1. The petitioner is a cinema Exhibitor doing business under the name and style of Renuka Talkies at Kottur in Bellary District. The first respondent viz., the Town Panchayat Kottur, issued a demand notice to the petitioner, by which it demanded payment of a sum of Rs. 2552/- by way of entertainment tax, levied on the basis of Rs. 2/-per cinema show with effect from 1-1-1961 (In the writ petition the date of this notice has been mentioned as 9-12-1960. But in the course of the argument, it transpired that the correct date of this notice is 12-10-1962. An application for making an amendment correcting the date has been filed on behalf of the petitioner).
The first respondent the Punch had at had, by its resolution of 13-12-1960, decided to levy this tax, at the rate of Rs. 2/- per show, as from 1-1-1961. It was in consequence of this resolution followed up by a notice dated 14-12-1960, stated to have been published under Sub-rule (4) of Rule 4 of the Mysore Taxes and Fees Rules, 1960 (hereinafter called the Tax and Fees Rules), that the said demand notice was issued to the petitioner. The petitioner preferred an appeal against this demand, under Section 74 of the Mysore Village Panchayats and Local Boards Act, 1959 (hereinafter called the Act). On account of certain reasons the details of which it is not necessary to state, that appeal was dismissed ex parte. The petitioner has now filed this writ petition, in which he attacks (he validity of Section 73(4)(1) read together with Item D in Schedule I of the Act, the validity of the resolution dated 13-12-1960, the validity of Rules 40 and 41 of the Taxes and Fees Rules and prays for the quashing of the notice aforesaid, dated 12-10-1962, by which the demand has been made for the payment of Rs. 2552/-.
We have heard, at considerable length, the arguments of Mr. Achar who appeared for the petitioner and Mr. Kadidal Manjappa who appeared for first respondent, the Town Panchayat. The learned Government Pleader has appeared for the third respondent, the State of Mysore.
2. The grounds on which the various attacks above referred to have been levelled, may briefly be stated, as follows. The validity of 'Section 73(4)(1) read together with Item D in Schedule I of the Act has been questioned on the ground that the levy of Rs. 2/- per cinema show is a tax on trade or profession within the meaning of Entry 60 of List II of the Seventh Schedule to the Constitution and that the limit of the maximum of Rs. 250/-under Article 276(2) of the Constitution, has been exceeded. The validity of Rule 40 has been attacked on the ground that the State Government did not have the competence to define the meaning of the word 'entertainment' and to include therein cinema shows also. The validity of Rule 41 has been challenged on the ground that it operates to encroach on the discretion of the Panchayat in the matter of determining the rate of taxes, which, according to the learned Advocate for the petitioner, has been exclusively vested in the Panchayat under Subsection (4) of Section 73 of the Act. The legality of the resolution dated 13-12-1960 has been questioned on the ground that it authorises the levy of the tax to be effective as from 1-1-1961, ignoring the requirements of Sub-rule (4) of Rule 4 of the Taxes and Fees Rules.
We now proceed to deal with each of the above contentions.
3. So far as the first contention regarding the validity of Section 73(4) of the Act is concerned, the learned Advocate for the petitioner did not press this contention, in view of the decision of the Supreme Court in Y.V. Srinivasa Murthy v. State of Mysore, AIR 1959 SC 894. In this case, the Supreme Court, relying on its earlier decision in Western India Theatres Ltd. v. Cantonment Board, Poona Cantonment, : AIR1959SC582 , repelled the contention that tax on cinema shows was a manner falling under Entry 60 of List II of the Seventh Schedule and subject to the limit specified under Article 276(2). The Supreme Court held that this was a tax falling within the ambit of Entry 62 of List II of the Seventh Schedule to the Constitution. Having regard to these authoritative pronouncements by the Supreme Court, the learned Advocate for the petitioner is, in our opinion, right in not pressing the above contention.
4. The relevant part of Rule 40, the validity of which has been attacked, is as follows:--
'40(i) 'Entertainment' means and includes a drama, cinema, circus, exhibition, amusement games or sport to which persons are admitted for payment;'
The contention of the learned Advocate is to the effect that it was not within the competence of the State Government which framed these rules, to define the word 'entertainment' so as to include a cinema show. The competence of the State Government to make rules, arises from Section 210 of the Act. Sub-section (2) of that section, without prejudice to the generality of the power conferred in Sub-section(l) enumerates the mutters in respect of which rules can he framed by the State Government, Sub-section (1) empowers the Stale Government, to make rules to carry out all or any of the purposes of the Act. The expression 'entertainment', has not been defined in the Act. That expression is sufficiently wide enough to include a variety of activities which serve to entertain an audience. The dictionary meaning of that expression includes performance or shows, and amusement (vide the Concise Oxford Dictionary).
