2000 Supreme(Bom) 308

IN THE HIGH COURT OF BOMBAY
A.P. Shah Dr. D.Y. Chandrachud, JJ.
Vasant Madhav Patwardhan others.... Petitioners.
Versus
State of Maharashtra others.... Respondents.
Writ Petition Nos. 1467 857 of 2000, decided on 17-4-2000.
Advocates appeared :
S.H. Aney, for petitioners.
V.V. D’Gama, for respondents.

Headnote:Article 14-Legislature in Taxing Statutes-The Courts have acknowledged that in designing fiscal or Economic Policy a certain degree of imperfection cannot be excluded. Therefore, that is not the reason to regard the measures as constitutionally invalid. Therefore, the challenge to Entertainment Amendment Act on ground of Unconstitutionality is not sustainable in law.- The legislature in matters relating to taxation and fiscal policy is entrusted with a wide degree of discretion. Courts have acknowledged that in designing fiscal or economic policy a certain degree of imperfection cannot be excluded. Perfection in the matter of tax legislation is a goal which eludes the policy makers. That, however, is not a reason to regard the measure as constitutionally invalid. While considering any challenge to tax legislation on the ground of constitution, it would be well be bear in mind the dictum of the Supreme Court in the State of Gujarat v. Shri Ambika Mills Ltd., (1974) 3 SCR 760 where Mr. Justice Mathew, speaking for the Supreme Court held thus:

       "Statutes are directed to less than universal situations. Law reflects distinctions that exist in the judgment of legislators - those who have the responsibility for making law fit fact. Legislation is essentially empiric. It addresses itself to the more or less crude outside world and not to the neat, logical models of the mind. To recognize 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, the liability to error, the bewildering conflict of the experts, and the number of times the Judges have been overruled by events- self-restraint can be seen to be the path to Judicial wisdom and institutional prestige and stability."

       This judgment was cited with approval in the judgment of the Supreme Court in the Federation of Hotel and Restaurant, AIR 1990 SC 1637, where the Constitution Bench held thus:

       "It is now well settled that though taxing laws are not outside Article 14, however, having regard to the wide variety of diverse economic criteria that go into the formulation of a fiscal policy, legislature enjoys a wide latitude in the matter of selection of persons, subject-matter, events, etc. for taxation. The tests of the vice of discrimination in a taxing law are, accordingly, less rigorous. In examining the allegations of a hostile, discriminatory treatment what is looked into is not its phraseology, but the real effect of its provisions. A legislature does not as an old saying goes, have to tax everything in order to be able to tax something. If there is equality and uniformity within each group, the law would not be discrimmatory. Decisions of this Court on the matter have permitted the legislatures to exercise an extremely wide discretion in classifying items for tax purposes, so long as it refrains from clear and hostile discrimination against particular persons or classes."

       Finally, reference may be made to the judgment of the Supreme Court in Venkateshwara Theatre v. State of Andhra Pradesh, (1993) 3 Supreme Court Cases 677 where the Supreme Court upheld a tax on entertainment on Cinemas under the Andhra Pradesh Entertainments Tax Act, 1939. The Supreme Court upheld that imposition of tax on the basis of a percentage of gross collection capacity per show held. Though earlier the tax was on the basis of the actual number of persons admitted to each show it was held to be open to the legislature to adopt a percentage of the gross collection capacity per show as the basis or measure. In paragraphs 21 and 22, of its judgment the Supreme Court while upholding the tax held thus:

       "Since in the present case we are dealing with a taxation measure it is necessary to point out that in the field of taxation the decisions of this court have permitted the legislature to exercise an extremely wide discretion in classifying items for tax purposes, as long as it refrains from clear and hostile discrimination against particular persons or classes.

       "Reference, in this context, may also be made to the decision of the U.S. Supreme Court in San Antonio Independent School District v. Rodriguex, wherein Justice Stewart speaking for the majority has observed:

       "No scheme of taxation, whether the tax is imposed on property, income or purchases of goods and services, has yet been devised which is free of all discriminatory impact. In such a complex area in which no perfect alternative exist, the Court does well not to impose too rigorous a standard of scrutiny lest all local fiscal schemes become subjects of criticism under the Equal Protection Clause."

