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Supreme Court of India
Darshan Lal Mehra And 23 Others vs Union Of India And Others on 4 August, 1992
Equivalent citations: 1992 AIR 1848, 1992 SCR (3) 704
Author: K Singh
Bench: Kuldip Singh (J)
           PETITIONER:
DARSHAN LAL MEHRA AND 23 OTHERS

	Vs.

RESPONDENT:
UNION OF INDIA AND OTHERS

DATE OF JUDGMENT04/08/1992

BENCH:
KULDIP SINGH (J)
BENCH:
KULDIP SINGH (J)
RAMASWAMY, K.

CITATION:
 1992 AIR 1848		  1992 SCR  (3) 704
 1992 SCC  (4)	28	  JT 1992 (4)	417
 1992 SCALE  (2)113


ACT:
     U.P.  Nagar  Mahapalika Adhiniyam,	 1959-Sections	172,
2(77)-Theatre tax under Lucknow Nagar Mahapalika Theatre Tax
Rules, 1965-Fixing rate of tax on the basis of annual rental
value of cinemas-Whether  arbitrary or violative of  Article
14 of the Constitution of India, 1950.



HEADNOTE:
     The  proposal of the Nagar Mahapalika, Lucknow to	levy
theatre	 tax,  @ Rs. 5 per cinema show held  in	 a  building
assessed on annual rental value of Rs. 10,000 or more and  @
Rs. 3 per cinema show held in a building assessed on  annual
rental	value  of less than Rs. 10,000 was accepted  by	 the
State Government by following the procedure laid-down  under
the U.P. Nagar Mahapalika Adhiniyam, 1959.
     The  Lucknow Nagar Mahapalika Theatre Tax	Rules,	1965
were framed and enforced with effect from December 15,	1965
and the theatre tax was levied with effect from June 1,1967.
     The  rate	of tax was increased from time to  time	 and
finally by a notification dated October 30, 1979 the theatre
tax  was enhanced to Rs.25 per show on all  class-I  cinemas
with annual rental value more than Rs. 10,000 and Rs. 20 per
show on all class II cinemas with annual rental value of Rs.
10,000 or less.
     The theatre tax imposed by Nagar Mahapalika,  Allahabad
was  challenged before the High Court under Article  226  of
the Constitution of India.  A Single Judge of the High Court
dismissed the writ petition.  Appeal against the judgment of
the  Single Judge was dismissed by a Division  Bench,  which
was  reported as Niranjan Lal Bhargava Trust,  Allahabad  v.
State of U.P. & others, (1972) All. L.J. 279.
     Petitioner	 No.6 challenged the initial  imposition  of
theatre	 tax  by filing a civil suit in the court  of  Civil
Judge,	which  was dismissed.  A Single	 Judge of  the	High
Court, following the judgment in Niranjan Lal Bhargava
						       705
Trust case, dismissed the second appeal filed by him.
     About 20 days after the dismissal of the regular second
appeal	by  the High Court, the petitioners  filed  a  Write
Petition  No.3512/76  in  the  High  Court  challenging	 the
imposition  of	theatre	 tax.  The said	 petition  is  still
pending before the High Court.
     The  petitioners - the cinema owners/lessees  in  these
Writ petitions under Article 32 of the Constitution of India
challenged the imposition of theatre tax by the	 Respondent-
Nagar Mahapalika, Lucknow, contending that Section 172(2) of
the   Act  was	unconstitutional  because  the	 legislature
abdicate   its	 function  by	delegating   the   essential
legislative  powers upon  the Nagar palikas to levy  all  or
any  of	 the  taxes  enumerated in  the	 Section;  that	 the
classification	of  cinemas on the basis  of  annual  rental
value  for  the	 purpose  of fixing  the  rate	of  tax	 was
arbitrary  and	as such was violative of Article 14  of	 the
Constitution  of India; and that the classification  had  no
nexus with the objects sought to be achieved.
     Dismissing	  the	writ   petitions   of	the   cinema
owners/lessesse, this Court,
     HELD : 1.01. The taxes under Section 172(2) of the U.P.
Nagar  Mahapalika  Adhiniyam,  1959 can	 be  levied  by	 the
Mahapalikas only for implementing those purposes and for  no
other  purpose.	  The Mahapalikas have	to  provide  special
civic  amenities  at the places where  cinemas/theatres	 are
situated.   So long as the tax has a reasonable relation  to
the  purposes  of  the Act the same cannot  be	held  to  be
arbitrary.  The rate of tax to be levied and the persons  or
the class of persons liable to pay the same is determined by
inviting  objections,  which  are  finally  considered	 and
decided by the State Government. [709 F-H]
     1.02.  The	 tax  is  levied  in  accordance  with	 the
statutory rules framed by the State Government and the	said
rules  are laid before each House of the  State	 Legislature
for  not  less	than  14  days	and  are  subject  to	such
modifications as the legislature may make during the session
they are so laid. [710A]
     Gopal Narain v. State of Uttar Pradesh and Anr., [1964]
4  S.C.R.  869	and The Western India  Theatres	 Limited  v.
Municipal  Corporation of the City of Poona, [1959] Supp.  2
S.C.R. 71, followed.
     1.03.  The annual rental value under the  Act  indicate
the extent of the
						       706
accommodation,	its  quality, the locality in  which  it  is
situated and other factors which relate to the enjoyment  of
the  building.	The  theatre   tax is levied  as  a  tax  on
amusement and entertainment. The amusement in a building  is
affected   by  all  those  factors  which  are	taken	into
consideration  while fixing the annual rental value  of	 the
building. Higher rental value in relation to a cinema  house
shows that it has better accommodation, better situation and
better	facilities  for	 amusement  and	 entertainment.	 The
higher annual value is indicative of a better quality cinema
house,	as  compared to a cinema house, which has  a  lesser
annual	rental	value.	There  is  nothing  unreasonable  or
improper  in classifying the cinema houses on the  basis  of
annual rental value. [710H-711B]
     The  Western  Indian Theatres Ltd.	 v.  The  Cantonment
Board,	Poona  Cantonment,,  [1959]  Supp  (2)	S.C.  R.  63
followed.
     Niranjan Lal Bhargave Trust, Allahabad v. State of U.P.
and others, (1972) All L.J. 279, approved.



