ELEL HOTELS AND INVESTMENTS LIMITED AND ANR. ETC. ETC. versus UNION OF INDIA

Citation: [1989] 2 S.C.R. 880 · Decided: 02-05-1989 · Supreme Court of India · Bench: R.S. PATHAK · Disposal: Dismissed

Cited by 6 judgment(s) · cites 2 · see the full citation network in Lexace

Judgment (excerpt)

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ELEL HOTELS AND INVESTMENTS LIMITED 
AND ANR. ETC. ETC. 
v. 
UNION OF INDIA 
MAY 2, 1989 
[R.S. PATHAK, CJ, SABYASACHI MUKHARJI, 
S. NATARAJAN, M.N. VENKATACHAL!AH AND 
S. RANGANATHAN, JJ.] 
Constitution of India, 1950: Articles 14 and 19( l)(g)-Hotel 
Receipts Act, 1980-Whether violative of. 
Articles 246, 248 and 254 & Schedule VII-Entries in legislative 
list-Whether to be construed in a wide and comprehensive conno-
tation. 
D 
Hotel Receipts Act, 1980: Sections 3, 5 and 6-Legislative 
competence-Whether falls under Entry 82, List/. 
The Hotel Receipts Tax Act, 1980 came into force on 9.12.1980. 
The Act imposed a special tax of 15% on the gross receipts of certain 
hotels, where the room charges for residential accommodation provided 
E to any person during the previous year were Rs. 75 or more per day per 
individual. The levy commenced from the assessment year 1981-82 but 
was discontinued from 27 .2.1982. Charges received from persons 
within the purview of certain Vienna Conventions were exempt from 
the tax. 
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The constitutional validity of the said Act was challenged in these 
writ petitions, on grounds of lack of legislative competence and of viola-
tion of Articles 14 and 19(I)(g). 
It was contended on behalf of the petitioners that the reliance on 
Entry 82, List I in support of the tax was wholly misconceived and the 
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tax in pith and substance was an impost under Entry 62, List II 
reserved to the States. It was also contended that the Act is patently 
violative of Article 14 since the basis of classification has no nexus with 
the object of the tax, in that other hotels which have much higher gross 
receipts are left out. It was contended hy the petitioners that the law 
imposed unreasonable burden on their freedom of business and 
H constituted a violation of Article 19(I)(g) of the Constitution. 
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ELEL HOTELS AND INVESTMENTS v. U.0.1. 
881 
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On behalf of the Respondent it was contended that the said tax 
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falls under Entry 82, List I and the word 'income' should not be read in a 
narrow and pedantic sense, but must be given its widest amplitude. The 
challenge to the Act on the ground that it was violative of Articles 14 
and 19(1)(g), was'also resisted by the Respondent. 
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Dismissing the writ petitions, 
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HELD: 1.1. The word 'income' is of elastic import. In interpret-
ing expressions in the legislative lists a very· wide meaning should be 
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given to the entries. In understanding the scope and amplitude of the 
expression 'income' in Entry 82, List I, any meaning which fails to 
accord with the plenitude of the concept of 'income' in all its width and c 
comprehensiveness should be avoided. The cardinal rule of interprela· 
~ lion is that the entries in the legislative lists are not to be read in a 
narrow or restricted sense and that each general word should be held to 
extend to all ancillary or subsidiary matters which can fairly and 
reasonably be said to be comprehended in it. The widest possible cons· 
!ruction, according to the ordinary meaning of the words in the entry, 
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must be put upon them. Reference to legislative practice maybe admis· 
sible in reconciling two conflicting provisions in rival legislative lists. In 
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construing the words in a constitutional document confering legislative 
power the most liberal construction should be put upon the words so 
that the same may have effect in their widest amplitude. 
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1.2. The expression 'income' in Entry 82, List I, cannot be sub-
jected, by implication, to any restriction by the way in which that term 
might have been deployed in a fiscal statute. A particular statute enac-
led under the Entry might, as a matter of fiscal policy, seek to tax some 
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species of income alone. The definitions would, therefore, be limited hy 
the consideration of fiscal policy of a particular statute. But the expres-
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sion 'income' in the legislative entry has always been understood in a 
~ wide and comprehensive connotation to embrace within it every kind of 
receipt or gain either of a capital nature or of a revenue nature. The 
'taxable-receipts' as defined in the statute cannot be held to fall outside 
such a 'wider connotation' of 'income' in the wider constitutional mean-
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ing and sense of the term as understood in Entry 82, List I. 
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Navinchandra Mafatlal v. CIT, Bombay City, [1955] 1 SCR 829 
and Bhagwandas Jain v. Union of India, AIR 1981 S.C. 907, relied on. 
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