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Anal Chowdhury Vs. State of West Bengal - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtKolkata High Court
Decided On
Case NumberMatter No. 855 of 1983
Judge
Reported in[1985]151ITR804(Cal)
ActsWest Bengal Entertainment-cum-Amusements Tax Act, 1982; ;Constitution of India - Article 301
AppellantAnal Chowdhury
RespondentState of West Bengal
Cases ReferredMeenakshi v. State of Karnataka
Excerpt:
- .....union tel. co. v. atlantic & pacific states tel. co. 5 nov. 102, 108.' 14. the purport of inter-state trade or intercourse also came up for consideration before the united states' supreme court in the case of fisher's blend station v. the tax commission of the state oj washington [1935] 80 lawyer's edition 956. in this case, the united states' supremecourt was concerned with the question whether a state occupation tax, measured by the gross receipts from radio and broadcasting stations within the state licensed to broadcast, and broadcasting, over an area embracing other states, is an unconstitutional burden upon inter-state commerce. in answering this question in the affirmative, the united states' supreme court made the following observation :'appellant is thus engaged in the.....
Judgment:

Borooah, J.

1. The subject-matter of challenge in this Rule is the constitutional validity of the West Bengal Entertainment-cum-Amusements Tax Act, 1982 (hereinafter referred to as 'the Act'), which came into force on and from April 1, 1983. The Act was passed by the West Bengal Legislature for raising additional resources for the benefit of the State. The 'charging provision of the Act is Section 4 which reads thus :

'Subject to the other provisions elsewhere contained in this Act, there shall be levied and collected on and from every holder of a television set or sets an entertainment-cum-amusement tax at the rate of rupees fifty for each year per television set held or possessed by him :

Provided that if the holder of a television set or sets becomes liable to pay the tax after the 30th day of June during a year, he shall be liable to pay during that year one-half of the amount of tax as specified above.'

2. Section 2(a) defines the holder of a television set to mean a person in whose name a licence is issued in respect of any television set under the Indian Wireless Telegraphy Act, 1933, and includes a, person, who is, for the time being, found in possession of any television set irrespective of its size or whether it is a black and white set or a colour set, and irrespective of the fact whether the person holds such licence or not.

3. Section 6(1) of the Act exempts the Central and State Governments, the Corporation of Calcutta, or any Municipality, Zilla Parishad, Panchayat Samiti or Gram Panchayat from the payment of such tax. Sub-section (2) of the said section similarly exempts educational institutions recognised by State Government or by an officer authorised by the State Government in this behalf when an application is made to the prescribed authority for such exemption. Sub-section (5) of Section 6, which is important for the purpose of this case, makes provisions for exempting from payment of the tax to a holderof a television set for the period the set is not in use. It would be advantageous to set out this sub-section in toto which reads thus :

'Any holder of a television set, who has paid the tax in respect of that set and claims that he shall not use or he has not used that set throughout the year, for which the tax is paid, may apply to the prescribed authority in the prescribed form for a certificate of exemption from payment of tax for the relevant year. If the prescribed authority is satisfied, on such enquiry, as it deems fit, that the claim is proved by the applicant, it may grant the certificate of exemption to the applicant, subject to such terms and conditions as may be prescribed. '

4. It is thus seen that any person who possesses a television set whether or not he has taken out a licence as required under the Indian Wireless Telegraphy Act, 1933, becomes subject to the levy of the tax under the Act by virtue of Section 4. The question that has to be decided is whether the West Bengal Legislature has the power under the provisions of the Constitution to levy any such tax ?

5. I have heard Mr. Tapan Kumar Pal on behalf of the petitioner and Mr. R. N. Bajoria on behalf of the State of West Bengal. Dr. Debi Prasad Pal has assisted this court as amicus ctiriae.

6. Mr. Tapan Kumar Pal's contentions are as follows :

(a) The Act which seeks to levy and collect the tax from the owner of a television set has no reference whatsoever to entertainment and/or amusement. As such the Act falls outside the purview of Entry 62 of List II of the Seventh Schedule to the Constitution and there is no other entry in the State or Concurrent Lists on which the State can fall back upon to justify the enactment.

