RAMACHANDRAN Vs. STATE OF KERALA

JUDGEMENT

(1.) THE points for consideration in these writ petitions are the same and so they are disposed of by this common judgment.

(2.) WHEN the petitioners applied for renewal of their F. L. I. Licences, for the year commencing from 1-4-1969, paying Rs 5,000/- as renewal fee, the respondents insisted that the petitioners should pay Rs. 15,000/- as renewal fee for each of the Licences.

(3.) IN Western INdia Theatres v. Cantonment Board AIR. 1959 SC. 582, the Supreme Court had to consider the question whether a tax levied on each show of a film in a theatre is a tax on entertainment or whether it is a tax on trade, business or calling. The Supreme Court held that the tax being a tax on each show, it is a tax on entertainment. The Court in considering the scope of the corresponding Entry in the Government of INdia act, 1935, said: "the entry contemplates luxuries entertainments, and amusements as objects on which the tax is to be imposed. If the words are to be so regarded, as we think they must, there can be no reason to differentiate between the giver and the receiver of the luxuries, entertainments, or amusements and both may, with equal propriety, be made amenable to the tax. It is true that economists regard an entertainment tax as a tax on expenditure and, indeed when the tax is imposed on the. receiver of the entertainment, it does become a tax on expenditure, but there is no warrant for holding that entry to contemplate only a tax on moneys spent on luxuries, entertainments or amusement. The entry, as we have said, contemplates a law with respect to these matters regarded as objects and a law which imposed tax on the act of entertaining is within the entry whether it falls on the giver or the receiver of that entertainment " The Court further said that the tax cannot be regarded as a tax imposed on the privilege of carrying on any trade, business or calling as the tax is imposed on every show, that is to say, on every instance of the exercise of the particular trade, calling or employment and the tax can only be regarded as a tax on entertainment. If there is no show, the Court said, there is no tax. The Court then added: "a lawyer has to pay a tax or fee to take out a licence irrespective of whether or not he actually practices. That tax is a tax for the privilege of having the right to exercise the profession if and when the person taking out the licence chooses to do so. " A luxury tax therefore must be a tax on objects of luxuries. It might be a tax on money spent on luxuries. The tax here, is not on any object; it is not imposed on any object as luxury. The tax is not on foreign liquor as an object when stocked, bought or sold. It is well-settled that a taxing statute must pass the test of the equality clause of the constitution See Mooppil Nair v. State of Kerala AIR. 1961 SC. 552. A uniform licence fee of rupees fifteen thousand, if treated as luxury tax, will fly in the face of Art. 14. A licencee who stocks or sells, say thousand bottles of foreign liquor in a year cannot be treated in the same manner as a licencee who stocks or sells only 100 bottles. If the tax is regarded as a tax on foreign liquor as luxury, the tax must be geared to the quantity or value of the liquor stocked, sold or bought. IN fact S. 18 (2) makes it clear that the tax is on liquor. S. 18 (2) (a) speaks of a gallenage fee or vending fee. If the tax really is a tax on an object as luxury, there must be some relation between the tax and the object taxed either in value or in measurement. A Classification on the basis of value or measurement is absolutely essential. IN other words, the point is that if the levy is a tax on luxury, it must be upon an object as luxury, and a uniform levy unrelated to the value, quantity or measurement of the object, will be violative of Art. 14. If the levy is considered as a tax or fee for the privilege of carrying on a wholesale trade in foreign liquor, then it is not a luxury tax, for the privilege of carrying on the trade cannot be regarded as a luxury. Foreign liquor may be regarded as luxury, but not the privilege of engaging in the business of its sale.