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PETITIONER:

SRINIVASA THEATRE AND ORS. ETC. ETC.

Vs.

RESPONDENT:

GOVERNMENT OF TAMIL NADU AND ORS. ETC. ETC.

DATE OF JUDGMENT12/03/1992

BENCH:

JEEVAN REDDY, B.P. (J)

BENCH:

JEEVAN REDDY, B.P. (J)

VENKATACHALLIAH, M.N. (J)

CITATION:

1992 AIR 999 1992 SCR (2) 164

1992 SCC (2) 643 JT 1992 (2) 312

1992 SCALE (1)643

ACT:

Tamil Nadu Entertainment Tax Act, 1939 : Section 5A(1)

(As amended by Act 40 of 1989)-Constitutional validity of.

Cinema Theatres-Entertainment Tax-Levy on the basis of

'admission system' and 'compositionsystem'-Classification of

theatres for the purpose of levy-Theatres situated within

the Municipal Corporations and Special Grade Municipalities

governed by 'admission system'-Theatres situated in other

local areas of Stage governed by 'composition system'-

Theatres situated within the radius of the five kilometers

of Municipal Corporation and Special Grade Municipalities

brought over from 'composition system' to 'admission

system'-But temporary and open theatres exempted from

'admission system'-Held classification of theatres was

reasonable and has nexus with the object of enactment-Held

change-over to 'admission system' from 'composition system'

is not an unreasonable restriction-Exemption to open and

temporary theatres held not discriminatory-Section 5A(1)

held not violative of Articles 14 and 19(1)(g).

Constitution of India, 1950 : Articles 14 and 38.

Expression 'Equality before law' and 'equal protection

of laws'-Meaning of-Relevance of State's obligation to bring

equality as contemplated by Article 38-Discussed.

Doctrine of legitimate-Legitimate expectation based on

legislative practice cannot be invoked for invalidating a

legislation.

Doctrine of legitimate expectation-Legitimate

expectation based on legislative practice cannot be invoked

for invalidating a legislation.

HEADNOTE:

The Tamil Nadu Entertainment Tax Act, 1939 provides for

levy of entertainment tax on admission to cinema theatres in

the State of Tamil Nadu. Until 1978 the entertainment tax

was levied on the basis of 'admission system' i.e. on the

actual number of tickets sold. In 1978 the Act was amended

and section 5(A) and 5(B) were introduced. These sections

introduced the 'composition system' of collection of

entertainment tax

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under which tax was levied based upon the gross collection

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capacity of cinema theatres irrespective of the actual

number of tickets sold. However, the newly introduced

'composition system' was not made applicable to the entire

State. While the theatres situated within the Municipal

Corporations of Madras, Madurai, Coimbatore and the Special

grade municipalities continued to be governed by the

original system of taxation i.e. 'admission system' the

theatres situated in all other local areas of the State were

governed by the composition system.

In 1989 the Act was further amended and Sub-section (1)

of Section 5(A) of the Act was substituted. By this

amendment, the percentage of entertainment tax via-a-vis the

rates of admission in force in corporation and special grade

municipality areas was reduced from 53% to 40%. At the same

time all the theatres situated within the radius of five

kilometers from the peripheral limits of such areas (belt)

which were hitherto governed by the composition system were

brought over to the admission system. However, the

temporary and open air theatres even though located in the

belt of five kilometers were excluded from this switch-over.

The appellants challenged the validity of section

5(A)(1) by filing various writ petitions which were

dismissed by a Division Bench of the Madras High Court.

In appeals to this Court, it was contended on behalf of

the appellants (1) that the Amendment Act is arbitrary and

violative of Article 14 inasmuch as (a) it classifies

theatres situated in a local area into two categories

subjecting one such category to a hostile treatment; (b) it

equates the theatres situated in village panchayats and

village townships and other lesser grade municipalities with

the theatres in corporation areas and special grade

municipalities area and that such a classification has no

relation to the object of the enactment; (2) exemption of

temporary and open theatres from the 'admission system' of

taxation is discriminatory; (3) the impugned provisions are

confiscatory in nature and they constitute an unreasonable

restriction upon the petitioners' fundamental right to trade

guaranteed by Article 19(1)(g); (4) The petitioners had come

to entertain a legitimate expectation, based on legislative

practice, that they would not be brought over to

'admission system' of taxation.