JUDGMENT:

ORIGINAL JURISDICTION : Writ Petition (Civil) Nos.
2426-2449 of 1980.

(Under Article 32 of the Constitution of India).
M.S. Ganesh for the petitioners.

Darshan Lal Misra, Ms. A. Subhashini, Ms. Shobha
Dikshit and P.K. Pillai for the Respondents.

The Judgment of the Court was delivered by
KULDIP SINGH. J. The imposition of “theatre tax” by the
Nagar Mahapalika, Lucknow has been challenged by the cinema
owners/lessees in these petitions under Article 32 of the
Constitution of India.

Section 172 and 2(77) of the U.P. Nagar Mahapalika
Adhiniyam 1959 (the Act) are reproduced hereunder :
Section 172 : Taxes to be imposed under this Act.
(1) For the purposes of this Act and subject to the
provisions thereof and of Article 285 of the
Constitution of India, the Mahapalika shall impose
the following taxes, namely :

707

(a) property taxes,

(b) ……………

(c) ……………

(2) In addition to the taxes specified in sub-
section (1), the Mahapalika may for the purposes of
this Act and subject to the provisions thereof
impose any of the following taxes, namely

(a) a tax on trades, callings and professions and
holding of public or private appointments;

(b) ……………

(c) ……………

(d) ……………

(d) ……………

(e) ……………

(f) ……………

(g) ……………

(h) ……………

(i) a theatre tax; and

(j) any other tax which the State Legislature has
the power under the Constitution of India to impose
in the State.

