDYJ
Leave granted
Heard counsel for the parties
These appeals arise from the common judgment and order of the Bombay High Court in a batch of writ petitions
The question is whether the photographic machinery imported by the appellants falls under Customs Tariff Heading No 9801
If it falls under it it is entitled to a concessional rate of duty
If not it is chargeable to a higher duty
The was enacted by Parliament with a view to consolidate and amend the law relating to customs duties
It repealed the Indian Tariff Act 1934 and Indian Tariff Amendment Act 1949
Section 2 says that the rates at which duties and customs shall be levied under the are those specified in the First and Second Schedules
Section 3 levies additional duty equal to excise duty
Chapter 98 was introduced in the Schedule with effect from February 28 1986
It relates to Project Imports Laboratory Chemicals Passengers Baggage Personal Importation by air or post Ship Stores
Chapter 98 provides a concessional rate of duty in respect of articles and items specified therein
Chapter Note 1 declares this chapter is to be taken to apply to all goods which satisfy the conditions prescribed therein even though they may be covered by a more specific heading elsewhere in this Schedule In other words if a particular article mentioned in Chapter 98 also falls under some other chapter heading still such item will be governed by chapter 98 and not by that other chapterheading
So far as photographic machinery is concerned it is not disputed that it falls under chapter 90 where the rate of duty is far higher
Chapter Note 2 which is of crucial relevance herein reads Heading No 9801 is to be taken to apply to all goods which are imported in accordance with the regulations made under section 157 of the 52 of 1962 and expressions used in this heading shall have the meaning assigned to them in the said regulations
emphasis added 659 Heading 9801 Sub Heading 980100 being relevant for our purpose must also be set out Heading Sub Description of Rate of duty No heading article Standard No Prefential Areas 9801 980100 All items of machinery 60 including prime movers instruments apparatus and appliance control gear and transmission equipment auxiliary equipment including those required for research and development purposes test and quality control as well as all components whether finished or not or raw materials for the manufacture of the aforesaid items and their components required for the intial setting up of a unit or the substantial expansion of an existing unit of a specified  1Industrial plant 2 irrigation project 3 power project 4 mining project 5 project for the exploration or oil or other minerals and 6 such other projects as Central Government may having regard to the economic development of the country notify in the official Gazette in this behalf and spare parts other raw materials including semifinished material or consumable stores not exceeding 10 of the value of the goods specified
above 660 provided that such spare parts raw materials or consumable stores are essential for the maintenance of the plant or project mentioned in to 6 above
 emphasis added The expression industrial plant is not defined in the or for that matter in the 
Chapter Note 2 of Chapter 98 which it must be emphasized is apart of statute itself says that the expressions used in heading No 9801 shall have the meaning assigned to them by the regulations made under Section 157 of the and further that heading No 9801 shall apply to all goods which are imported in accordance with such regulations
As contemplated by Chapter Note 2 of Chapter 98 of the  the Central Government framed the Project Imports Regulations under Section 157 of the  contained in notification No 23086 Cus
dated April 3 1986
They came into force on the same day
Regulation 1 of these Regulations says that they shall be called Project Imports Regulations 1986 and shall come into force on April 3 1986
Regulation 2 says that the said Regulations shall apply for assessment and clearance of goods falling under heading No 9801
Regulation 3 defines certain expressions including the expression industrial Plant
The definition reads as follows Industrial Plant means an industrial system designed to be employed directly in the performance of any process or series of processes necessary for manufacture production or extraction of a commodity but does not include i establishments designed to offer services of any description such as hotels hospitals photographic studios photographic film pro cessing laboratories photocopying studios laundries garages and workshops or iia single machine or a composite machine within the meaning assigned to it in Notes 3 and 4 to section XVI of the said Firs t Schedule
 A perusal of the definition of industrial plant makes it clear that it seeks to exclude industrial systems meant for establishment designed to offer services of 661 any description
It mentions certain service establishments by way of illustration
Photographic studios and photographic film processing laboratories happen to be mentioned specifically as some of the establishments designed to offer services
Once the Project Imports Regulations came into force the Customs authorities refused to treat the photographic equipment imported by the appellants and others as industrial plant falling under heading 9801 of the customs Tariff Act
They sought to levy duty thereon under Chapter 90
