6 etc
Civil Appeal No 1527 from the Judgment and Order dated 781984 of the Andhra Pradesh High Court in Writ petition No 8173 of 1984
AK Ganguly
MB Shetye A Subha Rao B Kanta Rao TVSN Chari Ms Bharathi Reddy and Ms Promila for the appearing parties
as amended by Act 24 of 1994 providing for imposition of entertainments tax it respect of entertainments held in cinema theatres located in the State of Andhra Pradesh
The Act has been enacted to provide for the levy of taxes on amusements and other attainments
Prior to January 1 1984 Section 4 of the Act provided for levy of entertainment tax at a rate fixed on the basis of percentage of the payment made by a person for admission to any entertainment
In addition there was a provision in Section 4 A for levy of a fixed amount by way of show tax for each show
By Act 59 of 1976 Section 4 C was introduced in the Act and Section 5 of the Act was substituted
under Section 4 C it was provided that in respect of entertain 623 ments held within tile jurisdiction of any local authority whose population did not exceed 25000 a tax for every entertainment show would be levied not on the basis of each payment for admission but at a certain percentage of the gross collection capacity per show
The percentages for such levy were fixed according to the population of the local authority within the jurisdiction of which the entertainments were held Gross collection capacity per show was defined in the Explanation to Section 4 C to mean the notional aggregate of all payments for admission the proprietor would realise per show if all the seats or accommodation as determined by the licensing authority under the Andhra Pradesh Cinemas Regulation Act 1966 in respect of the place of entertainment are occupied and calculated at the maximum rate of payments for admission as determined by the said licensing authority
The levy of tax in the manner as prescribed under Section 4 C could be dispensed with if the proprietor of the theatre opted for the composition scheme contemplated by Section 5 whereunder it was open to a proprietor to enter into an agreement with the prescribed authority to compound the tax payable under Section 4 C for a fixed sum which was to be arrived at in accordance with the formula prescribed under Section 5
According to this formula the tax was payable on the basis of a percentage of the gross collection capacity per show for the fixed rounds of shows for the whole year and the number of shows was fixed on the basis of the number of shows exhibited in the previous year
This arrangement continued till December 31 1983 whereafter the provisions of Sections 44 A and 5 were amended by Act No 24 of 1984
The provisions of Sections 44 A and 5 as amended by Act 24 of 1984 were as follows Section 4
1 There shall be levied and paid to the State Government a tax on the gross collection capacity on every show hereinafter referred to as the entertainments tax in respect of entertainments held in the theatres specified in column 2 of the table below and located in the located areas specified in the corresponding entry in column 1 of the said table calculated at the rates specified in the corresponding entry in column 3 thereof
THE TABLE __________________________________________________________ Local Area
Theatre Rate of tax on the gross collection ca pacity per show _________________________________________________________ 1 2 3 _________________________________________________________ 624 a Municipal corporations iAir conditioned 29 per cent and the Secunderabad Cantonment area and ii Air cooled 28 per cent the contiguous area iiiOrdinary 25 per cent thereof
other than air conditioned and air cooled b Selection grade muni i Air conditioned 28 per cent cipalities and contiguors area of iiAir cooled 27 per cent two Kilometres iiiordinary other 24 per cent thereof
than air conditioned 27 per cent and air cooled c Special tirade munici i Air conditioned 27 per cent palities and contiguous ii Air cooled 26 per cent area of two Kilometres iii Ordinary 23 per cent thereof
other than air conditioned and air cooled d First grade munici palities and conti i Air conditioned 26 per cent guous area of two ii Air cooled 25 per cent Kilometres thereof
iii Ordinary other 22 per cent than air conditioned and air cooled e Second grade munici All categories 21 per cent palities and contiguous area of two Kilometres thereof
f Third grade municipalities All categories 20 per cent and contiguous area of two Kilometres thereof
g Gram panchayats selec i Permanent and 19 per cent tion grade gram panchayats semi permanent 20 per cent townships and any other ii Touring and local areas
temporary Explanation
For the purpose of this section and section 5 the term gross collection capacity per show  shall mean the notional aggregate of all payments for admission the proprietor would realise per show if all the seats or accommodation as determined by 625 the licensing authority under the Andhra Pradesh Cinemas Regulation Act 1955 in respect of the place of entertainment are occupied and calculated at the maximum rate of payments for admission as determined by the said licensing authority