(3) The mahapalika taxes shall be assessed and
levied in accordance with the provisions of this
Act and the Rules and bye-laws framed thereunder.
(4) Nothing in this section shall authorise the
imposition of any tax which the State Legislature
has no power to impose in the State under the
Constitution of India.

Section 2 : In this Act unless there be something
requgnant to the subject or context-

(77) “theatre tax” means a tax on amusement or
entertainments.

708

Sub-Section (1) of Section 199 of the Act requires the
Nagar Mahapalika to make a preliminary proposal specifying
the tax which it desires to impose under section 172(2) of
the Act, the persons or class of persons to be made liable,
the amount or rate levyable for each such person or class of
persons and any other information which the Government
requires. It further requires the executive committee of the
Nagar Mahapalika to draft the rules in the respect which are
finally to be framed by the State Government. The draft
rules are published in the prescribed manner to enable the
affected public to file objections. Section 200 of the Act
makes it obligatory for the Nagar Mahapalika to consider
the objections so received and to re-publish the draft rules
in case any change is made therein as a result of such
consideration. After considering all the objections the
draft rules are finalised by the Nagar Mahapalika and are
forwarded to the State Government along with the objections.
Section 201 of the Act empowers the State Government to
reject, modify or to accept the proposed rules. Under
Section 202 of the Act it is only after the rules are
finalised by the State Government that the Nagar Mahapalika
can pass a special resolution imposing the tax from the date
to be specified. Under section 203 the special resolution is
sent to the Government and the tax is imposed on the
publication of the resolution in the Government gazette.
Section 540(4) of the Act provides that all rules made
under the Act shall be laid for not less than 14 days before
each House of the State Legislature as soon as they are made
and shall be subject to such modifications as the
legislature may make during the session they are to laid.

The proposal of the Nagar Mahapalika, Lucknow to levy
theatre tax, @ Rs.5 per cinema show held in a building
assessed on annual rental value of Rs. 10,000 or more and @
Rs. 3 per cinema show held in a building assessed of annual
rental value of less than Rs. 10,000, was accepted by the
State Government by following the procedure laid-down under
the act. The rules called The Lucknow Nagar Mahapalika
Theatre Tax Rules were framed and enforced with effect from
December 15, 1965 and thereafter the tax was levied with
effect from June 1, 1967. The rate of tax was increased from
time to time and finally by a notification dated October 30,
1979 published in the U.P. Government Gazette dated October
31, 1979 the theatre tax was enhanced to Rs. 25 per show on
all class-I- Cinemas with annual rental value of more than
Rs. 10,000 and Rs. 20 per show on all class II cinemas with
annual rental value of Rs. 10,000 or less.

709

At this stage we may notice the fact that the theatre
tax imposed by Nagar Mahapalika Allahabad was challenged by
the cinema exhibitors before the Allahabad High Court by way
of a writ petition under Article 226 of the Constitution of
India. The grounds of attack were substantially the same as
before us in these petitions A learned Single Judge of the
High Court dismissed the writ petition. Appeal against the
judgment of the learned Single Judge was dismissed by a
Division Bench consisting of R.S. Pathak and H. Swarup, JJ.
The judgment rendered by the Division Bench of the High
Court is reported as Niranjan Lal Bhargava Trust, Allahabad
v. State of U.P. & others, (1972) All L.J. 279.

Gulu Thadani, petitioner No.6 before us challenged the
initial imposition of theatre tax by filing a civil suit in
the court of Civil Judge, Lucknow which was dismissed. He
contested the suit up to the High Court. A learned Single
Judge of the High Court, following the judgment in Niranjan
Lal Bhargava Trust case, dismissed the second appeal filed
by Gulu Thadani on November 27, 1976. On December 17, 1976,
about 20 days after the dismissal of the regular second
appeal by the High Court, the petitioners before us filed a
writ petition No.3512/76 in the Allahabad High Court
(Lucknow Bench) challenging the imposition of theatre tax on
various grounds. The said petition is still pending before
the High Court.

