STATE OF KARNATAKA V. DRIVE-IN ENTERPRISE (2001) 4 SCC 60
FACTS
The case revolves around the proprietor of a drive-in theatre contesting the imposition of entertainment tax on cars entering the theatre. The argument posited that the government had no authority to levy tax on vehicle entry, but could do so on individual entry.
A drive-in cinema allows viewers to watch films either from their cars or by simply attending without a vehicle. Those opting for the latter pay Rs.3, while those choosing the former pay Rs.2. This imposition was legally challenged by the proprietor in the Karnataka High Court.
The High Court ruled that the imposition did not pertain to individuals, rendering it ultra vires (beyond legal authority). Subsequently, clause (v) was appended to section 2(i) of the act, and concurrently, sections 4A and 6 were amended. After multiple revisions, the appellate body reintroduced the tax on car entry.
Once again, this was contested in court through a writ petition. In determining the subject matter, the essence lies in the tax levied on individuals rather than car entry. It is imperative to ascertain the true nature and character of the tax.
ISSUES:
JUDGEMENT-
The Supreme Court upheld the High Court's judgment, affirming that under Section 62, the state legislature is indeed empowered to enact a law imposing tax on entertainment and luxuries. Section 3 specifies that the tax on admission payment shall be incorporated in the ticket price. The state is entitled to levy tax on each admission within the drive-in-theatre.
This indicates that individuals bringing their cars into the drive-in-theatre do so to enhance their entertainment experience. The level of comfort with which a person views the film influences the quality of entertainment. There is a distinction between viewing a film while seated inside a car and doing so while seated or standing in the auditorium without a car.
A person in a car enjoys a more luxurious viewing experience. The tax is imposed on the individual who is being entertained. It is immaterial in what name or form it is imposed. Once it is established that there is a connection between legislative competence and the subject matter of taxation, the tax is considered valid and justified. Consequently, the writ petition was dismissed.