TaxTMI 
TaxTMI 
1989 (5) TMI 50
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....grat, R.B. Hathikhanawala, R.F. Nariman, P.H. Parekh, Sanjey Bhartari, M.K.S Menon, R.K. Dhillon, Miss Rohini Chhabra, Miss Sunitha Sharma and Miss Ayesh Mishra, with them) for the petitioners. JUDGMENT The judgment of R. S. Pathak C. J. I. and Sabyasachi Mukharji, Natarajan and M. N. Venkatachaliah JJ. was delivered by M. N. Venkatachaliah J. S. Ranganathan J. delivered a separate judgment. M. N. VENKATACHALIAH J. -In these writ petitions under article 32 of the Constitution of India, the petitioners, who are engaged in, or associated with, the hotel industry in India, challenge the constitutional validity of the Expenditure-tax Act, 1987 (Central Act 35 of 1987). The Act envisages tax at 10 per cent. ad valorem on "chargeable expenditure" incurred in the class of hotels wherein "room charges" for any unit of residential accommodation are rupees four hundred or more per day per individual. The "chargeable expenditure" as defined in section 5 of the Act includes expenditure incurred in or payments made in such class of hotels in connection with the provision of any accommodation, residential or otherwise, food or drink whether at or outside the hotel ; or for any accommoda....
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....s of services. This tax will not apply to expenditure incurred in foreign exchange or in the case of persons enjoying diplomatic privileges." A brief survey of the provisions of the Act is perhaps necessary to apprehend and assess the grounds of challenge in their true perspective. Section 4 is the charging section which says : "Subject to the provisions of this Act; there shall be charged on and from the commencement of this Act, a tax at the rate of ten per cent. of the chargeable expenditure. " The expression "chargeable expenditure" is defined in clauses (a), (b), (c) and (d) of section 5, which read : "For the purposes of this Act, chargeable expenditure means any expenditure incurred in, or payments made to, a hotel to which this Act applies, in connection with the provision of, (a) any accommodation, residential or otherwise ; or (b) food or drink by the hotel, whether at the hotel or outside, or by any other person at the hotel ; or (c) any accommodation in such hotel on hire or lease ; or (d) any other services at the hotel, either by the hotel or by any other person, by way of beauty parlour, health club, swimming pool or other similar services . . ."....
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....ioner of Income-tax, Cornmissioner of Income-tax (Appeals), Inspecting Assistant Commissioner of Income-tax, Income-tax Officer and Inspector of Income-tax shall have the like powers and perform the like functions under this Act as he has and performs under the Income-tax Act, and for the exercise of his powers and the performance of his functions, his jurisdiction under this Act shall be the same as he has under the Income-tax Act." Section 24 provides: "The provisions of the following sections and Schedules of the Income-tax Act and the Income-tax (Certificate Proceedings) Rules, 1962, as in force from time to time, shall apply with necessary modifications as if the said provisions and the rules referred to expenditure-tax instead of to income-tax : 2(43B) and (44), 118, 125, 125A, 128 to 136 (both inclusive), 138, 140, 144A, 159 to 163 (both inclusive), 166, 167, 170, 171, 173 to 179 (both inclusive), 187, 188, 189, 220 to 227 (both inclusive), 229, 231, 232, 237 to 245 (both inclusive), 254 to 262 (both inclusive), 265, 266, 268, 269, 278B, 278C, 278D, 278E, 281, 281B, 282, 283, 284, 287, 288, 288A, 288B, 289 to 293 (both inclusive), the Second Schedule and the Third S....
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....services, envisaged in clauses (a) to (d) of section 5, are provided in a hotel or catering establishment which falls outside the class, the expenditure incurred thereon is unaffected by the law. This aspect of under inclusiveness is assailed as violative of article 14. .The petitioners further contend that the several provisions of the Act which impose certain statutory obligations of an onerous nature, the breach of which are visited with penal consequences, render the law an unreasonable restriction on the petitioners' fundamental rights under article 19(1)(g). The contentions urged in support of the petitions admit of being noticed and are formulated in the following terms : (a) The Act, in its true nature and character, is not one imposing an " expenditure-tax", as known to law, accepted notions of public finance, and to legislative practice but is, in pith and substance, either a tax on luxuries falling within entry 62 of List 11 of the Seventh Schedule ; or a tax on the consideration paid for the purchase of goods constituting an impost of the nature envisaged in entry 54 of List 11, and clearly outside the legislative competence of the Union Parliament; (b) that....
