JUDGMENT JUDGMENT judgment of R. S. Pathak C. J. I. and Sabyasachi Mukharji, Natarajan and M. N. Venkatachaliah JJ. was delivered by M. N. Venkatachaliah J. S. Ranganathan J. delivered separate judgment. M. N. VENKATACHALIAH J. -In these writ petitions under article 32 of Constitution of India, petitioners, who are engaged in, or associated with, hotel industry in India, challenge constitutional validity of Expenditure-tax Act, 1987 (Central Act 35 of 1987). Act envisages tax at 10 per cent. ad valorem on "chargeable expenditure" incurred in class of hotels wherein "room charges" for any unit of residential accommodation are rupees four hundred or more per day per individual. "chargeable expenditure" as defined in section 5 of Act includes expenditure incurred in or payments made in such class of hotels in connection with provision of any accommodation, residential or otherwise, food or drink whether at or outside hotel; or for any accommodation in such hotel on hire or lease; or any other services envisaged in that section. However, any expenditure incurred in or paid for in "foreign exchange" or by persons who enjoy certain diplomatic privileges and immunities is exempt. challenge to vires of Act is on grounds of lack of legislative competence and of violation of rights under articles 14 and 19(1)(g). Union of India seeks to sustain legislative competence to enact impugned law under article 248 read with entry 97 of List I of Seventh Schedule. Writ Petition No. 1395 of 1987 is quite comprehensive as to array of parties and may generally be regarded as representative of contentions urged in support of challenge. first petitioner therein is Federation of Hotel and Restaurant Association of India, which is said to be representative body of over 1,000 member-petitioners in India. Petitioners Nos. 2 to 5 are said to be Regional Associations of Federation and petitioners. Nos. 6 and 7 are two hotel companies which own several hotels in India. Petitioners Nos. 8 and 9 are Indian citizens who are directors and shareholders of petitioners Nos. 6 and 7, respectively. Petitioner No. 10 is practising chartered accountant who claims to use services in several hotels in India owned by members of Federation. array of petitioners is quite comprehensive so as to include all interests affected so as to satisfy requisite standing to sue from all points of view. Expenditure Tax Bill No. 90 of 1987, preceding impugned Act was introduced in Union Legislature on August 26, 1987. It became Act on September 14, 1987. It extends to whole of India except State of Jammu and Kashmir. requisite notification under section 1(3) of Act was issued on October 14, 1987, appointing November, 1, 1987, as date on which Act shall come into force. Expenditure Tax Bill No. 90 of 1987 states following as its objects and reasons ( [1987] 167 ITR (St.) 57): "The Bill seeks to impose tax on expenditure incurred in hotels where room charges for any unit of residential accommodation are four hundred rupees or more per day per individual. This tax will be levied at rate of ten per cent. of expenditure incurred in connection with provision of any accommodation, food, drinks and certain other categories of services. This tax will not apply to expenditure incurred in foreign exchange or in case of persons enjoying diplomatic privileges." brief survey of provisions of Act is perhaps necessary to apprehend and assess grounds of challenge in their true perspective. Section 4 is charging section which says (see [1987] 168 ITR (St.) 50): "Subject to provisions of this Act; there shall be charged on and from commencement of this Act, tax at rate of ten per cent. of chargeable expenditure. " expression "chargeable expenditure" is defined in clauses (a), (b), (c) and (d) of section 5, which read ([1987] 168 ITR (St.) 50): "For purposes of this Act, chargeable expenditure means any expenditure incurred in, or payments made to, hotel to which this Act applies, in connection with provision of, - (a) any accommodation, residential or otherwise; or (b) food or drink by hotel, whether at hotel or outside, or by any other person at hotel; or (c) any accommodation in such hotel on hire or lease; or (d) any other services at hotel, either by hotel or by any other person, by way of beauty parlour, health club, swimming pool or other similar services..." [ Rest of provisions of section 5 are omitted as unnecessary for present. expressions "assessee", "hotel" and "room charges" are some of material expressions defined in interpretation clause. "2(1)'assessee' means person responsible for collecting expenditure- tax payable under provisions of this Act." " 2 (6)'hotel' includes building or part of building where residential accommodation is, by way of business, provided for monetary consideration." "2(10)'room charges' means charges for unit of residential accommodation in hotel and includes charges for - (a) furniture, air-conditioner, refrigerator, radio, music, telephone, television, and (b) such other services as are normally included by hotel in room rent, but does not include charges for food, drinks and any services other than those referred to in sub-clauses (a) and (b)." Section 3 is crucial provision which lays down differentia for classification of hotel to which Act applies. That section provides that Act shall apply in relation to any "chargeable expenditure", incurred in hotel wherein "room charges" for any unit of residential accommodation at time of incurring of such expenditure are Rs. 400 or more per day per individual. levy of tax is confined to such class of hotels which satisfy that statutory standard. Where, however, composite charges are payable in respect of both residential accommodation and food, then "room charges" for purposes of determination of criteria attracting Act shall have to be apportioned in manner to be prescribed. Section 3 enables assessing officer to determine "room charges" on such reasonable basis as he may deem fit where (see [1987] 168 ITR (St.) 50): "(i) composite charge is payable in respect of residential accommodation, food, drinks and other services, or any of them, and case is not covered by provisions of sub-section (2), or (ii) it appears to Income-tax Officer that charges for residential accommodation, food, drinks or other services are so arranged that room charges are understated and other charges are overstated," Sections 6 and 24 envisage and provide for authorities to administer Act and engraft machinery and procedure of Income-tax Act. Section 6(1) says ([1987] 168 ITR (St.) 51): "Every Director of Inspection, Commissioner of Income-tax, Commissioner of Income-tax (Appeals), Inspecting Assistant Commissioner of Income-tax, Income-tax Officer and Inspector of Income-tax shall have like powers and perform like functions under this Act as he has and performs under Income-tax Act, and for exercise of his powers and performance of his functions, his jurisdiction under this Act shall be same as he has under Income-tax Act." Section 24 provides: (see [1987] 168 ITR (St.) 58): "The provisions of following sections and Schedules of Income-tax Act and Income-tax (Certificate Proceedings) Rules, 1962, as in force from time to time, shall apply with necessary modifications as if said provisions and rules referred to expenditure-tax instead of to income-tax: 2(43B) and (44), 118, 125, 125A, 128 to 136 (both inclusive), 138, 140, 144A, 159 to 163 (both inclusive), 166, 167, 170, 171, 173 to 179 (both inclusive), 187, 188, 189, 220 to 227 (both inclusive), 229, 231, 232, 237 to 245 (both inclusive), 254 to 262 (both inclusive), 265, 266, 268, 269, 278B, 278C, 278D, 278E, 281, 281B, 282, 283, 284, 287, 288, 288A, 288B, 289 to 293 (both inclusive), Second Schedule and Third Schedule: Provided that references in said provisions and rules to ' assessee' shall be construed as references to assessee as defined in this Act." Section 8(1) provides that every "person responsible for collecting" tax as defined in section 2(8) shall, before expiry of four months from March 31, in each year furnish or cause to be furnished to Income-tax Officer, in prescribed form and verified in prescribed manner, return in respect of immediately preceding financial year showing (a) aggregate of payments received in respect of "chargeable expenditure"; (b) amount of tax collected; (c) amount of tax paid to credit of Central Government; and (d) such other particulars as may be prescribed. incidence of tax is on persons who incur "chargeable expenditure" in class of hotels to which Act applies. Section 7 enjoins upon "person responsible for collecting" duty to collect taxes and pay same to credit of Central Government. "room charges" of Rs. 400 per day per individual stipulated in section 3 is differentium which keeps apart class of hotels to which Act applies. petitioners say that section 3 merely defines place, viz., hotel where room carries charge of Rs. 400 per day marked on it and rest of incidents and consequences of provisions of Act envisage levy of tax on "luxuries" provided at such place. legislation, it is urged, is squarely within entry 62 of List 11 within State power. Act, it is contended, does not impose "expenditure-tax" but taxes "luxuries". Even if legislation has "expenditure dampening" objective and seeks to inhibit, by creation of disincentives, ostentatious and wasteful expenditure, classification, it is said, has no rational basis. Persons similarly situated and who incur same extent and degree of expenditure on same luxuries are differentiated on sole basis that in one case expenditure is incurred in hotel where one of rooms has charge of Rs. 400 per day per individual marked for it, while in other though equally wasteful expenditure is incurred in more luxurious restaurant, latter expenditure is exempt. It is urged that even if more sophisticated and expensive food and drinks and other services, envisaged in clauses (a) to (d) of section 5, are provided in hotel or catering establishment which falls outside class, expenditure incurred thereon is unaffected by law. This aspect of under inclusiveness is assailed as violative of article 14. .The petitioners further contend that several provisions of Act which impose certain statutory obligations of onerous nature, breach of which are visited with penal consequences, render law unreasonable restriction on petitioners' fundamental rights under article 19(1)(g). contentions urged in support of petitions admit of being noticed and are formulated in following terms: (a) Act, in its true nature and character, is not one imposing " expenditure-tax", as known to law, accepted notions of public finance, and to legislative practice but is, in pith and substance, either tax on luxuries falling within entry 62 of List 11 of Seventh Schedule; or tax on consideration paid for purchase of goods constituting impost of nature envisaged in entry 54 of List 11, and clearly outside legislative competence of Union Parliament; (b) that even if Act is held to impose tax which is "sui generis" or "nondescript", tax with respect to which Union Parliament is competent to make law under article 248 and entry 97 of List 1, then, at all events, Act is violative of article 14 inasmuch as differentium on which hotels are classified is arbitrary and unintelligible, has no rational nexus with taxing policy under Act; (c) that Act is violative of petitioners' fundamental right under article 19(1)(g) as it imposes unreasonable and onerous restrictions on their freedom of business. Re: Contention (a): Shri Palkhivala, learned senior counsel for petitioners, contended that appellation of "expenditure-tax" given to impost is misnomer as concept of "expenditure-tax" as known to law and recognised by theorists of public finance is not tax on few stray items of expenditure but is term of art which has acquired technical import as "nomen juris" and that impost envisaged by Act, in its true nature and character, is no more and no less than tax on luxuries under entry 62, List II, within State's exclusive power. Learned counsel urged that delicate balance in demarcation in federal polity of legislative powers between Union and States would impose on Union, repository of residuary power, sensitive task of recognising both line of demarcation as well as constitutional mandate and disciplined reluctance not to cross it. contention as to lack of legislative competence emphasises two aspects-one with negative implication and other of positive import. Negatively, it is urged that impost is not, and does not satisfy concept of "expenditure-tax" which has technical connotation both in law and in public finance. tax on certain stray items of expenditure is not, it is contended, general "expenditure-tax". nomenclature of levy is really mere ill-fitting legal mask for what is really tax under entry 62, List 1. nomenclature of tax, it is urged, is irrelevant in deciding its true nature and character. It belongs to rudiments of subject, says learned counsel, that constitutional grantee of power cannot enlarge its own by choosing for legislation enacted in exercise of that power, nomenclature that corresponds to and semantically subsumes with grant. Shri Palkhivala submitted that true nature and concept of "expenditure-tax", as known to theories of public finance, has specific, well accepted legal connotation and is tax levied on income or capital spent or "consumed" in distinguishment of income or capital "saved". It is this concept of "expenditure-tax", as fiscal tool, which has certain social and economic objectives informing its policy. present impost and its incidents, it is urged, have no rational connection with concept of "expenditure-tax" known to and accepted by principles of public finance and recognised by established legislative practice. Referring to economists' concept of "expenditure-tax", learned counsel referred us to report of Study Group "On Taxation of Expenditure" (Government of India, Ministry of Finance, April[1987]: "An expenditure tax is generally taken to mean direct tax on personal consumption, i.e., total annual consumption (minus exemption, if any) of individual taxpayer or family. This implies that tax will be payable in year in which consumption takes place. One can conceive of tax base being computed by adding up all items of expenditure, which are by law defined as consumption expenditure,... or alternatively, by summing up all receipts and subtracting therefrom expenses of earning income as well as outflows in form of savings (going into different types of investments, including repayment of past loans). In practice, latter method would be preferable." (emphasis supplied). "India has distinction, shared with Sri Lanka, of having actually experimented with direct tax on consumption expenditure though idea itself had caught imagination of many tax theorists in developed countries, some of whom had developed practical systems for implemen- tation. In both India and Sri Lanka, tax was introduced on basis of recommendations of Prof. Nicholas Kaldor. Prof. Kaldor had been invited to come to India by Indian Statistical Institute to make investigation of Indian tax system in light of revenue requirements of Second Five Year Plan. In his report, he recommended introduction of direct tax on personal consumption expenditure as limb of comprehensive and self- checking system comprising income-tax, (which was already in operation in India), tax on capital gains (which had been tried for two years in post-war period and then withdrawn), annual tax on net wealth, general gift-tax and tax on personal expenditure. He envisaged that these five levies would be assessed simultaneously on basis of single comprehensive return, (emphasis supplied) "Under scheme of expenditure taxation suggested by Prof. Kaldor, taxpayer would not be required to give any detailed account of his outlays on consumption but only statement of his total outlay as part of comprehensive tax return showing all his receipts, investments, etc., and all items for which he claimed exemption...... "In India too, although expenditure tax was tried twice and was given up, there has been revival of interest in making expenditure base for personal taxation. In particular, it has been maintained that India should seriously consider moving towards progressive expenditure tax for three important reasons: (a) it will promote savings; (b) it would be, on whole, more equitable than present or any practicable form of income tax; and (c) it will significantly reduce inducement of direct tax evasion." In Musgrave on "Public Finance", referring to concept of personal expenditure tax, it is stated: "... In analogy to income-tax, taxpayer would determine his total consumption for year, subtract whatever personal exemptions or deductions were allowed, and apply progressive rate schedule to remaining amount of taxable consumption." (emphasis supplied). Shri Palkhivala also referred to certain passages of Nicholas Kaldor "On Expenditure Tax" and same eminent economist reports on "Indian Tax Reform", to reinforce submission that conceptualisation of "expenditure- tax", as fiscal tool for economic regulation, has specific and definite connotation and "tax" so conceptualised by experts on public finance is entirely different idea from one built into present legislation. very concept of "expenditure-tax" envisaged in impugned legislation, it is urged, is unknown to accepted principles of public finance and is result of grave misconception as to essential nature and incidents of what in law and legislative practice is recognised as "expenditure-tax". whole exercise, learned counsel said, is draft on credibility and that Finance Minister's speech on Bill leaves no doubt that what Government wanted from law was really tax on "luxuries". impost, it is urged, is not susceptible of any other legitimate understanding than that it is in substance and effect, tax on "luxuries" within States' power. Shri Palkhivala emphasised relevance of what was implicit in observations of this court in H. H. Prince Azam Jha Bahadur v. Expenditure-tax Officer [1972] 83 ITR 92; [1972] 1 SCR 470, made while upholding legislative competence of Union Parliament to enact Expenditure-tax Act, 1957, as referable to residuary entry 97 of List 1. implication of observations of this court at page 479 of report, according to learned counsel, is that what distinguished "expenditure-tax" from levy under entry 62 of List II, was that scheme of taxation took into account totality of expenditure over unit of time, as distinct from sums laid out on stray purchases of luxuries. Shri Palkhivala, then, submitted that notion of expenditure-tax, as recognised by legislative practice is relevant factor. In Croft v. Dunphy [1933] AC 156 (PC), Lord Macmillan held that when power is conferred on Legislature on particular topic, it is important, in determining scope of power, to have regard to what, in legislative practice, is ordinarily treated as embraced within topic and particularly in legislative practice of State which has conferred power. In Wallace Brothers and Co. Ltd. v. CIT [1948] 16 ITR 240 (PC); [1948] L. R. 75 IA 86, Lord Uthwatt referred to permissibility and, indeed, importance of referring to legislative practice as to what is ordinarily treated as within topic of legislation in understanding scope of legislative power. notion of expenditure-tax in scheme of Expendituretax Act, 1957, would, it is urged, detract from such legislative practice. second limb of argument is that impost is clearly of nature of tax on luxuries within entry 62 of List 1. simple test, according to argument, is whether, if State Legislature had enacted similar law, it would not have been held to be within its competence under entry 62 of List 11? answer would, according to submission, be emphatic affirmation. Referring to concept of luxury tax, learned counsel referred to New Encyclopaedia Britannica, Vol. 7, which, referring to "luxury tax", says: "Luxury tax, excise levy on goods or services considered to be luxuries rather than necessities. Modern examples are taxes on jewellery and per- fume. Luxury taxes may be levied with intent of taxing rich, as in case of late 18th and early 19th century British taxes on carriages and man- servants; or they may be imposed in deliberate effort to alter consumption patterns, either for moral reasons or because of some national emergency. In modern times, revenue production of luxury taxes has probably overshadowed moral argument for them. Furthermore, progressive nature of early taxes began to be lost as more lower income people's'luxuries' were taxed in interest of generating additional revenue; example is amusement tax." On analogy of wealth-tax envisaged by entry 86 of List 1, it was urged that even as concept of "wealth" for imposition of tax thereon is not individual components of assets of assessee but totality of all assets which assessee owns, so is concept of "expenditure" which does not consist of few stray items of expenditure but systematised reckoning of expenditure for and during particular unit of time. It was then urged that recourse to residuary power under article 248 read with entry 97 of List I should be very last refuge and would be available if, and only if, other entries in State and Concurrent lists do not cover topic. Reliance was also placed on observations of Federal Court in Subrahmanyan Chettiar v. Muttuswami' Goundan, AIR 1941 FC 47, where it was held (at p. 778 of AIR 1981 SC): "But resort to that residual power should be very last refuge. It is only when all categories in three Lists are absolutely exhausted that one can think of falling back upon nondescript." Shri Palkhivala recalled following, words of caution sounded by Chinnappa Reddy J. in International Tourist Corporation v. State of Haryana [1981] 2 SCR 364; AIR 1981 SC 774, 777: "Before exclusive legislative competence can be claimed for Parliament by resort to residuary power, legislative incompetence of State Legislature must be clearly established. Entry 97 itself is specific that matter can be brought under that entry only if it is not enumerated in List 11 or List III and in case of tax if it is not mentioned in either of those lists. In federal Constitution like ours where there is division of legislative subjects but residuary power is vested in Parliament, such residuary power cannot be so expansively interpreted as to whittle down power of State Legislature. That might affect and jeopardise very federal principle. federal nature of Constitution demands that interpretation which would allow exercise of legislative power by Parliament pursuant to residuary powers vested in it to trench upon State legislation and which would thereby destroy or belittle State autonomy must be rejected..." Shri Palkhivala also sought to demonstrate how, looked at from another angle, levy presents anomalous situation by splitting up transaction which would otherwise be one of sale of goods and isolating price of goods for separate treatment as distinct subject-matter for levy of expenditure- tax., thus robbing State power of its substance. Learned Advocate-General for State of Kerala, who intervened, made submissions which, while being substantially on lines of