JUDGMENT

S. C. AGRAWAL, J. :—These appeals and special leave petition raise common questions relating to the constitutional validity of Sections 4 and 5 of the Andhra, Pradesh Entertainments Tax Act, 1939 (hereinafter referred to as the Act), as amended by Act 24 of 1984, providing for imposition of entertainments tax in respect of entertainments held in cinema theatres located in the State of Andhra Pradesh.

2. The Act has been enacted to provide for the levy of taxes on amusements and other entertainments. Prior to January 1, 1984, Section 4 of the Act provided for levy of entertainment tax at a rate fixed on the basis of percentage of the payment made by a person for admission to any entertainment. In addition, there was a provision in Section 4-A for levy of a fixed amount, by way of "show tax", for each show. By Act 58 of 1976, Section 4-C was introduced in the Act and Section 5 of the Act was substituted. Under Section 4C, it was provided that in respect of entertainments held within the jurisdiction of any local authority whose population did not exceed 25,000, a tax for every entertainment show would be levied, not on the basis of each payment for admission, but at a certain percentage of the gross collection capacity per show. The percentages for such levy were fixed according to the population of the local authority within the jurisdiction of which the entertainments were held. Gross collection capacity per show was defined in the Explanation to Section 4-C to mean the notional aggregate of all payments for admission the proprietor would realise per show, if all the seats or accommodation as determined by the licensing authority under the Andhra Pradesh Cinemas (Regulation) Act, 1955 in respect of the place of entertainment are occupied, and calculated at the maximum rate of payments for admission as determined by the said licensing authority. The levy of tax in the manner as prescribed under Section 4-C could be dispensed with if the proprietor of the theatre opted for the composition scheme contemplated by Section 5 whereunder it was open to a proprietor to enter into an agreement with the prescribed authority to compound the tax payable under Section 4C for a fixed sum which was to be arrived at in accordance with the formula prescribed under Section 5. According to this formula, the tax was payable on the basis of a percentage of the gross collection capacity per show for the fixed rounds of shows for the whole year and the number of shows was fixed on the basis of the number of shows exhibited in the previous year. This arrangement continued till December 31, 1983, whereafter the provisions of Sections 4, 4-A and 5 were amended by Act No. 24 of 1984.

3. The provisions of Sections 4, 4-A and 5, as amended by Act 24 of 1984, were as follows :

"Section 4.(1) There shall be levied and paid to the State Government a tax on the gross collection capacity on every show (hereinafter referred to as the entertainments tax) in respect of entertainments held in the theatres specified in column (2) of the table below and located in the located areas specified in the corresponding entry in column (1) of the said table, calculated at the rates specified in the corresponding entry in column (3) thereof.

THE TABLE

Local Area Theatre Rate of tax on the gross collection capacity per show

(1) (2) (3)

(a) Municipal corporations and the Secunderabad cantonment area and the contiguous area of two kilometres thereof. (i) Air-conditioned 29 percent

(ii) Air-cooled 28 percent

(iii) Ordinary (other than air-conditioned and air-cooled) 25 percent

(b) Selection grade municipalities and the contiguous area of two kilometres thereof. (i) Air-conditioned 28 percent

(ii) Air-cooled 27 percent

(iii) Ordinary (other than air-conditioned and air-cooled) 24 percent

(c) Special grade municipalities and contiguous area of two kilometres thereof. (i) Air-conditioned 27 percent

(ii) Air-cooled 26 percent

(iii) Ordinary (other than air-conditioned and air-co