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....tically subsumes with the grant. Shri Palkhivala submitted that the true nature and concept of "expenditure-tax", as known to the theories of public finance, has a specific, well accepted legal connotation and is a tax levied on income or capital spent or "consumed" in distinguishment of income or capital "saved". It is this concept of "expenditure-tax", as fiscal tool, which has certain social and economic objectives informing its policy. The present impost and its incidents, it is urged, have no rational connection with the concept of "expenditure-tax" known to and accepted by the principles of public finance and recognised by established legislative practice. Referring to the economists' concept of "expenditure-tax", learned counsel referred us to the report of the Study Group "On Taxation of Expenditure" (Government of India, Ministry of Finance, April[1987] : "An expenditure tax is generally taken to mean a direct tax on personal consumption, i.e., the total annual consumption (minus an exemption, if any) of an individual taxpayer or family. This implies that the tax will be payable in the year in which consumption takes place. One can conceive of the tax base being comp....
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.... inducement of direct tax evasion." In Musgrave on "Public Finance", referring to the concept of a personal expenditure tax, it is stated : ". . . In analogy to the income-tax, the taxpayer would determine his total consumption for the year, subtract whatever personal exemptions or deductions were allowed, and apply a progressive rate schedule to the remaining amount of taxable consumption." (emphasis supplied). Shri Palkhivala also referred to certain passages of Nicholas Kaldor "On Expenditure Tax" and the same eminent economist reports on "Indian Tax Reform", to reinforce the submission that the conceptualisation of "expenditure-tax", as a fiscal tool for economic regulation, has a specific and definite connotation and the "tax" so conceptualised by experts on public finance is an entirely different idea from the one built into the present legislation. The very concept of "expenditure-tax" envisaged in the impugned legislation, it is urged, is unknown to accepted principles of public finance and is the result of a grave misconception as to the essential nature and incidents of what in law and legislative practice is recognised as "expenditure-tax". The whole exercise, l....
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.... an emphatic affirmation. Referring to the concept of a luxury tax, learned counsel referred to the New Encyclopaedia Britannica, Vol. 7, which, referring to "luxury tax", says "Luxury tax, excise levy on goods or services considered to be luxuries rather than necessities. Modern examples are taxes on jewellery and perfume. Luxury taxes may be levied with the intent of taxing the rich, as in the case of the late 18th and early 19th century British taxes on carriages and man-servants ; or they may be imposed in a deliberate effort to alter consumption patterns, either for moral reasons or because of some national emergency. In modern times, the revenue production of luxury taxes has probably overshadowed the moral argument for them. Furthermore, the progressive nature of the early taxes began to be lost as more lower income people's 'luxuries' were taxed in the interest of generating additional revenue ; an example is the amusement tax." On the analogy of the wealth-tax envisaged by entry 86 of List 1, it was urged that even as the concept of "wealth" for the imposition of a tax thereon is not the individual components of the assets of the assessee but totality of all assets w....
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....d Advocate-General for the State of Kerala, who intervened, made submissions which, while being substantially on the lines of the petitioners' contentions, however, sought to qualify that legislative competence to the extent of operation of the Act in the Union Territories could be sustained. Learned Attorney-General, on the contrary, submitted that the law, in pith and substance, is not one "with respect to" luxuries under entry 62 List I and the tax on expenditure, as the Legislature has chosen to conceive it, is referable to residuary power. Learned Attorney-General said that the economists' concept of such expenditure tax is at best an idea of the manner of effectuation of fiscal programme and is no limitation on the legislative power. Indeed, if a topic is not shown to fall within the fields of legislation in Lists II or III, no further inquiry is necessary in order to support the legislative competence of the Union to legislate on the topic. The purpose of incorporating a separate List for the Union, as observed in Union of India v. Harbhajan Singh Dhillon [1972] 83 ITR 582, 610 (SC) [1972] 2 SCR 33 at 67 is : ". . there is some merit and legal effect in having included....
