The court upheld the constitutionality of the cess levied on cinema tickets, affirming the State's legislative competence under Entry 62 of List II, Schedule VII of the Constitution, linking it to the welfare of cultural activists.

JUDGMENT :

NITIN JAMDAR, C.J.

1. The Appellants-Petitioners questioned the constitutional validity of Section 3C of the Kerala Local Authorities Entertainments Tax Act. The learned Single Judge dismissed the writ petition. Challenging the judgment, the Appellants have filed this appeal under Section 5 of the Kerala High Court Act, 1958.

2. Appellant No. 1 is the President of the Kerala Film Exhibitors Federation. Appellant No. 2 is a theatre owner. Respondents are the State of Kerala, Ministry of Culture, Department of Cultural Affairs, Kerala Cultural Activists’ Welfare Fund Board, the local authorities, Kerala Poorakkali Kala Academy, Kerala Drama Workers’ Welfare Association, Pallassana Social Development Society, National Association of Malayalam Artists; and Kerala Cine Exhibitors Association.

3. The Kerala Local Authorities Entertainments Tax Act, 1961 (Act of 1961) received the assent of the Governor on 1 July 1961. The Act of 1961 unifies and amends the law relating to the imposition and collection of taxes on amusements and other entertainments by the local authorities in the State of Kerala. Section 3 is the charging provision for the levy of tax and the rate of tax. Under this provision, a local authority, as defined under Section 2(6) of the Act of 1961, may levy entertainment tax at the prescribed rate. Section 3A of the Act of 1961 levies entertainment tax on seating capacity and Section 3B for amusement parks.

4. Under the Kerala Cultural Activists’ Welfare Fund Act, 2010 (Act of 2010), a Fund is constituted to grant relief to cultural activists, promote their welfare, and pay pensions to those who engage in various forms of arts, literature, and cultural activities in the State of Kerala. The Act of 2010 also constitutes a Board known as “the Kerala State Cultural Activists’ Welfare Fund Board” for the administration and management of the Fund.

5. The impugned provision, Section 3C, was inserted into the Kerala Local Authorities Entertainments Tax Act, 1961, by the State of Kerala through the Kerala Local Authorities Entertainments Tax (Amendment) Act, 2013, for levy of a Cess on the cinema tickets. The proceeds of this Cess have to be remitted by the Secretary of the local authority to the account of the Kerala Cultural Activists’ Welfare Fund Board constituted under the Act of 2010. This amendment to insert Section 3C into the Act of 1961 was published in the Official Gazette on 25 April 2013.

6. The Appellants-Petitioners filed W.P. (C) No. 4195 of 2013 seeking a declaration that the incorporation of Section 3C in the Act of 1961 is unconstitutional, void and inoperative. Relief was also sought to issue a writ of mandamus restraining the Respondents from implementing the Act of 2013 in the State of Kerala with respect to any of the cinema theatres in the State. A further declaration that the Act of 2010, to the extent inconsistent with the Cine-Workers Welfare Fund Act, 1981, is void, inoperative and unconstitutional.

7. Along with the subject writ petition, W.P. (C) Nos. 5465 of 2013 and 12705 of 2013 were filed by the film viewers. The learned Single Judge heard these writ petitions together and dismissed the challenge by judgment dated 12 October 2015. The learned Single Judge held that the State of Kerala had the legislative competence to enact Section 3C of the Act of 1961, and the challenge was without merit. Being aggrieved, the Petitioners in W.P. (C) No. 4195 of 2013 have preferred this Appeal.

8. This Appeal was admitted on 21 October 2015, and by interim order, it was directed that no prosecution shall proceed in compliance with the Amendment Act, 2013. This interim order was modified by an order dated 6 January 2016, recording that the Court had not restricted the theatre owners from collecting the cess amount of Rs. 3/- and even the authorities from recovering the said amount from the concerned theatre owners. This order was challenged by the Petitioners in Special Leave to Appeal No. 12797 of 2016, and