In view of the refusal of the Customs authorities to treat the photographic machinery imported by them as industrial plant within the meaning of Chapter 98 the appellants approached the Bombay High Court by way of the batch of writ petitions
Their contention was that until April 3 1986 photographic machinery was included within the expression industrial plant occurring in heading 9801 as well as in tariff heading 8466 of the old tariff
This fact was affirmed by the Government of India when a doubt was raised in their letter bearing NoF 5265283 Cus
TU dated November 4 1988
Even according to the normal meaning and connotation of the expression industrial plant photographic machinery falls within its purview
This is the sense in which the said expression is used in the Tariff Entry 980 1
If so the ambit and field of the said expression cannot be cut down by a regulation made under Section 157 of the 
If any particular machinery or equipment is to be excluded from the purview of the industrial plant it can and should be done only by the Act itself but not by a subordinate legislation like regulations
It was submitted that the 1986 regulations are outside the purview of Section 157 and are incompetent
The contentions were negatived and writ petitions dismissed by the Division Bench
In these appeals SSri Harish Salve and Kantawaala urged the following contention  1 A perusal of the discloses its scheme
The Act specifies the articles and things subjected to duty as also the rate to duty
Specification of articles is not left to be done by a delegate
It is true that power of exemption is conferred upon the Central government under Section 25 of the  but it is relevant to notice that a notification of exemption issued under Section 25 is required to be laid on the floor of both the houses of parliament by Section 159 of the Act
This shows the close control which the Parliament intended to exercise over the specification of articles and the rate of duty thereon
The Regulations made under Section 157 are not subject to Parliament s scrutiny in the sense that they are not required to be laid on the floor of the houses of Parliament under Section 159
Evidently Regulations were not supposed to deal 662 with any matters of substance
2 While enacting Section 157 Parliament could never have contemplated delegating to the Board the power to cut down the field and ambit occupied by the provisions of the or 
Regulations made by the Board stand on an inferior footing to the rules made by the Central Government under Section 156
The regulation making power was intended to be utilised for the purpose of providing procedural and peripheral provisions but certainly not for making a substantive provision cutting down the content and ambit of the provisions of the Act
3 Even if it is held for some reason that such a power was intended to be and was delegated to the Board it would be bad since it amounts to excessive delegation of legislative power
Regulation 3 of the new
Regulations which defines the expression industrial plant is clearly outside the province of regulation making power conferred by Section 157
The legislative history of tariff entry 98 militates against any such power being exercised by the Board
The Board cannot take away what the Parliament has given
The regulation in effect have the effect of amending the provision in the Act
They take away under the garb of defining the expression industrial plant  the beneficial rate of duty provided by Parliament in the interest of industrial progress of the country
The Regulations are inconsistent with the provisions of the 
SSri Ganguly and TVSN Chari learned counsel appearing for the Central Government on the other hand fully supported the validity of the said regulations
They pointed out that the validity of chapter Note 2 was not questioned before the High Court has been expressly recorded in the judgment under appeal
They submitted that the appellants should not be permitted to do so at this stage
Once Chapter Note 2 is taken as good the challenge to the 1986 Regulations must fail
The said note is not bad as amounting to excessive delegation of legislative power
In short they refuted each and every submission made by the learned counsel for the appellants
and are complimentary
to each other
Section 157 of the confers upon the Central Board of Excise and Customs constituted under the  the power to make regulations consistent with this Act and Rules generally to carry out the purposes of this Act
Sub section 2 particularises certain matters with respect to which regulations can be made
The specification of certain matters in sub section 2 is without prejudice to the generality of the power conferred by 663 Sub section 1
This is consistent with the standard legislative practice
Section 157 reads  157
Central power to make regulations
1 Without prejudice to any power to make regulations contained elsewhere in this Act the Board may make regulations consistent with this Act and the rulesgenerally to carry out the purposes of this Act
2 In particular and without prejudice to the generality of the foregoing power such regulations may provide for all or any of the following matters namely a the form of a bill of entry shipping bill bill of export import manifest import reports export manifest export report bill or transshipment boat note and bill of coastal goods b the conditions subject to which the transshipment of all or any goods under sub section 3 of Section 54 the transportation of all or any goods under Section 56 and the removal of ware housed goods from one warehouse to another under section 67 may be allowed without payment of duty c the conditions subject to which any manufacturing process or other operations may be carried on in a warehouse under Section 65
