Judgment Case ID: 1268

Judgment:
minal Appeal No. 146 of 1959. Appeal by special leave from the judgment and order dated January 5	 1959	 of the Punjab High Court in Criminal Appeal No. 238 of 1958. J. N. Kaushal and Naunit Lal	 for the appellant. B. K. Khanna	 R. H. Dhebar and D. Gupta	 for respondent. April 26. The Judgment of the Court was delivered by RAGHUBAR DAYAL	 J. This appeal	 by special leave	 is against the judgment of the Punjab High Court dismissing the appellant 's appeal and confirming his conviction under section 302 and section 307 read with section 149	 Indian Penal Code. The case for the prosecution was that the appellant and twelve other persons who were tried with him	 had	 on account of a dispute about the possession of a plot of land	 assaulted Darshan	 deceased	 and his companions	 when they were returning from their fields and that Darshan Singh and his companions also struck the appellant 's party in self defence. In the incident	 Darshan and Nand Lal received injuries on the one side while Daya Ram	 Hamela and Kartar Singh the appellant	 received injuries on the appellant 's side. Darshan Singh died on account of the injuries received. Daya Ram stated that when be	 Kartar Singh	 Hamela and a few other persons were going near about their field	 Darshan	 Nand Lal and others	 who happened to be sitting on a well	 challenged them and Nand Lal remarked that he would not let him (Daya Ram) escape. At this fight ensued between both the parties in which injuries were inflicted on each	 other. Daya Ram said that he did not know who speared Darshan	 deceased. 397 Kartar Singh stated that a member of Nand Lal 's party caused a spear blow in his abdomen and that he then ran away. He states that he did not cause any injury to anybody. Hamela stated that Darshan and others assaulted his party when they were going to plough the land in dispute and that they caused them	 injuries in selfdefence. The learned Sessions Judge	 after noting the allegations of the parties and the admitted facts about the dispute with respect to the plot of land	 said: "It is also not denied that the parties in this case instead of taking resort to law wanted to force the issue by the force of arms and for that purpose both the parties collected number of persons from Seel and other villages who were armed with deadly weapons such as spears	 gandasis and sticks and in order to decide the issue had a pitched fight which was pre concerted. The Public Prosecutor therefore maintained that under these circumstances the question of right of self defence to any party does not arise. " The learned Sessions Judge also said: "This proposition of law has not been challenged by the defence. As observed above	 in this case	 both the parties	 in order to assert their rights	 had a free fight which was pre concerted with the set purpose of forcing the issue mentioned above. " He further said: "The only point therefore which requires determination in this case is whether all or only some of the accused did participate in this assault	 and came to the conclusion that three accused, viz., Daya Ram, Hamela and Kartar Singh, who had admitted their presence in the incident and had received injuries, were proved to have taken part in that free fight, and that the participation of the other ten accused in the case was not established beyond doubt. He, however, said: Although I feel that Daya Ram	 Hamela and Kartara accused were accompanied by at least 9 or 51 398 10 persons	 but it is difficult to say who those 9 or 10 persons were." He therefore acquitted those ten persons giving them the benefit of doubt. The three convicted persons preferred an appeal to the High Court. Two questions were urged at the hearing. One was that when there was no evidence that there were more than five persons in the fight on the side of the appellants	 the learned Sessions Judge could not	 in law	 record a conviction under section 302 read with section 149	 he having acquitted the other ten persons specifically named by the P. Ws.	 as being the companions of the appellants. The other point was that the other party was the aggressor. The High Court	 on the first point	 said. : "The circumstances of this case leave no manner of doubt in our mind that there were a large number of persons on the side of the appellants and this number must have exceeded five	 and was more or less near the number of persons who were actually accused in the case. " On the second point	 it said: "We have no manner of doubt in our mind that there is no question of right of private defence and it is a clear case of a free fight between both the parties. It would not therefore be of any importance as to who gave the first lalkara and who started the fight. " It further held that the appellant 's party formed an unlawful assembly and its common object was to cause injuries to the opposite side which could result in the ordinary course of nature in death and	 consequently	 the conviction of the three appellants	 whose participation could not be doubted	 under