Judgment

VENKATACHALIAH, J. (for C.J.I.and Sabyasachi Mukharji, S. Natarajan and himself):- In these writ petitions under Article 32 of the Constitution of India, 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 a 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 per day per individual. The chargeable-expenditure as defined in Section 5 of the Act include 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 accommodation in such hotel on hire or lease; or any other services envisaged in that Section. However, any expenditure incurred in or paid for in "foreign exchange" or by persons who enjoy certain diplomatic privileges and immunities are exempt.

The challenge to the vires of the Act is on grounds of lack of legislative competence and of violation of the rights und