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TMI Blog1986 (4) TMI 36X X X X Extracts X X X X X X X X Extracts X X X X ..... pted depends on what basis is adopted by the Government. Some classifications adopted by the State in the calendar years 1984 and 1985 are assailed in the above group of cases. To state the facts: The State Government at first revised on December 29, 1983, the entry fee in theatres in the order in G. 0. 615. The rates were increased to Rs. 7 (sic) and Rs. 0.60 from the existing rates. On the same day, Ordinance No. 31 of 1983 was promulgated. The existing structure of the levy of entertainment tax with reference to population of towns was abandoned. While replacing the Ordinance by Act 24 of 1984, the Legislature introduced the concept of " gross collection capacity " for levy of the tax as explained in section 4 of the Act. What is introduced cumulatively, for short, is stated to be tax on shows exhibited. The structure that was abandoned is referred to as tax on sale of tickets. We adopt the two expressions wherever it is necessary to refer in the course of this order. There occurred a change of Government in the middle of August, 1984, for six weeks. That Government repealed the gross collection system and reintroduced the tax on tickets sold by Ordinance 26 of 1984. The O ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t section I is valid. The retroactivity of section I is not bad and the sub-clauses of the section are not ultra vires the Constitution. We have earlier narrated the quick succession of events in the calendar years 1984 and 1985. Whether there should have been swift changes or not in the statute book is not the point. Each Government has the undoubted right to implement what it considers to be its goals. In taxation, Governments have power to adopt any basis to tax entertainment. Each Government adopts the methods it considers necessary to optimise tax collections or achieve its aims or economic goals. The wisdom of the Government or the coarse of action is not in question. The Government in its plenary power can exempt one type of theatre and tax another type of theatre. In this regard, we are tempted to recount what Willis has said in his Constitutional Law, at page 587. The illustrious author said : A State does not have to tax everything in order to tax something. It is allowed to pick and choose districts, objects, persons, methods and even rates for taxation if it does so reasonably. " Such is the width of the power. The question, however, remains whether in choosing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 907] 206 US 307. The second is when Government feel by their earlier action that they have not achieved what was intended to be achieved because of a faux pas. This the Americans call Curative Statute. That expression is explained in Graham Fasher v. Goodcell [1931] 282 US 409. " Where the asserted vested right not being linked to any substantial equity arises from the mistake of officers purporting to administer the law in the name of the Government, the Legislature is not prevented from curing the defect in administration simply because the effect may be to destroy causes of action which would otherwise exist. " Lawyers in the United Kingdom and those who follow Anglo-Saxon phraseology call such acts " Validating Acts ". Another expression current in America is " small repairs " in this regard used by Holmes J. in 1901 in the case of Danforth v. Groton Water Co. (178 Mass 472). Small repairs in our jurisprudence widened the field covered by the expression in America. The distinction in the two expressions requires to fine-tune the subject. In these cases for deciding the issue, that aspect is not called for. The history in India as to retroactive legislation is entrenched in ce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... udicial self-restraint if not judicial deference to legislative judgment. The Legislature after all has the affirmative responsibility. The courts have only the power to destroy, not to reconstruct." The idea was elaborated: " The court is to remember that legislation is directed to practical problems, that the economic mechanism is highly sensitive and complex, that many problems are singular and contingent, that laws are not abstract propositions and do not relate to abstract units and are not to be measured by abstract symmetry, that exact wisdom and nice adaption of remedy are not always possible and that 'judgment is largely a prophecy based on meagre and uninterpreted experience'. " The ratio in Secy. of Agriculture v. Central Reig Refining Co. [1950] 94 LEd 381 "not to convert courts for relief from such economic crudities and inequities" was reiterated and further explained (p. 256 of 133 ITR): "howsoever great may be the care bestowed on its framing, it is difficult to conceive of a legislation which is not capable of being abused by perverted human ingenuity. The court must, therefore, adjudge the constitutionality of such legislation by the generality of its provisions a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dismissed W.P. No. 6404 of 1984 and batch on July 19, 1984, and upheld the Act. We have earlier stated about the change in the Government for six weeks commencing from the third week of August, 1984. That Government thought it fit to revert to the anterior basis of taxation. That Government issued Ordinance 26 of 1984 on September 5, 1984. The Ordinance was enforced from September 7, 1984, the day on which the period of seven weeks commenced. With the fall of that Government, the successor Government, which came to power in turn, repealed Ordinance 26 of 1984 and in the Act 16 of 1985 reiterated what was contained in the Act 24 of 1984 as the basis for collection of taxes. The proprietors in the instant batch of writ petitions do not question the prospective operation of Act 16 of 1985, as it has been already covered by the decisions of this court. The proprietors contend that gross collection method imposes onerous burdens on them. They complain that proprietors of cinemas cannot run business with any prospect of profit under gross collection taxation. They plead that the basis in the Entertainment Tax Act, 1939, was proper and appropriate. The basis in that Act should not hav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rtionate, unreasonable and arbitrary under article 19 of the Constitution. The State, on the other hand, relied on the oft-quoted passage of Rowlatt J. in U.K. and in India. Rowlatt J. in Cape Brandy Syndicate v. Inland Revenue Commissioners [1921] 1 KB 64, observed (at page 71): " In a taxing Act one has to look merely at what is clearly said. There is no room for any intendment. There is no equity about a tax. There is no presumption as to a tax. Nothing is to be read in, nothing is to be implied. One can only look fairly at the language used. " The State contends there is no equity about tax. The State Government have the power to impose taxes prospectively or retrospectively. Therefore, section I does not suffer any constitutional vice whatever. It is valid in law. It is not invalid under any constitutional principle. The Government is a master of policy that it adumbrates. They have decided to implement their policy. They have the power to do so and, therefore, enforcement of the Act with retrospective effect is not invalid. It is for the Government to decide, so it is argued, when to impose taxes with retrospective effect and not for the courts to dictate. It is n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ect of the binding judgment. " Therefore, the court added: " In our opinion, this is not a proper ground for imposing the levy at the higher rate with retrospective effect. It may be open to the legislature to impose the levy at the higher rate with prospective operation, but levy of taxation at higher rate which really amounts to imposition of tax with retrospective operation has to be justified on proper and cogent grounds. " Thus section 2 of the Amending Act to the extent that it imposes higher levy of 45 per cent. with retrospective effect from the first of April, 1966, and also section 3 of the Amending Act which nullified the judgment of the High Court in Cawasji Co. v. State of Mysore [1969] 1 Mys LJ 461, was held invalid. The other general and broad principles as to unreasonableness, relevant to statutes with retrospective effect, was evolved in the case of Kunnathat Thathunni Moopil Nair v. State of Kerala, AIR 1961 SC 552, where the Travancore-Cochin Land Tax Act 15 of 1985 was considered. The tests were improved in Assistant Commissioner of Urban Land Tax v. Buckingham and Carnatic Co. Ltd., AIR 1970 SC 169. The further tests whether the statute is confiscatory or ext ..... X X X X Extracts X X X X X X X X Extracts X X X X
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