S. C. AGRAWAL, J. - (1.) THESE appeals and special leave petition raise common questios relating to the constitutional validity of Sections 4 and 5 of the Andhra, Pradesh Entertainments Tax Act, 1939 (hereinafter referred to as 'the Act'), as amended by Act 24 of 1984, providing for imposition of entertainments tax in respect of entertainments held in cinema theatres located in the State of Andhra Pradesh.
(2.) THE Act has been enacted to provide for the levy of taxes on amusements and other entertainments. Prior to 1/01/1984, Section 4 of the Act provided for levy of entertainment tax at a rate fixed on the basis of percentage of the payment made by a person for admission to any entertainment. In addition, there was a provision in Section 4-A for levy of a fixed amount, by way of "show tax", for each show. By Act 58 of 1976, Section 4-C was introduced in the Act and Section 5 of the Act was substituted. Under Section 4C, it was provided that in respect of entertainments held within the jurisdiction of any local authority whose population did not exceed 25,000, a tax for every entertainment show would be levied, not on the basis of each payment for admission, but at a certain percentage of the gross collection capacity per show. THE percentages for such levy were fixed according to the population of the local authority within the jurisdiction of which the entertainments were held. 'Gross collection capacity per show' was defined in the Explanation to Section 4-C to mean the notional aggregate of all payments for admission the proprietor would realise per show, if all the seats or accommodation as determined by the licensing authority under the Andhra Pradesh Cinemas (Regulation) Act, 1955 in respect of the place of entertainment are occupied, and calculated at the maximum rate of payments for admission as determined by the said licensing authority. THE levy of tax in the manner as prescribed under Section 4-C could be dispensed with if the proprietor of the theatre opted for the composition scheme contemplated by Section 5 whereunder it was open to a proprietor to enter into an agreement with the prescribed authority to compound the tax payable under Section 4C for a fixed sum which was to be arrived at in accordance with the formula prescribed under Section 5. According to this formula, the tax was payable on the basis of a percentage of the gross collection capacity per show for the fixed rounds of shows for the whole year and the number of shows was fixed on the basis of the number of shows exhibited in the previous year. This arrangement continued till 31/12/1983, whereafter the provisions of Sections 4, 4-A and 5 were amended by Act No. 24 of 1984. The provisions of Sections 4, 4-A and 5, as amended by Act 24 of 1984, were as follows : "Section 4.(1) There shall be levied and paid to the State Government a tax on the gross collection capacity on every show (hereinafter referred to as the entertainments tax) in respect of entertainments held in the theatres specified in column (2) of the table below and located in the located areas specified in the corresponding entry in column (1) of the said table, calculated at the rates specified in the corresponding entry in column (3) thereof. JUDGEMENT_677_3_1993Html1.htm Explanation. - For the purpose of this section and Section 5, the term 'gross collection capacity per show' shall mean the notional aggregate of all payments for admission, the proprietor would realise per show if all the seats or accommodation as determined by the licensing authority under the Andhra Pradesh Cinemas (Regulation) Act, 1955, in respect of the place of entertainment are occupied and calculated at the maximum rate of payments for admission as determined by the said licensing authority. (2). The amount of tax under sub-section (1) shall be payable by the proprietor on the actual number of shows held by him in a week." "Section 4-A. (1) In-addition to the tax under Section 4, there shall be levied and paid to the State Government in the case of entertainments held in the local areas specified in column (f) of the Table below, a tax calculated at the rates specified in the corresponding entry in column (2) thereof : JUDGEMENT_677_3_1993Html2.htm (2) The tax leviable under sub-section (1) shall be recoverable from the proprietor. (3) The provisions of this Act other than Sections 4, 6 and 13 shall, so far as may be, apply in relation to the tax payable under sub-section (1) as they apply in relation to the tax payable under Section 4." "Secton 5. (1) In lieu of the tax payable under Section 4, in the case of the entertainments held in the theatres specified in column (2) of the table below and located in the local areas specified. in the corresponding entry in column (1) of the said table, the proprietor thereof may, at his option and subject to such conditions as may be prescribed, pay the amount of tax to the State Government every week as specified in the corresponding entry in column (3) thereof : JUDGEMENT_677_3_1993Html3.htm Explanation.