TMI Blog2001 (3) TMI 871X X X X Extracts X X X X X X X X Extracts X X X X ..... spondent -------------------------------------------------- M.P. CHANDRAKANTARAJ URS, J.- This writ petition is before the division Bench on account of the reference made by a learned single Judge of this Court by his order dated October 4, 1985. The learned single Judge, in the light of the challenge made to sub-clause (v) of clause (i) of section 2 of the Karnataka Entertainments Tax Act, 1958 (hereinafter referred to as "the Act"), found that the question raised in the writ petition was of importance which was required to be decided by a division Bench. 2.. Petitioner is a registered partnership firm known as Drive- in-Enterprises and the business is carried on in that name and style and is the owner of a drive-in-theatre. Before we go to the grounds urged challenging the provision, it will be useful to set-out that "drive- in-theatre" is specifically covered by rule 111-A occurring in Chapter XII, Part VI-A of the Karnataka Cinemas (Regulation) Rules, 1971 (hereinafter referred to as "the Rules") framed in exercise of the powers conferred on the State Government under regulation 22 of the Karnataka Cinemas (Regulation) Act, 1964. "Drive-in-cinema" is defined under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or contrivance, such person would not get; (iv) any payment for any purpose whatsoever connected with an entertainment which a person is required to make as a condition of attending or continuing to attend the entertainment in addition to the payment, if any, for admission to the entertainment; (v) any payment for admission of a motor vehicle into the auditorium of a cinema known as drive-in-theatre." The effect of the amendment is that payment for admission to a drive-in-theatre attracts tax not only on the persons who are occupants of the motor car but also on the motor vehicle itself, which was held to be impermissible in the earlier writ petition referred to above. In that view of the matter, the petitioner-firm, being the owner of the drive-in-theatre at Bangalore, has questioned the competence of the State Legislature to bring about the amendment in question in the purported exercise of its legislative power under entry 62 of List II of the Seventh Schedule to the Constitution, which reads as follows: "62. Taxes on luxuries, including taxes on entertainments, amusements, betting and gambling." It is alleged by the petitioner that there are only three drive- in-theat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ut. Our task is made easier by extracting that portion of the judgment, which is as follows: "Drive-in-theatre is an open air theatre encircled by a high wall having a huge open screen which is not enclosed. In front of the screen adequate and suitable place is provided for the parking of cars which drive into the enclosed space within the walls from where the occupants of the cars can view the cinema exhibited, sitting in the car if they so chose to do so. He has further pointed out that though it is not necessary to have an enclosed seating space for people in a drive-in-theatre the petitioner-firm in its drive-in-theatre has also provided in addition to parking space for the cars, an enclosed covered gallery with several seats where persons who have come in the car or persons who have come without a car can sit and watch the cinema exhibited on the same screen. The petitioner-firm charges Rs. 2 for the car to enter the enclosed space and per each occupant therein it charges Rs. 3. If a person comes either on a scooter or motor cycle or cycle or by walk and enters the place, no charge is made to the vehicle but like other persons in the car, they are also charged Rs. 3 per head ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an the films exhibited in the ordinary cinema theatre. They see the same or similar films. If they had to pay not only for themselves but also for their cars which are not entertained, then they can as well chose to see the same cinema in the ordinary theatre without entering the enclosure known as "drive-in-theatre". 13.. Therefore, as earlier held in the case of the petitioner by this Court, incidence of tax is on the person entertained just as the incidence of tax on luxuries consumed by a person is on the person enjoying those luxuries, as held by the Supreme Court in Express Hotels Private Ltd. v. State of Gujarat [1989] 74 STC 157, the very case on which the learned Government Pleader placed reliance, to which we will make reference later. Therefore, the amendment providing for payment for admission to a car brought about by the Second Amendment Act of 1983 by insertion of sub-clause (v) to clause (i) of section 2 of the Act is clearly beyond the competence of the term "entertainment" as defined under the Act even by giving the widest meaning to that expression in entry 62 of List II in the Seventh Schedule to the Constitution. Therefore, we have no hesitation to strike dow ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ove given reiterating what has been earlier said by this Court in the case of the petitioner. 19.. The petition stands allowed. The amendment inserting sub- clause (v) to clause (i) of section 2 by the Second Amendment Act of 1983 is declared ultra vires and beyond the State Legislature's competence. 