 section 156 confers upon the Central Government the power to make rules consistent with this Act generally to carry out the purposes of this Act
SubSection 2 of Section 156 again Specifies certain matters with respect to which rules can be made
The specification in sub section 2 is without prejudice to the generality of the power conferred by sub section 1
The Parliament has appointed two authorities ie central government and the Board to make rulesregulations to carry out the purposes of the Act generally
The character of Rules and of the Regulations made under Sections 156 and 157 respectively is the same both constitute delegated legislation
The Regulations are subject to an additional limitation viz they should not be contrary to the Rules 664 made under Section 156
The purpose of sub section 2 in both the sections is inter alia to allocate certain matters to each of them exclusively subject to these subsections both the delegates can exercise the power vested in them for carrying out the purposes of the Act
No established legislative practice of any considerable duration has been brought to our notice to read any further limitation into the regulation making power under Section 157 assuming that a legislative practice can be read as a limitation
We cannot therefore accept the contention that regulation making power under Section 157 should be confined only to peripheral andor procedural matters
It is not necessary for the purposes of this case to emphasis the need or the growing relevance of delegated legislation
Moreover enactments like customs Act and are not merely taxing statues but are also potent instruments in the hands of the Government for regulating the economy and the industrial development of the country
The economic  ministries had the establishments allied to them keep a close watch on the economy closely monitoring its behaviour
Power of taxation is one of weapons in the Government s armoury to regulate the economy
A certain industry may require encouragement while another may not
Yet another sector may require to be controlled nay discouraged on some occasions
In an under developed country like ours the emphasis is bound to be more on capital goods industry rather than on consumer goods  industry
The domestic industry has also to be protected and encouraged in certain situations
In 1986 the government which expression in this discussion includes the Board evidently thought that import of industrial systems  meant for establishments designed to offer services of any description such as hotels hospitals photographic studios photographic film processing laboratories  etc
needs no encouragement in the shape of concessional custom tariff and they said so through the said Regulations made in April 1986
It is not for the court to question the wisdom of the government s or for that matter of Board s policy
Board is a part of the government
It is in direct charge of the administration of the Act along with the government
Probably it is for this reason that the Parliament has through Chapter Note 2 vested the power to define the expressions occurring in Chapter 98 in the Board
In this scheme of things we cannot accept the argument of Sri Salve with respect to some kind of an inherent limitation upon the regulation making power of the Board
We cannot say that the said power is confined only to what the learned counsel calls peripheral andor procedural matters
There is another and perhaps more simpler answer to the attack upon the validity of the said Regulations
They are relatable not only to Section 157 of the but more 665 particularly to Chapter Note 2 of Chapter 98 of the 
Chapter Note 2 expressly states that the expressions used in Heading 9801 shall have the meaning assigned to them in the said regulations
In accordance with the said Chapter Note Project Imports Regulations have been made excluding establishments designed to offer services of any description from the purview of industrial plant
If the said regulations are good any valid there can be no escape from what they say the photographic equipment does not fall within the ambit of industrial plant
In this view of the matter the relevance of the alleged legislative practice with respect to regulation making power or of the situation obtaining prior to the framing of the said regulations is very little
The express power conferred by Chapter Note 2 of Chapter 98 cannot be curtailed or abridged with reference to alleged legislative practice relating to regulation making power assuming that such a practice is established and is relevant
The only question which really arises is whether Chapter Note 2 amounts to excessive delegation of legislative power
As rightly pointed out by ThommenJ In Supreme Court Employees Welfare Association vs Union of India  where the validity of a subordinate legislation whether made directly under the constitution or statute is in question the court has to consider the nature objects and scheme of the instrument as a whole and on the basis of that examination it has to consider what exactly was the area over which and the purposes for which power has been delegated by the governing law
 In statutes like and one has also to keep in mind that such legislation can be properly administered only by constantly adjusting it to the needs of the situation
