Aashirwad Films Vs. Union of India &
Ors  Insc 623 (18 May 2007)
S.B. Sinha & Markandey Katju
S.B. SINHA, J :
1. Constitutionality of a notification issued by the Government of the
Andhra Pradesh levying different rates of entertainment tax is in question in
this Writ Petition filed by the petitioner herein under Article 32 of the
Constitution of India. The petitioner herein carries on its business as a
distributor of motion film at Hyderabad. The field of his activity is said to
be distribution of Hindi films in the State of Andhra Pradesh.
2. The State of Andhra Pradesh made an Act known as "Andhra Pradesh
Entertainment Tax Act, 1939". The said Act was enacted in terms of Entry
No. 62 of List II of the VII Schedule of the Constitution of India which reads
as under :- "62. Taxes on luxuries including tax on entertainment,
amusement and betting and gambling."
3. It is not in dispute that the rate of tax in respect of Telugu film was
fixed at 10% and that of non-Telugu film has been fixed at 24%.
4. Representations were made to the Government of Andhra Pradesh to withdraw
the said purported discriminatory tax by the Andhra Pradesh State Film
Television and Theatre Development Corporation Ltd. in terms of its letter
dated 9th/11th December, 2002 addressed to the Secretary to the Government, GA
(I&PR) Department, Secretariat, Hyderabad as also other bodies and
parliamentarians, which was not acceded to. The decision of the State was
communicated to the petitioner by the Principal Secretary to the Government in
terms of its letter dated 19.9.2003 stating;
"I invite attention to the reference cited and inform that Government
have carefully examined your representation for grant of Tax relief to the
Hindi Films on par with Telugu Films and consider that there is no need to
extend such concession.
Accordingly the representation first cited is hereby rejected."
5. We may notice that the number of Hindi Films certified by the Censor
Board is highest in India. Films made in Telugu, however, appears to be next in
number as would appear from the following comparative chart:- COMPARATIVE CHART
SHOWING NUMBER OF INDIAN FILMS (LANGUAGE-WISE) CERTIFIED IN INDIA IN 2001, 2002
& 2003 _________________________________________________ No. Language 2003
1. Hindi 222 218 230
2. Telugu 155 167 206
3. Tamil 151 178 196
4. Kannada 109 113 93
5. Malayalam 64 101 135
6. Bengali 49 47 48
7. Marathi 25 20 18
8. Assamese 17 17 13
9. Gujarati 14 15 12
10. Chhattisgarhi 4 12 14
11. English 23 12 8
12. Oriya 13 10 6 .
6. Mr. Anil Kumar Tandale, learned counsel appearing on behalf of the Writ
Petitioner inter-alia would submit that the impugned levy is not justified
1. It contravenes Article 351 of the Constitution of India.
2. It is discriminatory in nature and thus ultra-vires Article 14 thereof.
7. Mr. R. Sundaravaradhan, learned senior counsel appearing on behalf of the
respondent on the other hand would submit that (i) Article 351 of the
Constitution of India has no application in the instant case.
(ii) The State enjoys a greater latitude in imposing different types of
taxes on different classes of the people.
(iii) In any event, as the Writ Petition does not contain any ground on the
basis whereof, the plea of discrimination could be raised, the same should not
be entertained by this Court.
8. We are not impressed with the submission of Mr. Anil Kumar Tandale,
learned counsel that in a case of this nature, Article 351 of the Constitution
of India would have any role to play. 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.
9. The State undoubtedly enjoys a 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.
10. A taxing statute, however, as is well known, is not beyond the pale of
challenge under Article 14 of the Constitution of India.
11. In M/s. Chhotabhai v. Union of India [AIR 1962 SC 1006], it was stated :
"(37) But it does not follow that every other Article of Part III is
inapplicable to tax laws. Leaving aside Art. 31(2) that the provisions of a tax
law within legislative competence could be impugned as offending Art. 14 is
exemplified by such decisions of this Court as Suraj Mal Mohta & Co. v.
A.V. Visvanatha Sastri, (1955) 1 SCR 448 : (AIR 1954 SC 545), and Shree
Meenakshi Mills Ltd., Maduari v. A.V. Visvanatha Sastri, (1955) 1 SCR 787 : (
(S) AIR 1955 SC 13). In Moopil Nair v. State of Kerala, AIR 1961 SC 552 the
Kerala Land Tax Act was struck down as unconstitutional as violating the
freedom guaranteed by Art. 14. It also goes without saying that if the
imposition of the tax was discriminatory as contrary to Art. 15, the levy would
12. A taxing statute, however, enjoys a greater latitude. An inference in
regard to contravention of Article 14 would, however, ordinarily be drawn if it
seeks to impose on the same class of persons or occupations similarly situated
or an instance of taxation which leads to inequality. The taxing event under
the Andhra Pradesh State Entertainment Tax Act is on the entertainment of a
person. Rate of Entertainment tax is determined on the basis of the amount
collected from the visitor of a cinema theatre in terms of the entry fee
charged from a viewer by the owner thereof.