The amount of tax under sub section 1 shall be payable by the proprietor on the actual number of shows held by him in a week Section 4 A 1 In addition to the tax under Section 4 there shall be levied and paid to the State Government in the case of entertain ments held in the local areas specified in column 1 of the Table below a tax calculated at the rates specified in the corresponding entry in column 2 thereof THE TABLE Local Areas Rate of tax for every show a Municipal Corporation and the Six rupees Secunderabad cantonment area and contiguous area of two Kilometers thereof
b Selection grade Special grade and the Six rupees first grade municipalities and contiguous area of two kilometers thereof
c Second grade and Third grade Four rupees municipalities and contiguous area of two kilometers thereof
d Gram Panchayats selection grade Two rupees
gram panchayats townships and any other local areas
2 The tax leviable under sub section 1 shall be recoverable from the proprietor
3 The provisions of this Act other than Sections 4 6 and 13 shall so far as may be apply in relation to the tax payable under subsection 1 as they apply in relation to th e tax payable under Section 4  626 Section 5
 1 In lieu of the tax payable under section 4
in the case of the entertainments held in the theatres specified in column 2 of the table below and located in the local areas specified in the corresponding entry in column 1 of the said table the proprietor thereof may at his option and subject to such conditions as may be prescribed pay the amount of tax to the State Government every week as specified in the corresponding entry in column 3 thereof  THE TABLE Local Area Theatre Amount of tax 1 2 3 a Municipal corpora i Air conditioned 24 per cent tions and the of the gross Secunderabad canton collection capacity ment area and the per show multi contiguous area of plied by 22 two kilometrers thereof
ii Air cooled 23per cent of the gross collection capacity per show multiplied by 22
iii Ordinary 20 per cent of the other than air gross collection conditioned and capacity per show air cooled multiplied by 22 bSelection grade muni i Air conditi 23 per cent of the cipalities and contiguous aned gross collection area of two kilometrers show multiplied by thereof
ii Air cooled 22 per cent of the gross collec tion capacity per show multiplied by 22
iii Ordinary 19 per cent of the other than air gross collection conditioned and capacity per air cooled show multiplied by 22
cSpecial grade munici i Air conditi 22 per cent of the 627 palities and contiguous oned gross show multi area of two kilo lied by 21
metrers thereof
ii Air cooled 21 per cent of the gross collection capacity per show multiplied by 21
iii Ordinary 18 per cent of the other than air gross collection conditioned and capacity per show air cooled multiplied by 21
dFirst grade municipali i Air conditi 21 per cent of ties and contiguous oned gross show area of two kilo multilied by 21
metrers thereof
ii Air cooled 20 per cent of the gross collection capacity per show multiplied by 21
iii Ordinary 17 per cent of the other than air gross collection conditioned and capacity per show air colled multiplied by 21
e Second grade muni All cate ores 16 per cent of the cipalities and conti gross collection guors area of two capacity per Kilometres there of show
f Third grade muni All categores 15 per cent of the cipalities and gross Collection contiguous area of capacity per show two Kilometres multiplied by 17
thereof
g Gram panchayats i Permanent 15 per cent of the selection grade gram and semi gross collection panchayats townships permanent capacity per and any other show multi local areas
plied by 14
ii Touring 14 per cent of the and temporary gross collection capacity per show multiplied by 7 628 Explanation
For the purposes of computing the gross collection capacity per show in respect of any place of entertainment the maximum seating capacity or accommodation and the maximum rate of payment for admission determined by the licensing authority under the Andhra Pradesh Cinemas Regulation Act 1955 as on the date when the proprietor is permitted to pay tax under this section shall be taken into account
2The amount of tax under sub section 1 shall be payable by the proprietor irrespective of the actual number of shows held by him in a week
3Any proprietor who opts to pay tax under this section shall apply in the prescribed form to the prescribed authority to be permitted to pay the tax under this section
4On being so permitted such proprietor shall pay the tax for every week as specified in sub section 1
5The option permitted under this section shall continue to be in force till the end of the financial year in which such option is permitted