petitioners' contentions, however, sought to qualify that legislative competence to extent of operation of Act in Union Territories could be sustained. Learned Attorney-General, on contrary, submitted that law, in pith and substance, is not one "with respect to" luxuries under entry 62 List I and tax on expenditure, as Legislature has chosen to conceive it, is referable to residuary power. Learned Attorney-General said that economists' concept of such expenditure tax is at best idea of manner of effectuation of fiscal programme and is no limitation on legislative power. Indeed, if topic is not shown to fall within fields of legislation in Lists II or III, no further inquiry is necessary in order to support legislative competence of Union to legislate on topic. purpose of incorporating separate List for Union, as observed in Union of India v. Harbhajan Singh Dhillon [1972] 83 ITR 582, 610 (SC) [1972] 2 SCR 33 at 67 is: ".. there is some merit and legal effect in having included specific items in List I for when there are three lists it is easier to construe List II in light of Lists I and 111. If there had been no List I, many items in List II would perhaps have been given much wider interpretation than can be given under present scheme. Be that as it may, we have three lists and residuary power and, therefore, it seems to us that in this context if Central Act is challenged as being beyond legislative competence of Parliament, it is enough to enquire if it is law with respect to matters or taxes enumerated in List II. If it is not, no further question arises. " (emphasis supplied) Learned Attorney-General characterised that petitioners' contention that impugned impost is really tax on luxuries or that one aspect of taxable event in sale of goods had impermissibly been isolated for creation of artificial idea "expenditure", suffers from certain basic fallacies. legislative powers, it is urged, recognise demarcation of distinct aspects of same matter as distinct topics of legislation and present challenge to legislative competence overlooks dichotomy of distinct aspects of same matter constituting distinct fields of legislation, line of demarcation, though sometimes thin and subtle, being real. Learned Attorney-General further contended that measure adopted for levy of tax does not necessarily determine its essential character and that object on which expenditure is laid out might be item of luxury or it might not be one; or "expenditure" might constitute price of goods but, what is taxed is "expenditure" aspect which, in itself, is susceptible of recognition, as distinct topic of legislation. We have bestowed our careful consideration to these rival contentions. principal question is whether tax envisaged by impugned law is within legislative competence of Union Parliament. In that sense, constitutionality of law becomes essentially question of power which, in federal constitution, unlike legally omnipotent Legislature like British Parliament, turns upon construction of entries in legislative lists. If Legislature with limited or qualified jurisdiction transgresses its powers, such transgression may be open, direct and overt, or disguised, indirect and covert. latter kind of trespass is figuratively referred to as "colourable legislation", connoting that although apparently Legislature purports to act within limits of its own powers yet, in substance and in reality, it encroaches upon field prohibited to it, requiring examination, with some strictness, of substance of legislation for purpose of determining what that Legislature was really doing. Wherever legislative powers are distributed between Union and States, situations may arise where two legislative fields might apparently overlap. It is duty of courts, however difficult it may be, to ascertain to what degree and to what extent, authority to deal with matters falling within these classes of subjects exists in each Legislature and to define, in particular case before them, limits of respective powers. It could not have been intention that conflict should exist; and, in order to prevent such result, two provisions must be read together, and language of one interpreted, and, where necessary, modified by that of other. Judicial Committee in Prafulla Kumar Mukherjee v. Bank of Commerce [1946] FCR 179; AIR 1947 PC 60, referred to, with approval, following observations of Sir Maurice Gwyer C. J. in Subrahmanyan Chettiar's case, AIR 1941 FC 47: "It must inevitably happen from time to time that legislation, though purporting to deal with subject in one list, touches also upon subject in another list, and different provisions of enactment may be so closely intertwined that blind adherence to strictly verbal interpretation would result in large number of statutes being declared invalid because Legislature enacting them may appear to have legislated in forbidden sphere. Hence rule which has been evolved by Judicial Committee, whereby impugned statute is examined to ascertain its'pith and substance', or its'true nature and character', for purpose of determining whether it is legislation with respect to matters in this list or in that." This necessitates "essential of federal Government, role of impartial body, independent of general and regional Governments", to decide upon meaning of decision of powers. court is this body. position in present case assumes slightly different complexion. It is not any part of petitioners' case that "expenditure-tax" is one of taxes within States' power or that it is forbidden field for Union Parliament. On contrary, it is not disputed that law imposing "expenditure-tax" is well within legislative competence of Union Parliament under article 248 read with entry 97 of List 1. But specific contention is that particular impost under impugned law, having regard to its nature and incidents, is really not "expenditure-tax" at all as it does not accord with economists' notion of such tax. That is one limb of argument. other is that law is, in pith and substance, really one imposing tax on luxuries or on price paid for sale of goods. crucial questions, therefore, are whether economists' concept of such tax qualifies and conditions legislative power and, more importantly, whether "expenditure" laid out on what may be assumed to be "luxuries" or on purchase of goods admits of being isolated and identified as distinct aspect susceptible of recognition as distinct field of tax legislation. In Lefroy's'Canada's Federal System', learned author, referring to "aspects of legislation" under sections 91 and 92 of Canadian Constitution, i. e., British North America Act, 1867, observes that "one of most interesting and important principles which have been evolved by judicial decisions in connection with distribution of legislative power is that subjects which in one aspect and for one purpose fall within power of particular Legislature may, in another aspect and for another purpose, fall within another legislative power. Learned author says: "... that by'aspect' must be understood aspect or point of view of legislator in legislating object, purpose, and scope of legislation that word is used subjectively of legislator, rather than objectively of matter legislated upon." In Union Colliery Co. of British Columbia Ltd. v. Bryden [1899] AC 580 (PC) at p. 587, Lord Haldane said: "It is remarkable way this Board has reconciled provisions of section 91 and section 92, by recognizing that subjects which fall within section 91 in one aspect, may, under another aspect, fall under section 92." Indeed, law "with respect to" subject might incidentally "affect" another subject in some way; but that is not same thing as law being on latter subject. There might be overlapping; but overlapping must be in law. same transaction may involve two or more taxable events in its different aspects. But fact that there is overlapping does not detract from distinctiveness of aspects. Lord Simonds in Governor-General in Council v. Province of Madras [1945] FCR 179, 193 (PC); AIR 1945 PC 98, 101, in context of concepts of duties of excise and tax on sale of goods said: "The two taxes, one levied upon manufacturer in respect of his goods, other upon vendor in respect of his sales, may, as is there pointed out, in one sense overlap. But in law there is no overlapping. taxes are separate and distinct imposts. If, in fact, they overlap, that may be because taxing authority, imposing duty of excise, finds it convenient to impose that duty at moment when excisable article leaves factory or workshop for first time on occasion of its sale.." Referring to "aspect" doctrine, Laskin's "Canadian Constitutional Law" states (at p. 115): "The `aspect' doctrine bears some resemblance to those just noted but, unlike them, deals not with what the'matter' is but with what it 'comes within'.. "....it applies where some of constitutive elements about whose combination statute is concerned (that is, they are its'matter'), are kind most often met with in connection with one class of subjects and others are of kind mostly dealt with in connection with another. As in case of pocket gadget compactly assembling knife blade, screwdriver, fishscaler, nailfile, etc., description of it must mention everything but in characterising it particular use proposed to be made of it determines what it is." "... I pause to comment on certain correlations of operative incompatibility and the'aspect' doctrine. Both grapple with issues arising from composite nature of statute, one as regards preclusory impact of federal law on provincial measures bearing on constituents of federally regulated conduct, other to identify what parts of whole making up matter bring it within class of subjects..." On distinction between what is "ancillariness" and what "incidentally affecting", treatise says (at p. 115): "... There is one big difference though it is little mentioned. Ancillariness is usually associated with explicit statutory provision of peripheral nature; talk about'incidentally affecting' crops up in connection with potential of non- differentiating statute to affect indiscriminately in its application matters assertedly immune from control and others. But it seems immaterial really whether it is its words or its works which draw flotsam within statute's wake." Referring to flexibility in modes of effectuating tax in view of innate complexities in fiscal adjustment of diverse economic factors inherent in formulation of policy of taxation and variety of policy options open to State, J. Rauls, in "Modern Trends in Analytical and Normative jurisprudence" [Introduction to Jurisprudence by Lord Lloyd of Hampstead and Freeman, 5 Edn.] observes: "...In practice, we must usually choose between several unjust, or second best, arrangements; and then we look to non-ideal to find least unjust scheme. Sometimes this scheme will include measures and policies that perfectly just system would reject. Two wrongs can make right in sense that best available arrangement may contain balance of imperfections, adjustment of compensating injustices." Adverting to "Expenditure dampening" policies and choice of measures designed to reduce aggregate demand for goods and services, "Dictionary of Economic Terms" by Allan Gilpin says: "Expenditure dampening policies: Government measures designed to reduce aggregate demand for goods and services in community. measures may consist of raising taxes (q. v.), lowering Government expenditure or curtailing hire-purchase or other credit facilities. See EXPENDITURESWITCHING POLICIES. Expenditure-switching policies: Government measures designed to influence pattern of expenditure by