TaxTMI 
TaxTMI 
1990 (1) TMI 319
X X X X Extracts X X X X
X X X X Extracts X X X X
....nto the scheme of the Act in view of the fact that it does not provide for assessment, appeal and other procedural safeguards; (iii) That the levy of flat rate of tax u/s. 4-B is arbitrary and in violation of Arts. 14 and 19(1)(g) of the Constitution; and (iv) That the levy u/s. 4-B at a flat rate of ₹ 2,500/- per month on video shows is not relatable to entry 62 of list 2 of VII schedule to the Constitution and is in fact a levy on the properties of the show and not on entertainment. 3. The learned single Judge accepted the contentions raised on behalf of the respondents and struck down the said provision. 4. The State being aggrieved by the said decision in the writ petitions, has come up in appeals questioning the correctness of the conclusions and reasoning of the learned single Judge. 5. We shall take up for consideration the contentions raised by the respondents inasmuch as the result of these appeals would depend upon the tenability and acceptability of the same. 6. The video cassette parlors are a class by themselves and cannot be compared to any ordinary cinema theatres exhibiting cinemas. Considering the nature of activity carried on by them in a small place....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he profits were widely discrepant and if that was discrimination "hardly any tax direct or indirect would escape the same censure". The Court took the view that that was not a case where barren lands were subjected to equality to productive lands and the methods of calculation under the impugned Act to find out the area of plantation was held to equalise different plantations for purposes of taxability. 8. The trend of decisions starting from Twyford Tea Company's case would disclose that the ratio of Moopii Nair's case [1961]3SCR77 is applied only where lands and buildings, which have apparently no income, are taxed along with others which produce income. The view expressed in Moopii Nair's case has not been applied outside taxation on lands and buildings. In Avinder Singh v. State of Punjab [1979]1SCR845 where tax at rupee one was levied on liquor bottles irrespective of the contents in them and the Supreme Court upheld the validity of the same. Again in Murthy Match works v. Asst. Collector, 1978(2)ELT429(SC) the Supreme Court held that a broad classification is sufficient. The facts in that case were that the former system of classification on the basis o....
X X X X Extracts X X X X
X X X X Extracts X X X X
....er two branches, to allow considerable free play although never any play for caprice, mala fides or cruel recklessness in intent and effect." 9. The objector of subjecting taxing power to Article 14 of the Constitution is that the State should evenly and equitably distribute the burden of taxation. The courts allow a wide latitude to legislative classification as there could be more than classification and if the legislature selects one of them courts would not be justified in interfering on the ground that the legislature ought to have adopted another basis which was more reasonable according to the Court. Hence, courts interfere only in cases where classification is capricious, fanciful or arbitrary or clearly unjust. A classification can be over-inclusive or under-inclusive. In the former case, situations or classes which ought to have been included are brought within the ambit of law and in the latter cases situations or classes which ought to have been ordinarily included are left out. In either case it does not seem proper to strike down the classification as a whole, unless it is incapable of extraction into the good and the bad or is so patently arbitrary and unjust. ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... at all depending upon the number of shows or the number of persons admitted or the seating capacity. It is a simple provision making collection at a fixed rate in respect of each of the video parlors. When such simple provisions are made it is wholly unnecessary for the legislature to make a provision for assessment or appeal. When the subject-matter of tax on video parlors under the Act is not complicated at all, the procedure prescribed even in the absence of assessment cannot be stated to be unreasonable. Such a view has been taken by the Supreme Court in Ram Badhan v. State of Bihar, [1967]3SCR1 . In the matter of payment of taxes under the Motor Vehicles Taxation Act a Division Bench of this Court has taken a similar view in Syed Rafiq Ahmed v. R.T.O. (1984) 1 Kar LJ 281 : (AIR 1984 NOC 254), which reads as under: "S. 4 of the Karnataka Motor Vehicles Taxation Act, 1957, requires all taxes levied under S. 3 to be paid in advance by the registered owner or person having possession or control of the vehicle. Such advance payment of taxes, except in cases where the amount levied on motor vehicles, such as, mopeds, scooters, motor cycles does not exceed ₹ 300 for the....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e machinery by way of appeal or revision by itself would not make the power unreasonable or arbitrary, much less would render the provision invalid. Regard will have to be had to several factors, such as, on whom the power is conferred , whether on a high official or a pretty officer, what is the nature of the power -- whether the exercise thereof depends upon the subjective satisfaction of the authority or body on whom it is conferred or is it to be exercised objectively by reference to some existing facts or tests, whether or not it is a quasi-judicial power requiring that authority or body to observe principles of natural justice and make a speaking order etc.; the last mentioned factor particularly ensures application of mind on the part of the authority or body only to pertinent or germane material on the record excluding the extraneous and irrelevant and also subjects the order of the authority or body to judicial review under the writ jurisdiction of the Court on grounds of perversity, extraneous influence, mala fides and other blatant infirmities. Moreover all these factors will have to be considered in the light of the scheme of the enactment and the purpose intended to be....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nst S. 54 of the Act and Rule 27 of the Bombay Town Planning Rules, 1955, framed under the Act which authorised summary eviction of the occupants of land vesting in the local authority under S. 53 of the Act, this Court has held in Babubhai & Co. v. State of Gujarat, [1985]3SCR614 , that the absence of a corrective machinery by way of an appeal does not always make a provision unreasonable. We agree with the above view. In any event the remedy under Art. 226 of the Constitution of India is available to a person aggrieved by such orders." 11-C. In the present cases, when the payment of the amount of tax being fixed and the payment being by each one of the parlors which is licensed under the relevant provisions of law and the period is also fixed, it is impossible to understand as to how this provision can be stated to be arbitrary in the absence of provisions for assessment, appeal or revision. The Act itself having provided a different but simple procedure in respect of video cassette parlors to say that absence of assessment or appeal or revision provision in this regard would offend the scheme of the Act does not stand to reason. 12. The argument that the levy is exorbitan....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rovision by way of legislation is thought appropriate, such provision will be made after following the due procedure." Therefore, this memo should allay the fears of the respondents that the tax levied would be collected irrespective of the shows held or not for any length of period once the licence is taken and they are bound to pay tax in each month even when in any month no show is held at all. 14. The respondents contended that Section 4-B of the Act is not a provision which provides for tax on entertainment but is really a tax on proprietorship of video parlors and hence has no competence to levy the tax in question. Elaborating this contention it is submitted that there can be a tax on the admission of a person to entertainment. When the rate of tax is not relatable to the admission of a person for entertainment, in substance it is not a tax on entertainment at all and therefore it is submitted that Section 4-B of the Act is invalid. As analysed earlier the levy under Section 4-B of the Act is a simple device for charging video parlors at a consolidated amount on a rough and ready basis. That basis is only a measure of tax and not the taxable event or subject. The fact....