sections 302 and 307 read with section 149	 Indian Penal Code	 was well based and must be upheld. Two points have been urged in this Court: (i) When ten out of the thirteen persons charged with the offence have been acquitted	 the remaining three persons cannot constitute an unlawful assembly; (ii) in a case of free fight	 each participant is liable for his own 399 individual act and as the appellant is not proved to have actually caused any injury to Darshan or Nand Lal	 he could not be convicted of the offences under sections 302 and 307. If the Courts below could legally find that the actual number of members in the appellant 's party were more than five	 the appellant 's party will constitute an unlawful assembly even when only three persons have been convicted. It is only when the number of the alleged assailants is definite and all of them are named	 and the number of persons found to be proved to have taken part in the incident is less than five	 that it cannot be held that the assailants ' party must have consisted of five or more persons. The acquittal of the remaining named persons must mean that they were not in the incident. The fact that they were named	 excludes the possibility of other persons to be in the appellant 's party and especially when there be no occasion to think that the witnesses naming all the accused could have committed mistakes in recognizing them. This is clear from the observations in Dalip Singh vs State of Punjab (1) of this Court: "Now mistaken identity has never been suggest ed. The accused are ail men of the same village and the eye witnesses know them by name. The murder took place in daylight and within a few feet of the two eye witnesses. " The same cannot be said in this case. The witnesses are from village Seel. A good number of the accused are from other villages. Only Nand Lal and Chetan Singh	 P. Ws. 22 and 23	 named all the thirteen accused. The other prosecution witnesses	 viz.	 Prem Singh	 P.W. 15	 Puran	 P. W. 16	 Jethu	 P. W. 17 and Norata	 P. W. 18	 did not name all the thirteen accused. None of them named more than seven accused and all of them said that there were thirteen persons in the appellant 's party. In this state of evidence	 it is not possible to say that the Courts below could not have come to the conclusion that there were more than five persons in the appellant 's party. (1) [1954].C.R. 145	150. 400 It follows therefore that the finding of the Courts below that the appellant 's party formed an unlawful assembly and that the appellant is constructively liable for the offences under section 302 and section 307	 Indian Penal Code	 in view of section 149	 is correct. The second contention that in a free fight each is liable for an individual act cannot be accepted in view of the decision of this Court in Gore Lal vs State of U. P. (1). This Court said in that case "In any event	 on the finding of the Court of first instance and of the High Court that both the parties had prepared themselves for a free fight and had armed themselves for that purpose	 the question as to who attacks and who defends is wholly immaterial	 and confirmed the conviction under section 307 read with section 149, Indian Penal Code. It may, however, be noted that it does not appear to have been urged in that case that each appellant could be convicted for the individual act committed by him. When it is held that the appellant 's party was prepared for a fight and to have had no right of private defence, it must follow that their intention to fight and cause injuries to the other party amounted to their having a common object to commit an offence and therefore constituted them into an unlawful assembly. The injuries they caused to the other party are caused in furtherance of their common object. There is then no good reason why they be not held liable, constructively, for the acts of the other persons of the unlawful assembly in circumstances which makes section 149, Indian Penal Code, applicable to them. Even if the finding that there were more than five persons in the appellant 's party be wrong, we are of opinion that the facts found that the appellant and his companions who were convicted had gone from the village armed and determined to fight, amply justified the conclusion that they had the common intention to attack the other party and to cause such injuries which may result in death. Darshan had two incised wounds and one punctured wound. Nand Lal (1) Criminal Appeal No. 29 of 1950, decided on December 15, 1960. 401 had two incised wounds and one punctured wound and two abrasions. The mere fact that Kartar Singh was not connected with the dispute about the plot of land is not sufficient to hold that he could not have formed a common intention with the others, when he went with them armed. The conviction under section 302 and section 307 read with section 149 can be converted into one under section 302 and section 307 read with section 34, Indian Penal Code. We therefore see no force in this appeal and accordingly dismiss it. Appeal dismissed. 
