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of <h1>Court upholds maintainability of reference, rejects preliminary objections, validates proviso, remits matter</h1> <h3>Natraj Chhabigrih, Sigra Versus State of U.P. and Ors.</h3> Natraj Chhabigrih, Sigra Versus State of U.P. and Ors. - TMI Issues Involved:1. Maintainability of the reference.2. Validity of the proviso to Section 3-A(1) of the Uttar Pradesh Entertainment & Betting Tax Act, 1979.3. Application of Article 14 of the Constitution of India.Detailed Analysis:1. Maintainability of the Reference:Preliminary Objections:The petitioners raised four preliminary objections:- The reference does not fall within the parameters of the law as laid down by the Full Bench in Rana Pratap Singh's case.- The issue has already been decided as the proviso to Section 3-A has been declared ultra vires.- The writ petition is barred by the principles of res judicata.- The State, having not appealed to the Supreme Court against the earlier decision in Kamla Palace, cannot seek reference in any subsequent case.State's Counterarguments:- The reference is maintainable as per the Full Bench decision in Firm Deo Dutt, which held that once the Chief Justice refers a matter to a larger bench, it cannot be said to be not maintainable.- The principle of res judicata under Section 11 Explanation VI, CPC, does not restrict the court's power to refer a matter to set right an earlier wrong declaration of law.- There is no constitutional or statutory bar to consider a similar point in a subsequent case except those covered by the principles of res judicata.Court's Decision:- The court held that the preliminary objections raised by the petitioners fail. The reference is within the law as laid down in Rana Pratap Singh's case, which allows for reconsideration if there is a manifest error or if the earlier judgment did not consider certain statutory provisions or binding precedents.2. Validity of the Proviso to Section 3-A(1):Contentions:- The petitioners argued that the proviso is discriminatory and violative of Article 14 as it excludes cinema proprietors receiving grant-in-aid from realizing extra charges for maintenance.- The State contended that the classification is reasonable and has a nexus with the object sought to be achieved. The proviso aims to balance the benefits given to different classes of cinema proprietors.Court's Analysis:- The court examined the scheme of the Act, which allows for different rates of tax for different classes of cinemas based on their location and other factors.- The proviso aims to avoid double benefits to cinema proprietors who are already receiving grant-in-aid, ensuring a balance between different classes of cinema proprietors.- The court referred to various judgments emphasizing the wide latitude given to the legislature in matters of economic and fiscal policies.Court's Decision:- The court held that the classification made by the proviso is reasonable and has a rational nexus with the object sought to be achieved by the Act. The proviso is not violative of Article 14 and is a valid piece of legislation.3. Application of Article 14:Contentions:- The petitioners argued that the proviso creates an unreasonable classification without any nexus to the object sought to be achieved.- The State argued that the classification is based on intelligible differentia and aims to balance the benefits given to different classes of cinema proprietors.Court's Analysis:- The court reiterated the principles of Article 14, which allows for reasonable classification based on intelligible differentia with a rational nexus to the object sought to be achieved.- The court found that the classification made by the proviso is reasonable and aims to balance the benefits given to different classes of cinema proprietors.Court's Decision:- The court held that the proviso to Section 3-A(1) is not discriminatory and does not violate Article 14 of the Constitution. The proviso is a valid piece of legislation.Conclusion:The court concluded that the law laid down in Kamla Palace was not correctly decided. The proviso to Section 3-A(1) of the Uttar Pradesh Entertainment & Betting Tax Act, 1979, is valid and does not violate Article 14 of the Constitution. The reference was disposed of accordingly, and the matter was remitted to the Division Bench for deciding the case on merits.
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