JUDGMENT
A. Lakshmana Rao, J.
1. In this batch of writ petitions, the validity of Ordinance No. 8 of 1988 authorising the levy of tax of Rs. 50 on every show of any film on television screen is questioned, as being violative of articles 14 and 19(1)(g) of the Constitution of India. The Ordinance has been replaced by the A.P. Entertainments Tax (Amendment) Act (23 of 1988). The petitioners in all these writ petitions are exhibitors of films on video. All of them obtained licence in form “K” for public exhibition of films on video, as required under the provisions of the A.P. Cinemas (Regulation) Act, 1955 and the Rules made thereunder. The licensing authority fixes the maximum number of persons to be admitted at a time and also the maximum rates of admission. They are mentioned in the licence. The exhibitors are liable to pay the entertainment tax and show tax levied under the A.P. Entertainments Tax Act, 1939 (hereinafter referred to as “the Act”) and the Rules made thereunder. In these writ petitions, only the levy and payment of show tax under section 4-A of the Act as amended by Ordinance No. 8 of 1988 is challenged and there is no dispute about the levy and payment of the entertainment tax under section 4 of the Act.
Prior to 20th May, 1988, the rates of show tax were as follows :
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Sl. Local area Rate of tax for
No. every show
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1 Municipal corporations, Secunderabad cantonment Rs. 6.00
area and the contiguous area of two kilometers
thereof.
2 Selection grade, special grade and first grade Rs. 6.00
municipalities and the contiguous area of two
kilometers thereof.
3 Second grade and third grade municipalities and Rs. 4.00
the contiguous area of two kilometers thereof.
4 Gram panchayats, selection grade gram Rs. 2.00
panchayats, townships and any other local area.
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2. With effect from 20th May, 1988, the rate of show tax had been enhanced by Ordinance No. 8 of 1988 which had been replaced by Act No. 23 of 1988. The revised rates are :
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Sl. Local area Rate of tax for
No. every show
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1 Municipal corporations, Secunderabad cantonment Rs. 12.00
area, selection grade, special grade and first
grade municipalities.
2 Second grade and third grade municipalities. Rs. 8.00
3 Gram panchayats, townships and any other local
authorities :
(a) With a population of 15,000 and above. Rs. 4.00
(b) With a population of less than 15,000 Rs. 2.00
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3. With effect from 20th May, 1988, sub-section (1-A) had been inserted in section 4-A of the Act, authorising the levy and payment to the State Government a tax of Rs. 50 on every show of any film on television screen exhibited through video cassette recorder in any of the local authorities of the State, in addition to the entertainment tax payable under section 4 of the Act. Questioning the validity of this provision, these writ petitions are filed.
4. It is not necessary to refer to the facts in each one of these writ petitions. It will suffice if we refer to the facts in one of the writ petitions, viz., W.P. No. 2314 of 1990. The petitioner had been granted licence in form “K” on March 12, 1987, for public exhibition of films on video for one year. It was renewed from time to time. The licensing authority fixed the maximum number of persons to be admitted at a time at 16 and the maximum rate of admission at Rs. 2 per head. The petitioner had been paying the entertainment tax of Rs. 68 per week and show tax at the rate of Rs. 2 per show as the video parlour in respect of which, the licence had been granted was situated in a gram panchayat. As he had been exhibiting two shows per day, he was paying show tax of Rs. 28 per week. He was served with a demand notice to pay show tax at the rate of Rs. 50 per show with effect from 20th May, 1988. It works out to Rs. 700 per week. Thus, the increase in show tax is from Rs. 28 to Rs. 700 per week.
5. It is stated in the counter-affidavit filed on behalf of the respondents that “once an Ordinance has been issued, it amounts that all the aspects have been examined before issue”. The petitioners are not prohibited from carrying on the trade or business of screening the films on video and the State Government has the power to levy different rates of tax “in the larger interest of public and revenue.” It is denied that the levy is either discriminatory or arbitrary or unreasonable.
