DARSHAN LAL MEHRA V. UNION OF INDIA (1992) 4 SCC 28 : AIR 1992 SC 714

DARSHAN LAL MEHRA V. UNION OF INDIA (1992) 4 SCC 28 : AIR 1992 SC 714

 

FACTS

• 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.

 

ISSUE:

• Whether the tax levied by the Nagar Palika is constitutional or not?

 

PETITIONER’S CONTENTIONS

1. 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.
2. 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 the Counsel the classification has no nexus with the objects sought to be achieved. 

 

RATIONALE

1. The Court while disagreeing with the Petitioner's contentions observed that 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 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.
2. The annual rental value under the Act indicates 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 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.

 

HELD

The Court was of the view that there is nothing unreasonable or improper in classifying the cinema houses on the basis of annual rental value. The writ petitions were dismissed with costs.