Dismissing the appeals, this Court,

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HELD: 1. The Tamil Nadu Legislature is competent to

declare that the theatres situated within the five kilometer

radius (belt) of the municipal corporation areas and the

areas of special grade municipalities shall be subjected to

the same method of taxation as the theatres situated within

the said areas. The Act no doubt adopt the local areas

declared under the Tamil Nadu Municipal Corporation Act,

Tamil Nadu Municipalities Act and Tamil Nadu Gram Panchayats

Act as the basis for prescribing the rate of taxation. But

it must be remembered that it was not obligatory upon the

legislature to do so. It could have adopted any other

basis. It is only for the sake of convenience that the

existing local areas - convenient existing units of

references - were adopted, it is not a question of power

but one of convenience. [177C-D]

1.1 The theatres situated within the belt are proximate

to the corporation and special grade municipality areas and

thus enjoy a certain advantage which the theatres beyond the

belt do not. They draw custom from within the corporation

areas by virtue of their proximity. The corporation areas

have a larger percentage of affluent persons than other

areas, who have more money at their disposal. They spend

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more on entertainment. The municipal boundary has no

significance for them. If there is a good picture in a

theatre situated beyond the municipal corporation limits

they would go and see it. [177H, 178A-B]

1.2 The classification or the distinction made between

theatres situated within the belt and the theatres outside

the belt is not an unreasonable one. The material placed

before the Court shows that theatres situated within the

belt are substantially in the same position as those within

the corporation or special grade municipality areas, if not

better. The theatres within the belt are akin to and

comparable to the theatres situated within the areas of

corporations and Special Grade Municipalities. Further it

is not disputed that the admission system fetches more

revenue to the State. It is precisely for this reason that

the said system is continued in the major cities. It cannot

be said that the classification has no nexus to the object.

[178H, 179A-C]

2. The argument that if the theatres situated within a

gram panchayat or a lesser grade municipality are to be

equated with the theatres within the corporation and other

areas they should also be allowed to charge the rates of

admission prevalent in corporation areas

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cannot be accepted. Firstly, rates of admission do not

merely depend upon the category of local areas but also upon

the amenities provided in the theatres. Secondly, the very

system of levy in both areas is different. Under section 4

i.e., admission system the rate of tax was 53% of the

admission charge, which is now brought down to 40% by the

impugned Amendment Act on the actual number of tickets sold

whereas in respect of theatres governed by composition

system, the rate of levy is upon the gross collection

capacity irrespective of the actual number of tickets sold

for a show or over a week. Thirdly, the rates of admission

are prescribed under a different enactment. [179F-H, 180A]

Moreover, the petitioners are not suffering any real

prejudice. Whichever the system of taxation, the amount

collected by way of entertainment tax is to be made over to

the State. Even under the composition system, the formula

evolved is supposed to represent the amount really collected

by way of entertainment tax. It may be that in a given case

or probably in many cases - the exhibitors may be saving a

part of the amount collected by way of entertainment tax by

paying only the compounded amount. But it may not

necessarily be so. There may be theatres where the formula

may work to their prejudice because of their low occupancy

rate. In any event, the mere fact that an exhibitor is able

to save a part of the tax by paying the compounded amount

cannot be treated as a benefit in law which he is deprived

by following the admission system. [180B-D]

3.Open-air theatres and temporary theatres stand on a

different footing from permanent theatres. They suffer from

several disadvantages which the others do not. They are a

class apart. If the impugned provision has treated them as

a separate class, no objection can be taken thereto. [181B]

4. The theory of legitimate expectation based upon

legislative practice cannot be brought in to defeat or

invalidate a legislation. It may at the most be used

against an administrative action, and even there it may not

be an indefeasible right. No case has been brought to the

notice of the Court where a legislation has been invalidated

on the basis that it offends the legitimate expectation of

the persons affected thereby. [181C-F]

Council of Civil Service Unions and Ors. v. Minister

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for the Civil Service, (1985) A.C, 374, referred to.

5. The impugned change-over to the 'admission system'

does not

168

amount to unreasonable restriction upon the petitioners'

fundamental right to trade. [182A]

6. Article 14 of the Constitution enjoins upon the

State not to deny any persons 'Equality before law' or 'the

equal protection of law' within the territory of India. The

two expressions do not mean the same thing even if there may

be much in common. Their meaning and content has to be

found and determined having regard to the context and scheme

of our Constitution. The word "law" in the former

expression is used in a generic sense - a philosophical

sense - whereas the word "laws" in the latter expression

denotes specific laws in force. [173C-E]

7. Equality before law is a dynamic concept having

many facets. One facet - the most commonly acknowledge - is

that there shall be no privileged person or class and that

none shall be above law. A facet which is of immediate

relevance herein is the obligation upon the State to bring

about, through the machinery of law, a more equal society

envisaged by the preamble and part IV of our Constitution.