The learned counsel for the petitioners has contended
that Section 172(2) of the Act is unconstitutional because
the legislature has abdicated its function by delegating the
essential legislative powers upon the Nagar Palikas to levy
all or any of the taxes enumerated in the Section. According
to him the said power is unguided and uncanalised. We do not
agree with the learned counsel. Section 172(2) of the Act
authorises the Mahapalikas to impose the taxes mentioned
therein, “for the purposes of this Act”. The obligations and
functions cast upon the Mahapalikas are laid down in various
provisions of the Act. The taxes under Section 172(2) of the
Act, therefore, can be levied by he Mahapalikas only for
implementing those purposes and for no other propose. The
Mahapalikas have to provide special civic amenities at the
places where cinemas/theatres are situated. So long as the
tax has a reasonable relation to the purposes of the Act the
same cannot be held to be arbitrary. The rate of tax to be
levied and the persons or the class of persons liable to pay
the same is determined by inviting objections which are
finally considered and decided by the State Government.
There is no force in the argument that the legislature has
710
abdicated its function to the Mahapalikas. The tax is levied
in accordance with the statutory rules framed by the State
Government and the said rules are laid before each House of
the State Legislature for not less than 14 days and are
subject to such modifications as the legislature may make
during the session they are so laid. The view we have taken,
we are supported by the judgments of this Court, in Gopal
Narain v. State of Uttar Pradesh and Anr.,
[1964] 4 S.C.R.
869 and The Western India Theatres Limited v. Municipal
Corporation of the
city of Poona, [1959] Supp. 2 S.C.R. 71.
We , therefore reject the contention raised by the learned
counsel for the petitioners.

The second contention raised by the learned counsel for
the petitioner is that the classification of cinemas on the
basis of annual rental value for the purpose of fixing the
rate of tax is arbitrary and as such is violative of Article
14 of the Constitution of India. According to him the
classification has no nexus with the objects sought to be
achieved. We do not agree. In The Western India Theatres
Ltd. v. The Cantonment Board, Poona, Cantonment,
[1959] Supp
2 S.C.R. 63 the Cantonment Board, Poona imposed
entertainment tax on cinemas. Rs. 10 per show was levied on
the two cinemas of Western India Theaters Ltd. and Rs. 5 per
show in other cases. The argument raised before this court
to the effect that the Cantonment Board had singled-out the
two cinema houses for discriminatory treatment by imposing
higher rate of tax, was answered as under :
“It may not be unreasonable or improper if a higher
tax is imposed on the show given by a cinema house
which contains large seating accommodation and is
situate in fashionable or busy localities where the
number of visitors is more numerous and in more
affluent circumstances than the tax that may be
imposed on shows given in a smaller cinema house
containing less accommodation and situate in some
localities where the visitors are less numerous or
financially in less affluent circumstances, for the
two cannot, in those circumstances, be said to be
similarly situate”.

The annual rental value under the Act indicate the
extent of the accommodation, its quality, the locality in
which it is situated and other factors which relate to the
enjoyment of the building. The theatre tax is
711
levied as a tax on amusement and entertainment. The
amusement in a building is affected by all those factors
which are taken into consideration while fixing the annual
rental value of the building. Higher rental value in
relation to a cinema house shows that it has better
accommodation, better situation and better facilities for
amusement and entertainment. The higher annual value is
indicative of a better quality cinema house as compared to a
cinema house which has a lesser annual rental value. We are,
therefore, of the view that there is nothing unreasonable or
improper in classifying the cinema houses on the basis of
annual rental value. The learned counsel for the petitioners
has not raised any other point before us.

The writ petitions are dismissed with costs. We
quantify the costs as Rs. 1000 to be paid by each petitioner.

V.P.R.					 Petitions dismissed.
						       712




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