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..... The latter kind of trespass is figuratively referred to as "colourable legislation", connoting that although apparently the Legislature purports to act within the limits of its own powers yet, in substance and in reality, it encroaches upon a field prohibited to it, requiring an examination, with some strictness, of the substance of the legislation for the purpose of determining what that Legislature was really doing. Wherever legislative powers are distributed between the Union and the States, situations may arise where the two legislative fields might apparently overlap. It is the duty of the courts, however difficult it may be, to ascertain to what degree and to what extent, the authority to deal with matters falling within these classes of subjects exists in each Legislature and to define, in the particular case before them, the limits of the respective powers. It could not have been the intention that a conflict should exist and, in order to prevent such a result, the two provisions must be read together, and the language of one interpreted, and, where necessary, modified by that of the other. The Judicial Committee in Prafulla Kumar Mukherjee v. Bank of Commerce [1946] F....
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....to the "aspects of legislation" under sections 91 and 92 of the Canadian Constitution, i. e., British North America Act, 1867, observes that "one of the most interesting and important principles which have been evolved by judicial decisions in connection with the distribution of legislative power is that subjects which in one aspect and for one purpose fall within the power of a particular Legislature may, in another aspect and for another purpose, fall within another legislative power. Learned author says : ". . . that by 'aspect' must be understood the aspect or point of view of the legislator in legislating the object, purpose, and scope of the legislation that the word is used subjectively of the legislator, rather than objectively of the matter legislated upon." In Union Colliery Co. of British Columbia Ltd. v. Bryden [1899] AC 580 (PC) at p. 587, Lord Haldane said : "It is remarkable the way this Board has reconciled the provisions of section 91 and section 92, by recognizing that the subjects which fall within section 91 in one aspect, may, under another aspect, fall under section 92." Indeed, the law "with respect to" a subject might incidentally "affect" anothe....
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....here is one big difference though it is little mentioned. Ancillariness is usually associated with an explicit statutory provision of a peripheral nature ; talk about 'incidentally affecting' crops up in connection with the potential of a non-differentiating statute to affect indiscriminately in its application matters assertedly immune from control and others. But it seems immaterial really whether it is its words or its works which draw the flotsam within the statute's wake." Referring to the flexibility in the modes of effectuating a tax in view of innate complexities in the fiscal adjustment of diverse economic factors inherent in the formulation of a policy of taxation and the variety of policy options open to the State, J. Rauls, in "Modern Trends in Analytical and Normative jurisprudence" [Introduction to Jurisprudence by Lord Lloyd of Hampstead and Freeman, 5 Edn.] observes: "...In practice, we must usually choose between several unjust, or second best, arrangements ; and then we look to non-ideal to find the least unjust scheme. Sometimes this scheme will include measures and policies that a perfectly just system would reject. Two wrongs can make a right in the sense....
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....ative powers, reference may be made to the annual letting value of a property in the occupation of a person for his own residence being, in one aspect, the measure for levy of property tax under State law and in another aspect constituting the notional or presumed income for purpose of income-tax. The petitioners' reference to legislative practice as determining the scope of the present legislation does not assist them. There are two infirmities in the contention. The first is that the question of legislative practice as to what a particular legislative entry could be held to embrace is in apposite while dealing with a tax which is sui generis or nondescript imposed in exercise of the residuary powers so long as such tax is not specifically enumerated in Lists 11 and 111. Secondly, there is no conclusive material indicating that the appropriate Legislature had limited the notion of a tax of this kind within any confines. It is relevant to recall the words of Lord Uthwatt in Wallace Brothers' case [1948] 16 ITR 240, 245 AIR 1948 PC 118, 120 : "The point of the reference is emphatically not to seek a pattern to which a due exercise of the power must conform. The object is to as....
