STATE OF KARNATAKA V. DRIVE-IN ENTERPRISES 

STATE OF KARNATAKA V. DRIVE-IN ENTERPRISES 

FACTS OF THE CASE 

The owner and proprietor of Drive-in-Theatre had challenged the charging of entertainment tax on the entry of cars inside the theatre. It was described as the government has no power to charge tax on entry of cars / motor vehicles but has the power to charge tax on the entry of a person . Drive-in-Cinema means a cinema with open-air theatre where people wishing to watch the cinema while sitting in the cars /motor vehicles are allowed and people who just wish to view the cinema are also allowed . The people who wish to view the cinema without the entry of cars are required to pay Rs.3  and the people who wish to view the cinema with the entry of cars and sitting in the car are required to pay Rs.2 . This imposition was challenged by the proprietor in the Karnataka High Court . 

It held that imposition was not on the person , the same was ultra vires (beyond the power) . (v) was added to clause (i) of section 2 of the act and contemporary , section 4A and 6 of the act were also amended . After several amendments , the appellate again imposed tax on the entry of cars . It was again challenged in the court under writ petition . It prompts the pith and substance , the subject matter is the tax imposed on the person and not the entry of cars . It is required to find out the true nature and true character of the tax . 

The supreme court reversed the decision of the high court and held that due to section 2 (i) which defines the payment for admission of a person to which payment of tax is required , the tax is justified and valid and within the competence of the state legislature . It shall be imposed in respect of each payment for admission on the payment of the ticket . 

ISSUE OF THE CASE 

• Whether the state legislature is competent to enact a law to impose tax under section 62 of list second of 7 schedule on entry of cars inside the drive-in-theatre ?
• Whether the state legislature is competent to impose tax on admission of cars / motor vehicles inside the drive-in-theatre especially when it is argued that cars / motor vehicles are not the people entertained ? 

CONTENTION OF THE PETITIONER

The petitioner argued in State of Karnataka V. Drive-In-Enterprises that the levy of entertainment tax on the entry of cars / motor vehicles . The petitioner challenged it again as the tax was again imposed due to (v) of clause (i) of section 2 . The petitioner referred to the case of Leventhal & Ors V. David Jones Ltd , though directly imposed by legislature , bridge tax is not a land tax . Both the taxes are quite different and are of different nature . The bridge tax was held valid under the legislative power of tax on land . The tax was provided for the public revenue for the common purposes of the state but for providing funds for the betterment .  

CONTENTION OF THE RESPONDENT 

The court held that the charging of entertainment tax on entry of cars / motor vehicles is valid due to section 2 (i) as the car is carried by the person himself for his comfort as a person sitting in his car or motor vehicle has a luxury of viewing the cinema . It is valid to charge as the pith and substance is the subject matter of the person viewing the cinema . It is absolutely immaterial to know the form and the nature by which the person is enjoying the cinema . 

JUDGEMENT OF THE CASE 

The supreme court holded the judgement given by the high court as under section 62 , state legislature is competent to act law to impose tax on entertainment and luxuries . 

Section 3 defines tax on payment of admission on the ticket . It shall be included in the ticket . The state is qualified to take tax on every admission inside the drive-in-theatre . It shows that the person who is entering the drive-in-theatre along with his car is taking the car in order to have better quality of entertainment . 

It depends on with what comfort the person has viewed the cinema. Quality of the entertainment is different when people watching the film sitting inside their cars and people watching the film sitting or standing in the auditorium without their cars .

A person sitting in the car will have a luxury view of watching the cinema . The tax is imposed on the person who has been entertained . It is immaterial to see in what name and form it is imposed . Once , it is found that there is a nexus between the legislative competence and subject matter of taxation , the tax is valid and justified . The writ petition shall stand dismissed . 

REFERENCES 

https://indiankanoon.org

written by Jiya Mongia an intern under legal vidhiya

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