       Article 226-Judicial Review-The State Legislature is competent to levy a tax on entertainment i.e. entertainment duty. The Court in the exercise of the power of the judicial review can not question the wisdom or the policy of taxing statutes.-In the circumstances, we do not find any substance in the challenge to the imposition of entertainment duty under the Bombay Entertainments Duty Act, 1923 in respect of entertainment provided through the medium of Cable T.V. The State legislature has brought within the net of taxation an activity which clearly involves the provision of entertainment. The State Legislature is competent to levy a tax on entertainment, which is what the entertainment duty in the present case is. The State enactment does not encroach upon the Parliamentary enactment namely, the Cable T.V. Network Regulation Act, 1995. The legislature in structuring the levy has maintained the element of nexus required to ensure that the tax does not encroach upon a prohibited area. The measure of the tax does not disturb the element of nexus in the present case. Like other forms of business, Cable T.V. is exigible to taxation. The State Legislature has been cognizant of new forms of technology which provide fresh avenues of entertainment. The Court in the exercise of the power of judicial review cannot question the wisdom or the policy of taxing statutes. We do no find any substance in the challenge to the constitutional validity of the entertainment duty in the present case.

       Article 246, Schedule Entertainment Tax-The entries in the 7th schedule to the Constitution have to be given an interpretation of width and amplitude and must include all ancillary and subsidiary matters which can reasonably and fairly be said to be comprehended in them- The state legislatures clearly have the power to impose a tax on entertainment being provided by way of the modem technology in this electronic age.- The entries in the 7th Schedule to the Constitution, it is well settled, have to be given an interpretation of width and amplitude and must include all ancillary and subsidiary matters which can reasonably and fairly be said to be comprehended in them. The entries in the three lists to the 7th Schedule do not constitute a source of power but are fields of legislation. The power to legislate is given by Article 246 of the Constitution. The position in law is equally well settled that in the Seventh Schedule to the Constitution the fields of legislation dealing with taxation are dealt with separately from other subjects. The Constitution empowers the State Legislatures to impose a tax on entertainments.

       The Constitution is an organic document and the vision of the Founding fathers cannot, by a process of artificial construction, be frozen at the scientific knowledge and technology which was available at the point of time when the Constitution was drafted. The visition of those who framed the Constitution was broad enough to reflect that as the generations would unfold, the Constitution would have to be interpreted to meet new circumstances and problems. Cable TV and the progressive evolution of technology in the Electronic age is thus not outside the taxing powers of the States. In so far as entertainment which is provided by instruments of modem technology is concerned, the State Legislature clearly have the power to impose a tax on such entertainment and that in our view is what is being imposed by the State Legislature in the present case.

       The duty which is imposed in the present case is a duty on entertainment. The duty is imposed at a certain rate per T.V. set which receives Radio frequency signals for the exhibition of films or moving pictures with the and of an Antenna or other apparatus for securing transmission through the cable network. The taxing event is thus entertainment. The duty is imposed with reference to every television set connected to the cable net work and the collection of duty is made through the proprietor. That is the plain consequence of Section 3(4) of the Act.

       In Section 2 (a) the expression "entertainment" has been defined to include, in the case of television, exhibition with the aid of any type of antenna with a cable net work attached to it or cable television for which persons are required to make payment by way of contribution or subscription or installation or connection charges or any other charges collected in any manner whatsoever. The expression "exhibition" is defined for the purpose of Section 2(a) to include exhibition through the television with the aid of antenna and with cable net work attached to it or cable television. Section 2(b) Similarly defines payments for admission to include contribution, subscription, installation and connection charges and all other charges collected for television exhibition with the aid of Antenna with a cable network attached to it or cable television. Section 2(g) defines "place of entertainment" to include a house, building, tent or any other place where relevant records pertaining to the management of providing cable television are kept. Section 2 (c) defines "proprietor" to include a person responsible for or for the time being in charge of management of providing cable connections from any type of Antenna or cable television. These provisions clearly amplify the nature of the duty sought to be imposed in relation to the entertainment provided by the Cable T.Y. network.

       The Cable T.V. network provides entertainment. In so far as common perceptions or ordinary understandings are a guide to legislative interpretation, entertainment is what the Cable T. V. is perceived to provide. The expression "entertainment", it is now well settled, includes, entertainment of any form of description. In Geeta Enterprises v. State of U.P, AIR 1983 SC 1098, the Supreme Court considered the meaning of the expression "entertainment" in the context of the U.P. Entertainment and Betting Tax Act, 1937. Section 2 (3) of the Act defines the expression to include any exhibitions, performance, amusement, game or support to which persons are admitted for payment. The Court held that the expression "entertainment" is neither a scientific nor a technical term and its meaning must be that as popularly understood of as understood in common parlance.