For equality before law can be predicate meaningfully only

in an equal society i.e., in a society contemplated by

Article 38 of the Constitution. [173F-G]

8. The instrument of taxation is not merely a means to

raise revenue in in India; it is, and ought to be, a means

to reduce inequalities. It is for this reason that while

applying the doctrine of classifications - developed mainly

with reference to and under the concept of "equal

protection of law" - Parliament is allowed more freedom of

choice in the matter of taxation vis-a-vis other laws. If

this be the situation in the case of direct taxes, it should

be more so in the case of indirect taxes, since in the case

of such taxes the real incidence is upon some other than

upon the person who actually makes it over to the State,

though, it is true, he cannot avoid the liability on the

ground that he has not passed it on. In the matter of

taxation it is, thus, not a question of power but one of

constraints of policy- the interest of economy, of trade,

profession and industry, the justness of the burden, its

'acceptability' and other similar consideration. But this

does not mean that taxation laws are immune from attack

based upon Article 14.It is only that parliament and

legislatures are accorded a greater freedom and latitude in

choosing the persons upon whom and the situations and stage

at which it can levy tax. Under the Constitution, there is

an added obligation upon he State to employ the power of

taxation-nay, all its powers - to achieve the goal

169

adumbrated in Article 38. [174C-H, 175A]

Gorantia Butchayya Chowdary & Ors. v. The State of A.P.

JUDGMENT:

Kerala, [1961] 3 S.C.R. 77; Spences Hostel Pvt. Ltd. v.

State of West Bengal, [1991] 2 S.C.C. 154; S.K. Datta, I.T.O

v. Lawrence Singh Ingty, [1968] 2 S.C.R. 165 and Elel Hostel

and Investments Ltd. v. Union of India, [1991] 2 S.C.C. 166,

referred to.

East India Tobacco Co. v. State of A.P., [1963] 1

S.C.R. 404 and Sanjeev Coke Mfg. Co. v. Bharat Coking Coal

Ltd & Anr., [1983] 1 S.C.R. 1000 cited.

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&

CIVIL APPELLATE JURISDICTION : Civil Appeal Nos. 2004

to 2012 o 1992.

From the Judgment and order dated 8.10.90 of Madras

High Court in W.P. Nos. 8710/89, 8734/89, 8736/89, 8751/89,

8748/89, 8735/89, 8749/89, 8727/89 and 8737/89.

WITH

Civil Appeal Nos. 2013 to 2021/92, 2022 to 2024/92,

2025, 2026, 2027-2028 and 1029 of 1992.

A.K.Ganguli, K. Parasaran, B.R.L Iyenger, Mrs. Nalini

Chidambaram, A.V. Rangam, A.T.M. Sampath, Probir Choudhary,

M.N. Krishnamani, K.P. Sunder Rao and G. Srinivasan for the

Appellants.

R. Mohan and V. Krishnamoorthy for the Respondents.

The following Judgment of the Court was delivered by

B.P. JEEVAN REDDY, J. Heard learned counsel for the

petitioners and the respondents.

Leave granted.

These appeals are preferred by the Writ petitioners in

a batch of writ petitions which were dismissed by a Division

Bench of Madras High Court by its common judgment and order

dated 8th October, 1990. Questions arising in these appeals

are common. So are the relevant facts. For the sake of

convenience, we shall take the facts in Civil Appeal No.

2008

170

of 1992 arising from writ petition No. 8748 of 1989 (filed

by Raja Theatre, represented by it licencee-Parasuram Petty.

village, Madurai).

Tamil Nadu Entertainment Tax Act, 1939 provides for

levy of entertainment tax on admission to cinema theatres,

among others. The rates of admission to cinema theatres in

the State of Tamil Nadu are prescribed under the Tamil Nadu

Cinema (Regulation) Act and the rules made thereunder.

Different rates of admission are prescribed depending upon

the locality in which the theatre is situated and the

amenities provided therein. Entertainment Tax is prescribed

at a particular percentage of the rate of admission, which

percentage again differs from locality to locality.

Entertainment Tax, thus, constitutes a component of the

total amount charged for admission to a cinema theatre.

Until the year 1978, entertainment tax was collected on

the actual number of tickets sold. The owners/exhibitors of

cinema theatres were required to make over the actual amount

of entertainment tax collected by them for each shoe to the

Government. With a view to simplify the collection of tax,

Section 5(A) and 5(B) were introduced by the 1978 Amendment

Act. These Sections, introduced a new and substitute method

of collection of entertainment tax based upon the gross

collection capacity of a cinema theatre. A formula was

devised to determine the tax payable per show or per week as

the case may be. Gross collection capacity meant the total

amount that would be collected by a cinema theatre if all

the seats therein are filled. But inasmuch as no cinema

theatre can expect to have its full capacity filled for each

show on each show on each day of the month, a reasonable

figure was adopted and the tax payable per show determined.