6It shall be lawful for the prescribed authority to vary the amount of tax payable by the proprietor under sub section 1 during the period of option permitted under this section any time if there is an increase in the gross collection capacity per show in respect of the place of entertainment by virtue of an upward revision of the rate of payment for admission therein or of the seating capacity or accommodation thereof or where the local area in respect of which permission is granted is upgraded or if it is found for any reason that the amount of tax has been fixed lower than the correct amount
7Every proprietor who has been permitted to pay the tax under this section shall intimate to the prescribed authority forthwith such increase in the gross collection capacity per show in respect of the place of entertainment failing which it shall be open to the pre scribed authority by giving fifteen days notice to cancel the option so permitted
629 8Where a proprietor fails to pay the amount of tax on the due date such amount of tax shall be recoverable with interest calculated at such rate as may be prescribed
9 The amount of tax due under this section shall be rounded of to the nearest rupee and for this purpose where such amount contains part of a rupee consisting of paise then if such part if fifty paise or more it shall be increased to one rupee and if such part is less then fifty paise it shall be ignored
 As a result of the said amendments the earlier mode of levy of tax on the basis of the percentage of each payment for admission prescribed in Section 4 was replaced by a mode similar to that provided in Section 4 C ie on the basis as prescribed percentage of the gross collection capacity per show
In the table appended below sub section 1 of section 4 rates 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 and air cooled or ordinary other than air conditioned and air cooled or permanent semi permanent including touring and temporary theatres
In the Explanation to sub section 1 of section 4 the term gross collection capacity per show  was defined in the same terms as in the Explanation to Section 4 C to mean the full collection per show if all the seats in the theatre are occupied
In sub section 2 of section 4 it was specifically provided that the amount of tax under sub section 1 shall be payable by the proprietor on the actual number of shows held by him in a week
Section 5 gave an option to the proprietor 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 shows varied with the nature of the theatre as well as the category of the local area in which it was situate
In section 4 A a fixed amount was leviable by way of show tax on each show
A number of writ petitions were filed in the High Court to challenge the validity of sections 4 4 A and 5 of the Act as amended by Act 24 of 1984
The said writ petitions were decided by a division bench of the High Court by judgment dated July 19 1984
The constitutional validity of the provisions was challenged on three grounds viz  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 630 conferred on the State Legislature under entry 62 of List II of the Seventh Schedule ii section 4 was hit by Article 14 of the Constitution inasmuch as by treating unequals as equals it gave rise to discrirmination amongst different theatres situate within the same local area and iii the levy of entertainment tax under section 4 being exproprietory amounts to an unreasonable restriction on the right guaranteed to the petitioners by Article 19 1 of the Constitution and was not saved by clause 6 of Article 19
Relying upon the decisions of this Court in Western India Theatres vs Contonment Board 1959 Supp 2 SCR 63 Y V Srinivasamurthy vs State of Mysore AIR 1959 SC 894 and State of Bombay vs RMD Chamarbaugwala   the High Court has held that the State Legislature was competent to levy the impugned tax under entry 62 of list 11 of the Seventh Schedule to the Constitution since the said head of legislative power empowers imposition of tax upon entertainments and amusements and not on the persons entertained or the persons provided amusement and it has to be paid by the persons who provides the entertainment or amusement
The High Court further held that so long as the tax levied retains the character of entertainment tax the Legislature is competent to adopt such basis or such measure or such method of levy as it thinks appropriate
The High Court rejected the contention that the only method in which Legislature can levy the entertainment tax is that prescribed in the old Section 4 ie on the basis of the payment of admission
The challenge on the around of Article 14 was negatived by the High Court on the view that wide discretion is 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 could not be said to be either discriminatory or arbitrary much less could it be said that it metes out hostile discrimination to certain theatres