In AIR 1959 SC 891, referred to above, the Supreme Court has proceeded on the basis that the words 'entertainment' and 'amusement' found in Entry 62 of List II of the Seventh Schedule, include cinema shows also. It is thus clear that by including cinema within the definition of 'entertainment' in Rule 40, the State Government has not in any way extended the ambit of the meaning of the expression 'entertainment'. This rule is not in excess of the rule-making power of the State' Government and it clearly serves the purposes of the Act. It may' be mentioned that in addition to the general power that is available to the State Government under Sub-section (1) of Section 210, there is specific provision under Clause (1) of Subsection (2), enabling the State Government to make rules for the guidance generally of the Pancayats etc., in all matters connected with the administration of the Act, which may not have been specifically provided for; similarly, Clause (q) of Sub-section (2) enables the State Government to make rules in respect of matters for which there is no provision or sufficient provision in the Act and for which the Government considers it necessary to make rules for giving effect to the purposes of the Act. The definition above referred to in Rule 40(i) serves to_ clarify the meaning of the expression 'entertainment' for giving effect to the provisions of the Act. We do not find any substance in the contention that the State Government lacks the competence to make such a rule.
As we understand the contention of the learned Advocate for the petitioner, the attack against the validity of Rule 41 is closely connected with the attack against the legality of the resolution dated 13-12-l996. It seems to be convenient to consider both these matters together.
The said resolution dated 13-12-60 is as follows :---
'Resolution No. 124 :--
1959 ne Mysore Village Panchayati Mattu Local Board Act No. 73 (4) (1) prakara.
Fairs and Festivals and Entertainment Tax nannu 1-1-61 rinda vidhisalu manjoou maduva vishaya.
1. Drama for every show. 10-002. Cinema for every show. 2-003. Circus for every show, 2-004. For every exhibition per day 10-005. Games per day. 10-006. Sport per day. 5-007. For every fair 20-008. For every festival 20-00 After considering all objections and suggestions received in this office, it is hereby resolved in this office, it is hereby resolved (sic) to levy rates proposed from 1-1-1961.
Sd/- K. Siddalingangouda,
Town Pauchayat, Kottur'.
That the preliminary steps to be taken under the Act and the Rules before passing the resolution have all been taken in this case, has not been questioned before us. The attack against the validity of this resolution rests on three grounds. Firstly, that it has fixed 1-1-1961 as the date from which the tax has to be levied, is not in consonance with the provisions of sub-rule (4) of Rule 4; secondly, that there has been no publication of a notice such as is required by Sub-rule (4), before the tax can be validly levied; thirdly, that in view of the decision of this Court reported in 1962-40 Mys LJ 863, fin which it has been held that Rule 41 is not valid,) the decision of the Panchayat to levy show tax at the rate of Rs, 2/- per show, relying on the said rule, renders that resolution bad.
In order to appreciate properly the first two contentions referred to above, it wilt be necessary to set out Sub-rule (4) of Rule 4, which reads as follows:--
'4. Procedure for discretionary taxes or fees :--
(1) x x(2) x x(3) x x (4) when a Panchayat decides to levy or vary any tax or fee specified in Sub-section (4) of Section 73, the Rules in that part of these Rules, which relate to such tax or 'fee, together with a notice that the tax or fee, as determined by the Panchayat, shall be levied at the rate specified therein, shall be published by the Panchayat by affixing copies thereof in the office of the Panchayat, and at the village chavadi or at any other conspicuous part in the village- It shall also announce by beat of drum in the village the fact of such publication. The tax or fee snail thereafter be levied at the rate and from the date, which shall be specified in the notice and which shall not be less than one month from the date of publication of the notice.'
What has been contended by the learned Advocate for the petitioner is that according to the provisions of Sub-rule (4), after the Panchayat had decided to levy the tax, it had to publish a notice in the manner specified in Sub-rule (4), setting out the rate at which the tax had to be levied and the date from which that tax would be levied, such date not being less than one month from the date of the publication of the notice. It is pointed out on behalf of the petitioner, that the specification of 1-1-1961 as the date from which the levy will come into force, conflicts with the requirements of Sub-rule (4). It is, no doubt, true that if the levy had to take effect from 1-1-1961, the procedure that had to be followed as required by Sub-rule (4), would not have been complied with. This direction in the resolution, to the effect that the levy has to become effective from 1-1-1961 cannot be held to be legally permissible, inasmuch as it comes into conflict with the requirements of Sub-rule (4). But, that does not mean that the rest of the decision of the Panchayat as embodied in the said resolution, becomes bad merely because of this direction.