13. It is not the case of the respondent that the imposition of different
rates of entertainment tax is justified on any ground other than language.
Entertainment of a person may not wholly depend upon the language of the
film he sees. A film may be produced in one language and may be dubbed in
another. Even within a State, people belonging to different regions may speak
different languages, although the State language may be one.
14. It has been accepted without dispute that taxation laws must also pass
the test of Article 14 of the Constitution of India. It has been laid down in a
large number of decision of this Court that a taxation statute for the reasons
of functional expediency and even otherwise, can pick and choose to tax some.
Importantly there is a rider operating on this wide power to tax and even
discriminate in taxation: that the classification thus chosen must be
reasonable. The extent of reasonability of any taxation statute lies in its
efficiency to achieve the object sought to be achieved by the statute. Thus,
the classification must bear a nexus with the object sought to be achieved [See
Moopil Nair v. State of Kerala AIR 1961 SC 552, East India Tobacco Co. v. State
of Andhra Pradesh AIR 1962 SC 1733, V. Venugopala Ravi Varma Rajah v. Union of
India and Anr. AIR 1969 SC 1094, Assistant Director of Inspection Investigation
v. Kum. A.B. Shanthi AIR 2002 SC 2188, The Associated Cement Companies Ltd. v.
Government of Andhra Pradesh and Anr. AIR2006SC928]
15. Objectives in a statute may have a wide range. But the entire matter
should also be considered from a social angle. In any case, 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.
16. In that behalf, it is important to read the object of a taxation statute
on the touchstone of social values as mentioned in the Constitution. An adverse
conclusion can be drawn if a particular statute goes against such values. It is
on thing to say that the taxation statute does not further social good, but
quite another when it disturbs the social fabric. The court may take adverse
note in respect to statutes falling in the latter category. We herein note two
cases where an attempt has been made to raise this discussion to the pedestal
of Directive Principles. In Sri Srinivasa Theatre and Ors. v. Government of
Tamil Nadu and Ors. [(1992) 2 SCC 643], this Court held:
"Article 14 of the Constitution enjoins upon the State not to deny to
any person 'Equality before law' or 'the equal protection of laws' within the
territory of India. The two expressions do not mean the same thing even if
there may be much in common Equality before law is a dynamic concept having
many facets. One facet - the most commonly acknowledged - is that there shall
be no privileged person or class and that none shall be above law. A facet
which is of immediate relevance herein is the obligation upon the State to
bring about, through the machinery of law, a more equal society envisaged by
the preamble and Part IV of our Constitution. For, equality before law can be
predicated meaningfully only in an equal society i.e., in a society
contemplated by Article 38 of the Constitution, which reads:
38. State to secure a social order for the promotion of welfare of the
people. (l) The State shall strive to promote the welfare of the people by
securing and protecting as effectively as it may a social, economic and
political, shall inform all the institutions of the national life.
(2) The State shall, in particular, strive to minimise the inequalities in
income, and endeavour to eliminate inequalities, in status, facilities and
opportunities, not only amongst individuals but also amongst groups of people
residing in different areas or engaged in different vocations.
The instrument of taxation is not merely a means to raise revenue in India;
it is, and ought to be, a means to reduce inequalities.
You don't tax a poor man. You tax the rich and the richer one gets,
proportionately greater burden he has to bear. Indeed, a few years ago, the
Income-tax Act taxed 94p out of every rupee earned by an individual over and
above Rupees one lakh. The Estate Duty Act, no doubt since repealed, Wealth-tax
Act and Gift- tax Act are all measures in the same direction. It is for this
reason that while applying the doctrine of classification - developed mainly
with reference to and under the concept of "equal protection of laws"
Parliament - is allowed more freedom of choice in the matter of taxation vis-a-
vis other laws...In the matter of taxation it is, thus, not a question of power
but one of constraints of policy - the interests of economy, of trade,
profession and industry, the justness of the burden, its 'acceptability' and
other similar considerations. We do not mean to say that taxation laws are
immune from attack based upon Article 14. It is only that Parliament and
legislatures are accorded a greater freedom and latitude in choosing the
persons upon whom and the situations and stages at which it can levy tax.
We are not unaware that this greater latitude has been recognised in USA and
UK even without resorting to the concepts of 'equality before law' or "the
equal protection of laws" - as something that is inherent in the very
power of taxation and it has been accepted in this country as well. In the
context of our Constitution, however, there is an added obligation upon the
State to employ the power of taxation - nay, all its powers - to achieve the
goal adumbrated in Article 38."