(b) The Act is beyond the legislative power of the State under Entry 62 of List II as more than 60 per cent. of the programme, which comprises news and views, cannot be termed as 'entertainment' and as such it is outside the purview of the said entry.

(c) The television programme being a telegraphic communication transmitted by the Door Darshan Kendra, a Central Authority established under the Indian Telegraphs Act and falling under Entry 31 of List I to the Seventh Schedule, is beyond the scope of the taxing power of the State under Entry 62 of List II to the said Schedule. The Act in pith and substance purports to impose a tax on communication covered by Entry 31 of List I.

(d) The television programme being telecast throughout the territory of India from different Door Darshan centres across the boundary of different States is an inter-State telegraphic communication through themicrowave system and the same falls under the expression 'intercourse' mentioned in Article 301 of the Constitution and as such is immune from State taxation.

(e) Television is a public utility service and a private person who holds a television set for his own personal use does not carry on any trade or business with such a set nor does he derive any monetary benefit from such set, he being the ultimate consumer of the programme which is derived through the set and, as such, the Act is beyond the taxing power of the State Legislature.

7. Mr. R. N. Bajoria in opposing the rule contended that the impugned legislation is valid and is within the legislative competence of the State Legislature as it is covered under Entry 62 of List II of the Seventh Schedule to the Constitution. According to Mr. Bajoria, Entry 31 of List I has no relevance as the Act is a taxation measure seeking to levy tax on luxury, entertainment or amusement. Mr. Bajoria then submitted that the omission of the word 'luxury' from the title of the Act has no relevance as the entries in the different lists in the Seventh Schedule are mere heads or topics of ligislation and the widest possible meaning should be given to the words used therein. In this context, Mr. Bajoria also contended that the expression 'luxury' used in Entry 62 of List II would include television. He also submitted that what is an item of luxury has to be ascertained with reference to the state of society, the common standard of living of the people and the cost or expenditure involved in purchasing the item and other attending circumstances. As regards the purported violation of Article 301 of the Constitution by the impugned Act, Mr. Bajoria contended that the said article can have no manner of application unless there was some impediment on the free transmission of application, that is, unless there was some impediment on the free transmission of television by the State Government, such as jamming of the programmes which are telecast by the different Door Darshan Kendras.

8. Dr. Pal more or less supported Mr. Tapan Kumar Pal in his arguments and further contended that in order to justify the Act under Entry 62 of List II, the object of taxation must be a luxury and television, which is now in common use, cannot be deemed to be a luxury and, furthermore, as the word 'luxury' has been omitted from the objects and reasons of the Act, the State cannot fall back upon the term 'luxury' in justifying the validity of the Act.

9. Television is akin to the radio, wireless and telegraph because it knows no barriers and the television net work in India with its focal point in Delhi is gradually spreading to most parts of this country. A few years ago, one could not have conceived of witnessing the majesty and grandeur ofthe Republic Day Parade in Delhi in glorious colour even in the remotest corners of India. The people of India can through their T.V. sets and sitting in their home see and hear the President, the Prime Minister, the Chief Ministers of their respective States and other National leaders, which they could not formerly do. The culture, such as folk dances and music of the different parts of India, are now transmitted through the different Door Darshan Kendras. This certainly helps to weave the fabric of national integration. If, as in other countries, such as, the United Kingdom and the United States of America, television sets are installed in class rooms of schools, including those meant for the poorer or weaker sections of the society, the school children will have the advantage of much better educational facilities. Farmers can through the media of television, visually see and learn how to grow more crops on their land, what fertilisers to use and how to deal with pests or pestilence whenever they occur. As such, television as a mass media and a means of mass communication, must be allowed to grow and expand for the general upliftment of a developing country, such as ours.