The procedure that is required to be followed under Sub-rule (4), has to be resorted to after the Panchayat has taken the decision to levy the tax, after it has considered the objections referred to in Sub-rule (3). But, there is nothing in Sub-rule (4) to make it obligatory on the part of the Panchayat, to specify in its decision, that the levy should come into effect from a particular date, According to the scheme of Sub-rule (4), the date from which the levy becomes effective has to be specified in the notice to be published under Sub-rule (4). Therefore, the direction in the resolution dated 13-12-1960, to the effect that the levy should become effective from 1-1-1961, is a superfluous direction. The invalidity of such a superfluous direction cannot affect the decision of the Panchayat as embodied in that resolution, thg decision to levy tax being separable from this invalid direction. It may also be stated that, it in spite of this invalid direction, the procedure that is required under Sub-rule (1) had been complied with, the validity of such a resolution and the levy could not have been open to challenge. In these circumstances, while holding that the direction to the effect Hut the levy should be effective from 1-1-1961 is illegal, we find that the same being separable, the validity of the decision of the Panchayat to levy the tax is not thereby adversely affected.
But, from the mere fact that the decision of the Panchayat as embodied in that resolution to levy the tax, is valid, it does not follow that the Panchayat should proceed to' demand and collect the tax, without following the further procedure that has been prescribed by Sub-rule (4). At our request Mr. Kadidal Manjappa the learned Advocate for the respondent has produced before us the notice that was published by the Panchayat, under Sub-rule (4). That notice is dated 14-12-1960 and it is staled in that notice, that the levy of the taxes will come into effect from 1-1-1961. This notice suffers from two serious infirmities. Firstly there is no mention of the rate of tax, as is required in Sub-rule (4); secondly, the date, namely, 1-1-1961 from which it was proposed to levy the tax, falls short of the minimum interval of one mouth, which is required between the date of the publication of the notice and the date from which the levy of the taxes becomes ineffective; in this matter also, it conflicts with Sub-rule (4).
In regard to both these matters, the learned Advocate for the first respondent, tried to contend that the infirmities do not adversely affect the legality of the levy. According to him, when after following the procedure of Sub-rules (1) to (3), the Panchayat had taken the decision to levy taxes, the lion-mention of the rate of taxes as well as the failure to provide the prescribed minimum interval between the date of the publication of the notice and the date on which it was proposed that the levy should become effective, were minor irregularities in procedure. He suggested that in such a case, it may be possible for the Panchayat to make a demand as from a date which '-as beyond thirty days from the date of publication of the notice. We do not find ourselves in agreement with this ground urged on behalf of the first respondent. The competence to levy the tax, accrues to the Panchayat, only when it lies satisfied all the requirements prescribed by law in regard to the levy of such tax. The competence given to the Panchayat, under Subsection (4) of Section 73 of' the Act to levy these discretionary taxes and fees, is unqualified or unregulated. As is clear from the said Subsection (4) that levy should be 'minimum such manner ...... as may he prescribed.' Therefore, the levy of that tax must be brought about in that way as is required under Sub-rule (4) of Rule 4.
Article 205 of the Constitution requires that no tax shall be levied or collected except by authority of law. As pointed out by the High Court of Madras in Rayalseema Constructions v. Deputy Commercial Tax Officer, Mannady Division, Madras, : AIR1959Mad382 , 'the words 'Levy' and 'Collection' have been used in Article 265 of the Constitution in a comprehensive manner and are intended to include and envelop the entire process of taxation commencing from the taxing statute to the taking away of the money from the pocket of the citizen. And, what Article. 265 enjoins is that every stage in this entire profess must be authorised by law'. Therefore, by reason of the provisions of Sub-rule (4) not having been complied with, the levy of the tax will not become legally effective and whatever demand notices may have been issued to the petitioner, they will be invalid and inoperative.