The High Court also observed that since it was not possible to predicate absolute equality between two theatres and also because the situation and economics of each theatre are different it is impossible to expect or call upon the Legislature to evolve such classification which would meet every conceivable case and which would not result in prejudice even to a single theatre
It was observed that different rates have been prescribed for different local areas and for different types of theatres ie ordinary air cooled and air conditioned and the Legislature took note of the fact that rate of occupancy in villages will be lower compared to towns and similarly in bigger towns there will be greater rate of occupancy and finally in cities the rate of occupancy would be even higher and it could not be said that this expectation was unrealistic or seunreasonable as to call for interference by the court
As regards the challenge based on Article 19 1 g the High Court has taken note of the letter dated July 26 1983 addressed by the Andhra Pradesh Film Chamber of Commerce to the Hon ble Chief Minister of Andhra Pradesh wherein the exhibitors not only asked 631 tax which suggestion was accepted by the Government with certain modifications varying from 2 to 4 over the rates suggested by the Association
The High Court observed 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 could not be said to be either unreasonable or exproprietory
The High Court however held that the agreements which had already been entered into by the proprietors of cinema theatres under section 5 as it stood prior to January 1 1984 would be effective and valid for the period for which they were entered into
The High Court has also observed that merely because the form for exercise of option as contemplated under sub section 3 of section 5 had not been prescribed it could not be said that section 5 had not come into operation or was unenforceable and that it was open for the proprietor to send an intimation on an ordinary paper and the authority would be bound to treat it as proper intimation
The High Court rejected the contention that section 5 was discriminatory inasmuch as it did not provide for reduction of the composition amount in case of reduction of seating capacity of a theatre during the period of one year for which the option was exercised although under sub section 6 of section 5 the provision had been made for enhancement of the composition amount in case the seating capacityaccommodation or the rates of payment for admission were enhanced
The High Court observed that section 5 was only optional and no one was compelled to be governed by it or to opt for the composition scheme contained in section 5 and that according to the said scheme the option once exercised was in force till the end of the financial year in which such option was permitted and that if a person opts to be governed by section 5 he does so with his eyes open and he must be deemed to have accepted all the conditions and features of the scheme and it was not open to him to say that he would avail of the beneficial provisions of the scheme while rejecting those features which are not advantageous to him
CANos
4642 4784193 2218522285 22385224 2885 229 232 34 85 146885 and 1469 7085 have been filed against the said decision of the High Court dated July 19 1984
CA Nos 572285 152786 and SLP C No 3127 85 have been filed against the decision of the High Court dated August 7 1984 which is based on the earlier decision dated July 19 1984 and similarly CA Nos
185889 and 479889 are directed against the decisions dated February 12 1986 and March 30 1998 based on the earlier decision dated July 19 1984
During the pendency of these appeals the Act was amended by AP Act 23 of 1988 and AP Act 16 of 1991 whereby the Tables below Sections 44 A and 5 were substituted and sub Section 6 A was inserted in Section 5 whereby 632 provision was made for reduction of the amount of tax payable by the proprietor during the financial year if there is a reduction in the seating capacity or in the accommodation of the place of entertainment at any time during the period of six months commencing from the 1st day of April and ending with 30th day of September or from the 1st day of October and ending with 31st day of March of any financial year
The learned counsel appearing for the appellants have assailed the constitutional validity of sections 4 and 5 on two grounds viz  1 that the impugned provisions do not fall within the ambit of the legislative power conferred on the State Legislature under Entry 62 of List II of the Seventh Schedule of the Constitution  and 2 that the impugned provisions were violative of the right to equality guaranteed under Article 14 of the Constitution inasmuch as they treated unequals as equal by imposing tax at a uniform rate on a particular class of cinema theatres irrespective of their location and occupancy