- For the purposes of, computing the gross collection capacity per show in respect of any place of entertainment, the maximum seating capacity or accommodation and the maximum rate of payment for admission determined by the licensing authority under the Andhra Pradesh Cinemas (Regulation) Act, 1955, as on the date when the proprietor is permitted to pay tax under this section shall be taken into account. (2) The amount of tax under sub-section (1) shall be payable by the proprietor irrespective of the actual number of shows held by him in a week. (3) Any proprietor who opts to pay tax under this section shall apply in the prescribed form to the prescribed authority to be permitted to pay the tax under this section. (4) On being so permitted, such proprietor shall pay the tax for every week as specified in sub-section (1). (5) The option permitted under this section shall continue to be in force till the end of the financial year in which such option is permitted. (6) It shall be lawful for the prescribed authority to vary the amount of tax payable by the proprietor under sub-section (1) during the period of option permitted under this section at any time, if there is an increase in the gross collection capacity per show, in respect of the place of entertainment by virtue of an upward revision of the rate of payment for admission therein or of the seating capacity or accommodation thereof or where the local area in respect of which permission is granted is upgraded or if it is found for any reason that the amount of tax has been fixed lower than the correct amount. (7) Every proprietor who has been permitted to pay the tax under this section shall intimate to the prescribed authority forthwith such increase in the gross collection capacity per show in respect of the place of entertainment, failing which it shall be open to the prescribed authority by giving fifteen days notice to cancel the option so permitted. (8) Where a proprietor fails to pay the amount of tax on the due date, such amount of tax shall be recoverable with interest calculated at such rate as may be prescribed. (9) The amount of tax due under this section shall be rounded off to the nearest rupee and for this purpose, where such amount contains part of a rupee consisting of paise, then if such part if fifty paise or more it shall be increased to one rupee and if such part is less than fifty paise, it shall be ignored." As a result of the said amendments, the earlier mode of levy of tax on the basis of a percentage of each payment for admission prescribed in Section 4 was replaced by a mode similar to that provided in Section 4-C, i.e., on the basis as prescribed percentage of the gross collection capacity per show. In the table, appended below sub-section (1) of Section 4 rates were fixed on the basis of a percentage of the gross collection capacity per show varying with the category of the local area in which the theatre was situated as well as on the nature of the theatre, viz., air-conditioned, air-cooled or ordinary (other than air-conditioned and air-cooled) or permanent, semi-permanent including touring. and temporary theatres. In the Explanation to sub-section (1) of Section 4, the term 'gross collection capacity per show' was defined in the same terms as in the Explanation to Section 4-C, to mean the full collection per show if all the seats in the theatre are occupied. In sub-section(2) of Section 4, it was specifically provided that the amount of tax under sub-section (1) shall be payable by the proprietor on the actual number of shows held by him in a week. Section 5 gave an option to the proprietor to pay a weekly consolidated amount irrespective of the number of shows actually held by him and the said amount was fixed on the basis of the prescribed number of shows per week. The number of shows varied with the nature of the theatre as well as the category of the local area in which it was situate. In Section 4-A, a fixed amount was leviable by way of show tax on each show.
(3.) A number of writ petitions were filed in the High Court to challenge the validity of Sections 4, 4-A and 5 of the Act, as amended by Act 24 of 1984. The said writ petitions were decided by a Division Bench of the High Court by judgment dated 19/04/1984. The constitutional validity of the provisions was challenged on three grounds, viz. : (i) the levy of entertainment tax on the basis of gross collection capacity without reference to the actual amount collected or the actual number of tickets sold or the numbur of persons admitted was ultra vires the legislative power conferred on the State Legislature under Entry 62 of List II of the Seventh Schedule; (ii) Section 4 was hit by Art, 14 of the Constitution inasmuch as by treating unequals as equals, it gave rise to discrimination amongst different theatres situate within the same local area; and (iii) the levy of entertainment tax under S. 4 being exproprietary amounts to an unreasonable restriction on the right guaranteed to the petitioners by Art. 19(1)(g) of the Constitution, and was not saved by clause (6) of Art. 19.;