STATE OF GUJARAT Vs. HOTEL RATRANI

JUDGEMENT

(1.) The main appeal by special leave arises from the judgment and order of the High Court of Gujarat, made on 1-3-1985/4-3-1985 in Special Civil Application No. 4459 of 1984 and batch. The other appeals relate to the decision of the Bombay High Court in Ramesh Waman Toke v. State of Maharashtra, AIR 1984 Bom. 345 : 1984 (2) Bom. CR 268. The Gujarat High Court has foliowed the decision of the Bombay High Court. In all the cases, the facts are not in dispute.

(2.) The respective legislatures brought Sec. 6-A in Bombay and the Gujarat Entertainment Tax Act, 1977 providing for levy and collection of tax on entertainment by Video Cassette Recorder or Player on Television or Videoscope in any place of entertainment or omnibus etc, at the rates specified therein. The latter Act came into force w.e.f. 14-6-1984. The Government made Rules by name, the Gujarat Cinema (Regulation and Exhibition by Video) Rules, 1984 (for short "the Rules"). The Rules have come into force on the same date. The respondents filed the writ petitions challenging the Constitutionality of Sec. 6-A, Rules 13(1) and 19(ii) of the Rules. The High Court while upholding the Constitutionality of the Act and the Rules held that the gross collection of the entertainment tax on the Video Recorder or Video Player on Television or Videoscope is arbitrary and violative of Art. 14. It also held that the Rules are ultra vires. Thus, these appeals by special leave.

(3.) In Venkateshwara Theatre v. State of A. P., 1993 (3) SCC 677 this Court considered the Constitutionality of Secs. 4, 4-A and 5 of the A. P. Entertainments Tax Act, 1939 (X of 1939) providing for levy and collection of entertainment tax on the gross collection in cinema theatre. It was held in paragraph 16 that entertainment tax that would be collected over and above the average occupancy rate would constitute the profit of the proprietor. In the circumstances, it cannot be said that the adoption of the system of Consolidated levy in Sec. 4(1), as amended by Act 24 of 1984, alters the nature of tax and it ceases to be a tax on entertainment.