1989 (5) TMI 52 - SUPREME COURT

Constitutional validity of legislations of different States, viz., the State of Gujarat, State of Tamil Nadu, the State of Karnataka and the State of West Bengal, imposing a tax on "luxuries" under entry 62 of List II of the Seventh Schedule to the Constitution of India is challenged.

Held that:- High Court was not in error in its understanding of the import of the concept of "luxuries" in entry 62 as a subject of tax.The concept of a tax on "luxuries" in entry 62, List 11, cannot be limited merely to tax things tangible and corporeal in their aspect as "luxuries". It is true that while frugal or simple food and medicine may be classified as necessities, articles such as jewellery, perfume, intoxicating liquor, tobacco, etc., could be called articles of luxury. But the legislative entry cannot be exhausted by these cases, illustrative of the concept. The entry encompasses all the manifestations or emanations, the notion of "luxuries" can fairly and reasonably be said to comprehend and the element of extravagance or indulgence that differentiates "luxury" from "necessity" cannot be confined to goods and articles. There can be elements of extravagance or indulgence in the quality of services and activities.

So far as the argument that fundamental rights under article 19(1)(g) are violated by a levy on a mere provision for luxury, without its actual utilisation, is concerned, it is settled law that the mere excessiveness of tax or that it affects the earnings cannot, per se, be held to be violative of article 19(1)(g).

The composite elements of lodging accommodation and services associated with it cannot be broken into components so as to distinguish some components as necessities, some others as comforts and yet others as luxuries. Even necessities and comforts which have to them the additional element of undue elegance to a point of extravagance and indulgence might become luxuries. Though the arguments on these contentions were not without their interesting facets, We must, however, express our inability to accept them as valid arguments against the constitutionality of the provisions.

Another relevant consideration is the identity and status of the repository of the power. The power is given to a high authority like the State Government. In these circumstances, it cannot be said that the power is an uncanalised power and is an arbitrary or unreasonable one. There are statutory guides governing its exercise and the guidelines are governed by well-settled principles of interpretation.

No fault can be found with this provision in section 4(3) which merely states that where the usual lodging charges are not collected for providing the lodging accommodation, tax shall be payable as if the usual charges had been collected. This is a provision against evasion. There is no merit in the challenge to the validity of this provision.

n the present case, it has not been pointed out how a tax on "luxuries" enjoyed by a person in a hotel is either discriminatory or has the direct and immediate effect of impeding the freedom of intercourse. It is no reason for extending the freedom which section 92 confers upon trade and commerce among the States to something which precedes it and is outside the freedom conferred. Appeal dismissed.