This calls for a good amount of discretion to be allowed to the delegate
As is often pointed out flexibility is essential in law making and it is one of the advantages of rules and regulations that they can be altered much more quickly and easily than can acts of Parliament
 We have pointed out hereinbefore the necessity of constant and continuous monitoring of the nation s economy by the government and its various institutions and the relevance of these enactments as a means of ensuring a proper and healthy growth
Looked at from this angle we are unable to see any substance in the argument that Chapter Note 2 amounts to excessive delegation of the Parliament s essential legislative function
Chapter 98 provides a concessional tariff inter alia to industrial plant
The expression industrial plant is a term of wide connotation
All kind of industrial plants may not require to be encouraged
Some may others may not
Decisions of this nature have to be made from time to time
Parliament cannot obviously do this
It has therefore left the function to the Board which as emphasised hereinbefore is in immediate direct charge of the administration of the Act along with and subject to the guidance of the central 666 government
In Vasantlal Maganbhai Sanjanwala vs State of Bombay   it is observed by this Court that self effacement of legislative power in favour of another agency either in whole or in part is beyond the permissible limits of delegation
At the same time it is held it is for a court to hold on a fair generous and liberal construction of an impugned statute whether the legislature exceeded such limits
But the said liberal construction should not be carried by the Courts to the extent of always trying to discover a dormant or a latent legislative policy to sustain an arbitrary power conferred an executive authorities
It is the duty of the Court to strike down without any hesitation any arbitrary power conferred on the executive by the legislature
These words were quoted with approval in a subsequent decision of the Constitution Bench in Devidas vs State of Punjab  Krishna lyer J emphasised this very aspect in the context of a taxing statute in Avinder Singh vs Punjab  The learned Judge said   the legislature cannot self efface its personality and make over in terms plenary the essential legislative functions
The legislature is responsible and responsive to the people and its representatives the delegate may not be and that is why excessive delegation and legislative hara kiri have been frowned upon by constitutional law
This is a trite proposition but the complexities of modem administration are so bafflingly intricate and bristle with details urgencies difficulties and need for flexibility that our massive legislatures may not get off to a start if they must directly and comprehensively handle legislative business in all their plenitude proliferation and particularisation
Delegation of such part of legislative power becomes a compulsive necessity for viability
If the 500 odd parliamentarians are to focus on every minuscule of legislative detail leaving nothing to subordinate agencies the annual output may be both unsatisfactory and negligible
The law making is not a turnkey project readymade in all detail and once this situation is grasped the dynamics of delegation easily follow
Thus we reach the second constitutional rule that the essentials of legislative functions shall not be delegated but the inessentials however numerous and significant they be may well be made over to appropriate agencies
of course every delegate is subject to the authority and control of the principal and exercise of delegated power can always be directed corrected or cancelled by the principal
 667 Applying the principles aforesaid we cannot say that the Parliament has by empowering the Board to define the expression industrial plant occurring in Chapter 98 delegated its essential legislative function
Indeed we see no self abnegation on the part of the Parliament
The power conferred by Chapter Note 2 is undoubtedly different from the power of exemption conferred by Section 25
It makes little difference in principle that while an exemption notification is required to be laid on the floor of the Parliament Regulations made under Section 157 are not so required
Absence of such requirement does not mean absence of control by the Parliament over the acts of the delegate
Nor are we satisfied that by excluding the industrial systems meant for establishments designed to offer services of any description the Board has travelled beyond its brief Reference may be had in this connection to the decision of this court in State of Tamil Nadu vs Hind Stone Section 15 of the empowers the State Government to make rules for regulating the grant of quarry lease mining lease and other mineral concessions in respect of minor minerals and purposes connected therewith
In exercise of the said power the Government of Tamil Nadu framed Tamil Nadu Minor Mineral concession Rules 1959
Rule 8 of the Rules prescribed the procedure for lease of quarries to private persons
Rule 8C which was introduced in the year 1977 imposed a prohibition on the grant of lease of quarries in respect of black granite to private persons
The Rule provided that notwithstanding anything to the contrary contained in the said rules no lease for quarrying black granite shall be granted to private persons on or after7th December 1977
It could be ranted only to the State Government or to a corporation wholly owned by it