While considering the question as to legislative competence of the State Legislature it is necessary to bear in mind that the impugned provisions provide fir 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 thing 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
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
If 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 a tax
It is therefore necessary to examine the scope of the legislative entry viz Entry 62 of List II which is invoked in support of the competence of the State Legislature to impose the tax and ascertain whether the subject of the tax imposed by the impugned provisions falls within the ambit of the said entry
Entry 62 of List 11 is as follows 62
Taxes on luxuries including taxes on entertainments amusements betting and gambling The said entry is in pari materia with entry 50 of the Provincial List in the Seventh Schedule to the Government of India Act 1935
Construing the said entry this Court in the Western India Theatres vs Cantonment Board supra has rejected the contention that the entry contemplates a law imposing taxes on persons who receive or enjoy the luxuries or the entertainments or the amusements 633 and has held The entry contemplates luxuries entertainments and amusements as objects on which the tax is to be imposed  
The entry a we have said contemplates a law with respect to the matters regarded as objects and law which imposes tax on the act of entertaining is within the entry whether it falls on the giver or the receiver of that entertainment p69 In that case the Cantonment Board had imposed entertainment tax of Rs 10 per show on the cinema houses of the appellant in the said appeal and Rs 5 per show on others
Upholding the said imposition this Court has held It is a tax imposed on every show that is to say on every instance of the exercise of a particular trade calling or employment
If there is no show there is no tax 
The impugned tax is a tax on the entertainment resulting in a show
p 69 70 Similarly in Y V Srinivasamurthy vs State of Mysore supra upholding the provisions of the Mysore Cinematograph Shows Act 1951 enacted under the Constitution which authorised levy of tax on conematograph shows at rates prescribed in a rising scale according to the seating accommodation and the cities where the cinematograph show was held this Court following the decision in Western India Theatres case supra held that the said Act was validly enacted in exercise of the legislative power conferred by entry 62 of List II
In the instant case we find that prior to the enactment of Act 24 of 1984 Section 4 provided for levy of entertainment tax on the basis of each payment for admission to the cinema theatre and under Section 4 C in respect of entertainments held within the jurisdiction of a local authority whose population did not exceed 25000 the tax was levied on the basis of the prescribed percentage of the gross collection capacity per show
In other words 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 gross 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 nature of the local area where it was situated
Under section 5 an option was given to pay a tax on the basis of the 634 prescribed percentage fixed for a fixed number of shows in a week irrespective of the number of shows actually held
It is not disputed that the tax as it was being levied prior to January 1 1984 ie before the amendment of Section 4 by Act 24 of 1984 was a tax on entertainment falling within the ambit of entry 62 of List 11
The question is 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 be a tax on entertainments and falls beyond the field of legislative competence conferred on the State Legislature by Entry 62 of List 11
In our view the said question must be 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 theatre 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 for 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 in our opinion alter the nature of the tax or the subject matter of the tax which continues to be a tax on entertainment
The mode of levy based on per payment for admission  prescribed 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 cinematheatre 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 41 and substituted by Act 24 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 return submitted by the proprietor containing the number of persons admitted to each show and the amount of tax collected
Prior to the enactment of Act 24 of 1984 tax was leviable on the basis of either of the two modes under Section 41 and4 C
On an examination of the rates prescribed under both the modes the High Court 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 Section 4 and 5 as amended by Act 24 of 1984 the High Court has observed that the said rates 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