6. It may be noticed that the enhancement of show tax with effect from 20th May, 1988, in respect of cinema theatre situated within the local limits of (1) the Municipal corporations, Secunderabad cantonment area, selection grade, special grade and first grade municipalities was from Rs. 6 to Rs. 12 per show; (2) Second grade and third grade municipalities was from Rs. 4 to Rs. 8 per show; (3) Gram panchayats with a population of 15,000 and above was from Rs. 2 to Rs. 4 per show. So far as the cinema theatres situated within the local limits of gram panchayats with a population of less than 15,000 are concerned, there was no enhancement in the rate of show tax and it continues to be Rs. 2 per show.
7. The main contention advanced on behalf of the petitioners is that the exhibitors of films on television screen through video cassette recorder are subjected to clear and hostile discrimination and the provisions of sub-section (1-A) of section 4-A of the Act levying tax of Rs. 50 per every show of any film on television screen are confiscatory in nature.
8. There is no dispute that prior to 20th May, 1988, the rate of show tax varied from Rs. 2 to Rs. 6 per show having regard to the local area where the cinema theatre or video parlour had been situated. The same rate of show tax had been levied in respect of cinema theatres and video parlours. After the amendment of section 4-A of the Act, with effect from 20th May, 1988, the rate of show tax had been enhanced in respect of cinema theatres and the enhanced rates varied from Rs. 2 to Rs. 12 per show depending upon the local area within which the cinema theatre was situated. After the amendment, these rates of show tax are made inapplicable to video parlours and they are subjected to levy of show tax at the rate of Rs. 50 per show.
9. Thus, it is abundantly clear that the exhibitors of films by means of a cinematograph in a cinema theatre are liable to pay show tax ranging from Rs. 2 to Rs. 12 per show, depending upon the nature of the local area in which the cinema theatre is situated. It is a matter of common knowledge that the number of seats in a cinema theatre will generally be in hundreds and the rate of admission will be more than Rs. 2 per seat at least in respect of some of the classes. Even if such a theatre is situated within the local limits of a Municipal corporation, or selection grade, or special grade, or first grade municipality, the show tax that can be levied in respect of such a theatre is only Rs. 12 per show and it cannot be more than Rs. 2 per show if the theatre is situated within the local limits of a gram panchayat, the population of, which is less than 15,000. If that is so, we are unable to understand how a video parlour referred to above, with a seating capacity for sixteen persons where films are exhibited on television screen through video cassette recorder can be subjected to a uniform rate of show tax of Rs. 50 per show irrespective of the nature of the local area within which it is located. It is no doubt true that the Legislature has wide discretion and greatest freedom in classifying persons or property for the purpose of taxation and it can pick and choose either objects or persons or methods or even rates of tax, if it does so reasonably. But at the same time, the Legislature shall refrain from making a hostile discrimination against a particular class of persons. Whereas the owner of a cinema theatre whose income per show will be much more than that of the owner of a video parlour, is subjected to levy of maximum show tax of Rs. 12 per show, we see no justification in levying show tax of Rs. 50 per show in respect of a video parlour. Thus, the provision is per se discriminatory.
10. Both of them have a fundamental right to carry on the trade or business of exhibiting films. It will not be inappropriate to say that the owners of cinema theatres have the potential to earn more than the owners of video parlours. In such a situation, it will be clearly arbitrary and unreasonable to subject a person, who earns less in the business to a higher rate of tax than the person, who earns more in carrying on the same or similar business. There need not be mathematical precision in levying the rates of tax, but there should be some classification where one is required, in order to eliminate obviously unjust results. If the sole intention of the Legislature is to eliminate the exhibitors of video films from the business under the cloak of taxation, such action is liable to be struck down as violative of articles 14 and 19(1)(g) of the Constitution of India. If the exhibitors of cinematograph films are not in a position to carry on their business successfully by reason of a number of video parlours having come into existence, that cannot be a ground for driving the owners of video parlours out of their business under the guise of taxation. If the Legislature uses the device of taxation for the purpose of achieving the object of improving the business prospects of the exhibitors of cinematograph films at the cost of exhibitors of video films, then it will be a clear case of colourable exercise of power.