The validity of Rule 8C was challenged on the ground that it travels beyond the purview of the Act inasmuch as the power to make rules conferred upon the State Government by Section 15 was meant for regulating the rant of quarry leases in respect of minor minerals but not for prohibiting it for creating a monopoly in itself State Government
It was also argued that since the decision contained in Rule 8C involved a major change of policy it could be done only by the legislature and not by a subordinate legislative body
Both these arguments were rejected
Following observations are apposite 
It was pointed out by the Privy Council in Commonwealth of Australia vs Bank of New South Wales and we agree with what was stated therein that the problem whether an enactment was regulatory or something more or whether a restriction was direct or only remote or only incidental involved not so much legal as political social or economic consideration
Each case it was said must be judged on its own facts and in its own setting of time and circumstances and it might be that in regard to some economic 668 activities and at same Stage of social development prohibition with a view to State monopoly was the only practical and reasonable manner of regulation
Another of the submission of the learned counsel was that the GOMs
No 1312 dated December 2 1977 involved a major change of policy which was a legislative function and therefore beyond the competence of a subordinate legislating body
We do not agree with the submission
Whenever there is as witch over from private sector  to public sector  it does not necessarily follow that a change of policy requiring express legislative sanction is involved
It depends on the subject and the statute
For example if a decision is taken to impose a general and complete ban on private mining of all minor minerals such a ban may involve the reversal of a major policy and so it may require Legislative sanction
But if a decision is taken to ban private mining of a single minor mineral for the purpose of conserving it such a ban if it is otherwise within the bounds of the authority Given to the Government by the Statute cannot be said to involve any change of policy
 The statement of law is clear and we agree with it respectfully
We are therefore of the considered opinion that Chapter Note 2 cannot be faulted as an instance of excessive delegation of essential legislative function nor can the Project Imports Regulations be faulted on the ground of travelling beyond the purview of the statute
For the above reasons the appeals fail and are dismissed
No costs
Appeals failed


Summary:
Prior to January 1 1984 the Andhra Pradesh Entertainment Tax Act 1989 in Section 4 provided for levy of entertainment tax at a rate fixed on the has is of percentage of payment made by a person for admission to any entertainment
In section 4 C in respect of entertainments held within the jurisdiction if any local authority where population did nit exceed 25 000
tax was levied at a certain percentage of the gross collection capacity per show and the percentage for such levy were fixed according to the population of the local authority within the jurisdiction of which the entertainment held
The Amending Act 24 of 1984 replaced the earlier mode of levy of tax prescribed in Section 4 and introduced a mode of levy of tax on the has is of a prescribed percentage of the gross collection capacity per show
The rates 617 were fixed on the basis of a percentage of the gross collection capacity per show varying with the category of the local area in which the theatre was situated as well as on the nature of the theatre viz air conditioned air cooled or other than air conditioned and air cooledor permanentsemi permanent including touring and temporary the atres
The proprietor was given an option to pay a weekly consolidated amount irrespective of the number of shows actually held by him and the said amount was fixed on the basis of the prescribed number of shows per week
The number of show 
varied with the nature of the theatre as well as the category of the local area in which it was situate
A fixed amount was also leviable by way of show tax on each show
Before the High Court a number of writ petitions were filed challenging the validity of sections 44 A and 5 of the Andhra Pradesh Entertainments Tax Act 1939 as amended by Act 24 of 1984 on the grounds that i the levy of entertainment tax on the basis of gross collection capacity without reference to the actual amount collected or the actual number of tickets sold or the number of persons admitted was ultra vires the legislative power conferred on the State Legislature under Entry 62 of List 11 of the Seventh Schedule of the Constitution ii section 4 was hit by Article 14 of the Constitution as it gave rise to discrimination amongst different theatres situate within the same local area and that iii the levy of entertainment tax under section 4 being exproprietory amounted to an unreasonable restriction on the right guaranteed to the petitioners by Article 191 g of the Constitution and was not saved under Article 196
Relying upon the decisions in Western India Theatres vs Cantonment Board 1959 Supp 2 SCR 63 YV Srinivasamurthy vs State of Mysor
AIR 1959 SC 894 and State of bombay vs RMD Chamarbaugwala