If the exhibitor opted to pay the tax every week, he was

entitled to exhibit any number of shows in the week not

exceeding 28 shows. This system, which may be called

'composition system', for the sake of convenience, dispensed

with the requirement of verification of the number of ticket

sold for each show in each cinema theatre. It appears to be

convenient to theatre-owners as well since they are relieved

of the botheration of submitting returns and establishing

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their correctness. However, this method was not made

applicable to the entire State. The theatres situated

within the Municipal Corporations of Madras, Coimbatore and

the special grade municipalities continued to be governed by

the original system of taxation, which may for the sake of

convenience be called 'admission system'. Theatres situated

in all other local areas of the State are governed by the

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composition system.

In 1989, the Act was further amended by Tamil Nadu Act

40 of 1989, the Act impugned herein. By virtue of this Act,

the percentage of entertainment tax vis-a-vis the rates of

admission in force in corporation and special grade

municipality areas was brought down from 53% to 40%. At the

same time, all the theatres situated within the radius of

five kilometers from the peripheral limits of such areas

were brought within the purview of the admission system. In

other words, the theatres situated within the five kilometer

'belt' abutting the said areas, which were hitherto governed

by the composition system were brought over to the admission

system. The several theatres concerned in this batch of

appeals are all situated within one or the other such

'belt'. The theatre concerned in writ petition No. 8748 to

1989 is situated in village Parasuram Petty and was governed

by composition system but since it falls within the five

kilometer belt abutting Madurai Corporation area, it is

brought over to admission system. This change is brought

about by substitution of Sub-Section (1) of Section 5(A),

and in particular, by virtue of the two provisos appended to

Sub-section 5(A) (i). However, the temporary (tourist) and

open air theatres even though located in the belt are

excluded from this switch-over.

Petitioner-appellants impugned the validity of Section

5(A)(i) on several grounds all of which have been negatived

by the High Court.

S/Sri B.R.L Iyengar, K. Parasarn and Sampath urged the

following contentions before us;

1. The Act classifies the theaters in the State with

reference to their location i.e., with reference to the

local area wherein they are situated. The theatres situated

within the municipal corporation limits are subjected to a

higher rate of tax than the theatres situated in the

selection grade municipalities. Similarly, the theaters

situated within the area of selection grade municipalities

are subjected to a higher rate of tax than the theatres

situated in the first grade municipalities and so on. This

classification is an eminently reasonable one. Even the

rates of admission prescribed under Tamil Nadu Cinema

(Regulation) Act and rules recognize this distinction. By

virtue of the impugned amendment, however, several theatres

situated within panchayat towns, village panchayats and

other lesser grade municipalities, which theatres were

hitherto enjoying the benefit of composition system are

suddenly deprived of the said beneficial system and

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placed on par with the theatres situated in corporation

areas and special grades municipalities for no other reason

than that they happen to fall within the five kilometer

radius of such areas. The result is that in a

village/municipality abutting a municipal corporation area,

while some theatres are governed by the composition systems,

the other theatres (which happen to fall within the 'belt')

are governed by a different systems, namely admission

system. This invidious distinction, amounting to hostile

discrimination, has been brought about for no valid reason.

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Having adopted the gradation of the local area as the basis

for method of taxation, rate of tax and all other purposes,

there is no justification to treat some of the theatres

situated in some of these areas differently. Indeed, the

very creation and concept of 'belt' is impermissible.

2. The Amendment Act is arbitrary, unreasonable and

violative of Article 14 inasmuch as (a) it classifies

theatres situated in a local area into two categories

subjecting one such situated in a category to a hostile

treatment;

(b) it equates the theatres situated in village

panchayats and village town-ships and other lesser grade

municipalities with the theatres in corporation areas and

special grade municipalities areas; in short, it seeks to

treat unequals equally, which itself is a negation of the

guarantee of equal protection of laws.

There is absolutely no basis for the above two war

classification nor such classification has any relation to

the object of the enactment. The respondents failed to

place before the court any material justifying such

classification and discrimination.

3. The unreasonableness of the impugned provision is

evident from the fact that the appellant-theatres continue

to be governed by the rates of admission prescribed for

their respective local areas. For example, the theatre

concerned in writ petition No. 8748 of 1989 is governed by

and permitted to charge rates of admission prescribed for

similar theatres situated in Madurai corporation area-while

in the matter of method of taxation it is equated with the

theatres in the said corporation area. This is a clear case

of hostile discrimination.

4 The petitioners had come to entertain a legitimate

expectation,

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based on legislative practice, that they would not be

treated on par with the theatres situates in municipal

corporation and special grade municipality areas and had

adjusted their affairs accordingly. The sudden change

brought about by the impugned Act has dealt a severe blow to

them and has put their vary continued existence in peril.