635 It has been urged that since both the modes of levy of tax were prevalent prior to the enactment of Act 24 of 1984 an option should have been given to the proprietor of a cinema theatre to choose between either of the two modes and that under the impugned provisions the choice is confined to two modes of assessment under the same system of consolidated levy based on the gross collection capacity per show one on the basis on the gross collection capacity per show under Section 41 and other on the basis of gross collection capacity per show for a prescribed number of shows per week under section 5
We find no substance in this contention
Once it is held that tax on entertainment could be levied by either of the two modes viz per payment 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 be available to the proprietor of the cinema theatre in this regard
The legislature does not transgress the limits of its legislative power conferred on it under Entry 02 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
We are therefore unable to accept the contention urged on behalf of the appellants that the impugned provisions contained in Section 4 and 5 as amended by Act 24 of 1984 are ultra vires the legislative power conferred on the State Legislature under Entry 62 of List II
The challenge to the impugned provisions on the basis of Article 14 is grounded on the principle that discrimination would result if unequals are treated equally are reliance is placed on the decision of this Court in K T Moopil Nair vs The State of Kerala  Anr  It has been urged that under section 4 as substituted by Act 24 of 1984 a uniform rate has been prescribed for cinema theatres of a particular class situate in different parts of the same local area although the average rate of occupancy in the cinema theatres located in different parts of the same local area is not the same and a cinema theatre which is located in the central part of the local area would have better rate of occupancy as compared to a theatre located in a remote part and further that the occupancy in the theatre depends on various of the factors which have not been taken into account
We find it difficult to accept the contention
Article 14 enjoins the State not to deny to any person equality before the law or the equal protection of the laws
The phrase equality before the law contains the declaration of equality of the civil rights of all persons within the territories of India
It is a basic principle of republicanism
The phrase equal protection of laws is adopted from the Fourteenth Amendment to US Constitution
The right 636 conferred by Article 14 postulates that all persons similarly circumstanced shall be 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 i it is founded on an intelligible differentia which distinguishes those that are grouped together from others and ii the differentia 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 palpably arbitrary
See Re Special Courts Bill at pp
534 5361
It there is equality and uniformity within each group the law will not be condemned as discriminative thou oh due to some fortuitous circumstance arising out of a peculiar situation some included in a class get and advantage over others so long as they are not singled out for special treatment
See Khandige Sham Bhat vs Agricultural Income Tax Officer  at p 8 171 Since in the present case we are dealing with a taxation measure it is necessary to point out that in the field of taxation the decisions of this Court have permitted the legislature to exercise an extremely wide direcretion in classifying items for tax purposes so long as it refrains from clear and hostile discrimination against particular persons or classes
See East India Tobacco Co vs State of AP 19631 1 SCR 404 at p 411 PM Ashwathanarayanan Shetty vs State of karnataka 1988 Supp
3 SCR 155 at p 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 and Gannon Dunkerley and Co vs State of Rajasthan  at p 3971
Reference in this context may also be made to the decision of the US Supreme Court in San Antonio Independent School District vs Bodrigues 41 at p 41 wherein Justice Stewart speaking for the majority has observed No scheme of taxation whether the tax is imposed on property income or purchases 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 Protection Clause
 637 Just a difference in treatment of persons similarly situate leads of 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 be condemned as discriminatory if there is absence of rational relation to the object intended to be achieved by the law
In K T Moopil Nair vs State of Kerala supra this Court was dealing with a law providing for imposition of uniform land tax at a flat rate without having regard to the quality of the land or its productive capacity
The law was held to be violative of Article 14 of the constitution of the ground that lack of classification had created inequality
The said decision in K T Moopil Nair s case supra has been explained by this Court is Jalan Trading Co Pvt Ltd vs Mill Mazdoor Union   in the context of challenge to the validity of section 10 of the providing for payment of a minimum bonus of 4 by all industrial establishments irrespective of the fact whether they were making profit
