STATE OF GUJARAT ETC versus HOTEL RATRANI THROUGH ITS PROPRIETOR SHRI KANJI VISHWRAM PATE, BHUJ (KUTCH) ETC.

Citation: [1996] SUPP. 9 S.C.R. 820 · Decided: 10-12-1996 · Supreme Court of India · Bench: K. RAMASWAMY, G.T. NANAVATI · Disposal: Appeal(s) allowed
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Judgment (excerpt)

A 
B 
STATE OF GUJARAT ETC 
v. 
HOTEL RATRANI THROUGH ITS PROPRIETOR SHRI KANJI 
VISHWRAM PATE, BHUJ (KUTCH) ETC. 
DECEMBER 10, 1996 
(K. RAMASWAMY AND G.T. NANAVATI, JJ.] 
Gujarat Entertainment Tax Act, 1977.: Section 6-A 
C 
Entertainment t<IJt-i..evy on entertainment by Video Cassette Recorder 
or Player on Television or Videoscope in any place of entertainment or 
omnibus etc.-Validity of-Section 6-A held valid-It makes valid provision 
for the due collection of the entertainment tax when the proprietor of the 
video-recorder/video games entertains the persons admitted into the theatre 
or exhibits the video· recorder/video player in omnibus at the rates spedfied 
D thereundei--lt is not beset with a11y arbitrariness in the exercise of the power. 
Gujarat Cinema (Regulatio11 & Exhibitio11 by Video) Rules, 1984 : 
Rules 13(2), 14(2) a11d 22-Validity of Rule 13(2) held ultra vires--Rule 22 
hefd void-Held: Rule 14(2) was incidental to a11d co11Seque11ce ofe11force-
E ment of regulation. 
Venkateshwara Theater v. State ofA.P. & Ors., [1993] 3 SCC 677, 
relied on. 
Ramesh Waman Roke & Ors. v. State of Maharashtra, AIR (1984) 
F Bom. 345, approved. 
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 586 of 
1986 etc. 
From the Judgment and Order dated 1/4.3.85 of the Gujarat High 
G Court in S.C.A. No. 4459 of 1984. 
Yashank Adhyaru, Ms. Alka Agarwal, Ms. H. Wahi & J.M. and 
Associates, G.B. Sathe and D.M. Nargolkar for the Appellants. 
Krishan Mahajan, P.H. Parekh, P.S. Rao, Ms. Deep Mala and S.C. 
H Patel for the Respondents. 
820 
r 
STATE v. HOTELRATRANI 
821 
The following Order of the Court was delivered : 
The main appeal by special leave arises from the judgment and order 
of the High Court of Gujarat, made on March 1/4, 1985 in Special Civil 
Application No. 4459/84 and batch. The other appeals relate to the 
decision of the Bombay High Court in Ramesh Waman Rake & Ors. v. State 
of Maharashtra AIR (1984) Born. 345. The Gujarat High Court has fol-
lowed the decision of the Bombay High Court. In all the cases, the facts 
are not in dispute. 
A 
B 
The respective Legislatures brought Section 6-A in Bombay and the 
Gujarat Entertainment Tax Act, 1977 providing for levy and collection of C 
tax on entertainment by Video Cassette Recorder or Player on Television 
or Videoscope in any place of entertainment or omnibus etc. at the rates 
specified therein. The latter Act came into force w.e.f. June 14, 1984. The 
Government made Rules by name, Gujarat Cinema (Regulation & Exhibi-
tion by Video) Rules, 1984 (for short, the 'Rules"). The Rules have come 
into force on the same date. The respondents filed the writ petitions D 
challenging the constitutionality of Section 6-A, Rules 13(1) and 19(ii) of 
the Rules. The High Court while upholding the constitutionality of the Act 
and the Rules held that the gross collection of the entertainment tax on 
the Video Recorder or Video Player on Television or Videoscope is 
arbitrary and violative of Article 14. It also held that the Rules are ultra E 
vires. Thus, these appeals by special leave. 
In Venkateshwara Theater v. State of A.P. & Ors., [1993] 3 SCC 677, 
this Court considered the constitutionality of Sections 4, 4-A and 5 of the 
AP. Entertainment Tax Act, 1939 providing for levy and collection of 
entertainment tax on the gross collection in Cinema theater. It was held in F 
paragraph 16 that entertainment tax that would be collected over and 
above the average occupancy rate would constitute the profit of the 
proprietor. In the circumstances, it cannot be said that the adoption of the 
system of consolidated levy in Section 4(1), as amended by Act 24 of 1984, 
alters the nature of tax and it ceases to be a tax on entertainment. 
G 
In paragraph 17, on the gross collections, it was held thus : 
"It has been urged that since both the modes of levy of tax were 
prevalent prior to the enactment of Act 24 of 1984, an option 
should have been given to the proprietor of a cinema theatre to H 
822 
A 
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c 
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SUPREME COURT REPORTS [1996] SUPP. 9 S.C.R. 
choose between either of the two modes and that under the 
impugned provisions the choice is confined to two modes of 
assessment under the same system of consolidated levy based on 
the gross collection capacity per show, one on the basis of gross 
collection capacity per show under Section 4(1) and other on the 
basis of gross collection capacity per show for a prescribed num-
ber, of shows per week under Section 5. We fin
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