5. The impugned provisions are confiscatory in nature.

They constitute an unreasonable restriction upon the

fundamental right to trade guaranteed to them by Article

19(1)(g) of the Constitution of India.

Article 14 of the Constitution enjoin upon the State

not to deny to any person 'Equality before law' or 'the

equal protection of laws' within the territory of India.

The two expressions do not mean the same thing even if there

may be much in common. Section 1 of the XIV Amendment to

U.S. Constitution uses only the latter expression whereas

the Irish Constitution (1937) and the West German

Constitution (1949) use the expression "equal before law"

alone. Both these expressions are used together in the

Universal Declaration of Human Rights, 1948, Article 7

whereof says "All are equal before the law and are entitled

without any discrimination to equal protection of the law."

While ascertaining the meaning and content of these

expression, however, we need not be constrained by the

interpretation placed upon them in those countries though

their relevance is undoubtedly great. It has to be found

and determined having regard to the context and scheme of

our Constitution. It appears to us that the word "law" in

the former expression is used in a generic sense-a

philosophical sense-whereas the word "law" in the latter

expression denotes specific laws in force.

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Equality before law is a dynamic concept having many

facets. One facet-the most commonly acknowledged-is that

there shall be no previleged person or class and that none

shall be above law. A facet which is of immediate relevance

herein is the obligation upon the State to bring about,

through the machinery of law, a more equal society envisaged

by the preamble and part IV of our Constitution. For

equality before law can be predicated meaningfully only in

an equal society i.e., in a society contemplated by Article

38 of the Constitution, which reads;

"38 State to secure a social order for the

promotion of welfare of the people. (1) The state

shall strive to promote the welfare of the people

by securing and protecting as effectively as it may

174

a social, economic and political, shall inform all

the institutions of the national life.

(2) The State shall, in particular strive to

minimise the inequalities in income, and endeavour

to eliminate inequalities, in status, facilities

and opportunities, not only amongst individuals but

also amongst groups of people residing in different

areas or engaged in different vocations."

The instrument of taxation is not merely a means to

raise revenue in India; it is, and ought to be, a means to

reduce inequalities. You don't tax a poor man. You tax the

rich and the richer one gets, proportionately greater burden

he has to bear. Indeed, a few years ago, the Income Tax Act

taxed 94p out of every rupee earned by an individual over

and above Rupees one Lakh. The Estate Duty Act, no doubt

since repealed, Wealth Tax Act and Gift Tax Act are all

measures in the same direction. It is for the reason that

while applying the doctrine of classification-developed

mainly with reference to and under the concept of "equal

protection of laws"-Parliament is allowed more freedom of

choice in the matter of taxation vis-a-vis other laws. If

this be the situation in the case of direct taxes, it should

be more so in the case of indirect taxes, since in the case

of such taxes the real incidence is upon some other than

upon the person who actually makes it over to the State,

though, it is true, he cannot avoid the liability on the

ground that he has not passed it on. In the matter of

taxation it is, thus, not a question of power but one of

constraints of policy-the interests of economy, of trade,

profession and industry, the justness of the burden, its

'acceptability' and other similar considerations. We do not

mean to say that taxation laws are immune from attack

based upon Article 14. It is only that parliament and

legislatures are accorded a greater freedom and latitude in

choosing the persons upon whom and the situation and stags

at which it can levy tax. We are not unaware that this

greater latiude has been recognised in USA and UK even

without resorting to the concepts of 'equality before law'

or "the equal protection of laws" -as something that is

inherent in the very power of taxation and it has been

accepted in this country as well. (See in this connection

the decision of Subba Rao, CJ., (as he then was) in Gorantia

Butchavva Chowdary & Ors., v. The State of A.P. & Ors., 1958

A.P. 294, where the several US and English decisions have

been carefully analysed and explained). In the context of

our Constitution, however, there is an added obligation upon

the

175

State to employ the power of taxation-nay, all its powers-to

achieve the goal adumbrated in Article 38.

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The decisions of this court on the above aspect are

legion, starting from Moopil Nair v. State of Kerala, [1961]

3 SCR 77. One of the latest decisions is in Spences Hotel

Pvt. Ltd. v. State of West Bengal, [1991] 2 S.C.C. 154

wherein almost all the earlier decisions of this court on

this aspect have been referred to and discussed. To bring

out the principle, it would be sufficient if we refer to two

of them namely S.K. Datta, I.T.O v. Lawrence Singh Ingty,

[1968] 2 S.C.R. 165 and Elel Hotel and Investments Ltd. v.