10. Television has certainly bypassed the radio and the cinema as the most effective media of communication, entertainment and education. With the setting up of more and more T.V. stations with a corresponding increase in the number of television sets, a natural consequence was bound to follow, viz., television was sought to be made a source for increasing the State's revenue. The ball was set rolling by the State of Maharashtra with the enactment of the Maharashtra Luxury-cum-Entertainment Tax on Holders of Television Set Act, 1982. The constitutional validity of this Act was challenged by a number of writ petitions filed in the Bombay High Court. These writ petitions were disposed of by a Division Bench of the Bombay High Court which upheld the vires of the Maharashtra Act, inter alia, on the ground that a T.V. set was an article of luxury and the Act was a valid piece of legislation as levying a tax on entertainment and amusement and was within the legislative competence of the State Legislature under Entry 62 of List II of the Seventh Schedule to the Constitution. Incidentally, the Bombay High Court did not examine the validity of the aforesaid Act in the light of Article 301 of the Constitution. This decision of the Bombay High Court, being the case of Mumbai Grahak Panchayat v. State of Maharashtra has been reported in [1983] Tax LR 2770. Obviously encouraged by the judgment of the Bombay High Court, the West Bengal Legislature enacted the Act which is almost pari materia with the Maharashtra Act except for the omission of the word 'luxury' from the title of the Act.

11. Although the vires of the Act has been challenged on different grounds, I propose to decide this question on a short point, viz., whether by theAct, Article 301 of the Constitution has been violated Article 301 reads thus:

'Subject to the other provisions of this part, trade, commerce and intercourse throughout the territory of India shall be free.'

12. This provision of the Constitution fetters the exercise of legislative power by the Union or the States even under the taxation topics enumerated in Lists I to III of the Seventh Schedule, if the exercise of such power interferes with the freedom of trade, commerce and intercourse throughout the territory of India. Any law, whether passed by Parliament or the Legislature of a State will be void unless it is saved by some other provision of Chapter XIII of the Constitution, such as, Article 302 or 304.

13. At this stage, it will be necessary to understand the meaning of the term 'intercourse' as used in Article 301 of the Constitution and as to whether television can be brought within that expression.

'Intercourse' has been separately mentioned in Article 301 alongside the word 'commerce' and it must, therefore, necessarily refer to 'intercourse' which is not commercial in nature.

In the Permanent Edition of West's Words and Phrases, 'Intercourse' has been defined thus :

'Intercourse means a commingling, intimate connections or dealings between persons or nations, as in common affairs and civilities, in correspondence or trade; communication, commerce, especially interchange of thought and feeling, association, communion. Webster's Diet...............

The Supreme Court of the United States, by one of its ablest members, has given a plain and comprehensive exposition of the term 'commerce' less general than the word 'intercourse', used without qualification, but sufficient to include all the ramifications of commerce. Says Marshall C.J.: 'It describes the commercial intercourse between nations and parts of nations in all of its branches, and is regulated by prescribing rules for carrying on that intercourse'. The telegraph constitutes a branch of commercial intercourse.' So interwoven has the custom of communication by telegraph become with trade and traffic, that separates itself without serious disturbance of vast trade relations and financial transactions would be a task as difficult as to cut the pound of flesh without a drop of blood.' Western Union Tel. Co. v. Atlantic & Pacific States Tel. Co. 5 Nov. 102, 108.'

14. The purport of inter-State trade or intercourse also came up for consideration before the United States' Supreme Court in the case of Fisher's Blend Station v. The Tax Commission of the State oj Washington [1935] 80 Lawyer's Edition 956. In this case, the United States' SupremeCourt was concerned with the question whether a State occupation tax, measured by the gross receipts from radio and broadcasting stations within the State licensed to broadcast, and broadcasting, over an area embracing other States, is an unconstitutional burden upon inter-State commerce. In answering this question in the affirmative, the United States' Supreme Court made the following observation :

'Appellant is thus engaged in the business of transmitting advertising programme from its stations in Washington to those persons in other States who 'listen in' through the use of receiving sets. In all essentials, its procedure does not differ from that employed in sending telegraph or telephone messages across State lines, which is inter-State commerce.