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....finitely of the opinion as explained a little later, that the scheme of our Constitution and the actual terms of the relevant articles, namely, article 246, article 248 and entry 97, List 1, show that any matter, including tax, which has not been allotted exclusively to the State Legislatures under List 11 or concurrently with Parliament under List 111, falls within List 1, including entry 97 of that list, read with article 248." It was held that the subject did not fall under entry 49, List 11, and that despite the exclusion in entry 86, List 1, the Union, as the repository of the residuary power, had the competence to legislate as long as the topic was not allotted to or within the State power. It was further observed [1972] 83 ITR 582, 591 and 615) : "It seems to us unthinkable that the Constitution-makers, while creating a sovereign democratic republic, withheld certain matters or taxes beyond the legislative competence of the Legislatures in this country either legislating singly or jointly . . ." "There is no principle that we know of which debars Parliament from relying on the powers under specified entries 1 to 96, List 1, and supplementing them with the powers und....
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....e "room charges" for any unit of residential accommodation are Rs. 400 or more per day per individual, while expenditure of greater magnitude and quantum incurred in other hotels is not exigible to the tax, either because such room charges are less than Rs. 400 or because the establishment which, though providing food and drink and other services envisaged by section 5, may not provide residential accommodation. This distinction, it is said, is violative of the constitutional pledge of equality. The averments in this behalf in the memorandum of writ petition are these : "There is no basis or intelligible differentia for discriminating between the levy of the tax on expenditure over food or drink provided by a hotel and the food or drink provided by a restaurant or eating house not situated in a hotel (or in a hotel to which the Act does not apply) even though the cost of food or beverage is higher than that on similar items in an applicable hotel. There is also no intelligible differentia for discriminating between levying of tax on expenditure on food and drinks outside the hotel which is provided by the hotel and not levying tax on expenditure on food and drinks incurred outsi....
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....rsons or classes. But, with all this latitude, certain irreducible desiderata of equality shall govern classifications for differential treatment in taxation laws as well. The classification must be rational and based on some qualities and characteristics which are to be found in all the persons grouped together and absent in the others left out of the class. But this alone is not sufficient. Differentia must have a rational nexus with the object sought to be achieved by the law. The State, in the exercise of its Governmental power, has, of necessity, to make laws operating differently in relation to different groups or class of persons to attain certain ends and must, therefore, possess the power to distinguish and classify persons or things. It is also recognised that no precise or set formulae or doctrinaire tests or precise scientific principles of exclusion or inclusion are to be applied. The test could only be one of palpable arbitrariness applied in the context of the felt needs of the times and societal exigencies informed by experience. Classifications based on differences in the value of articles or the economic superiority of the persons of incidence are well recog....
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....islation. To recognise marked differences that exist in fact is living law ; to disregard practical differences and concentrate on some abstract identities is lifeless logic." "In the utilities, tax and economic regulation cases, there are good reasons for judicial self-restraint if not judicial deference to legislative judgment. The Legislature, after all, has the affirmative responsibility. The courts have only the power to destroy, not to reconstruct. When these are added to the complexity of economic regulation, the uncertainty, tile liability to error, the bewildering conflict of the experts, and the number of times the judges have been overruled by events-self-limitation can be seen to be the path to judicial wisdom and institutional prestige and stability." In G. K. Krishnan v. State of Tamil Nadu [1975] AIR 1975 SC 583 [1975] 2 SCR 715, 729, Mathew J. referred to the following observations of the Supreme Court of U. S. A. in San Antonio School District v. Rodrigues [1973] 411 US I (at p. 592 of AIR 1975 SC) : "Thus we stand on familiar ground when we continue to acknowledge that the Justices of this court lack both the expertise and the familiarity with local probl....