Union of India, [1991] 2 S.C.C. 166. In the former case,

this court observed:-

"It is not in dispute that taxation laws must also

pass the test of Art. 14. That has been laid down

by this Court in Moopil Nair v. State of Kerala,

[1961] 3 S.C.R. 77. But as observed by this Court

in East India Tobacco Co. v. State of Andhra

Pradesh, [1963] 1 S.C.R. 4040, in deciding whether

a taxation law is discriminatory or not it is

necessary to bear in mind that the State has a wide

discretion in selecting persons or objects it will

tax, and that a statute is not open to attach on

the ground that it taxes some persons or objects

and not others; it is only when within the range of

its selection, the law operates unequally, and that

cannot be justified on the basis of any valid

classification, that it would be violative of

Article 14. It is well settled that a State does

not have to tax everything in order to tax

something. It is allowed to pick and choose

district, objects, persons, methods and even rates

for taxation if it does so reasonable."

Similarly, it was observed in the other case by one of

us (Venkatachaliah, J.):

"It is now well settled that a very wide latitude

is available to the legislature in the matter of

classification of objects, persons and things for

purposes of taxation. It must need to be so,

having regard to the complexities involved in the

formulation of a taxation policy. Taxation is not

now a mere source of raising money to defray

expenses of government. It is a recognised fiscal

tool to achieve fiscal and social objectives. The

differentia of

176

classification presupposes and proceeds on the

premise that it distinguishes and keeps apart as a

distinct class hotels with higher economic class

hotels with higher economic status reflected in one

of the indicia of such economic superiority. The

presumption of constitutionality has not been

dislodged by the petitioners by demonstrating how

even hotels, not brought into the class, have also

equal or higher chargeable receipts and how the

assumption of economic superiority of hotels to

which the Act is applied is erroneous or

irrelevant."

We shall now proceed to examine the contentions before

us in the light of the above principles, but before we do

that we think it appropriate to remind ourselves of the

following dictum :

"...in the ultimate analysis, we are not really to

concern our selves with the hollowness or the self-

condemnatory nature of the statements made in the

affidavits filed by the respondents to justify and

sustain the legislation. The deponents of the

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affidavits filed into court may speak for the

parties on whose behalf they swear to the

statement. They do not speak for the Parliament.

No one may speak for the Parliament and Parliament

is never before the Court. After Parliament has

said what is intends to say, only the Court may say

what the Parliament to say. None else. Once a

statute leaves Parliament House, the Court's is the

only authentic voice which may echo (interpret) the

Parliament. This the Court will do with reference

to the language of the statute and other

permissible aids. The executive Government may

place before the court their understanding of what

Parliament has said or intended to say or what they

think was Parliament's object and all the facts and

circumstances which in their view led to the

legislation. When they do so, they do not speak

for Parliament. No Act of Parliament may be struck

down because of the understanding or

misunderstanding of Parliamentary intention by the

executive government or because their (the

Government's) spokesmen do not bring out relevant

circumstances but indulge in empty and self-

defeating affidavits. They do not and they cannot

bind Parliament. Validity of Legislation is not to

be judged merely judged merely by affidavits filed

on behalf of the State, but by all the relevant

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circumstances which the court may ultimately find

and more especially by what may be gathered from

what the legislature has itself said. We have

mentioned the facts as found by us and we do not

think that there has been any infringement of the

right guarantee by Article 14." (Sanjeev Coke

Manufacturing Company v. Bharat Cooking Coal Ltd. &

Anr., [1983] 1 S.C.R. 1000 at 1029).

We shall first examine whether it was not competent for

the Tamil Nadu Legislature to declare that the theatres

situated within the five kilometer radius (belt) of the

municipal corporation areas and the areas of special grade

municipalities shall be subjected to the same method of

taxation as the theatres situated within the said area ? It

is true that the Act adopts the local areas declared under

the Tamil Nadu Municipal Corporation Act, Tamil Nadu

Municipalities Act and Tamil Nadu Gram Panchayats Act as the

basis or prescribing the rate of taxation. But it must be

remembered that it was not obligatory upon the legislature

to do so. It could have adopted any other basis. It is

only for the sake of convenience that the existing local

areas, convenient existing units of reference, were adopted.

It is not a question of power but one of the convenience.

There was nothing precluding the legislature to have

declared in the very first instance (i.e. at the time of

1978 Amendment Act) that the admission system was to

continue in force now only in the corporation areas but also

in five kilometer radius (belt) abutting each of those

areas. The only question then would have been, as not it

is, whether such a course brings about an unreasonable

classification or whether it amounts to treating unequals on

a uniform basis.

