STATE OF U.P. AND ANR. versus KAMLA PALACE

Citation: [1999] SUPP. 5 S.C.R. 452 · Decided: 17-12-1999 · Supreme Court of India · Bench: S.P. BHARUCHA · Disposal: Dismissed

Judgment (excerpt)

A 
STATE OF U.P. AND ANR. 
v. 
KAMLA PALACE 
DECEMBER 17, 1999 
B 
[S.P. BHARUCHA, R.C. LAHOTI AND N. SANTOSH HEGDE, JJ.] 
Uttar Pradesh Entertainment and Betting Tax Act, 1979/Constitution 
of India, 1950-Section 3A!Article 14-Levy of entertainment tax on payment 
for admission to entertainment including cinema-Grant-in-aid scheme 
C extended to cinema houses also by a government Order subject to a ceiling 
on the maximum admission fee-Act amended in 1989, introduced realisation 
of extra charge on account of air-cooling/conditioning-The Actfurther 
amended twice-Provided for realisation of extra charge by cinema owners 
for maintenance a/so-Proviso to Section 3A excluded cinema houses 
D receiving grant-in-aid from realising extra charge for maintenance-
Chal/enged before High Court in a writ petition-Held to be ultra vires by 
.a Division Bench-Another Division Bench hearing similar petitions di~sented 
with the said decision-Full Bench held it not to be ultra vires-On appeal-
Held, Article 14 does not prohibit reasonable classification by Legislature 
for attaining specific ends-Economic and Tax laws enjoy a greater latitude 
E than laws relating to civi~ rights-The two classes of cinema owners existed 
well before the amendme~t-Cinema owners receiving grant-in-aid formed a 
class by themselves different from those not receiving the grant-Object 
sought was boosting of entertainment facilities-The classification had nexus 
with the object sought to be achieved 
F 
The State of U.P. enacted the Uttar Pradesh Entertainments and Betting 
Tax Act, 1979 introducing levy of entertainment tax on all payment for 
admission to any entertainment including cinematographic exhibitions. The 
State ofU.P., by a Government Order dated 17-09-1983. extended the scheme 
of grant-in-aid for permanent cinema houses constructed within a specified 
G period, subject to certain conditions. One of the main conditions was that the 
grant-in-aid was admissible only to such cinema houses which had fixed their 
maximum entrance rates at not more than Rs. 2.50 including taxes. By the 
U.P. Cinemas and Taxation Laws Amendment Act, 1989, Section 3A was 
introduced in the Act providing for realisation of certain extra charge on the 
admission fee on account of air-cooling/conditioning of the cinema hall. By 
H 
452 
STATE v. KAMLA PALACE 
453 
the 1992 amendment, realisation of an extra charge on account of maintenance A 
was also permitted which was raised substantially by the 1995 amendment. 
Proviso to Section 3A of the Act, however, precluded the proprietors receiving 
grant-in-aid/incentives from the Government from realising the said extra 
charge during the period the aid is received. Classification of cinema houses 
into those receiving aid and those not receiving aid for the purposes of B 
realising maintenance charges was challenged by the respondent and others 
before the High Court as being violative of Article 14 of the Constitution of 
India. A Division Bench of the High Court, vide judgment dated 10-07-1995, 
held the said proviso to be ultra vires the Constitution on the ground that 
the said classification had no ne~us with the purpose sought to be achieved. 
However, another set of similar writ petitions came before another Division C 
Bench of the High Court which dissented with the view of the earlier Division 
Bench in its judgment. On this the matter was referred to the Full Bench 
which also held the proviso as not violative of Article 14 of the Constitution. 
After the full Bench decision, the appellant moved an application for review 
of the judgment dated 10-07-1995 which was dismissed. Hence the present 
appeal. 
D 
The respondent contended that irrespective of the fact of receiving grant-
in-aid, the cinema houses required maintenance equally and therefore, the 
classification was unreasonable and also did not in any way achieve the object 
of boosting the maintenance of cinema houses. The appellant contended that 
the classification was well-defined as the incenti,·e scheme was optional and 
temporary for the purpose of encouraging permanent cinema houses in 
particular localities identifiable by reference to population to statistics and 
also it restricted the rate of admission fee as prescribed by the Government. 
According to the appellant such cinema houses were clearly distinguishable 
from those not receiving aid. 
Disposing the appeals, this Court 
F 
HELD: 1.1. At the point of time when the impugned provisio

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