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TMI Blog2007 (5) TMI 325X X X X Extracts X X X X X X X X Extracts X X X X ..... Kr. Singh, Rahul Shukla, A. Sanand, T.V. George, Mrs. Sandhya Goswami and V.K. Verma, Advocates, with them) for the respondents. -------------------------------------------------- The judgment of the court was delivered by S.B. Sinha J. The constitutionality of a notification issued by the Government of the Andhra Pradesh levying different rates of entertainment tax is in question in this writ petition filed by the petitioner herein under article 32 of the Constitution of India. The petitioner herein carries on its business as a distributor of motion film at Hyderabad. The field of his activity is said to be distribution of Hindi films in the State of Andhra Pradesh. The State of Andhra Pradesh made an Act known as "the Andhra Pradesh Entertainments Tax Act, 1939". The said Act was enacted in terms of entry No. 62 of List II of the Seventh Schedule to the Constitution of India which reads as under: "62. Taxes on luxuries including taxes on entertainments, amusements, betting and gambling." It is not in dispute that the rate of tax in respect of Telugu film was fixed at 10 per cent and that of non-Telugu film has been fixed at 24 per cent. Representations ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ainable. The State undoubtedly enjoys a greater latitude in the matter of a taxing statute. It may impose a tax on a class of people, whereas it may not do so in respect of the other class. A taxing statute, however, as is well known, is not beyond the pale of challenge under article 14 of the Constitution of India. In Chhotabhai Jethabhai Patel v. Union of India AIR 1962 SC 1006, it was stated: "(37) But it does not follow that every other article of Part III is inapplicable to tax laws. Leaving aside article 31(2) that the provisions of a tax law within legislative competence could be impugned as offending article 14 is exemplified by such decisions of this court as Suraj Mal Mohta and Co.v.A.V. Visvanatha Sastri [1955] 1 SCR 448; AIR 1954 SC 545 See [1954] 26 ITR 1 (SC)., and Shree Meenakshi Mills Ltd., Madurai v.A.V. Visvanatha Sastri [1955] 1 SCR 787; AIR 1955 SC 13 See 91954] 26 ITR 713 (SC). In Moopil Nair v. State of Kerala AIR 1961 SC 552, the Kerala Land Tax Act was struck down as unconstitutional as violating the freedom guaranteed by article 14. It also goes without saying that if the imposition of the tax was discriminatory as contrary to article 15, the levy w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hrined under articles 19, 21 as also the Preamble of the Constitution of India. In that behalf, it is important to read the object of a taxation statute on the touchstone of social values as mentioned in the Constitution. An adverse conclusion can be drawn if a particular statute goes against such values. It is one thing to say that the taxation statute does not further social good, but quite another when it disturbs the social fabric. The court may take adverse note in respect to statutes falling in the latter category. We herein note two cases where an attempt has been made to raise this discussion to the pedestal of directive principles. In Sri Srinivasa Theatre v. Government of Tamil Nadu [1992] 2 SCC 643 See [1993] 89 STC 201 (SC)., this court held: "Article 14 of the Constitution enjoins upon the State not to deny to any person 'equality before law' or 'the equal protection of laws' within the territory of India. The two expressions do not mean the same thing even if there may be much in common . . . Equality before law is a dynamic concept having many facets. One facet the most commonly acknowledged is that there shall be no privileged person or class and that none sha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... law' or 'the equal protection of laws' as something that is inherent in the very power of taxation and it has been accepted in this country as well. In the context of our Constitution, however, there is an added obligation upon the State to employ the power of taxation nay, all its powers to achieve the goal adumbrated in article 38." (emphasis supplied) In Elel Hotels and Investments Ltd.v. Union of India [1989] 3 SCC 698 See [1989] 74 STC 146 (SC). Justice Venkatachaliah observed: ". . . It is now well-settled that a very wide latitude is available to the Legislature in the matter of classification of objects, persons and things for purposes of taxation. It must need to be so, having regard to the complexities involved in the formulation of a taxation policy. Taxation is not now a mere source of raising money to defray expenses of Government. It is a recognised fiscal tool to achieve fiscal and social objectives. The differentia of classification presupposes and proceeds on the premise that it distinguishes and keeps apart as a distinct class hotels with higher economic status reflected in one of the indicia of such economic superiority . . ." (emphasis supplied) The fa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the States' action. It is assessed on certain elements of business, such as, manufacture, purchase, sale, consumption, use, capital, etc., but its payment is not a condition precedent. It is not a term or condition of a licence. A fee is generally a term of a licence. A tax is a payment where the special benefit, if any, is converted into common burden." In Hardev Motor Transport v. State of M.P. [2006] 9 JT SC 454 this court stated: "29. Section 3 of the 1991 Act is the charging section. It provides that the tax shall be levied on every motor vehicle used or kept for use in the State at the rates specified in the First Schedule. The levy of tax, therefore, is on the motor vehicles. Its rate may vary keeping in view its use or the nature thereof . . ." This court in this case is not concerned with the application of test of reasonableness while considering the constitutionality of a statute. The test of reasonableness, however, would vary from statute to statute and the nature of the right sought to be infringed or the purpose for imposition of the restriction. It is also not a case where a section of the people have been picked up and they form the constituted class by i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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