The learned Advocate for the petitioner has further sought to contend that the resolution dated 13-12-J960, is also invalid because of the reason that it fixes the rate of tax at Rs- 2/- per show. His argument is that the determination of the rate in relation to each show, is due to Rule 41 which, according to him, has been held to be invalid by this Court in the decision reported in 1962--10 Mys LJ 863-For the reasons which will be set out presently, we are not prepared to attach much weight to this contention. In the first place, there is no material on the basis of which we can say that in the present case, the first respondent has relied on Rule 41 for determining the rate of the tax, in relation to each show. Neither in the resolution nor in the notice dated 14-12-60, is there any reference to the said rule. In the decision reported in 1962-40 Mys LJ 863, (as can be seen from what has been stated in the first paragraph at page 864), the Panchayat, there, purported to exercise its power not merely under Section 73(4), but also under Rule 41. If a Panchayat has power under Section 73(4) read together with the Entry D of Schedule I of the Act to levy such a tax, irrespective of the provisions of Rule 41, then, the question of the validity of Rule 41 will not be material when the Panchayat has not relied on that rule but on the power conferred under Section 73(4) read together with Entry D of Schedule I. Secondly it seems to us that certain material aspects do not appear to have been brought to the notice of the Court in the case reported in 1962-40 Mys LJ 863.
Rule 41(1) (which is the portion material for the present purpose) reads as follows : --
'41. Rate of tax on fairs, festivals or entertainments : -- (1) A Panchayat which decides to levy a tax on fairs, festivals or entertainments shall levy it at a rate varying according to the area taken up by such fair or festival or in the case of an entertainment at a rate fixed for a day or for a show but in any case not exceeding the maximum rates specified in Schedule I of the Act.'
At p. 867 of the Mysore decision above referred to, their Lordships were of the view that by enacting Rule 41, the Stale Government usurped on the power conferred upon the Panchayat; in their view the only power conferred upon the State Government, was to enact a rule regulating the procedure by which the imposition could be made by the Panchayat, and that the State Government had no power to direct the Panchayat to determine the rate of taxes in any particular manner or by any particular method. This conclusion was reached, mainly as a result of the learned Judges being of the view that Section 73(4) of the Act had to be read in a way differently from that in which that sub-section actually stood. At pages 864 and 865, His Lordship Somnath lyer, who delivered the judgment has stated as follows :--
'Now Section 73(4) consists of two parts. The first part of that sub-section authorises the Panchayat to levy six kinds of taxes or tees referred to in it, and, such levy as the subsection itself directs has to be made by the Panchayat in the manner prescribed by the rules made by the Government under Sec. 210 of the Act. By the second part of that sub-section, the Panchayat was again authorised to determine the rates at which these taxes or fees may be imposed. It is obvious from the second part of this sub-section that that determination has to be made by the Panchayat by the application of its own mind and in the exercise of its own discretion unfettered by any rules which may be made by the Government in the exercise of its rule making authority conferred on it by Section 210.
I am not impressed by the argument addressed by Mr. Government Pleader that even the manner in which the determination of the rate could be made by the Panchayat can be prescribed by the State Government by rules. The adverbial phrase 'in such manner', occurring in Sub-section (4) of Section 73, it is plain, qualifies the verb 'levy' and does not qualify the verb 'determine'.
'Sub-section (4), in my opinion, has to be read as hereunder:
'A Panchayat may levy all or any of the following taxes or fees in such manner and subject to such exemptions as may be prescribed and at such rates as the Panchayat may determine not exceeding the maximum rates specified in Schedule 1.' That, in my opinion, is how we have to read that sub-section. If the section is so read, it becomes obvious that the only rules which a Stale Government may make with reference to the levy are the rules prescribing the manner in which the levy may be made. Those rules cannot regulate the determination of the rates of the taxes or fees, that determination being one left exclusively to be made by the Panchayat.'
With very great respect, we may point out that the view taken of the learned Judge in regard to Rule 41 results from what is practically a recasting of Sub-section (4) of Section 73 of the Act. Ordinarily, when interpreting a section or provision of law, the Court has to take that section or provision of law as it stands and find out its meaning. Where the meaning is plain, it has to be given effect to. In AIR 1950 SC 165, (New Piece Goods Bazaar Co., Ltd. v. Commissioner of Income-Tax Bombay, the Supreme Court has observed that it is the primary duty of a Court to give effect to the intention of the Legislature as expressed in the words used by it and no outside consideration can be called in aid to find that intention. It seems to us that it may be only in very extreme cases, where the purpose of the Act or section cannot otherwise be given effect to, that resort may be had to the recasting or reconstruction of the section.