It is urged for the appellants that as a result of

creation of such belts, theatres situated in a given local

areas, be it a gram panchayat or a lesser grade

municipality, are getting categorised into two classes-those

which happen to fall within the belt and those outside. The

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former are obliged to follow the admission system whereas

the latter continue to enjoy the facility of composition

system. This is undoubtedly true as a fact but the question

is whether such a classification, brought about by the

impugned provisions of the Act, is unreasonable and un-

related to the object underlying the enactment? It cannot be

denied that the theatres situated within the belt are

proximate to the corporation and special grade municipality

areas and thus enjoy a certain advantage which the theatres

beyond the belt do not.

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They draw custom from within the corporation areas by virtue

of their proximity. The corporation areas have a larger

percentage of affluent persons than other areas, who have

more money at their disposal. They spend more on

entertainment. The municipal boundary has no significance

from them. If there is a good picture in a theatre situated

beyond the municipal corporation limits they would go and

see it. This is not a mere surmise. The respondents have

given a concrete instance which is also referred to in the

judgment of the High Court. A sketch drawn in respect of

Erode town alongwith the daily collection particulars of a

theatre, Bharati theatre, situated in the belt abutting the

said town was placed before the High Court. On a

consideration of the same, the High Court has observed:

"The sketch produced by the respondents shows the

mushroom growth of theatres just outside the limits

of the Erode Special Grade Municipality which lie

within the five kilometer belt. The daily

collection of Bharati theatre which is in the five

kilometer belt shows that the theatres within the

Special Grade Municipality are mostly showing old

pictures whereas Bharati theatre was exhibiting a

comparatively new picture. We are, therefore,

satisfied that the theatres in the five kilometer

belt can be no stretch of imagination be said to be

not on par with the theatres in the respective

corporation of the Special Grade Municipalities."

It is further stated in the counter-affidavit that the

distributors are preferring the theatres in the periphery of

cooperation and Special Grade Municipality areas for

exhibiting first run pictures over the theatres within those

areas. It is also averred that in the interior areas of

such abutting panchayats, (i.e., outside the five kilometer

radius) the theatres exhibit only second run pictures and

there is definitely less population in and around such

theatres. In those areas, it is stated, there is

practically no floating population, whereas in the theatres

within the five kilometer belt, mostly first run pictures

are exhibited and there is considerable floating population.

It is also submitted by the respondents that a number of

housing colonies have sprung up just outside the corporation

limits and the limits of Special Grade Municipalities, the

inhabitants whereof partronise theatres within the belt.

All this shows that the classification or the distinction

made between theatres situated within the belt and the

theatres outside the belt

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is not an unreasonable one. It also establishes that the

theatres within the belt are akin to and comparable to the

theatres situated within the areas of corporation and

Special Grade Municipalities. It is not disputed that the

admission system fetches more revenue to the State. It is

precisely for this reason that the said system is continued

in the major cities. It cannot be said that the

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classification has no nexus to the object.

It is then argued that the theatres situated within a

village panchayat or a lesser Grade Municipality cannot be

equated with the theatres situated within the corporation

areas or for that matter those situated within the areas of

Special Grade Municipalities merely by virtue of the fact

that they abut the latter areas. The material referred to

above does, however, establish that the theatres situated

within the belt are substantially in the same position as

those within the corporation/special grade municipality

areas, if not better. We may also mention that the concept

of belt is not a novel one. In adjoining Andhra Pradesh,

this concept has been in force since quite a few years

earlier to its introduction in Tamil Nadu.

It is then argued that while equating the theatres

situated within the belt with the theatres situated within

the corporation areas, the rates of admission for the

theatres in the belt are retained at the original level.

(As stated hereinabove, rates of admission are prescribed

under the Tamil Nadu Cinema (Regulation) Act and the rules

and orders made thereunder. Different rates of admission

are prescribed for theatres situated in different categories

of local areas and also having regard to the amenities

provided therein). The petitioners grievance is that

theatres situated within a gram panchayat or a lesser grade

municipality, as the case may be, are permitted only the

rates of admissible for that local areas, they are still not

allowed to charge the higher rates of admission in force in

such areas. The argument is that if they are to be equated

with the theatres within the corporation and other areas

they should also be allowed to charge the rates of admission

prevalent in corporation areas. We are not impressed,

Firstly, rates of admission do not merely depend upon the

category of local area but also upon the amenities provided

in the theatre. Secondly, the very system of levy in both

areas is different. Under section 4(i.e., admission system)

the rate of tax was 53% of the admission charge, which is

now brought down to 40% by the impugned Amendment Act on the

actual number of tickets sold whereas in respect of theatres

governed by composition

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system, the rate of levy-whether it is 27% or any other

percentage is upon the gross collection capacity

irrespective of the actual number of tickets sold for a show

or over a week. Thirdly, the rates of admission are

prescribed under a different enactment. If the petitioners

are so advised they can always apply to the appropriate

authority for revision of rates of admission. It is not

submitted by the petitioners that any of them has applied

and have been refused. The contention, therefore, is

unacceptable. We may also mention in this connection that

the petitioners are not suffering any real prejudice.