community. For example, taxing of imported goods may effect switch of expenditure from imported to home- produced goods; devaluation of nation's currency may have same effect as imports become more expensive. See EXPENDITURE-DAMPENING POLICIES." Learned Attorney-General also referred to following observations in British Tax System [by J. A. Kay M. A. King] to indicate that tax on expenditure need not necessarily be expenditure-tax in economists' reckoning of things: "An annual expenditure tax, which seeks to measure individual's spending in each separate year of assessment, poses very serious administrative problems, because it requires that his assets be assessed annually..." "....But there is much easier way of reaching more accurate answer. You simply measure how much foreign currency you took with you, add amount of currency you bought while abroad, and subtract what was left when you got back. You measure, not expenditure itself, but sources of expenditure, and can thus achieve simple and reliable measure on basis of small number of recorded (and readily verifiable) transactions." It is trite that true nature and character of legislation must be determined with reference to question of power of Legislature. consequences and effects of legislation are not same thing as legislative subject-matter. It is true nature and character of legislation and not its ultimate economic results that matter. Indeed, as instance of different aspects of same matter, being topic of legislation under different legislative powers, reference may be made to annual letting value of property in occupation of person for his own residence being, in one aspect, measure for levy of property tax under State law and in another aspect constituting notional or presumed income for purpose of income-tax. petitioners' reference to legislative practice as determining scope of present legislation does not assist them. There are two infirmities in contention. first is that question of legislative practice as to what particular legislative entry could be held to embrace is in apposite while dealing with tax which is sui generis or nondescript imposed in exercise of residuary powers so long as such tax is not specifically enumerated in Lists 11 and 111. Secondly, there is no conclusive material indicating that appropriate Legislature had limited notion of tax of this kind within any confines. It is relevant to recall words of Lord Uthwatt in Wallace Brothers' case [1948] 16 ITR 240, 245 AIR 1948 PC 118, 120: "The point of reference is emphatically not to seek pattern to which due exercise of power must conform. object is to ascertain general conception involved in words in enabling Act." But, as observed in Navinchandra Mafatlal v. CIT [1954] 26 ITR 758, 763 (SC); [1955] 1 SCR 829, 835, meaning of word "income" as given in Income-tax Act is not determinative of its content as entry in legislative list. Das J. observed: "It is, therefore, clear that none of authorities relied on by Mr. Kolah establish what may be called legislative practice indicating connotation of term'income', apart from income-tax statute. In our view, it will be wrong to interpret word'income' in entry 54 in light of any supposed English legislative practice as contended for by Mr. Kolah..." In Union of India v. H. S. Dhillon [1972] 83 ITR 582, 604; [1972] 2 SCR 33 at 61, this court dealt, with scope of residuary power under entry 97, List 1. Referring to following observations of Lord Loreburn in Attorney-General for Ontario v. Attorney-General for Canada [1912] AC 571 at 581 (PC): "Now, there can be no doubt that under this organic instrument powers distributed between Dominion on one hand and provinces on other hand, cover whole area of self-government within whole area of Canada. It would be subversive of entire scheme and policy of Act to assume that any point of internal self-government was withheld from Canada." (emphasis supplied) It was held that last portion of above excerpt applied fortiori to Constitution of Sovereign Democratic Republic. Sikri C. J. proceeded to observe [1972] 83 ITR 582, 604 [1972] 2 SCR 33 at 61: "If this is true scope of residuary powers of Parliament, then we are unable to see why we should not, when dealing with Central Act, enquire whether it is legislation in respect of any matter in List II for this is only field regarding which there is prohibition against Parliament. If Central Act does not enter or invade these prohibited fields, there is no point in trying to decide as to under which entry or entries of List I or List III Central Act would rightly fit in. " Then, considering includibility of value of agricultural property in wealth of assessee under Wealth-tax Act despite exclusionary words in entry 86, List 1, learned Chief Justice said [1972] 83 ITR 582, 591): "...we are definitely of opinion as explained little later, that scheme of our Constitution and actual terms of relevant articles, namely, article 246, article 248 and entry 97, List 1, show that any matter, including tax, which has not been allotted exclusively to State Legislatures under List 11 or concurrently with Parliament under List 111, falls within List 1, including entry 97 of that list, read with article 248." It was held that subject did not fall under entry 49, List 11, and that despite exclusion in entry 86, List 1, Union, as repository of residuary power, had competence to legislate as long as topic was not allotted to or within State power. It was further observed [1972] 83 ITR 582, 591 and 615): "It seems to us unthinkable that Constitution-makers, while creating sovereign democratic republic, withheld certain matters or taxes beyond legislative competence of Legislatures in this country either legislating singly or jointly..." "There is no principle that we know of which debars Parliament from relying on powers under specified entries 1 to 96, List 1, and supplementing them with powers under entry 97, List 1, and article 248, and for that matter powers under entries in Concurrent List." subject of tax is different from measure of levy. measure of tax is not determinative of its essential character or of competence of Legislature. In Sainik Motors v. State of Rajasthan [1962] 1 SCR 517; AIR 1961 SC 1480, provisions of State law levying tax on passengers and goods under entry 56 of List I were assailed on ground that State was, in guise of taxing passengers and goods, in substance and reality taxing income of stage carriage operators or, at any rate, was taxing "fares and freights", both outside of its powers. It was pointed out that operators were required to pay tax calculated at rate related to value of fare and freight. Repelling contention, Hidayatullah J., speaking for court, said (at p. 1484 of AIR 1961 SC): "...We do not agree that Act, in its pith and substance, lays tax upon income and not upon passengers and goods. Section 3, in terms, speaks of charge of the'tax in respect of all passengers carried and goods transported by motor vehicles', and though measure of tax is furnished by amount of fare and freight charged, it does not cease to be tax on passengers and goods..." indeed, reference may be made to following statement in Encyclopaedia Britannica [Vol. 14, page 459 ] on "Luxury Tax" "A different approach to luxury taxation, much less frequently found, seeks to single out luxury component of spending on given object rather than taxing specified goods and services as luxuries. One example of this is Massachusetts 5% tax on restaurant meal of $. 1 or more.." (emphasis supplied). submissions of learned Attorney-General that tax is essentially tax on expenditure and not on luxuries or sale of goods failing within State power, must, in our opinion, be accepted. As contended by learned Attorney- General, distinct aspect, namely, "the expenditure" aspect of transaction falling within Union power must be distinguished and legislative competence to impose tax thereon sustained. Contention (a) is, in our opinion, unsubstantial and, accordingly, fails. Re: Contention (b): It is urged that application of Act is, confined to hotels where "room charges" for any unit of residential accommodation are Rs. 400 or more per day per individual, while expenditure of greater magnitude and quantum incurred in other hotels is not exigible to tax, either because such room charges are less than Rs. 400 or because establishment which, though providing food and drink and other services envisaged by section 5, may not provide residential accommodation. This distinction, it is said, is violative of constitutional pledge of equality. averments in this behalf in memorandum of writ petition are these: "There is no basis or intelligible differentia for discriminating between levy of tax on expenditure over food or drink provided by hotel and food or drink provided by restaurant or eating house not situated in hotel (or in hotel to which Act does not apply) even though cost of food or beverage is higher than that on similar items in applicable hotel. There is also no intelligible differentia for discriminating between levying of tax on expenditure on food and drinks outside hotel which is provided by hotel and not levying tax on expenditure on food and drinks incurred outside hotel but which is not provided by hotel, even though latter expenditure may be more greater than former..." "The arbitrariness and lack of intelligible differentia is even more apparent in respect of clause 5 (d) read with exception (c), To give example, if shop or office is owned by hotel in hotel, any expenditure incurred in such shop or office would attract expenditure tax but if such shop or office is not owned or managed by hotel even though situated in hotel premises, such expenditure in/by hotel would not be liable to impugned expenditure-tax." "By way of illustration, it may be pointed out that in City of Bombay, there are numerous restaurants like, Talk of Town, China Garden, Gazebo and Gaylord which are similarly situated in every way to restaurants located in applicable hotels, from point of view of their decor, furnishing, range of menu, pricing of items, standards of service. clientele of such restaurants is also as affluent as class of people who patronise restaurants which are located in applicable hotels. Furthermore, many of said independent restaurants are far more luxurious and expensive than restaurants and/or dining rooms attached to applicable hotels in City of Bombay which have one or more rooms charging daily tariff of rupees 400 or more per person." It is now well settled that though taxing laws are not outside article 14, however, having regard to wide variety of diverse economic criteria that go into formulation of fiscal policy, Legislature enjoys wide latitude in matter of selection of persons, subject-matter, events, etc., for taxation. tests of vice of discrimination in taxing law are, accordingly, less rigorous. In examining allegations of hostile, discriminatory treatment, what is looked into is not its phraseology, but real effect of its provisions. Legislature does not, as old saying goes, have to tax everything in order to be able to tax something. If there is equality and uniformity within each group, law would not be discriminatory. Decisions of this court on matter have permitted Legislatures to exercise extremely wide discretion in classifying items for tax purposes, so long as it refrains from clear and hostile discrimination against particular persons or classes. But, with all this latitude, certain irreducible desiderata of equality shall govern classifications for differential treatment in taxation laws as well. classification