We do not find from the judgment of this Court above referred to, that there was any such difficulty in respect of Sub-section (4) of Section 73 which would necessitate the reading of that section in a way different -from that in which it actually stood. The attention of the learned Judges, does not appear to have been invited to the difference in the language between Sub-sections (1) and (4) of Section 73 of the Act. The suggested reading of Sub-section (4) by the learned Judge has the effect of recasting that sub-section so as to make it similar to Subsection (1) of Section 73 of the Act. In the very same section when the Legislature had adopted a construction in Sub-section (4) which was different from that of Sub-section (1) that difference must be presumed to have been intentional. That would be an additional circumstance to give effect to the meaning of Subsection (4), in the way in which that provision actually stands. It seems to us, that if the meaning of Sub-section (4) is gathered from the language and construction of that sub-section as it now stands, it is possible to say that the determination by the Panchayat of the rate (not exceeding the maximum specified in the schedule), should also be in accordance with the manner prescribed in the rules. Further, the attention of the Court does not appear to have been invited specifically to either the and (q)it of Sub-section (1) of Section 210 or Clauses (1) and (q) of Sub-section (2) of Section 210 of the Act. So it is possible to say from Sub-section (4) of Section 73 (as that sub-section actually stands), that the determination of the rate of tax by the Pauchayat should also be in the manner prescribed, then, a rule like Rule 41 could be framed within the ambit of Clauses (1) and (q), even without resorting to the general power under Sub-section (1) of Section 210. Further, the full implications of Entry D in Schedule I, do not appear to have been placed before the Court, in that case. Entry D in Schedule I is as follows :--
* * * * * *D. Tax on fair, festival and entertainment. Rs. 20 per fair, festival or entertainment.* * * * * *'
It is seen that the maximum of Rs. 20/-has been specified as tax per entertainment. Entry D in Schedule I affords the clear clue that the maximum of Rs. 20/- has been specified in respect of each occasion of entertainment. Each cinema show would be an entertainment. While dealing with a similar tax, the Supreme Court has pointed out in the Western India Theatres Ltd. : AIR1959SC582 , case above referred to, that 'the lax is a tax on the act of entertainment resulting in a show.' If the entertainment consists of a cinema show, then, it would not be unreasonable or in conflict with the purposes of Section 73(4) read with Entry D' of Schedule I, to make a rule to the effect that the tax may be levied in respect of each show. In this connection, it may also be pointed out that Rule 44, the validity of which has not been questioned, provides that the 'tax on entertainment shall be due and payable on each occasion before the beginning of each entertainment'; all these aspects were not brought to the notice of Their Lordships in the 1962-40 Mys LJ 863, ease above referred to. At page 867 of the decision above referred to. Their Lordships have observed as follows : -
'Ordinarily, if Rule 41 had not been made by the State Government, it would have been open to the Panchayat to require the petitioner to pay by way of entertainment tax a certain percentage of the collections made by him during each of the shows; it might have called upon the petitioner to pay a certain sum ot money each month or it might have determined the tax payable by the petitioner on some other basis.'
We may venture to say that their Lordships may not have considered it necessary to make these observations, if above said aspects had been placed before them, in that case. The matter having been argued at some length before us and the question being of considerable public importance, we felt it necessary to set out all these aspects, though in the present case, the validity or otherwise of Rule 41 may not be of materiality, in view of the fact that no reliance has been placed by the first respondent on that rule and in our view there is competence for the first respondent under Section 73(4) read together with Entry D of Schedule I, to have levied this tax, with reference to each cinema show.
One other contention urged, incidentally by the learned Advocate for the petitioner is that on account of the numerous levies to which the petitioner has been subjected, as detailed in Paragraph IV(2) of his affidavit, this tax would operate as a highly exorbitant, unreasonable and prohibitive one. As indicated in the judgment of the Supreme Court in Srinivasa Murthy's case. AIR 1959 SC 894, above referred to, the Court is not concerned 'with the wisdom of the Legislature and that it would be a dangerous precedent to allow his views of the members of the Court as to the serious consequences of excessive taxation to lead to a conclusion that the law is 'ultra vires'.' If the petitioner has been subjected to hardship on account of taxation brought about by valid enactments of competent Legislatures, it will not be a matter for interference by the Courts. Further, it may be pointed out that the proposed levy, in this case, is just 1/10th of the maximum provided under Entry D of Schedule I. Having regard to this factor, we find ft difficult to say that the tax is 'highly exorbitant, unreasonable and prohibitory'.
5. The resultant position is, that such demand notices as may have been issued to the petitioner to make payment of the tax amounts(on the authority of the notice tinted14-12-1960), cannot be sustained and are hereby quashed. It is open to the first respondentto take such steps as may be necessary underthe law, should the Panchayat be desirous orimposing and collecting this tax. Except forthe quashing of the notices of demand asalready slated, this writ petition is dismissed inother respects. Parties will bear their owncosts.
6. Order accordingly.