11. Let us examine, having regard to the facts whether the provisions of sub-section (1-A) of section 4-A of the Act are confiscatory in nature, as urged by the learned counsel for the petitioners. The total number of seats in the petitioner-video parlour is 16. The rate of admission is Rs. 2 per seat. Even if all the 16 seats are occupied, the total collection per show will be only Rs. 32. But the exhibitor has to pay Rs. 50 towards show tax only. Thus, the exhibitor is left with no other alternative than to either close down his business or subject himself to the confiscatory measure of taxation by the State. Some of these video parlours are situated in villages providing entertainment to the villagers. It is true that some of them are situated in urban areas. In a few of the video parlours, such as the one in W.P. No. 5303 of 1990, the seating capacity may be around 50 divided into two classes of 25 seats each, with the rates of admission of Rs. 2 for the higher class and Rs. 1 for the lower class. It is quite evident that the State Legislature intended to permit public exhibition of films on television screen through video cassette recorder and made law authorising granting of licence for that purpose. Having granted licences thereby permitting the video parlours to carry on the business of screening films on video, if the State Legislature makes use of the device of taxation as a cloak to eliminate them from carrying on such trade or business, it amounts to colourable exercise of power.
12. For the reasons stated above, we hold that the levy is violative of articles 14 and 19(1)(g) of the Constitution of India.
13. In this context, it would be apposite to refer to the observations of the Constitution Bench of the Supreme Court in Rai Ramkrishna v. State of Bihar :
“In view of the recent decisions of this Court, Mr. Sastri also concedes that taxing statutes are not beyond the pale of the constitutional limitations prescribed by articles 19 and 14, and he also concedes that the test of reasonableness prescribed by article 304(b) is justiciable. It is, of course, true that the power of taxing the people and their property is an essential attribute of the Government and Government may legitimately exercise the said power by reference to the objects to which it is applicable to the utmost extent to which Government thinks it expedient to do so. The objects to be taxed so long as they happen to be within the legislative competence of the Legislature can be taxed by the Legislature according to the exigencies of its needs, because there can be no doubt that the State is entitled to raise revenue by taxation. The quantum of tax levied by the taxing statute, the conditions subject to which it is levied, the manner in which it is sought to be recovered, are all matters within the competence of the Legislature, and in dealing with the contention raised by a citizen that the taxing statute contravenes article 19, courts would naturally be circumspect and cautious. Where for instance it appears that the taxing statute is plainly discriminatory, or provides no procedural machinery for assessment and levy of tax, or that it is confiscatory, courts would be justified in striking down the impugned statute as unconstitutional …”
14. Reiterating the principle that the burden of proving the discrimination under a taxing statute is always heavier, another Constitution Bench of the Supreme Court pointed out in Twyford Tea Co. Ltd. v. State of Kerala
“Differences in treatment must be capable of being reasonably explained in the light of the object for which the particular legislation is undertaken. This must be based on some reasonable distinction between the cases differentially treated. When differential treatment is not reasonably explained and justified the treatment is discriminatory.”
15. In view of what is stated above, we hold that sub-section (1-A) of section 4-A of the A.P. Entertainments Tax Act, 1939, in so far as it authorizes the levy of a tax of Rs. 50 on every show of any film on television screen exhibited through video cassette recorder in any of the local authorities of the State is held to be unconstitutional, as being violative of articles 14 and 19(1)(g) of the Constitution of India. Accordingly, clause (iii) of sub-section (1-A) of section 4-A of the A.P. Entertainments Tax Act, 1939, is struck down.
16. The writ petitions are accordingly allowed with costs. Advocate’s fee Rs. 200 in each.
17. Writ petitions allowed.