must be rational and based on some qualities and characteristics which are to be found in all persons grouped together and absent in others left out of class. But this alone is not sufficient. Differentia must have rational nexus with object sought to be achieved by law. State, in exercise of its Governmental power, has, of necessity, to make laws operating differently in relation to different groups or class of persons to attain certain ends and must, therefore, possess power to distinguish and classify persons or things. It is also recognised that no precise or set formulae or doctrinaire tests or precise scientific principles of exclusion or inclusion are to be applied. test could only be one of palpable arbitrariness applied in context of felt needs of times and societal exigencies informed by experience. Classifications based on differences in value of articles or economic superiority of persons of incidence are well recognised. reasonable classification is one which includes all who are similarly situated and none who are not. In order to ascertain whether persons are similarly placed, one must look beyond classification and to purposes of law. In Jaipur Hosiery Mills (P.) Ltd. v. State of Rajasthan [1970] 2 SCC 27; [1970] 26 STC 341 (SC), notification under Rajasthan Sales Tax Act, 1950, exempting from tax sale of garments which did not exceed Rs. 4 per piece was assailed. This court found classification permissible. It was held (at p. 343 of 26 STC ): "... it has to be borne in mind that in matters of taxation, Legislature possesses large freedom in matter of classification. Thus wide discretion can be exercised in selecting persons or objects which will be taxed and statute is not open to attack on mere ground that it taxes some persons or objects and not others. It is only when within range of its selection law operates unequally and cannot be justified on basis of valid classification that there would be violation of article 14. " In Hira Lal Rattan Lal v. S TO [1973] 2 SCR 502, 510, 51 [1973] 31 STC 178, 185, 186 (SC), this court said: "....It is open to Legislature to define nature of goods, sale or purchase of which should be brought to tax. Legislature was not incompetent to separate processed or split pulses from unsplit or unprocessed pulses and treat two as separate and independent goods. " "... But Legislature has wide powers of classification in case of taxing statutes." "....The classification between processed or split pulses and unprocessed or unsplit pulses is reasonable classification. It is based on use to which those goods can be put. Hence, in our opinion, impugned classification is not violative of article 14." In State of Gujarat v. Shri Ambica Mills Ltd. [1974] 3 SCR 760, 784; AIR 1974 SC 1300, 1314, Mathew J. said: "Statutes are directed to less than universal situations. Law reflects distinctions that exist in fact or at least appear to exist in judgment of legislators those who have responsibility for making law fit fact. Legislation is essentially empiric. It addresses itself to more or less crude outside world and not to neat, logical models of mind. Classification is inherent in legislation. To recognise marked differences that exist in fact is living law; to disregard practical differences and concentrate on some abstract identities is lifeless logic." "In utilities, tax and economic regulation cases, there are good reasons for judicial self-restraint if not judicial deference to legislative judgment. Legislature, after all, has affirmative responsibility. courts have only power to destroy, not to reconstruct. When these are added to complexity of economic regulation, uncertainty, tile liability to error, bewildering conflict of experts, and number of times judges have been overruled by events-self-limitation can be seen to be path to judicial wisdom and institutional prestige and stability." In G. K. Krishnan v. State of Tamil Nadu [1975] AIR 1975 SC 583; [1975] 2 SCR 715, 729, Mathew J. referred to following observations of Supreme Court of U. S. A. in San Antonio School District v. Rodrigues [1973] 411 US I (at p. 592 of AIR 1975 SC): "Thus we stand on familiar ground when we continue to acknowledge that Justices of this court lack both expertise and fami- liarity with local problems so necessary to making of wise decisions with respect to raising and disposition of public revenues. Yet, we are urged to direct States either to alter drastically present system or to throw out property tax altogether in favour of some other form of taxation. No scheme of taxation, whether tax is imposed on property, income, or purchases of goods and services, has yet been devised which is free of all discriminatory impact. In such complex arena in which no perfect alternatives exist, court does well not to impose too rigorous standard of scrutiny lest all local fiscal schemes become subjects of criticism under Equal Protection Clause." In ITO v. N. Takin Roy Rymbai [1976] 103 ITR 82, 89 (SC); [1976] 3 SCR 413, it was held: "Given legislative competence, Legislature has ample freedom to select and classify persons, districts, goods, properties, incomes and objects which it would tax, and which it would not tax. So long as classification made within this wide and flexible range by taxing statute does not transgress fundamental principles underlying doctrine of equality, it is not vulnerable on ground of discrimination merely because it taxes or exempts from tax some incomes or objects and not others. Nor mere fact that tax falls more heavily on some in same category, is by itself ground to render law invalid. It is only when within range of its selection, law operates unequally and cannot be justified on basis of valid classification, that there would be violation of article 14." In present case, bases of classification cannot be said to be arbitrary or unintelligible nor as being without rational nexus with object of law. hotel where unit of residential accommodation is priced at over Rs. 400 per day per individual is, in legislative wisdom, considered class apart by virtue of economic superiority of those who might enjoy its custom, comforts and services. This legislative assumption cannot be condemned as irrational. It is equally well recognised that judicial veto is to be exercised only in cases that leave no room for reasonable doubt. Constitutionality is presumed. These words of James Bradley Thayer may be recalled: "This rule recognises that, having regard to great, complex ever- unfolding exigencies of government, much which will seem unconstitutional to one man, or body of men, may reasonably not seem so to another; that Constitution often admits of different interpretations; that there is often range of choice and judgment; that in such cases Constitution does not impose upon Legislature any one specific opinion, but leaves open this range of choice; and that whatever choice is rational is Constitutional. " (emphasis supplied) [Supreme Court Statecraft; Rule of Law and Men Wallace Mendelson: p. 41] Thayer also referred to words of Chief Justice of Pennsylvania way back in 1811, which are also worth recalling: "For weighty reasons, it has been assumed as principle in constitutional construction by Supreme Court of United States, by this Court, and every other court of reputation in United States, that Act of legislature is not to be declared void unless violation of constitution is so manifest as to leave no room for reasonable doubt." In Secretary of Agriculture v. Central Roig Refining Co. [1949] 338 I.T. s. 604, Supreme Court of USA said: "... This court is not Tribunal for relief for crudities and inequities of "... This court is not Tribunal for relief for crudities and inequities of complicated experimental economic legislation. In Hoechst Pharmaceuticals Ltd. v. State of Bihar [1985] 154 ITR 64 (SC); AIR 1983 SC 1019, 1046, it was observed: "On questions of economic regulations and related matters, court must defer to legislative judgment. When power to tax exists, extent of burden is matter for discretion of law-makers. It is not function of court to consider propriety or justness of tax, or to enter upon realm of legislative policy. If evident intent and general operation of tax legislation is to adjust burden with fair and reasonable degree of equality, constitutional requirement is satisfied..." It is contended that standards and measures for computation of "chargeable expenditure under Act are vague and arbitrary. It is pointed out that expression "or other similar services" in clause (d) of section 5 is non- specific and vague. This argument does not commend itself to us. It is true that when statute says "other similar services" it does not contemplate that "other services" shall, in all respects, be same. If they were same, then words would, indeed, be unnecessary. These were intended to embrace services like but not identical with-those described in preceding words. content of expression "other similar services" following, as it does, preceding expressions "by way of beauty parlour, health club, swimming pool or..." has definite connotation in interpretation of such words in such statutory contexts. matter is one of construction as to whether any particular service falls within section and not one of constitutionality. We find contention (b) is also not acceptable. Re: Contention (c) It is urged that provisions of Act impose unreasonable restriction on petitioners' fundamental right under article 19(1)(g). It is averred in petition: "... various taxes to which hotel industry is subject are mentioned in earlier part of this petition. Thus, in respect of food and beverages consumed in hotel, element of taxes representing sales tax and present expenditure-tax works out, for example in Maharashtra, to as much as thirty five per cent. Likewise, in respect of room tariff, element of tax works out, for example in Gujarat, to as much as thirty-seven per cent. details of said calculations are given in exhibit'D' annexed to this petition. hotel industry today is subject to extremely heavy dose of taxation in shape of income-tax and even recent tax on works contracts. petitioners say that tourism industry is now not in position to sustain any additional burden and impugned tax is literally last straw on camel's back..." It is also contended: "...Several of hotels belonging to members of petitioner associations have entered into long-term contracts for supply of food and beverages and for providing accommodation. execution of such contracts would become onerous and even impossible in view of levy of present expenditure-tax. There is no provision in Act or any separate legislation whereby hotels can pass on such tax to persons who have contractually agreed to avail of any services at contracted rates... " taxing statute is not, per se, restriction of freedom under article 19(1)(g). policy of tax, in its effectuation, might, of course, bring in some hardship in some individual cases. But that is inevitable, so long as law represents process of abstraction from generality of cases and reflects highest common factor. Every cause, it is said, has its martyrs. Then again, mere excessiveness of tax or even circumstance that its imposition might tend towards diminution of earnings or profits of persons of incidence does not, per se, and without more, constitute violation of rights under article 19(1)(g). Fazal Ali J., though in different context, in Sonia Bhatia v. State of U. P. [1981] AIR 1981 SC 1274, 1284 [1981] 3 SCR 239 at 258, observed: "The Act seems to implement one of most important constitutional directives contained in Part IV of Constitution of India. If in this process few individuals suffer severe hardship, that cannot be helped, for individual interests must yield to larger interests of community or country as indeed every noble cause claims its martyr." Contention (c) is also insubstantial. In result, for foregoing reasons, these petitions fail and are dismissed. However, in circumstances of case, there will be no order as to costs. RANGANATHAN J. -I have perused judgment of my learned brother, Venkatachaliah J., in this batch of writ petitions as well as in two connected batches of matters, viz., C. A. Nos. 338 and 339 of 1981, and W. P. Nos. 254- 261 of 1981. 