20.. Any tax collected from the petitioner in accordance with the interim directions given by this Court or otherwise is liable to be refunded by the respondents in the light of the conclusion reached by us that it was incompetent for the State to levy tax on the entry of motor vehicles into a drive-in-theatre. There will be no order as to costs. Rule is made absolute. The State preferred an appeal to the Supreme Court COUNSEL APPEARING FOR THE PARTIES: M. Veerappa, Advocate, for the appellant. Anil Kr. Sangal, Advocate, for the respondent. JUDGMENT The judgment of the Court was delivered by V.N. KHARE, J.- This appeal is directed against the judgment of the Karnataka High Court passed in the writ petition filed by the respondent herein whereby sub-clause (v) of clause (i) of section 2 of the Karnataka Entertainments Tax Act, 1958 (hereinafter referred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urt. The said judgment was affirmed by a division Bench of that court. It was held, that the levy being not on a person entertained (i.e., car/motor vehicle), the same was ultra vires. After the aforesaid decision, the Karnataka Legislature amended the Act by Act No. 3 of 1985. By the said amendment, sub- clause (v) was added to clause (i) of section 2 of the said Act. Simultaneously, sections 4-A and 6 of the Act were also amended. After the aforesaid amendments, the appellant herein, again levied entertainment tax on admission of cars into drive-in-theatre. This levy was again challenged by means of a petition under article 226 of the Constitution and the said writ petition was allowed, and as stated above, the High Court struck down sub-clause (v) to clause (i) of section 2 of the Act. 4.. Learned counsel appearing for the appellant urged that insertion of sub-clause (v) of clause (i) of section 2 of the Act is a valid piece of legislation and after its insertion and amendment of section 6 and section 4-A of the Act, the appellant-State was competent to levy and realise the entertainment tax on the admission of cars/motor vehicles inside the drive-in-theatre. Learned counsel u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate Legislature. In other words, when a levy is challenged, its validity has to be adjudged with reference to the competency of the State Legislature to enact such a law, and while adjudging the matter what is required to be found out is the real character and nature of levy. In sum and substance, what is to be found out is the real nature of levy, its pith and substance and it is in this light the competency of the State Legislature is to be adjudged. The doctrine of pith and substance means that if an enactment substantially falls within the powers expressly conferred by the Constitution upon the Legislature, it cannot be held to be ultra vires merely because its nomenclature shows that it encroaches upon matters assigned to another heading of legislation. The nomenclature of a levy is not conclusive for determining its true character and nature. It is no longer res integra that the nomenclature of a levy is not a true test of nature of a levy. In Goodyear India Ltd. v. State of Haryana [1990] 76 STC 71 (SC); (1990) 2 SCC 71, it was held that the nomenclature of an Act is not conclusive and for determining the true character and nature of a particular levy with reference to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... though directly imposed by the Legislature, the bridge tax is not a land tax, was supported by argument founded in particular on two manifest facts. The bridge tax does not extend to land generally throughout New South Wales, but to a limited area comprising the City of Sydney and certain specified shires, and the purpose of the tax is not that of providing the public revenue for the common purposes of the State but of providing funds for a particular scheme of betterment. No authority was vouched for the proposition that an impost laid by statute upon property within a defined area, or upon specified classes of property, or upon specified classes of persons, is not within the true significance of the term a tax. Nor so far as appears has it ever been successfully contended that revenue raised by statutory imposts for specific purposes is not taxation." (emphasis supplied) 11.. In Raza Buland Sugar Co. v. Municipal Board, Rampur AIR 1962 All. 83 which was subsequently approved in Raza Buland Sugar Co. Ltd. v. Municipal Board, Rampur [1965] 1 SCR 970, the question arose as to whether the Municipal Board can levy water tax when the power to legislate was in respect of the land a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... proprietor of an entertainment, the entertainments tax at the appropriate rate specified in sub-section (1) in respect of such entertainment, as if full payment had been made for admission to the entertainment according to the class of seat or accommodation which the holder of such ticket is entitled to occupy or use; and for the purpose of this Act, the holder of such ticket shall be deemed to have been admitted on payment." Sub-section (1) of section 6 runs as under: "6. Manner of payment of tax.-(1) Save as otherwise provided in section 4A or 4B, the entertainments tax shall be levied in respect of each payment for admission or each admission on a complimentary ticket and shall be calculated and paid on the number of admissions." 13.. Entry 62 of List II of the Seventh Schedule empowers the State Legislature to levy tax on luxuries, entertainments, amusements, betting and gambling. Under entry 62, the State Legislature is competent to enact law to levy tax on luxuries and entertainments. The incidence of tax is on entertainment. Since entertainment necessarily implies the persons entertained, therefore, the incidence of tax is on the person entertained. Coming to the que ..... X X X X Extracts X X X X X X X X Extracts X X X X
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