1988 (6) TMI 319 - HC - VAT and Sales Tax

Summary

Issues Involved: Constitutionality of Section 4B of the Karnataka Entertainments Tax Act, 1958; Violation of Articles 14 and 19(1)(g) of the Constitution of India.

Issue-wise Detailed Analysis:

1. Constitutionality of Section 4B of the Karnataka Entertainments Tax Act, 1958:

The petitioners, licensees conducting video shows, challenged the provision under Section 4B of the Karnataka Entertainments Tax Act, 1958, which imposed a fixed monthly tax of Rs. 2,500 on video shows. They argued that this levy did not align with the scheme of the Act, which traditionally collected entertainment tax based on each admission or per show. The court noted that Section 4B was a special provision introduced to levy tax on video shows, distinct from the general provisions applicable to other types of entertainment. The court found that the lump sum tax under Section 4B did not fit into the scheme of the Act, which levied tax either on each admission or on each show. The court concluded that Section 4B imposed a tax de hors the charging section, making it a colorable piece of legislation.

2. Violation of Articles 14 and 19(1)(g) of the Constitution:

The petitioners contended that the fixed tax rate under Section 4B was arbitrary and violated Articles 14 and 19(1)(g) of the Constitution. They argued that the lump sum levy, irrespective of seating capacity, population, admission rates, and the number of shows, lacked a rational nexus to the object of the Act. The court referenced several Supreme Court decisions, including K.T. Moopil Nair v. State of Kerala and State of Andhra Pradesh v. Nalla Raja Reddy, which struck down similar arbitrary tax provisions. The court found that Section 4B conferred unguided power on the State Legislature to impose any ad hoc sum, making it arbitrary and unreasonable. The absence of provisions for appeal, reduction, or waiver of the tax further rendered Section 4B unconstitutional. The court concluded that the fixed tax rate under Section 4B was arbitrary, unscientific, and did not align with the scheme of the Act, thus violating Article 14.

Judgment:

The court declared Section 4B of the Karnataka Entertainments Tax Act, 1958, unconstitutional, allowing the writ petitions. The State Government was given three months to implement this ruling.