1984 (2) TMI 53 - HC - Income Tax

Summary

Issues Involved:
1. Constitutional validity of the West Bengal Entertainment-cum-Amusements Tax Act, 1982.
2. Legislative competence of the State Legislature under Entry 62 of List II of the Seventh Schedule to the Constitution.
3. Violation of Article 301 of the Constitution regarding freedom of trade, commerce, and intercourse.

Detailed Analysis:

1. Constitutional Validity of the Act:
The primary issue was the constitutional validity of the West Bengal Entertainment-cum-Amusements Tax Act, 1982, which levied a tax on television set holders. The Act aimed to raise additional resources for the State, with the charging provision being Section 4, which levied an annual tax of fifty rupees per television set. Section 6(1) exempted certain government bodies and educational institutions from the tax, while Section 6(5) provided for exemptions if the television set was not in use.

2. Legislative Competence under Entry 62 of List II:
The petitioner argued that the Act did not fall under Entry 62 of List II, which pertains to taxes on luxuries, including entertainment and amusements. The contentions were:
- The Act did not relate to entertainment or amusement, thus falling outside Entry 62.
- Television programs, primarily comprising news and views, could not be classified as entertainment.
- The Act was essentially a tax on communication, falling under Entry 31 of List I, beyond the State's taxing power.
- Television, being a public utility service, was not a luxury item and thus could not be taxed as such.

The State contended that the Act was valid under Entry 62, arguing that television could be considered a luxury and that the omission of the word "luxury" from the Act's title was irrelevant. The State also argued that the Act did not impede the free transmission of television programs, thus not violating Article 301.

3. Violation of Article 301:
The court focused on whether the Act violated Article 301 of the Constitution, which guarantees freedom of trade, commerce, and intercourse throughout India. The term "intercourse" was interpreted to include non-commercial communication, such as television broadcasts. The court referred to U.S. Supreme Court cases and legal commentaries to support this interpretation.

The court held that television broadcasts, being a form of intercourse, were protected under Article 301. The Act imposed a tax on the use of television sets, effectively taxing the programs broadcasted. This was seen as a restriction on the freedom of intercourse guaranteed by Article 301.

The court further examined whether the Act could be justified under Article 304(b), which allows States to impose reasonable restrictions in the public interest with the President's prior sanction. The Act did not receive such sanction, nor did it serve a public interest that would justify the restriction, such as promoting the television industry or providing educational benefits.

Conclusion:
The court concluded that the Act violated Article 301 and could not be justified under Article 304(b). Consequently, the Act was declared ultra vires and void. The court did not address other points raised in the challenge, as the decision on Article 301 was sufficient to invalidate the Act. The authorities were directed to refund any tax paid under the Act.

Judgment:
The rule was made absolute, and the West Bengal Entertainment-cum-Amusements Tax Act, 1982, was declared unconstitutional and void. There was no order as to costs, and the authorities were directed to refund any taxes paid under the Act.