This Court held that the judgment in Moopil Nair s case supra has not enunciated any broad proposition that when persons or objects which are unequals are treated in the same manner and are subjected to the same burden or liability discrimination inevitably results
It was observed  It was not said by the Court in that case that imposition of uniform liability upon persons objects or transactions which are unequal must of necessity lead to discrimination
Ordinarily it may be predicated of unproductive agricultural land that it is incapable of being put to profitable agricultural use at any time
But that cannot be so predicated of an industrial establishment which has suffered loss in the accounting year or even over several years successively
Such an establishment may suffer loss in one year and make profit in another  p35 It was further observed Equal treatment of unequal objects transactions or persons is not liable to be struck down as discriminatory unless there is simulta 638 neously absence of a rational relation to the object intended to be achieved by the law p36 The limitations of the application of the principle that discrimination would result if unequals are treated as equal in the field of taxation have been pointed out by this Court in Twyford Tea Co Ltd  Anr
vs The State of Kerala  Anr 1970 3SCR 383 wherein tax at a uniform rate was imposed on plantations
Hidayatullah CJ speaking for the majority while upholding the tax has observed It may also be conceded that the uniform tax falls more heavily on some plantations than on others because the profits ire widely discrepant
But does that involve a discrimination  If the answer be in the affirmative hardly any tax direct or indirect would escape the same ensure for taxes touch purses of different lengths and the very uniformity of the tax and its equal treatment would become its undoing
The rich and the poor pay the same taxes irrespective of their incomes in many instances such as the sales tax and the profession tax etc pp
389 390 It was further observed  The burden is on a person complaining of discrimination
The burden is proving not possible inequality  but hostile unequal  treatment
This is more so when uniform taxes are levied
It is not proved to us how the different plantations can be said to be hostilely or unequally treated
A uniform wheel tax on cars does not take into account the value of the car the mileage it runs or in the case of taxis the profits it makes and the miles per gallon it delivers
An ambassador taxi and a fiat tasi give different out turns in terms of money and mileage
Cinemas pay the same show fee
We do not take a doctrinaire view of equality p393 94 In the instant case we find that the legislature has prescribed different rates of tax by classifying theatres into different classes namely air conditioned air cooled ordinary other than air conditioned and air cooled permanent and semipermanent and touring and temporary
The theatres 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 circum 639 stances for the purpose of imposition of tax
The grievance of the appellants is that the classification is not perfect
What they want is that there should have been further classification amongst the theatres falling in the same class on the basis of the location of the theatre is each local area
We do not think that such a contention is well founded
In relation to cinema theatres it can be said that the attendance in the various cinema theatres within a local area would not be uniform and would depend on factors which may very from time to time
But this does not mean that cinema theatres in a particular category of local area will always be at a disadvantage so as to be prejudicely affected by a uniform rate as compared to cinema theatres having a better location in the local area
It is therefore not possible to accept the contention that the impugned provisions are violative of right to equality guaranteed under Article 14 of the Constitution on the basis that unequals are being treated equally
Another contention that has been urged on behalf of the appellants is that while provision was made under sub section 6 of section 5 for enhancement of the amount of tax in the event of increase in the amount of gross collection capacity there was no corresponding provision for reduction for the amount of tax in the event of reduction in the gross collection capacity
The said provision for enhancement contained in sub section 6 of section 5 relates to the cases where 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
In any event the said grievance has how been removed by the introduction of sub section 6 A in section 5 by amendments introduced in the Act by AP Act 23 of 1988 and AP Act 16 of 199 1
In the result we find no merit in these appeals and the special leave petition and they are accordingly dismissed