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....ch which will seem unconstitutional to one man, or body of men, may reasonably not seem so to another ; that the Constitution often admits of different interpretations ; that there is often a range of choice and judgment ; that in such cases the Constitution does not impose upon the Legislature any one specific opinion, but leaves open this range of choice ; and that whatever choice is rational is Constitutional. " (emphasis supplied) [Supreme Court Statecraft; The Rule of Law and Men Wallace Mendelson : p. 41] Thayer also referred to the words of a Chief Justice of Pennsylvania way back in 1811, which are also worth recalling "For weighty reasons, it has been assumed as a principle in constitutional construction by the Supreme Court of the United States, by this Court, and every other court of reputation in the United States, that an Act of the legislature is not to be declared void unless the violation of the constitution is so manifest as to leave no room for reasonable doubt." In Secretary of Agriculture v. Central Roig Refining Co. [1949] 338 I.T. s. 604, the Supreme Court of USA said : ". . . This court is not a Tribunal for relief for crudities and inequities ....
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....arat, to as much as thirty-seven per cent. The details of the said calculations are given in exhibit 'D' annexed to this petition. The hotel industry today is subject to an extremely heavy dose of taxation in the shape of income-tax and even the recent tax on works contracts. The petitioners say that the tourism industry is now not in a position to sustain any additional burden and the impugned tax is literally the last straw on the camel's back . . ." It is also contended : "...Several of the hotels belonging to members of petitioner associations have entered into long-term contracts for supply of food and beverages and for providing accommodation. The execution of such contracts would become onerous and even impossible in view of the levy of the present expenditure-tax. There is no provision in the Act or any separate legislation whereby hotels can pass on such a tax to persons who have contractually agreed to avail of any services at contracted rates . . . " A taxing statute is not, per se, a restriction of the freedom under article 19(1)(g). The policy of a tax, in its effectuation, might, of course, bring in some hardship in some individual cases. But that is inevitab....
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....eding on parallel lines and that each of the sets of legislations is quite safe from attack on the ground of legislative incompetence. Whether this contention is acceptable and both sets of enactments can be saved or whether one of the two has to give way to the other is the question for consideration in these batches of cases. The set of State enactments which blazed the trail (to be followed up by others) and hence are prior in point of time, is that comprising of various statutes passed by several States in India. The specific State legislations which are in challenge in the petitions and appeals before us (as indicated in the brackets at the end) are (a) Gujarat Tax on Luxuries (Hotels and Lodging Houses) Act (No. 24 of) 1977. [C. A. Nos. 338, 339 of 1981 ; W. P. Nos. 7990, 8338, 8339, 9110 of 1981] (b) Tamil Nadu Tax on Luxuries in Hotels and Lodging Houses Ordinance, 1980, followed by an Act (Act No. 6 of 1981 W. P. No. 162 of 1982] (c) Karnataka Tax on Luxuries (Hotels and Lodging Houses) Act (No. 22 of) 1979. [W. P. Nos. 12.71 and 1272 of 1982] (d) West Bengal Entertainments and Luxuries (Hotels and Restaurants) Tax Act (No. 21 of) 1972. [W. P. No. 5321 of [1....
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....for some of the affected hoteliers to rush to court for relief against this two-pronged taxation of their receipts. Writ petitions were filed challenging the competence of both sets of enactments and these have now come up for final hearing. It must, however, be mentioned here that the levy of the hotel receipts tax was withdrawn after a year ; nevertheless it was in operation for one assessment year and hence the challenge to its validity is not purely academic. The validity of the 1980 Act has been upheld by my learned brother as traceable to entry 82 of List I in the Seventh Schedule to the Constitution-Taxes on income other than agricultural income. respectfully agree. The relief conferred by the withdrawal of the 1980 Act was, however, shortlived ; it was only a "lull before the storm" which descended on all hoteliers in the form of the Expenditure-tax Act, 1987 (hereinafter referred to as "the 1987 Act"). Before referring to this enactment, the validity of which has been challenged in Writ Petition No. 1393 of 1987, it will be convenient to run back on the time machine by a period of three decades., Mr. Nicholas Kaldor, Reader in Economics in the University of Cambridge....