1 respectfully agree with his conclusions in all these matters but wish to add few words, primarily in so far as constitutional validity of Expenditure-tax Act, 1987, is concerned. As my learned brother has set out, analysed and discussed in detail provisions of various statutes, validity of which is in question, I shall avoid repetition of same and confine myself only to consideration of crucial issues for determination. contentions of assessees in three batches of cases above referred to, prima facie sought to make out state of direct collision between group of State enactments on one hand and couple of Central enactments on other, which cannot be averted save by declaring one set of enactments to be invalid. powerful, if also "diplomatic", endeavour of learned Attorney-General, appearing for Union of India, was to show that these sets of enactments are not really on collision course at all but, on contrary, are proceeding on parallel lines and that each of sets of legislations is quite safe from attack on ground of legislative incompetence. Whether this contention is acceptable and both sets of enactments can be saved or whether one of two has to give way to other is question for consideration in these batches of cases. set of State enactments which blazed trail (to be followed up by others) and hence are prior in point of time, is that comprising of various statutes passed by several States in India. specific State legislations which are in challenge in petitions and appeals before us (as indicated in brackets at end) are: (a) Gujarat Tax on Luxuries (Hotels and Lodging Houses) Act (No. 24 of) 1977. [C. A. Nos. 338, 339 of 1981; W. P. Nos. 7990, 8338, 8339, 9110 of 1981] (b) Tamil Nadu Tax on Luxuries in Hotels and Lodging Houses Ordinance, 1980, followed by Act (Act No. 6 of 1981 W. P. No. 162 of 1982] (c) Karnataka Tax on Luxuries (Hotels and Lodging Houses) Act (No. 22 of) 1979. [W. P. Nos. 12.71 and 1272 of 1982] (d) West Bengal Entertainments and Luxuries (Hotels and Restaurants) Tax Act (No. 21 of) 1972. [W. P. No. 5321 of [1985] States of Uttar Pradesh, Maharashtra and Kerala have also passed similar enactments, being the: (a) Uttar Pradesh Taxation and Land Revenue Laws Act (No. 8 of) 1975; (b) Maharashtra Tax on Luxuries (Hotels and Lodging Houses.) Act (XLI of) 1987; and (c). Kerala Tax on Luxuries in Hotels and Lodging Houses Act (No. 32 of ) 1976, repealing Kerala Ordinance No. 5 of 1976. above statutes have apparently been enacted by various State Legislatures in exercise of legislative powers conferred on them under article 246(3) of Constitution, read with entry 62 of List 11 in Seventh Schedule to Constitution of India, which runs: "62. Taxes on luxuries, including taxes on entertainments, amusements, betting and gambling." (Some aspects thereof are also sought to be related to entry 54 of List 11, but as this stands on same footing as entry 62 for purposes of present case, no separate reference is made to entry 54 hereinafter). This is clear because short title to each of above enactments describes it as Act to provide for "imposition " or "the levy and collection" of tax on "luxuries" or "entertainment and luxuries" in or provided in "hotels" or "hotels and restaurants" or "hotels and lodging houses". Although "luxuries and entertainments" may be provided or availed of in various ways and could all be made subject-matter of tax by virtue of entry above referred to, these enactments are confined only to one type of such entertainments and luxuries, viz., those provided in hotels, restaurants or lodging houses, as defined under relevant enactments. Also, only certain specified classes of entertainments or luxuries provided in such places are brought to tax. details of imposition, levy and collection of taxes vary with enactments and need not be repeated here. It is quite clear from scheme of legislations that they all fall within scope of entry 62 of List 11 set out earlier. My learned brother has held so and I agree. Indeed, their validity would, perhaps, have gone unchallenged but for enactment by Parliament of Hotel Receipts Tax Act, 1980 (hereinafter referred to as "the 1980 Act"). When, in pursuance of 1980 Act, tax on some of receipts of hotelier was sought to be charged with effect from February 1, 1981, it was but natural for some of affected hoteliers to rush to court for relief against this two-pronged taxation of their receipts. Writ petitions were filed challenging competence of both sets of enactments and these have now come up for final hearing. It must, however, be mentioned here that levy of hotel receipts tax was withdrawn after year; nevertheless it was in opera- tion for one assessment year and hence challenge to its validity is not purely academic. validity of 1980 Act has been upheld by my learned brother as traceable to entry 82 of List I in Seventh Schedule to Constitution-Taxes on income other than agricultural income. I respectfully agree. relief conferred by withdrawal of 1980 Act was, however, shortlived; it was only "lull before storm" which descended on all hoteliers in form of Expenditure-tax Act, 1987 (hereinafter referred to as "the 1987 Act"). Before referring to this enactment, validity of which has been challenged in Writ Petition No. 1393 of 1987, it will be convenient to run back on time machine by period of three decades., Mr. Nicholas Kaldor, Reader in Economics in University of Cambridge, was proponent of levy styled "expenditure-tax". When Government of India requested him, some time in fifties, to have look at system of direct taxation prevailing in this country and make his recommendations for comprehensive scheme of tax reform, he suggested, inter alia, levy of "expenditure-tax". His opinion was that such levy, supplementing income- tax levy at rates lower than those prevalent then, would enable Government to more effectively harness its resources. In course of arguments before us, copious references have been made to passages from Nicholas Kaldor's book ("An Expenditure-tax " published by George Allen and Unwin Ltd. of U. K. ) and his "Survey Report on Indian Tax Reform" (published by Government of India) but it will be sufficient to mention here that Prof. Kaldor's report was implemented by Parliament by enacting Expenditure-tax Act, 1957 (hereinafter referred to as "the 1957 Act"). validity of above Act was challenged before this court but unsuccessfully. decision of this court is reported as H. H. Prince Azam Jha Bahadur v. ETO [1972] 83 ITR 92 (SC); [1972] 1 SCR 470. nature and scope of Act have been dealt with in above decision and it is unnecessary to repeat same here. 1957 Act was withdrawn after few years; to be precise, with effect from assessment year 1965-66. It was given up both because it was found to be too cumbersome and difficult to administer and also because yield of revenue therefrom was not substantial due to limited number of assessees it covered. After it was given up, as already mentioned, 1980 Act occupied field for very short time, pendency of writ petitions challenging its validity having perhaps largely contributed to its withdrawal. After some interval, now, Parliament has come in with 1987 Act. ambit and scope of this Act along with, on one hand, its distinguishing features, as contrasted with 1957 and 1980 Acts and its similarities, when compared to State legislations, on other, have been brought out in judgment of brother Venkatachaliah J. and do not need repetition here. It is in this background that we have to determine pith and substance of 1987 Act and decide whether Parliament had legislative competence to enact same or not. legislative competence to enact same or not. short question that one has to answer in these cases is whether levies in question by States and Union can both stand or whether we have to treat levies as either tax on "luxuries" or as tax on "income" or "expenditure" and thus uphold one of them but not both. I do not think there can be any doubt at all that, in context of social and economic conditions that prevailed in India, it was luxury for any person to stay in hotels charging high rents and providing various types of facilities, amenities and conveniences such as telephone, television, airconditioner, etc. decision of this court in A. B. Abdul Kadir v. State of Kerala [1976] AIR 1976 SC 182; [1976] 2 SCR 690, and in particular discussion at pages 699 to 701 places this beyond all doubt. This aspect has also been discussed by Thakkar J. of Gujarat High Court (as his Lordship then was) in judgment under appeal and I am in agreement with his reasonings and conclusion that Gujarat statute has been validly enacted in exercise of powers available to State Legislatures under entry 62 of List 11. This applies equally to other impugned State enactments as well. It has been argued that monetary ceilings for rents have been fixed at such low figures that even temporary stay at not so comfortable hotel or lodging house, when person is constrained to go outside his hometown, will become luxury, according to these standards. Indeed, some statistics have been supplied by Gujarat petitioners in support of such contention. But this, I think, is matter which must be left to legislative determination. As is well known, Legislature has, particularly in taxing statute, considerable amount of latitude and there is no material to hold that, in fixing standards of indication of luxury, Legislature has not applied its mind. In fact, figures have been amended from time to time and one has to presume that Legislature had good reason for fixing these standards. State legislations are, therefore, clearly within competence of State Legislatures and are not liable to be challenged. It seems equally clear that pith and substance of legislation of 1980 Act is, as held by Venkatachaliah J., traceable to entry 82 of List 1. In interpreting scope of legislative entries in three lists, we have to keep in mind that, while on one hand it is desirable that each entry in each of lists should receive broadest interpretation, it is equally important, on other, that three lists should be read together and harmoniously. Our attention was drawn to some of entries in List 11 which show that legislative power in respect thereof are to be exercised subject to powers of Parliament envisaged under List 1, vide entries Nos. 2, 17, 22, 23, 24, 26, 27, 32, 33 and 50. There is no doubt that these entries have to be read subject to entries of List I which have been mentioned or powers of Parliament referred to therein. These, however, are instances of entries which, on their very language, are controlled by entries in List 1. But even apart from these instances, language of clauses (1) and (3) of article 19 makes it clear that power of State Legislature to make laws with respect to any of matters enumerated in List 11 is subject to exclusive power of Parliament to make laws with respect to any of matters enumerated in List 1. Hence, if matter is covered by entry in Union