TaxTMI 
TaxTMI 
2001 (3) TMI 871
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....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 the Rules. "Motor car" is defined under clause (16) of section 2 of the Motor Vehicles Act, 1939, which was in force at the time of presentation of this writ petition. Even in the Motor Vehicles Act of 1988 "motor car" is defined in the same manner as motor car at clause (26) of section 2 of the Motor Vehicles Act, 1988. They read thus: Motor Vehicles Act, 1939 Motor Vehicles Act, 1988. "2(16): 'Motor car' means any motor vehicle other than a transport vehicle, omni bus, road-roller, tractor, motor cycle or invalid carriage. 2(26): 'Motor car' means any motor vehicle other than a transport vehicle, omni bus, road-roller, tractor, motor cycle or inva....
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.... 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-theatres in the whole country and its theatre which is situated a little outside the city limits of the City of Bangalore, is one such. These facts are not disputed by the State. 5. The petitioner, inter alia, questions the competence of the State Legislature to bring about the amendment contending that it affects its constitutional right to equality guaranteed under article 14, its right to carry on trade or profession under article 19 and the levy of tax on motor vehicle is without the authority of law in terms of article 265 of the Constitution. 6.. No return as such has been filed by the State. But the learned Government Pleader argued....
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....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." This is also not disputed by the learned Government Pleader. 9.. We are of the view that grievance, if any, founded on articles 14 and 19 of the Constitution are not really grievances of the petitioner as the petitioner cannot be said to be the aggrieved person. Levy of tax is on the person entertained and the petitioner is not such a person. It is only an entertainer. To the extent article 19 of the Constitution may be pressed into service, the ground urged in support thereof is founded on the severe competition offered to the drive-in- theatre by the popularity of video films exhibited on television screens in additio....
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....989] 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 down the amendment as such. 14.. However, Mr. H.L. Dattu, learned Government Pleader, appearing for the State of Karnataka has contended that corresponding amendment has been made in section 6 of the Act by which a provision is made that taxes shall be levied under sections 4-A and 4-B in respect of each payment for admission or on each counter ticket and shall be calculated and paid on the number of admissions and therefore it is the incidence of admission of the cars which is sought to be realised by the amendment effected by insertion of sub-clause (v) to clause (i) of section 2 of the Act and therefore it is within the ....
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.... 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 to as "the Act") was struck down as being beyond the legislative competence of the State Legislature. 2.. The respondent herein, is the owner and proprietor of a drive-in-theatre in the outskirts of Bangalore city wherein cinema films are exhibited. It is alleged that the drive-in-theatre is distinct and separate in its character from other cinema houses or theatres. The drive-in-cinema is defined under rule 111-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 (R....
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.... 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 urged that in pith and substance, the levy is on the person entertained and not on the admission of cars/motor vehicles inside the drive-in-theatre. It was also urged that the State Legislature is fully competent to impose such a levy. 5.. Learned counsel for the respondent, inter alia, urged that the drive-in-theatre is a different category of cinema unlike cinema houses or theatres, that, the special feature of the drive-in-theatre is that, a person can view the film exhibited therein while sitting in his car, that, the admission of cars/motor vehicles into drive-in-theatre is incidental and part of concept of dr....
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.... 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 legislative competence of Legislature, the court will look into pith and substance of the legislation. In R.R. Engineering Co. v. Zila Parishad, Bareilly (1980) 3 SCC 330 the question arose as to whether the Zila Parishad can levy tax on calling or property. The argument was that the levy is tax on income, therefore, it is ultra vires. However this Court held thus: "The fact that the tax on circumstances and property is often levied on calling or property is not conclusive of the nature of the tax; it is only as a matter of convenience that income is adopted as a yardstick or measure for assessing the tax. Th....
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....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 and building. The High Court held that in pith and substance water tax is not on water but it is a levy on land and building. 12.. We are in full agreement with the aforesaid statement of law and are of the view that it is not the nomenclature of the levy which is decisive of the matter, but its real nature and character for determining the competency or power of State Legislature to enact law imposing levy. It is in the light of the aforesaid statement of law, we would examine the validity of levy challenged in the present case. Before we deal with the question in hand, we would first examine the prov....
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....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 question whether the State Legislature is competent to levy tax on admission of cars/ motor vehicles inside the drive-in-theatre especially when it is argued that car/motor vehicles are not the persons entertained. Section 3 which is charging provision, provides for levy of tax on each payment of admission. Thus, under the Act, the State is competent to levy tax on each admission inside the drive-in-theatre. The challenge to the levy is on the ground that the vehicle is not a person entertained and, therefore, the levy is ultra vires. It cannot be disputed that the car or motor vehicle does not go i....