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....on that one has to answer in these cases is whether the levies in question by the States and the Union can both stand or whether we have to treat the levies as either tax on "luxuries" or as tax on "income" or "expenditure" and thus uphold one of them but not both. I do not think there can be any doubt at all that, in the context of the social and economic conditions that prevailed in India, it was a luxury for any person to stay in hotels charging high rents and providing various types of facilities, amenities and conveniences such as telephone, television, air-conditioner, etc. The decision of this court in A. B. Abdul Kadir v. State of Kerala [1976] AIR 1976 SC 182 ; [1976] 2 SCR 690, and in particular the discussion at pages 699 to 701 places this beyond all doubt. This aspect has also been discussed by Thakkar J. of the Gujarat High Court (as his Lordship then was) in the judgment under appeal and I am in agreement with his reasonings and conclusion that the Gujarat statute has been validly enacted in exercise of the powers available to the State Legislatures under entry 62 of List 11. This applies equally to the other impugned State enactments as well. It has been argued t....
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....ent to make laws in regard thereto. This is so far as the general power of legislation is concerned. As pointed out by this court in M. P. V. Sundararamier and Co. v. State of AP [1958] AIR 1958 SC 468 [1958] 9 STC 298 [1958] SCR 1422, 1479 and 1490, the legislative entries are so arranged that the power to enact laws in general and the power to impose taxes are separately dealt with. The subject matters of taxation available to Parliament are enumerated in entries 82 to 97 of List I, those available to the State Legislatures in entries 45 to 63 of List 11 and those available to both in entry 44 of List 111. Under section 246(1), Parliament has exclusive power to make laws with respect to any of the matters and this includes the power to impose taxes-enumerated in List 1. In this situation and in view of the fact that the 1980 Act is, in pith and substance, a tax on income, its constitutional validity can be in no doubt at all. But, can the Union enactment of 1987 also be supported for the same reasons, as imposing an expenditure tax which, as held in Azam Jha's case [1972] 83 ITR 92 (SC) ; [1972] 1 SCR 470, falls within the scope of entry 97 of List I ? Shri Palkhivala says it ....
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....xempted) and that too only when it exceeded certain limits. The analogy of the Income-tax or Wealth-tax or Gift-tax Acts also does not really help us. Though they are enactments which cover a larger area of the subject-matter taxed, that was because the Legislature found it expedient to do so and not because they were obliged to cover the entire area of income, wealth or gift. An Act imposing a tax, for example, on hotel receipts alone or dividends alone or on capital gains alone will not be any the less a tax on income within the scope of entry 82 of List I. Likewise even if the Legislature had confined its levy of wealth-tax only to certain assets such as lands and buildings or the Gift-tax Act had levied a tax only on gifts of agricultural land, they would not have ceased to fall within the scope of the relevant entries of the Union List, so long as, in pith and substance, they were found respectively to be taxes on the capital value of the assets in question or on the transaction of gift. The Central Excise Act, for example, does not levy excise duty on the manufacture and production of all goods and additional excise duty is levied only in respect of certain goods. So also, in....
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..... K. Bhargava v. Union of India [1966] 59 ITR 243 (SC) [1966] 2 SCR 22 and Bhagwan Dass Jain v. Union of India [1981] 128 ITR 315 (SC) ; [1981] 2 SCR 808. There is not even that much of legislative practice, so far as expenditure-tax is concerned, which would justify our importing any limitation on the concept of a "tax on expenditure" under entry 97 of List 1. A perusal of the decision of this court upholding the validity of the 1957 Act Azam Jha's case [1972] 83 ITR 92 (SC) ; [1972] 1 SCR 470, does not also justify the reading in of any such limitation. The wider coverage of the tax made it easier for the court to pinpoint its subject-matter as "expenditure" and to treat it as a matter falling under the residuary entry, but it does not justify the inference sought to be drawn that a tax cannot be said to be a tax with reference to "expenditure" because it does not tax expenditure in general but confines itself to certain types or categories of expenditure. Once it is granted that the tax need not exhaust the entire universe of the subjectmatter, the extent of the subject-matter that should be covered or selected for imposing tax should be entirely left to Parliament, subject only....