Western U. Teleg Co. v. Spoight, 254 US 17; 65 L. Ed. 104; 41 S.Ct. 11, New Jersey Bell Teleph Co. v. State Board of Taxes & Assessments, 280 US 338, 74 L Ed. 463, 50 S. Ct. 111, Cooney v. Mountain States Teleph & Teleg Co., 294 U.S. 384, 79 L Ed 934; 55 S. Ct. 477, Pacific Teleph & Teleg Co. v. Tax Commission, decided March 2, 1936 (297 US 403 ante, 760; 56 S. Ct. 522; 105 ALR 1). In each, transmission is effected by means of energy manifestations produced at the point of reception in one State which are generated and controlled at the sending point in another. Whether transmission is effected by the aid of wires, or through a perhaps less well understood medium, 'the ether', is immaterial, in the light of these practical considerations which have dictated the conclusion that the transmission of information inter-State is a form of 'intercourse', which is commerce. (See Gibbons v. Ogden, 9 Wheat 1, 189. 6 L Ed. 23, 68). The essential purpose and indispensable effect of all broadcasting is the transmission of intelligence from the broadcasting station to distant listeners. It is that for which the customer pays. By its very nature broadcasting transcends State lines and is national in its scope and importance, characteristics which bring it within the purpose and protection, and subject it to the control of the 'commerce' clause. (See Federal Radio Commission v. Nelson Bros. Bond & Mortg Co., 289 US 266, 279; 77 L Ed. 1166, 1175, 53 S. Ct. 627 ; 89 ALR 406.'

15. In Basu's Commentary on the Constitution of India, fifth edition, the author has described 'intercourse' used in Article 301 of the Constitution as under:

'Since 'intercourse' has been separately mentioned in Article 301 of our Constitution, in juxtaposition with the word 'commerce', it would refer to non-commercial intercourse. As observed by the Privy Council, it refers to the 'freedom of an individual' to cross the barrier and have dealings with the citizens of another part of the country, irrespective ofthe movement of goods or merchandise J and as the American Supreme Court has held, the medium of such dealings may be speech, music, radio, television and the like.'

16. It is thus clear that television can be brought within the meaning of the word 'intercourse' as used in Article 301 of the Constitution. The next question that arises is whether the Act is violative of Article 301 and, if so, whether it can be struck down on that ground ?

17. The appellants in the Supreme Court Case of Atiabari Tea Co. Ltd. v. State of Assam, : [1961]1SCR809 , who were growers of tea in the State of Assam and elsewhere and had to carry their tea to the auction houses in Calcutta for sale in this country or for export, challenged the validity of the Assam Taxation (on Goods carried by Roads or Inland Waterways) Act, 1954, on the ground that the Act and the Rules and Notifications framed thereunder were ultra vires the Constitution being repugnant to the provisions of Article 301, as a tax on the carriage of tea through the State of Assam had the effect of interfering with the freedom of trade, commerce and intercourse.

18. The Supreme Court, in the majority judgment, made the following observations (p. 247, 249, 251, 254 of AIR 1961 SC):

'The provision contained in Article 361 guaranteeing the freedom of trade, commerce and intercourse is not a declaration of a mere platitude, or the expression of a pious hope of a declaratory character; it is not also a mere statement of a directive principle of State policy ; it embodies and enshrines a principle of paramount importance that the economic unity of the country will provide the main sustaining force for the stability and progress of the political and cultural unity of the country......

That is why it seems to us that Article 301, read in its proper context and subject to the limitations prescribed by the other relevant articles in Part XIII, must be regarded as imposing a constitutional limitation on the legislative power of Parliament and the Legislatures of the States. What entries in the legislative lists will attract the provisions of Article 301 is another matter ; that will depend upon the content of the freedom guaranteed ; but wherever it is held that Article 301 applies, the legislative competence of the Legislature in question will have to be judged in the light of the relevant articles of Part XIII; this position appears to us to be inescapable......the freedom of trade guaranteed by Article 301 is freedom from all restrictions except those which are provided by the other articles in Part XIII. What these restrictions denote may raise a larger issue, but in the present case we will confine our decision to that aspect of the matter which arises from the provisions of the Act under scrutiny. It is hardly necessary to emphasise that in dealing with constitutional questions courts should be slow to embark upon an unnecessarily wide or general enquiry and should confine their decision as far as may be reasonably practicable within the narrow limits of the controversy arising between the parties in the particular case. We will come back again to Article 301 after examining the other articles in Part XIII.........If any Act imposes any directrestrictions on the very movement of such goods, it attracts the provisions of Article 301, and its validity can be sustained only if it satisfies the requirements of Article 302 or 304 of Part XIII.'