The parties are however left to bear their own costs
VPR Appeals dismissed


Summary:
Notification under section 4 for acquisition of 89 Acres 4 Kanals and 12 Marlas of land in a village in Punjab published on January 27 1978
Appellants claimed compensation Rs 30000 per Bigha ie Rs 1500 per Biswa on the ground that 15 Biswas of land situated near the acquired land had been sold on July 121977 for Rs 24000 which works out to Rs 1600 per Biswa
Land Acquisition Collector classified the acquired land In 6 blocks and awarded Market Value ranging between Rs 30000 to Rs 6000 per acre
In reference under Section 18 the District Judge disagreed with classification
The learned Judge relying on sale deeds dated September 41972 June 14 1976 February 23 1977 and July 15 1977 all for small extents awarded compensation  Rs 800 for the rest of land besides solatium and interest
Appeals filed in the High Court by State of Punjab and by one batch of claimants
Another batch of claimants filed cross objections
The learned Single Judge allowed appeals filed by the State and dismissed appeals and cross objections of the claimants
Market Value was determined on working out average price on the basis of sale deeds dated September 41972 and June 14 1976 filed by claimants and mutation entries dated August 31 1977 and October 41977 filed by the State
Belting was carved at depth of 100 Ft
from main road and deduction of 13rd was made towards development charges
Consequently market value determined  Rs 750 per Biswa for land abutting main road and  Rs 500 per Biswa for the rest of land
Judgment and order of the learned Single Judge was confirmed by Division Bench
Claimants by special leave petition filed appeals for higher compensation
This court determined market value at Rs 1000 per Biswa and allowing the appeals to that extent HELD It is settled law that to determine market value of the land the sales of land under requisition if any or the sales in the neighborhood lands 646 that possessed of same or similar features or fertility or other advantageous features would furnish basis to fix just and fair market value
649 E The price for which the willing vender would offer the land and willing vendee would agree to purchase it as a prudent man in normal market conditions as on date of notification or near about the date is acid test to fix market value
Sales and purchases of land at throw away price at arms length or depressed sales or facade of sales made in quick succession to inflate market value do not offer any basis to determine just Market Value
649 F In order to adjudge whether sales are bonafide whether consideration mentioned in the deed was infect and really passed whether the lands covered by sale deeds and relied on possessed of same or similar potentialities or fertilities or advantageous features would be brought out on record only by examination of the vendor or the vendee or if neither of them is available the attesting witness who has personal knowledge of the bargain and passing of consideration
Hence it is mandatory
650 A Periyar  Pareekanni Rubbers Ltd vs State of Kerala Sale deeds of small extents being retail price do not offer comparable basis to fix compensation when large block is acquired
If sale transactions relate to the lands under acquisition and if found to be genuine and bonafide transactions then it may be considered but reasonable margin must be given in fixing wholesale price
650 E Collector of Lakhimpur vs Bhuban Chandra Dutta AIR 1971 SC 2015 Mirza Nausherwoan Khan  Another vs Collector Land Acquisition Hyderabad   Ram Rattan  Others vs State of Uttar Pradesh  Smt
Kaushalya Devi Bogra  Others vs Land Acquisition Officer Aurangabad Others   Administrator General of West Bengal vs Collector Varanasi  and Special Tehsildar Land Acquisition vs A Mangal Gowri Court in the first instance has to determine as to which of the sale deeds are relevant proximate in point of time and offer comparable base to 647 determine market value
The after average price has to be worked out and the contention that highest value should be fixed cannot he accepted
651 D State of Madras vs AM Ranjan  Another   Collector of Lakhimpur vs Bhuban Chandra Dutta AIR 1971 SC 2015 Sint
Kaushalva Devi Bogra  Others vs Land Acquisition Officer Aurangabad  Another  and Administrator General of West Bangal vs Collector Varanasi  The Principle of belting is perfectly legal and unexceptionable as the lands abutting the main road up to a specified depth depending on factual material on record would fetch higher market value than lands situated in interior area
652 A If the acquired land is undeveloped deduction of at least 1 3rd is necessary towards development charges
652 F Brig
Sahib Singh Kalha  Others vs Amritsar Improvement Trust  Others  Administrator General of West Bengal vs Collector Varanasi   Special Tehsildar Land Acquisition vs A Mangal Gowri  and Bhagwathula Swamnanna  Others vs Special Tehsildar Land Acquisition Visakhapatnam