Whichever the system of taxation, the amount collected by

way of entertainment tax is to be made over to the State.

Even under the composition systems, the formula evolved is

supposed to represent the amount really collected by way of

entertainment tax. It may be that in a given case or

probably in many cases-the exhibitors may be saving a part

of the amount collected by way of entertainment tax by

paying only the compounded amount. But it may not

necessarily be so. There may be theatres where the formula

may work to their prejudice because of their low occupancy

rate. In any event, the mere fact that an exhibitor is able

save a part of the tax by paying the compounded amount

cannot be treated as a benefit in law which he is deprived

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of by following the admission system.

Reference in this connection may also be made to the

position obtaining in Andhra Pradesh as is evidenced by the

Judgement in writ petition No. 6404 of 1986 and batch dated

19th July, 1984 which is now pending appeal in this court.

In that State, the exhibitors are opposing the composition

system. They want the admission system to continue. We

need not go into the precise reason why the exhibitors in

Andhra Pradesh are opposing the composition system or why

the Tamil Nadu exhibits are opposing the admission system.

Suffice it to say, that composition system is only a

substitute system and the formula evolved thereunder is

supposed to represent approximately the true amount

collected by an exhibitors by way of entertainment tax.

Under both the systems, the entertainment tax collected from

the cinegoer has to be made over to he State. May be that

the composition system is more convenient in the sense that

it obviates keeping of records. establishing their

correctness and so on and so forth.

Yet another argument urged is that while bringing all

the theatres located in the belt to the admission system,

the impugned provision has exempted the open-air theatres

and temporary theatres from such changeover.

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This is said to be a discriminatory action. We cannot

agree. So fat as open air theatres are concerned, it is

stated by the respondents that there are only two such

theatres in the entire state. It is not the case of the

petitioners' that any such theatre is located in any of the

belts concerned herein. Even otherwise, open-air theatres

and temporary theatres stand on a different footing from

permanent theatres. They are a class apart. If the

impugned provisions has treated them as a separate class, no

objection can be taken thereto.

Another argument urged by Sri Parasaran is that the

petitioners' had come to entertain a legitimate expectation

based upon legislative practice that they would not be

brought over to admission system. Factually speaking, we

must say that no such legislative practice has been brought

to our notice. Prior to 1978, all the theatres all over the

State were governed by admission system alone. Even after

introduction of Section 5(A) and 5(B) it was made applicable

to several local areas in two stages i.e., in 1978 and 1982.

Indeed by Amendment Act 20/83 and 48/86 certain local areas

governed by Section 5(A) and 5(B) were removed from their

purview and brought back to admission system. The entire

experiment has been spread over a period of only about 14

years. We cannot say that this period is sufficient to

establish, what may be called, a 'legislative practice'.

Even otherwise, we are not satisfied that the said theory

can be brought in to defeat or invalidate a legislation. It

may at the most be used against an administrative action,

and even there it may not be an indefeasible right. No case

has been brought to our notice where a legislation has been

invalidated on the basis that it offends of legitimate

expectation of the persons affected thereby. We may in this

connection refer to the decision of the House of ords in

Council of civil Service Unions and Ors. v. Minister for the

Civil Service, (1985) A.C. 374, wherein this theory is

referred to. In this case, the staff of Government

Communications Headquarters (G.C.H.Q) had the right to

unionisation. By an order made by the Government this right

to unionisation was taken away insofar as the employees of

G.C.H.Q. are concerned. The Union questioned the same. It

was held by the House of Lords that though the Unions had a

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legitimate expectation that before barring them for

unionisation they would be consulted, the security

consideration put forward by the Government, over-ride the

right of the petitioner's to prior consultation.

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We are also not impressed by the argument that the

impugned change-over amounts to unreasonable restriction

upon the petitioners' fundamental right to trade. Whichever

the system, the exhibitor's liability is only to make over

the tax collected by him to the State. We have referred

hereinbefore to material placed before the court, which

shows that the theatres situated within the belts are in no

way differently situated that the theatres located within

the corporation areas. It may also be noted that all has

been done by the impugned provision is to bring back these

theatres to admission system, by which they were governed

prior to 1978 Amendment.

For all the above reasons, these appeals fail and are

dismissed. No order as to costs.

T.N.A Appeals dismissed.

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