17. In Elel Hotels and Investments Limited and Others v. Union of India
[(1989) 3 SCC 698], Justice Venkatachaliah observed:
"It is now well settled that a very wide latitude is available to the
legislature in the matter of classification of objects, persons and things for
purposes of taxation. It must need to be so, having regard to the complexities
involved in the formulation of a taxation policy. Taxation is not now a mere
source of raising money to defray expenses of government. It is a recognised
fiscal tool to achieve fiscal and social objectives. The differentia of
classification presupposes and proceeds on the premise that it distinguishes
and keeps apart as a distinct class hotels with higher economic status
reflected in one of the indicia of such economic superiority"
18. The fact of the matter remains that it is difficult to laud the
objective of the taxation statute in the instant matter which differentiates on
the basis of language alone. This is definitely derisive of social attributes
of the polity and Article 14 in its basic form i.e. equality before law. If any
classification seeks to take refuge of exception under reasonable differentia
category under Article 14, it must stay clear of the broad constitutional
mandate as mentioned hereinbefore. 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.
19. In Venkateshwara Theatre v. State of Andhra Pradesh and Others [(1993) 3
SCC 677] this court observed:
"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, so long as it refrains from clear and
hostile discrimination against particular persons or classes."
20. It is also required to be realized that imposition of reasonable tax is
a facet of good governance.
21. Another aspect of the matter cannot also be lost sight of. Taxing
statute like penal statues should receive strict construction. It cannot be
arbitrary. [See Bidhannagar (Salt Lake) Welfare Asson. V. Central Valuation
Board & Ors., Civil Appeal No. 6345 of 2000 decided this date]
22. It may be true that the Court ordinarily is not concerned with the rate
of tax unless the same is wholly arbitrary or confiscatory. However, it is well
settled that generally speaking a tax imposed must be reasonable. We may only
notice that a Constitution Bench of this Court in Jindal Stainless Ltd. v.
State of Haryana & Ors. [JT 2006 (4) SC 611] stated :
"38. Tax is levied as a part of common burden. The basis of a tax is
the ability or the capacity of the taxpayer to pay.
The principle behind the levy of a tax is the principle of ability or
capacity. In the case of a tax, there is no identification of a specific
benefit and even if such identification is there, it is not capable of direct
measurement. In the case of a tax, a particular advantage, if it exists at all,
is incidental to the States' action. It is assessed on certain elements of
business, such as, manufacture, purchase, sale, consumption, use, capital etc.
but its payment is not a condition precedent. It is not a term or condition
of a licence. A fee is generally a term of a licence. A tax is a payment where
the special benefit, if any, is converted into common burden."
23. In Hardev Motor Transport v. State of M.P. & Ors. [JT 2006 (9) SC
454], this Court stated;
"29. Section 3 of the 1991 Act is the charging section. It provides
that the tax shall be levied on every motor vehicle used or kept for use in the
State at the rates specified in the First Schedule. The levy of tax, therefore,
is on the motor vehicles. Its rate may vary keeping in view its use or the
24. This Court in this case is not concerned with the application of test of
reasonableness while considering the constitutionality of a statute. The test
of reasonableness, however, would vary from statute to statute and the nature
of the right sought to be infringed or the purpose for imposition of the
restriction. It is also not a case where a Section of the people have been
picked up and they form the constituted class by itself. It is furthermore not
a case where the State has picked up and chosen districts, objects, methods in
the matter of imposition of tax. However, although a legislative body has a
wide discretion, and taking statute may not be held invalid unless the classification
is clearly unreasonable and arbitrary but it is also trite that class
legislation is that which makes an improper discrimination by conferring
particular privileges. "Class legislation is that which makes an improper
discrimination by conferring particular privileges upon a class of persons,
arbitrarily selected from a large number of persons, all of whom stand in the
same relation to the privilege granted and between whom and the persons not so
favoured no reasonable distinction or substantial difference can be found
justifying the inclusion of one and the exclusion of the other from such
privilege. A classification must not be arbitrary, artificial or evasive and
there must be a reasonable, natural and substantial distinction in the nature
of the class or classes upon which the law operates."
(See Weaver's Constitutional Law, Page 397)
25. 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. The burden was, therefore, on the
State to show that the imposition was justified. 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. Although the legislature enjoys a greater freedom and
latitude in chosing person upon whom and suggest upon which it can levy tax, it
is trite that taxing legislations are not immune from attack based on Article
14. It is also not the case of the respondent State that in imposing different
rate of tax, they intend to achieve an avowed object envisaged under Part IV of
the Constitution of India.
26. We, furthermore, may take judicial notice of the fact and keeping in
view that this case was tagged with other matters where it had been brought to
our notice that some States have been making hostile discriminations at the
instance of the distributors of the films produced in local languages.
State of Andhra Pradesh imposed the said tax on the said basis which is per
se discriminatory in nature.
27. We are, therefore, of the opinion that the impugned levy cannot be
sustained being discriminatory in nature. It is struck down accordingly.
Petitioner would, thus, be bound to pay tax at the rate at which
entertainment tax has been levied in respect of Telugu films. The Writ Petition
is allowed with costs. Counsel's fees assessed at Rs. 50,000/-.
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