A I R the High Court dismissing the writ petitions held that the State Legislature was competent to levy the tax under Entry 62 of List 11 of the Seventh Schedule that as the tax levied retained the character of entertainment tax the Legislature was competent to adopt such basis or such measure or such method of levy that wide discretion was allowed to the Legislature in the matter of classification and in the matter of selection of persons to be taxed and that the two fold classification made by section 4 was neither discriminatory nor arbitrary or it did not mete out hostile discrimination to certain theatres that the rates of tax that were prescribed under section 4 based on an average expected occupancy rate of less than 50 per cent to 66 per cent was neither unreasonable nor expropriatory that section 5 was only optional and no one was compelled to be governed by it or to opt for the composition scheme and if a person opted to be governed by section 5 he must be deemed 618 to have accepted all the conditions and features of the scheme
During the pendency of these appeals Special leave petition in this court the Act of 1939 was amended by AP Act 23 of 1988 and AI Act 16 of 1991 whereby the Tables below sections 4 4 A and 5 were substituted and subsection 6A was inserted in section 5
Before this Court the appellants and the petitioners reiterated two contentions raised before the High Court while assailing the constitutional validity of sections 4 and 5 of the Act namely 1 that the impugned provisions did not fall within the ambit of the legislavite power conferred on the St Ate Legislature under Entry 62 of List 11 of the Seventh Schedule of the Constitution ii that the impugned provisions were violative of Article 14 of the Constitution as they provided for imposing tax at a uniform rate in a particular class of Cinema theaters irrespective of their location and occupancy
Dismissing the appeal and the Special Leave petition this Court HELD 11
While considering the question as to legislative competence of the State Legislature it is necessary to bear in mind that the impugned provisions provide for imposition of a tax and a tax has two distinct elements viz subject of the tax and the measure of the tax
The subject of the tax is the person think or activity on which the tax is imposed and the measure of the tax is the standard by which the amount of tax is measured
632 1 12
The competence of the Legislature to enact a law imposing a tax under a particular head of the legislative list has to be examined in the context of the subject of the tax
It the subject of the tax falls within the ambit of the legislative power conferred by the head of legislative entry it would be within the competence of the Legislature to impose such as tax
632 E 13
Prior to the enactment of Act 24 of 1984 there were two modes for levy of the tax one on the basis of the actual number of persons admitted to each show and the other on the basis of the percentage of the grows collection capacity per show
As a result of the amendments introduced by Act 24 of 1984 the system for levy of tax on the basis of number of persons actually admitted to each show was dispensed with and the tax was to be levied on the basis of the percentage of the gross collection capacity per show and different percentages were prescribed depending on the type of the theatre and the 619 nature of the local area where it was situated
633 F H 14
The question whether the alteration in the said mode of levy of tax by Act 24 of 1984 has the effect of altering the nature of the tax in a way that it has ceased to he a tax on entertainments and falls beyond the field of legislative competence conferred in the State Legislature by Entry 62 of List 11 must he answered in the negative The fact that instead of tax being levied on the basis of the payment for admission made by the persons actually admitted in the theater it is being levied on the basis of the gross collection capacity per show calculated on the basis of the notional aggregate of all the payments fair admission which the proprietor would realise per show if all the seats or accommodation in respect of the place of entertainment are occupied and calculated at the maximum rate of payments for admission would not alter the nature of the tax or the subject matter of the tax which continues to he a tax on entertainment
634 B D 15
The mode of levy based on per payment for admission  proscribed under Section 41 prior to amendment by Act 24 of 1984 necessitated enquiry into the number of shows held at the theatre and the number of persons admitted to a cinema theatre for each show and gave room for abuse both on the part of proprietor as well as other officers incharge of assessment and collection of tax
The mode of levy or measure of the tax prescribed under section 41as substituted by Act24 of 1984 is a more convenient mode of levy of the tax inasmuch as it dispenses with the need to verify or enquire into the number of persons admitted to each show and to verify the correctness or otherwise of the returns submitted by the proprietor containing the number of persons admitted A each show and the amount of tax collected
634 E 16
On an examination of the rates prescribed under both the modes it is found that under the system of consolidated levy prescribed under Section 4 C the proprietor could break even if the average rate of occupancy was 40
As regards the rates prescribed under Sections 4 and 5 as amended by Act 24 of 1984 they are based on an average expected occupancy rate of less than 50 or 66 depending upon the area in which the theatre is situated