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....cular statute may be restricted. The latter cannot be described as a tax on "luxuries" and does not fall within the scope of entry 62 of the State List and, in the absence of any referability to any other entry of List 11, it is safe from attack under article 248(2) and will also be covered, if need be, by entry 97 of List 1. The second argument is that, after the decision in Azam Jha's case [1972] 83 ITR 92 (SC) ; [1972] 1 SCR 470, holding that a "tax on expenditure" will be legislation covered by entry 97 in List I, the constitutional position is the same as if, before item 97, a specific entry had been inserted in List I [say, entry 96A] which reads "Taxes on expenditure". The result, he says, is that the Central legislation will be squarely covered by an entry in List I and so we need not embark on any investigation as to whether it falls or does not fall under any entry in list 11 or List 111. It seems to me that there is a fallacy in the second line of argument addressed by the learned Attorney-General. I do not think that the legislative lists can be interpreted, as suggested by him, on the assumption that there is a deemed entry, "Taxes on expenditure", added to List I a....
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....he assets acquired by him and also asked to pay an expenditure tax on the money spent on such acquisition. A can be asked to pay sales tax on the goods sold by him to B and also asked to pay or collect a tax on the expenditure incurred by B to purchase the same. Such instances, he says, can be multiplied and will reduce the argument to an absurdity. The Attorney-General, on the other hand, submits that the question whether both legislations relate to the same matter does not bring out correctly the controversy in issue. He says that if the expression "matter", in this context, is understood in its widest sense, it will create chaos in the matter of interpretation of the lists. According to him, for applying the doctrine of pith and substance, we have to understand the expression "matter" not in a "gross", but in a "rare" sense. He develops this contention by invoking, to his aid, what may be called the "aspect" rule as explained in certain text books and judicial decisions. A. H. F. Lefroy in his "Canadian Constitution" observes, at p. 98: "Sec. XXI. Aspect of legislation : Subjects which in one aspect and one purpose fall within section 92 of the Federation Act and so are....
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....will indeed be seen to vary with different aspects of subject-matter as understood in a wide sense. This can be seen from some of the decided cases. The first triumvirate of cases that arose in India under the Government of India Act, viz. In re, Central Provinces and Berar Act XIV of 1953 [1939] FCR 18, Province of Madras v. Boddu Paidanna and Sons [1942] AIR 1942 FC 33 ; [1942] FCR 90, Governor-General in Council v. Province of Madras [1945] FCR 179, were concerned with the question whether the impugned tax was one on the sale of goods or an excise duty. Interpreting the word "subject-matter" in a broad sense, it could perhaps be said that both were taxes with respect to goods. But this concept alone was not sufficient to dispose of the case because the relevant legislative entries did not talk of taxes with respect to goods but referred to taxes in respect of two different activities referable to goods (conveniently described as the "taxable event"), one the manufacture and production of goods and the other with the sale thereof. In the light of these legislative entries, the two different activities could properly be regarded as two different matters for taxation and the releva....
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.... tax on the aspect of ownership or occupation of the property ; the second on the aspect of income from the property. The decision of this court in Bhagwan Dass Jain v. Union of India [1981] 128 ITR 315 ; [1981] 2 SCR 808 is also to the same effect. The Hingir-Rampur Coal Co. Ltd. v. State of Orissa [1961] 2 SCR 537 ; AIR 1961 SC 459, was concerned with the validity of an Orissa Act which sought to levy a cess not exceeding 5% of the valuation of the coal stacked at the pit's mouth. The question was whether this was in pith and substance a duty of excise (entry 84 of list 1) or a fee to regulate and control the coal mining industry (entries 66 and 23 of List 11). Here again, though the method adopted for recovering the impost was the same as that of an excise duty, the validity of the tax was upheld as it related to the aspect of control over the industry rather than to the aspect of an impost on production of coal. Sainik Motors' case [1962] 1 SCR 517 furnishes an illustration which comes nearer to the question at issue before us. In that case, a Rajasthan Act purported to levy a tax on passengers and goods measuring it by reference to the fares and freights charged by opera....