Luxury tax on corporate hospitals upheld as within State legislative competence under the Constitution.

The State Legislature's power under Article 246(3) read with Entry 62 of List II extends to taxes on luxuries generally, and is not confined to luxuries in hotels or clubs alone; on that basis, the levy on accommodation and allied facilities in corporate hospitals was within legislative competence. The challenge to validity also failed because a statute cannot be struck down merely for possible misuse or perceived harshness; the challenger must establish a specific constitutional infirmity, and the presumption of constitutionality applied. The amendments were therefore upheld, and the Article 14 challenge failed.

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Issues: Whether the amendments to the Andhra Pradesh Tax on Luxuries in Hotels and Lodging Houses Act, 1987, so far as they levy luxury tax on corporate hospitals, were beyond the legislative competence of the State Legislature or otherwise unconstitutional.

Analysis: The power of a State Legislature under Article 246(3) read with Entry 62 of List II of the Seventh Schedule extends to taxes on luxuries generally, and is not confined to luxuries provided in hotels or clubs alone. Luxury, in this context, means something enjoyed over and above the necessaries of life. On that principle, the levy on accommodation and allied facilities provided in corporate hospitals could not be invalidated merely because such facilities may in some cases be necessary for treatment. The Court also held that a statute cannot be struck down solely because it may be capable of misuse or because the Court considers it arbitrary or unreasonable; a challenge to validity must disclose a specific constitutional infirmity. The presumption of constitutionality and the burden on the challenger to establish invalidity were also applied.

Conclusion: The amendments were upheld as within legislative competence and not unconstitutional. The challenge under Article 14 also failed.

Ratio Decidendi: A State law imposing tax on luxuries is constitutionally valid if it falls within Entry 62 of List II, and it cannot be struck down merely on the ground that it may be considered harsh, capable of misuse, or unreasonable unless a specific constitutional prohibition is shown.

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