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1989 (5) TMI 51 - SC - Indian LawsConstitutional validity of the Hotel Receipts Tax Act, 1980 challenged on grounds of lack of legislative competence and of violation of articles 14 and 19(1)(g) Held that:- The expression "income" in entry 82, List 1, cannot, therefore, be subjected, by implication, to any restriction by the way in which that term might have been deployed in a fiscal statute. A particular statute enacted under the entry might, as a matter of fiscal policy, seek to tax some species of income alone. The definitions would, therefore, be limited by the consideration of fiscal policy of a particular statute. But the expression "income" in the legislative entry has always been Understood in a wide and comprehensive connotation to embrace within it every kind of receipt or gain either of a capital nature or of a revenue nature. The "taxable receipts" as defined in the statute cannot be held to fall outside such a "wider connotation" of "income" in the wider constitutional meaning and sense of the term as understood in entry 82, List 1. Hotels in which room charges were ₹ 400 or more per day per person were alone brought under the Act. The differentia was held to be both intelligible and endowed with a rational nexus to the object of the legislation, viz., bringing to tax certain class of expenditure incurred at hotels which were legislatively presumed to attract an economically superior class of clientele. Having regard to the wide latitude available to the Legislature in fiscal adjustments, the classification was found not violative of article 14. 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. The presumption of constitutionality has not been dislodged by the petitioners by demonstrating how even hotels, not brought into the class, have also equal or higher chargeable receipts and how the assumption of economic superiority of hotels to which the Act is applied is erroneous or irrelevant. Appeal dismissed.
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