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Issues Involved:
1. Legality of the entertainment duty imposed on video game parlours under the Bombay Entertainment Duty Act, 1923 as amended by Act No.7 of 1987. 2. Whether the tax is imposed on the act of entertainment or on the machine itself. 3. Whether the provisions of the Act are discriminatory and violative of Article 14 of the Constitution of India. Detailed Analysis: 1. Legality of the Entertainment Duty: The petitioners, proprietors of video game parlours, challenged the provisions of the Bombay Entertainment Duty Act, 1923 as amended by Act No.7 of 1987, arguing that the duty imposed is on the machine itself, which is beyond the legislative competence and not covered by Entry No.62 of List II of the Seventh Schedule. They contended that the tax should be on the act of entertainment and not on the equipment. The respondents argued that the video game or video show is exigible to tax under Section 3 of the Act, relying on the Supreme Court decision in M/s. Geeta Enterprises v. State of Uttar Pradesh, which held that video games fall within the purview of the word "entertainment" as envisaged in sub-sec. (3) of Section 2 of the Act. 2. Tax on Act of Entertainment vs. Machine: The petitioners argued that the tax levied is hypothetical and notional, as it is imposed on the machine regardless of its use, which makes it a tax on the machine itself rather than on the act of entertainment. They relied on the Supreme Court decision in Western India Theatres Ltd. v. Cantonment Board Poona, which stated that a tax should be imposed on every instance of the exercise of the particular trade, calling, or employment. The respondents countered that the tax is based on the entertainment received by the patrons and that a lump sum duty is the only feasible method. The court found that the tax is in substance on the act of entertainment, as the machine is merely a criterion for calculation. The provisions of Section 4C of the Act, which allows for remission or refund if the machine remains inoperative, further support this view. 3. Discrimination and Article 14: The petitioners contended that the provisions are discriminatory as they treat unequals equally, violating Article 14 of the Constitution. The respondents argued that the classification is area-wise and rational, as video game parlours in Bombay make more profits due to higher patronage. The court held that the classification is reasonable and not violative of Article 14, citing the Supreme Court's observation in State of Maharashtra v. Madhukar Balkrishna Badiya, which emphasized that tax laws must respond to local needs and courts should be aware of their limited familiarity with these needs. The court noted that the classification is based on the average takings of video game parlours and is thus justified. Conclusion: The court concluded that the lump sum entertainment duty imposed on video game parlours is legal and within the legislative competence. The tax is on the act of entertainment rather than on the machine itself, and the classification made under the Act is reasonable and not discriminatory. Consequently, the writ petitions were dismissed, and the rule was discharged with no order as to costs.
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