2007 Supreme(SC) 822

2007(4) Supreme 438
SUPREME COURT OF INDIA
(From Andhra Pradesh High Court)
S.B. Sinha & Markandey Katju, JJ
Aashirwad Films — Petitioner
versus
Union of India & Ors — Respondent
Appeal (civil) 709 of 2004
Decided on : 18-05-2007
Counsel for the Parties :
For the Appellant : Anil Kumar Tandale, Advocate.
For the Respondent : R. Mohan, ASG., R. Sundaravaradhan, Sr. Adv., Manoj Saxena, Rajinish Kr. Singh, Rahul Shukla, A. Sanand, T.V. George, Mrs. Sandhya Goswami and V.K. Verma, Advocates.

IMPORTANT POINTS
A taxation statute for the reasons of functional expediency and even otherwise, can pick and choose to tax some of the people but the classification thus chosen must be reasonable and must bear a nexus with the object sought to be achieved.
It is difficult to laud the objective of the taxation statute which differentiates on the basis of language alone. This is definitely derisive of social attributes of the polity and Article 14 of the Constitution.

Headnote:Constitution of India – Articles 351 and 32 – In a case of different rates of entertainment tax on the basis of language, Article 351 of the Constitution of India would not have any role to play – Even assuming that there was a violation thereof, the same would not come within the purview of Part III of the Constitution of India and thus its application under Article 32 in relation thereto is not maintainable. (Para8).

       Constitution of India – Article 14 – The State undoubtedly enjoys greater latitude in the matter of a taxing statute – It may impose a tax on a class of people, whereas it may not do so in respect of the other class – A taxing statute, however, as is well known, is not beyond the pale of challenge under Article 14 of the Constitution of India. (Paras 9 and 10).

       AIR 1962 SC 1006 – Relied upon.

       Andhra Pradesh Entertainment Tax Act, 1939 – A taxation statute for the reasons of functional expediency and even otherwise, can pick and choose to tax some of the people but the classification thus chosen must be reasonable and must bear a nexus with the object sought to be achieved – It cannot be the object of any statute to be socially divisive in which event it may fall foul of broad constitutional scheme enshrined under Articles 19, 21 as also the Preamble of the Constitution of India. (Paras 14 and 15).

       AIR 1961 SC 552; AIR 1962 SC 1733; AIR 1969 SC 1094; AIR 2002 SC 2188; AIR 2006 SC 928 – Referred to.

       Constitution of India – Article 14 – It is difficult to laud the objective of the taxation statute which differentiates on the basis of language alone – This is definitely derisive of social attributes of the polity and Article 14 – In the instant matter, the classification solely on the basis of language, fails in its initiative to be called reasonable–The classification thus is arbitrary and as such violative of Article 14 of the Constitution of India. (Para18).

       (1992) 2 SCC 643; (1989) 3 SCC 698; (1993) 3 SCC 677 – Relied upon.

       Interpretation of Statute – Imposition of reasonable tax is a facet of good governance – Taxing statute like penal statues should receive strict construction, it cannot be arbitrary – It is well settled that generally speaking a tax imposed must be reasonable. (Paras 20 to 22).

       Civil Appeal No. 6345 of 2000; JT 2006 (4) SC 611; JT 2006 (9) SC 454 – Relied upon.

       Constitution of India – Article 14 – The purported classification only on the basis of language without anything more and in particular having regard to the difference in the rate of tax, in our opinion is ex-facie arbitrary – Different rates of entertainment tax had not been levied having regard to the nature of theatre, the area where they were situated or extent of occupancy etc. – It has not been explained as to whether cinema theatres exhibiting Telugu films suffer from any disadvantage which others had not been – It has not been shown as to why the same theatre where films in different languages are exhibited would be a class apart, only because at different times exhibit films produced in different languages – Moreover, how Telugu films have been treated as a separate class have not been stated – State of Andhra Pradesh imposed the said tax at the instance of the distributors of the films produced in local language which is per se discriminatory in nature – Impugned levy cannot be sustained being discriminatory in nature. (Paras 25 to 27)

       Facts of the case :

       Andhra Pradesh State Film Television and Theatre Development Corporation Ltd. fixing rates of entertainment tax in respect of Telugu film at 10% and that of non-Telugu film at 24%.

       Representations were made to the Government of Andhra Pradesh to withdraw the said purported discriminatory tax which was not acceded to.

       Findings of the Court :

       Impugned levy of tax cannot be sustained being discriminatory in nature.