6261	ition No. 1395 of 1987. (Under Article 32 of the Constitution of India). N.A. Palkhiwala, T.R. Andhyarujina, Soli J. Sorabjee, R. Dada, section Ganesh, J.R. Gagrat, R.B. Aggarwala, P.G. Gokhale, V.B. Aggarwala, R.J. Gagrat, R.B. Hathikhanawala, R.F. Nariman, P.H. Parekh, Sanjay Bhartari, M.K. Menon, R.K. 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, S.K. Dholakia, P.S. Poti, G.A. Shah, V. Jaganatha Rao, K. Sudhakaran, Ms. A. Subha shini, B.B. Ahuja, H.K. Puri, A Subba Rao, A.S.Bhasme, K.R. Nambiar, M.N. Shroff, M. Veerappa, R. Mohan, R. Ayyamperumal and J.P. 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 19(1)(g). 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 1	000 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 21.8.1987. It became an Act on 14.9.1987. It extends to the whole of India except the State of Jammu and Kashmir. The requisite notification under Section 1(3) of the Act was issued on 14.10.1987 appointing 1.11.1987 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. 2(1) "assessee" means a person responsible for collecting the expenditure tax payable under the provisions of this Act. 2(6) "Hotel" includes a building or part of a building where residential accommodation is	 by way of business	 provided for a monetary consideration. 2(10) "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 Rs.400 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 6(1) 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: 2(43B) 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 8(1) provides that every "person responsible for collecting" the tax as defined in Section 2(8) 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 Rs.400 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 Rs.400 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 Rs.400 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 19(1)(g). 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 19(1)(g) 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	 i.e.	 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] L.R. 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 H.S. 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 i.e.	 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	 P.C. 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." (p.1 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 (p.115) 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 (q.v.) 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 J.A. Kay M.A. 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 H.S. 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 M/s. 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 Rs.400 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 Rs.400 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 5(d) 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 and/or 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 Rs.4 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 G.K. Krishnan vs Tamil Nadu	 [1975] 2 SCR 715 Mathew J. referred to the following observations of the Supreme Court of U.S.A. 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 I.T.O. 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 Rs.400 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 M/s 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 19(1)(g). 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 19(1)(g). 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 19(1)(g). Fazal Ali J.	 though in a different con text	 in Sonia Bhatia vs State of U.P. & 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. (C.A. 338	339/1981; W.P. 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 162/82) (c) Karnataka Tax on Luxuries (Hotels and Lodging Houses) Act (No. 22 of) 1979. (WP 1271 2/82) (d) West Bengal Entertainments and Luxuries (Hotels and Restaurants) Tax Act (No. 21 of) 1972. (WP 5321/85) 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 246(3) 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 w.e.f. 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 U.K.) 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 E.T.O.	 ; 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 246(1) 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 D.H. Nazareth etc.; 	 and Union of India vs H.S. 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 248(2) 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. A.H.P. 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 C.P. & 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 G.G. 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. N.P.V. Petitions dismissed.

Summary:
The appellant was tried along with two others under sections 302 and 307 read with section 149 of the Indian Penal Code. The prosecution case against them was that they along with ten others had taken part in a free fight resulting in the death of one belonging to the other side. The Sessions judge held that the accused were accompanied by nine or ten others but that it was not proved who they were. He	 therefore	 gave them the benefit of the doubt and acquitted them. The High Court on appeal affirmed that decision. It was urged on behalf of the appellant in this Court that (1) the offence of unlawful assembly had not been made out and (2) that in a free fight each participant is liable for his own act and the conviction of the appellant	 who had caused no injury to the deceased	 was untenable under sections 302 and 307 of the Indian Penal Code. Held	 that the contentions must fail. It is only when the number of the alleged assailants is definite and all of them are named and the number of persons proved to have taken part in the incident is less than five that it can be said that there was no unlawful assembly. The acquittal of the remaining named persons must mean that they were not in the incident. The fact that they were named	 excludes the possibility of other persons to be in the appellant 's party and especially when there can be no occasion to think that the witnesses naming all the accused could have committed mistakes in recognising them. Since this was not the position in the instant case	 it could not be said that the courts below were wrong in holding that there was unlawful assembly. Dalip Singh vs State of Punjab	 ; 	 referred to. It is not correct to say that in a premeditated free fight each is liable for his individual act. Where the accused party prepare for a free fight and can	 therefore	 have no right of private defence	 their intention to fight and cause injuries to the other party amounts to a common object so as to constitute unlawful assembly. Gore Lal vs State of U. P.	 Cr. A. No. 129 of 1959 dated 15 12 1960	 referred to. 396 Even assuming that in the instant case the finding that there were more than five persons in the appeLlant 's party was wrong	 the conviction of the appellant would be maintainable under section 302 and section 307 read with section 34 of the Indian Penal Code.