1984 (6) TMI 15 - HC - Income Tax

Summary

Issues Involved:
1. Whether the notification dated March 31, 1984, violates constitutional safeguards under Article 14.
2. The validity of the classification made by the State Government regarding entertainment tax exemptions.
3. The legality of the notification and memorandum issued by the State Government under Section 8 of the Bengal Amusement Tax Act, 1922.

Issue-wise Detailed Analysis:

1. Violation of Constitutional Safeguards under Article 14:
The principal question in the appeal and the writ petition was whether the notification dated March 31, 1984, violated the constitutional safeguards under Article 14 of the Constitution. The learned counsel for the writ petitioner argued that the notification was discriminatory and treated equals unequally. The classification by the State Government was deemed unwarranted and unauthorized, making the consequent issuance of the memorandum by the Commercial Tax Officer bad in law. The court reiterated that classification must not be arbitrary but rational, based on intelligible differentia with a reasonable relation to the object of the legislation. It was found that the classification did not satisfy the twin tests required under Article 14, thus contravening constitutional safeguards.

2. Validity of Classification for Entertainment Tax Exemptions:
The State Government's classification between group theatres, amateur theatres, amateur jatras, and professional theatres was challenged. The notification under challenge provided that no entertainment tax shall be charged for performances organized by group theatres, amateur theatres, or amateur jatras, subject to certification. The court noted that dramatic performances, whether by group theatres or professional theatres, aim at social reformation and have social values. The classification based on monetary gain and engagement of artists on a regular or contractual basis was deemed arbitrary and without a rational relationship to the object of the Act. The court held that the classification did not meet the requirements of reasonable classification under Article 14.

3. Legality of the Notification and Memorandum under Section 8:
The notification dated March 31, 1984, rescinded previous orders exempting payment of entertainment tax on performances other than cinematographic exhibitions. The court examined the provisions of the Bengal Amusement Tax Act, 1922, and its amendments. It was found that the power to grant exemptions under Section 8 was circumscribed by the requirement that the entertainment be for social, educational, or scientific purposes. The court concluded that the introduction of clauses from the old Section 8 for classification purposes was contrary to recognized principles of law. The notification and the memorandum dated April 7, 1984, were set aside and quashed as they were found to be ultra vires and unenforceable.

Conclusion:
The court declared the notification dated March 31, 1984, to be ultra vires and restrained the appellant from enforcing it. The notification and the memorandum were set aside and quashed, and the appellants were directed to refund the collected tax to the writ petitioners within four weeks. The appeal failed, and the rule issued by the learned trial judge was made absolute, with no order as to costs. The prayer for stay was rejected.