19. Television being an intercourse within the meaning of Article 301 of the Constitution, the West Bengal Legislature would be competent to bring restrictive taxes subject to the provisions of Chapter XIII and in particular to the provision of Article 304 which reads thus :

'Notwithstanding anything in Article 301 or Article 303, the Legislature of a State may by law-

(a) impose on goods imported from other States or the Union territories any tax to which similar goods manufactured or produced in that State are subject, so, however, as not to discriminate between goods so imported and goods so manufactured or produced ; and

(b) impose such reasonable restrictions on the freedom of trade, commerce or intercourse with or within that State as may be required in the public interest:

Provided that no Bill or amendment for the purposes of Clause (b) shall be introduced or moved in the Legislature of a State without the previous sanction of the President. '

20. The Act cannot be brought within the purview of Article 304(a); the question, therefore, arises as to whether the validity of the Act can be upheld by the provisions of Sub-clause (b) of the said article ?

21. Under Sub-clause (b), the State is entitled to impose reasonable restrictions on the freedom of trade, commerce or intercourse, with or within the State, if it is necessary in public interest. Another pre-requisite to justify a legislation under Sub-clause (b) is the previous sanction of the President or a subsequent assent under art. 255 of the Constitution. No such previous sanction or subsequent assent was given to the Act.

22. The tax sought to be imposed by the Act is to augment the State's revenue. As such, it cannot be said to be in public interest. If the tax was imposed e.g., to promote the television industry in West Bengal or to provide free television sets to educational institutions, or even if a part of the tax was utilised for such purpose, then it could be said that the tax was in public interest. Moreover, the very thought of payment of the tax might deter persons of the lower income group from purchasing aT. V. set, 'Janata' black and white models which are now available for less than Rs. 2,000 and the prices of such sets are likely to come down with the increasing popularity of colour sets. In this connection, reference may be made to a recent decision of the Supreme Court in the case of Meenakshi v. State of Karnataka, . In this group of appeals, the appellants who were operators of omnibuses, minibuses or stage carriages in the State of Karnataka, came up with a grievance against the enhancement of tax on their vehicles levied under the Karnataka Taxation and certain other Laws (Amendment) Act, 1979, on the ground that the collection of the tax prior to the impugned enhancement was sufficient to meet the cost of construction and maintenance of roads and bridges in the State and, hence, the tax imposed under the enhanced rate under the Taxation Amendment Act, 1979, was violative of the freedom of trade, commerce and intercourse guaranteed under Article 301 of the Constitution. The Supreme Court in upholding the taxation measure observed that when revenue collected by such tax is employed for purposes which would not only not restrict or impede but facilitate the smooth and unhampered trade, commerce and intercourse throughout the territory of India, such tax would not be violative of Article 301 of the Constitution.

23. For yet another reason, the Act cannot be brought either under Sub-clause (a) or (b) of Article 301 of the Constitution. By the impugned Act, tax is not actually sought to be imposed upon a television set but upon the programme which is telecast through the set. This is clear on a reference to Sub-clause (5) of Section 6 of the Act which entitles a holder to the refund of the tax when the set is not in actual use.

24. In the result, I must hold that since the Act affects the freedom of intercourse through the media of television guaranteed under Article 301 of the Constitution and since the State's power of taxation is derived from Article 245 and the said power is subject to the other provisions of the Constitution including those of Chapter XIII, the Act must be declared to be ultra vires and void. In view of this conclusion, it is unnecessary for me to enter into the other points urged in support or in challenge in this rule nor is it necessary to refer to the other decisions which have been cited. The rule is, accordingly, made absolute. There will be no order as to costs. If any holder of a television set has paid any tax under the Act, the authorities concerned are directed to refund the same as expeditiously as possible.


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