This would mean that the entertainment tax that would be collected over and above the average occupancy rate would constitute the profit of the proprietor
In the circumstances it cannot be said that the adoption of the system of consolidated levy in Section 41 as amended by Act 24 of 1984 alters the nature of tax and it has ceased to be a tax on entertainments
634 F H 620 17
Once it is held that tax in entertainment could be levied either of the two modes viz per payments of admission or gross collection capacity per show it is for the legislature to decide the particular mode or modes of levy to be adopted and whether a choice should he available to the proprietor of the cinema theatre in this regard
The legislature does not transgress the limit of its legislative power confer red on it under Entry 62 of List 11 if it decides that consolidated levy on the basis of gross collection capacity per show shall be the only mode for levy of tax on entertainments 635 C 18
The impugned provisions contained in Sections 4 and 5 as amended by Act 24 of 1984 are not ultra vires the legislative power conferred on tile State Legislature under Entry 62 of List 11
635 D Western India Theatres vs Cantonment Board 1959 Supp 2 SCR 63 and Y V Srinivasamurthy vs State of Mysore AIR 1959 SC 894 explained 201
The right conferred by Article 14 postulates that all persons similarly circumstanced shall he treated alike both in privileges conferred and liabilities imposed Since the State in exercise of its governmental power has of necessity to make laws operating differently on different groups of persons within its territory to attain particular ends in giving effect to its policies it is recognised that the State must possess the power of distinguishing and classifying persons or things to be subjected to such laws
It is however required that the classification must satisfy two conditions namely iit is founded on an intelligible different is which distinguishes those that are grouped together from others and ii the differential must have a rational relation to the object sought to be achieved by the Act
It is not the requirement that the classification should be scientifically perfect or logically complete
Classification would be justified if it is not palpable arbitrary
636 A C Re Special Courts Bill at pp
534 536 and Khandige Sham Bhat vs Agricultural Income Tax Officer  at p 817
followed
In the field of taxation the legislature exercises an extremely wide discretion in classifying items for the purposes so long as it refrains from clear and hostile discrimination against particular persons or classes
636 E 621 East India Tobacco Co vs State of AP  at p 411 PM Ashwathanarayana Shetty vs State of Karnataka
1988 Supp3 SCR 155 at pm 188 Federation of Hotel  Restaurant Association of India vs Union of India at p 949 Kerala Hotel  Restaurant Association vs State of Kerala  at p 530 Gannon Dunkerley and Co vs State of Rajasthan at 397 and San Antonio Independent School District vs Bodriques  at p 41 referred to
just as a difference in the treatment of persons similarly situate leads to discrimination  so also discrimination can arise if persons who are unequals ie differently placed
are treated similarly
In such a case failure on the part of the legislature to classify the persons who are dissimilar in separate categories and applying the same law irrespective of the differences brings about the same consequence as in a case where the law makes a distinction between persons who are similarly placed
A law providing for equal treatment of unequal objects transactions or persons would he condemned as discriminatory if there is absence of rational relation to the object intended to he achieved by the law
637 A B K T Moopil Nair vs The State of Kerala  Anr
   distinguished
Jalan Trading Co pvt Ltd vs Mill Mazdoor Union  and Twyford Tea Co Ltd  Anr vs The State of Kerala  Anr   referred to
In the instant case the legislature has prescribed different rates of tax by classifying theatres in the different classes namely air conditionedair cooled ordinary other than air conditioned and air cooled permanent and semi permanent and touring and temporary
The theatre have further been categorized on the basis of the type of the local area in which they are situate
It cannot therefore be said that there has been no attempt on the part of the legislature to classify the cinema theatres taking into consideration the differentiating circumstances for the purpose of imposition of tax
638 G H 205
In relation to cinema theatres it can he said that the attendance in the various cinema theatres within a local area would not be uniform and would depend on factors which may vary from time to time
But this does not mean that cinema theatres in a particular category of local area will always 622 be at a disadvantage so as to be prejudicially affected by a uniform rate as compared to cinema theatres having a better location in the same local area
The contention that the impugned provisions are violative of right to equality guaranteed under Article 14 if the Constitution on the basis that unequals are being treated equally cannot be accepted
639 B C 3
The provision for enhancement contained in sub section 16 of section 5 relates to the cases
There the proprietor of a cinema theatre opts for payment of weekly consolidated amount
Since the proprietor has the option to opt for the said scheme he cannot complain that the scheme suffers from inequality
on account of absence of a corresponding provision for reduction of amount of tax
639 E