STATE OF KARN ATAKA AND ORS. versus DRIVE IN ENTERPRISES

Citation: [2001] 2 S.C.R. 378 · Decided: 13-03-2001 · Supreme Court of India · Bench: V.N. KHARE · Disposal: Appeal(s) allowed

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

Judgment (excerpt)

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STATE OF KARN ATAKA AND ORS. 
DRJVE-lN-ENTERPR!SES 
MARCH 13. 2001 
[V.N. KHARE AND RUMA PAL, JJ.] 
Karnataka Ente11ainment Tax Act : Section 2(i)(v). 
Ente11ain1nenl Tax-On admission of ca.'~/1notor vehicles inside Drive-
in-Theatr'e-Levy of-High Cou11 struck do1vn the p1vvision as unconstitu-
tional-Correctness u,f-1-/eld: The lel'y u.f enfe11aitunenf tax is on the person 
en1e11ained and not on !he curs/n!olor 1•ehicles-l-Io1veve1; State Legislature 
competenf lo levy enfe;tailunent tax under Entry 62, List fl on acbnission of 
cars/1notor vehicles inside Dri 1'e-in-111ea1 re since the person entef1ained sits in 
his car and views the film-Constitution of India, 1950, Ent;y 62, List fl, VII 
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Sch.-Kamataka Cinemas (Regulation) Rules, 1971, R. 111-A-Karnataka 
Cinema' (Regulation) Act, 1964, RP-g. 22. 
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Doctrines: 
Doctrine of Pith and Substance-Meaning and applicability of 
Words and Phrases : 
"Ente11uinmenf "'-Meaning of-In the context r!f S. 2( e) of the Kamataka 
Ente11ainment Tax Act. 
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The respondent was the owner of a Drive-in-Theatre into which 
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admisssions \Vere given to persons desiring to view cinema while sitting in 
their motorcars taken inside the theatre. The appellant-State levied enter-
tainment tax under Section 2(i)(v) of the Karnataka Entertainment Tax 
Act on admission of cars inside the theatre. The High Court held that the 
levy was not on a person entertained (i.e. car/motor vehicles), the same was 
ultra vi res and struck down Section 2(i)(v) of the Act as being beyond the 
legislative competence of the State Legislature. Hence this appeal. 
On hehalf' of the appellant-State it was contended that in pith and 
substance, the levy was on the person entertained and not on the admission 
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of cars/motor vehicles inside the Drive-in-Theatre and therefore, the State 
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STATE v. DRIVE-IN-ENTERPRISES 
Legislature was fully competent to impose such a levy. 
Allowing the appeal, the Court 
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HELD : 1. When a levy is challenged, its validity has to be adjudged 
with reference to the competency of the State Legislature to enact such a 
law, and while adjudging the matter what is required to be found out is the 
real character and nature of levy, its pith and substance and it is in this 
light, the competency of the State Legislature is to be adjudged. The 
doctrine of pith and substance means that if an enactment substantially 
falls within the powers expressly conferred by the Constitution upon the 
Legislature, it cannot be held to be ultra vims merely because its nomencla-
ture shows that it encroa.ches upon matters assigned to another heading of 
legislation. The nomenclature of a levy is not conclusive for determining its 
true character and nature. [383-D-E] 
Goodyear India lid v. State of Haryana, [1990] 2 SCC 71, R.R. 
Engineering Co. v. Zita Parishad, Bareilly, [1980] 3 SCC 330; Kera/a State 
Electricity Board v. Indian Aluminium Co., [1976] 1 SCC 466; Raza Buland 
. Sugar Co. v. Rampur Municipality, AIR (1962) All. 82 and Governor Gen· 
eral-in-Council v. Province of Madras, AIR (1945) PC 98, referred to. 
2.1. Entry 62 of List II of the Seventh Schedule of the Constitution 
empowers the State Legislature to levy tax on luxuries, entertainment, 
amusements, betting and gambling. Under Entry 62, the State Legislature 
is competent to enact law to levy tax on luxuries and entertainment. The 
incidence of tax is on entertainment. Since entertainment necessarily im· 
plies the persons entertained, _therefore, the incidence of tax is on the 
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person entertained. [386-H; 387-A] 
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2.2. Section 3 of the Karnataka Entertainment Tax Act, which is the 
charging provision, provides for levy of tax on each payment of admission. 
Thus, under the Act, the State is competent to levy tax on each admission 
inside the Drive-in· Theatre. The challenge to tlte levy is on the ground that 
the vehicle is not a person entertained and, therefore, the levy is ultra vires. 
It cannot be disputed that the car or motor vehicle does not go in,ide the 
Drive-in· Theatre of its own. It is driven inside the Theatre by the person 
entertained. In other words the person entertained is admitted inside the 
Drive-in· Theatre along with the car/motor vehicle. Thereafter the person-
entertained while sitting inside his car inside the auditorium views the film 
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380 
SUPREME COURT REPORTS 
(200 I] 2 S.C.R. 
exhibited therein. This shows that the person entertained i

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