List, no restrictions can be read into power of Parliament to make laws in regard thereto. This is so far as general power of legislation is concerned. As pointed out by this court in M. P. V. Sundararamier and Co. v. State of AP [1958] AIR 1958 SC 468 [1958] 9 STC 298 [1958] SCR 1422, 1479 and 1490, legislative entries are so arranged that power to enact laws in general and power to impose taxes are separately dealt with. subject matters of taxation available to Parliament are enumerated in entries 82 to 97 of List I, those available to State Legislatures in entries 45 to 63 of List 11 and those available to both in entry 44 of List 111. Under section 246(1), Parliament has exclusive power to make laws with respect to any of matters and this includes power to impose taxes-enumerated in List 1. In this situation and in view of fact that 1980 Act is, in pith and substance, tax on income, its constitutional validity can be in no doubt at all. But, can Union enactment of 1987 also be supported for same reasons, as imposing expenditure tax which, as held in Azam Jha's case [1972] 83 ITR 92 (SC); [1972] 1 SCR 470, falls within scope of entry 97 of List I? Shri Palkhivala says it cannot be. His first contention is that tax levied by 1987 Act is not, in fact and in truth, expenditure-tax. He says that it is not sufficient for Legislature to give such description or label to tax proposed to be levied by it as does not fall under List II and claim that it should proposed to be levied by it as does not fall under List II and claim that it should be upheld under entry 97. tax sought to be imposed should be one which has real existence and recognition in world of economics. According to him, economic concept of expenditure tax is of tax that is levied not on isolated items of expenditure but one on totality of expenditure incurred by assessable entity, just as income-tax has gained recognition as tax on total income of taxable entity. That was concept of expenditure-tax which Nicholas Kaldor had in mind, which was embodied in 1957 Act and which, hence, was endorsed with approval by this court. tax on few items of expenditure, it is said, is not necessarily same as expenditure tax. Referring to decisions of this court upholding levy of wealth-tax and gift- tax in so far as it affected agricultural lands: GTO v. D. H. Hazareth [1970] 76 ITR 713; [1971] 1 SCR 195 and Union of India v. H. S. Dhillon [1972] 83 ITR 582 (SC); [1972] 2 SCR 33, it is submitted that decisions may well have been different had they been concerned with imposition only on "lands and buildings" by reference to their capital value or only on "agricultural lands" on occasion of gift. It is difficult to accept contention that tax cannot be considered to be expenditure-tax because it is not on "expenditure" generally but is restricted to specific types of expenditure. There is no legal; judicial, economic or other concept of expenditure-tax that would justify any such restrictive meaning. If, conceptually, expenditure incurred by person can be subject-matter with reference to which tax can be levied, there is no reason why such taxation should not be restricted only to certain items or categories of expenditure and why its base should necessarily be so wide as to cover all expenditure incurred by assessable entity. After all, even under 1957 Act, all expenditure of all persons was not liable to tax. It substantially covered only certain types of assessees and certain types of expenditure (for several types of expenditure were exempted) and that too only when it exceeded certain limits. analogy of Incometax or Wealth-tax or Gift-tax Acts also does not really help us. Though they are enactments which cover larger area of subject-matter taxed, that was because Legislature found it expedient to do so and not because they were obliged to cover entire area of income, wealth or gift. Act imposing tax, for example, on hotel receipts alone or dividends alone or on capital gains alone will not be any less tax on income within scope of entry 82 of List I. Likewise even if Legislature had confined its levy of wealth- tax only to certain assets such as lands and buildings or Gift-tax Act had levied tax only on gifts of agricultural land, they would not have ceased to fall within scope of relevant entries of Union List, so long as, in pith and substance, they were found respectively to be taxes on capital value of assets in question or on transaction of gift. Central Excise Act, for example, does not levy excise duty on manufacture and production of all goods and additional excise duty is levied only in respect of certain goods. So also, in regard to sales tax. It is, indeed, even possible to say that no tax levy in respect of any subject-matter can or does operate universally without any exceptions or exemptions. Selection of objects and goods for taxation is essence of any tax legislation and any limitation of nature suggested is unwarranted curtailment of this selective power of taxation of Parliament. There is also no established legislative practice which would enable one to limit concept of expenditure-tax in manner suggested. So far as expenditure-tax is concerned, only legislation earlier in force was 1957 Act which was in force for period of eight years. Such shortlived legislation can hardly furnish foundation of argument to limit scope of legislative power to manner in which it was exercised under that enactment. If, after withdrawing this legislation, Parliament considered that it was not worthwhile or possible to impose tax on all expenditure and that it would be sufficient, expedient or necessary to impose such levy only on lavish spending in certain directions, that cannot certainly be precluded on any theory of established legislative practice, as was done in State of Madras v. Gannon Dunkerley and Co. (Mad) Ltd. [1959] SCR 379, in respect of sales tax. In that case, legislative trend prevalent over decades was relied upon in interpreting expression "sale of goods" used in Constitution. But there court was concerned with legal term "sale" which had acquired definite connotation in law and in legislative instruments and that analogy cannot be availed of to interpret scope of entry 97. On other hand, even fairly long established legislative practice under which income-tax levy by Centre was restricted to legislative practice under which income-tax levy by Centre was restricted to items of income stricto sensu (as contrasted with capital gains) was not considered sufficient to place that type of restriction on interpretation of expression "taxes on income" used in Central Legislative List: vide, Navinchandra Mafatlal v. CIT [1954] 26 ITR 758 (SC); [1955] 1 SCR 829. Not only that, validity of later definitions of "income" under Income-tax Act which have much wider ambit has been upheld as covered by above legislative entry. See, in this context, decisions in Navnit Lal C. Javeri v. K. K. Sen, AA C [1965] 56 ITR 198 (SC); AIR 1965 SC 1375, H. K. Bhargava v. Union of India [1966] 59 ITR 243 (SC) [1966] 2 SCR 22 and Bhagwan Dass Jain v. Union of India [1981] 128 ITR 315 (SC); [1981] 2 SCR 808. There is not even that much of legislative practice, so far as expenditure-tax is concerned, which would justify our importing any limitation on concept of "tax on expenditure" under entry 97 of List 1. perusal of decision of this court upholding validity of 1957 Act Azam Jha's case [1972] 83 ITR 92 (SC); [1972] 1 SCR 470, does not also justify reading in of any such limitation. wider coverage of tax made it easier for court to pinpoint its subject-matter as "expenditure" and to treat it as matter falling under residuary entry, but it does not justify inference sought to be drawn that tax cannot be said to be tax with reference to "expenditure" because it does not tax expenditure in general but confines itself to certain types or categories of expenditure. Once it is granted that tax need not exhaust entire universe of subjectmatter, extent of subject-matter that should be covered or selected for imposing tax should be entirely left to Parliament, subject only to any criteria of discrimination or unreasonableness that may attract provisions of Part III of Constitution. fact that 1987 Act seeks to tax only expenditure on items which can be described as luxuries is, however, used by Shri Palkhivala to support his other contention (which has really troubled me considerably) that pith and substance of both sets of legislations is same, that they both impose tax only on luxuries or entertainments and that distinction sought to be made on behalf of Revenue that one is tax on "luxuries" while other is tax on expenditure incurred by person on luxuries is only distinction between "Tweedledum" and "Tweedledee". object and effect of tax on luxuries is only to curb expenditure on luxuries and such tax may be imposed, levied or collected either from provider of luxuries or person who enjoys them. object of expenditure-tax is also similar and that can also be levied either on person who spends moneys directly, or through some other person, or even from person who benefits by incurring of such expenditure. provision of luxury and payment for it are only obverse sides of same coin and cannot, from any practical point of view, be considered as two separate and independent subject-matters of taxation. It is well-settled proposition that entries in legislative lists should be given broadest connotation and, hence, tax on luxuries by reference to expenditure thereon will fall clearly under entry in State List. pith and substance of both sets of legislation, therefore, falls only under entry 62 of State List. This being so, entry 97 of List I will have no applicability at all; that can be called in aid only to cover matters not specifically enumerated or taxes not mentioned in List II or 111. It is, therefore, not possible, it is urged, to sustain validity of 1987 Act by reference to entry 97 of list I. learned Attorney-General sought to meet this contention in two ways. He first urged that pith and substance of two legislations are different. tax on "luxuries" measured by reference to amount charged or paid therefor is totally different from tax to curb opulent or ostentatious expenditure, even though categories of expenditure brought in for taxation by particular statute may be restricted. latter cannot be described as tax on "luxuries" and does not fall within scope of entry 62 of State List and, in absence of any referability to any other entry of List 11, it is safe from attack under article 248(2) and will also be covered, if need be, by entry 97 of List 1. second argument is that, after decision in Azam Jha's case [1972] 83 ITR 92 (SC); [1972] 1 SCR 470, holding that "tax on expenditure" will be legislation covered by entry 97 in List I, constitutional position is same as if, before item 97, specific entry had been inserted in List I [say, entry 96A] which reads "Taxes on expenditure". result, he says, is that Central legislation will be squarely covered by entry in List I and so we need not embark on any investigation as to whether it falls or does not fall under any entry in list 11 or List 111. It seems to me that there is fallacy in second line of argument addressed by learned Attorney-General. I do not think that legislative lists can be interpreted, as suggested by him, on assumption that there is deemed entry, "Taxes on expenditure", added to List I as result of decision in Azam Jha's case [1972] 83 ITR 92 (SC); [1972] 1 SCR 470. One cannot add entries to legislative lists on basis of decisions of this court. In Azam Jha's case [1972] 83 ITR 92 (SC) , pith and substance of Act considered did not fall under any of entries in List 11 or 111. That being so, this court upheld it by reference to entry No. 97 describing tax, having regard to its pith and substance, as tax on expenditure. Here, however, we have legislation which covers only certain types of expenditure and contention of petitioners is that these are all items of expenditure pertaining to luxuries. decision in Azam Jha's case [1972] 83 ITR 92 (SC), cannot help us to determine whether legislation before us should be construed as imposing tax on expenditure or one on luxuries. If, in spite of its dealing with only certain types of expenditure relatable to luxuries, it can be said to be, in pith and substance, not tax on luxuries, then we may hold that Parliament can legislate with reference to it and, for purposes of convenience, take advantage of its description as tax on expenditure to rest it on entry 97 of List I. In other words, entry 97 of List I cannot come to our rescue unless we are in position to say that substance of Central legislation in question is not tax on luxuries, entertainments or amusements. This takes us to first part of argument of learned Attorney-General. Is there tenable and true distinction between tax on expenditure levied by Act and tax on luxuries? Are Parliament and State Legislatures dealing with same "matter" and taxing one and same thing, though describing it differently or are they taxing two different matters or things? Shri Palkhivala says that subject-matter of taxation is "luxury" and that it is meaningless to consider expenditure incurred on it as separate and distinct subject-matter. acceptance of such argument, he says, will lead to double taxation in respect of almost every matter on earth. For instance, may be taxed on salary or interest or dividend paid to him by B as his income and, at same time, B can be asked to pay tax on expenditure incurred by him by way of such salary, interest or dividend payment. can be asked to pay wealth-tax on capital value of assets acquired by him and also asked to pay expenditure tax on money spent on such acquisition. can be asked to pay sales tax on goods sold by him to B and also asked to pay or collect tax on expenditure incurred by B to purchase same. Such instances, he says, can be multiplied and will reduce argument to absurdity. Attorney-General, on other hand, submits that question whether both legislations relate to same matter does not bring out correctly controversy in issue. He says that if expression "matter", in this context, is understood in its widest sense, it will create chaos in matter of interpretation of lists. According to him, for applying doctrine of pith and substance, we have to understand expression "matter" not in "gross", but in "rare" sense. He develops this contention by invoking, to his aid, what may be called "aspect" rule as explained in certain text books and judicial decisions. A. H. F. Lefroy in his "Canadian Constitution" observes, at p. 98: "Sec. XXI. Aspect of legislation: Subjects which in one aspect and one purpose fall within section 92 of Federation Act and so are proper for provincial legislation may, in another aspect and for another purpose fall within section 97 and so be proper for Dominion legislation. And as cases which illustrate principle show, by'aspect' here must be understood aspect or point of view of legislator in legislating, object, purpose and scope of legislation. word is used subjectively of legislator, rather than objectively of matter legislated upon." To similar effect is passage from Laskin's "Canadian Constitutional Law" extracted in judgment of Venkatachaliah J. Federal Court in C. P. and Berar Act case [1939] FCR 18; AIR 1939 FC 1, 10, also touches upon "aspect" theory at p. 49: "Here are two separate enactments, each in one aspect conferring power to impose tax upon goods; and it would accord with sound principles of construction to take more general power, that which extends to whole of India as subject to exception created by particular power, that which extends to province only." (emphasis added) similar reference to "aspect" of legislation can be seen in Kerala State Electricity Board v. Indian Aluminium Co. Ltd., AIR 1976 SC 1031, 1044; [1976] 1 SCR 552 at p. 573-74: "The argument of learned Solicitor-General appearing on behalf of Kerala Electricity Board in support of his submission that legislation falls under entries 26 and 27 of List 11 may be summarised as follows: Those entries do not enable State Legislatures to legislate with regard to all conceivable goods like arms, ammunition, atomic minerals, etc., as was argued by Mr. Sen. Legislature, while legislating with respect to matters within its competence, should be deemed to know its limits and its legislative authority and should not be deemed to be legislating beyond its jurisdiction. One thing that has always got to be kept clear in one's mind is that there may be more than one aspect with regard to particular subjectmatter". (emphasis added) Relying on this principle, and backed by these observations, learned Attorney-General submits that, properly understood, pith and substance of 1987 Act is "expenditure" and not "luxuries". At first blush, argument of learned Attorney-General may sound little subtle and somewhat artificial but, on some reflection, legislative competence will indeed be seen to vary with different aspects of subject-matter as understood in wide sense. This can be seen from some of decided cases. first triumvirate of cases that arose in India under Government of India Act, viz. In re, Central Provinces and Berar Act XIV of 1953 [1939] FCR 18, Province of Madras v. Boddu Paidanna and Sons [1942] AIR 1942 FC 33; [1942] FCR 90, GovernorGeneral in Council v. Province of Madras [1945] FCR 179, were concerned with question whether impugned tax was one on sale of goods or excise duty. Interpreting word "subject-matter" in broad sense, it could perhaps be said that both were taxes with respect to goods. But this concept alone was not sufficient to dispose of case because relevant legislative entries did not talk of taxes with respect to goods but referred to taxes in respect of two different activities referable to goods (conveniently described as "taxable event"), one manufacture and production of goods and other with sale thereof. In light of these legislative entries, two different activities could properly be regarded as two different matters for taxation and relevant legislation was held to be one concerned with "sale" and not with "manufacture". In other words, there could be two enactments "each, in one aspect, conferring power to impose tax upon goods." legislation was held not to be vitiated merely because there was element of overlapping in that both excise duty and sales tax became leviable on same assessee in respect of same goods and by reference to same sale price when first sale after manufacture occurs, one by reference to "manufacture" aspect and other by reference to "sales" aspect. This bifurcation of two different aspects pertaining to goods was justified by language of legislative entries themselves which referred separately to different sets of activities and put them down in different legislative lists. Again, on same principle, manufacture of electricity may attract excise duty at point of its captive consumption (under entry 84 of List I) and also tax on consumption or sale of electricity (referable to entry 53 of List 11). power to levy taxes with respect to "property" has created similar problems. All States (or corporations and municipalities therein) levy property tax on owner or occupier which is almost universally measured by reference to its annual value (viz., rent it would fetch if let from year to year). Income-tax Act also charges tax on same basis. In other words, in realistic and practical sense, tax was levied by both Legislatures on same amount and with reference to same matter. But both levies have been upheld under 1935 Act, former as "tax on lands and buildings, hearths and windows" (entry 42 of ListII) and latter as tax on income (under entry 34 of List I). Ralla Ram [1948] FCR 207, AIR 1949 FC81, pointed out that they were different types of levies one on land and buildings (generally, but not necessarily, measurable by reference to income derived or capable of being derived) and other on income (actually or notionally) derived from it. pith and substance of former, it was said, was notionally) derived from it. pith and substance of former, it was said, was not "income" (from property) though tax was levied on basis thereof. Expressed differently, it could be said that, though both were taxes with respect to property, they touched different aspects of above subject matter; first was tax on aspect of ownership or occupation of property; second on aspect of income from property. decision of this court in Bhagwan Dass Jain v. Union of India [1981] 128 ITR 315; [1981] 2 SCR 808 is also to same effect. Hingir-Rampur Coal Co. Ltd. v. State of Orissa [1961] 2 SCR 537; AIR 1961 SC 459, was concerned with validity of Orissa Act which sought to levy cess not exceeding 5% of valuation of coal stacked at pit's mouth. question was whether this was in pith and substance duty of excise (entry 84 of list 1) or fee to regulate and control coal mining industry (entries 66 and 23 of List 11). Here again, though method adopted for recovering impost was same as that of excise duty, validity of tax was upheld as it related to aspect of control over industry rather than to aspect of impost on production of coal. Sainik Motors' case [1962] 1 SCR 517 furnishes illustration which comes nearer to question at issue before us. In that case, Rajasthan Act purported to levy tax on passengers and goods measuring it by reference to fares and freights charged by operators for carriage of such passengers or goods. If it were to be treated as tax on "fares and freights", it would be tax on income which State Legislature could not levy. But, if treated as tax on passengers and goods carried by road, it was valid under entry 56 of List 11. validity of Act was upheld on latter ground, court pointing out that tax was on goods and passengers though measured by reference to fares and freights. This dichotomy could perhaps also be justified on basis of language of entry 89 of List 1. That entry makes distinction between two types of imposts and illustrates two different aspects of same matter, viz., taxes in respect of vehicles carrying passengers or goods can form separate matters for taxation. In light of above entries and decisions, I think that learned Attorney-General is right in urging that, merely because 1987 Act as well as State Acts levy taxes which have ultimate impact on persons who enjoy certain luxuries, pith and substance of both cannot be considered to be same. object of tax on luxury is to impose tax on enjoyment of certain types of benefits, facilities and advantages on which Legislature wishes to impose curb. idea is to encourage society to cater better to needs of those who cannot afford them. For instance, luxury tax may, to cite catchy example, encourage construction of "Janata" hotels rather than five star hotels. Such tax may be on person offering luxury or person enjoying it. It may be levied on basis of amount received for providing, or amount paid for or expended for enjoying, luxury. Conceivably, it could be on different bases altogether. object of expenditure-tax and, that, conceptually, there can be expenditure-tax is borne out by Azam Jha's case [1972] 83 ITR 92 (SC) is to discourage expenditure which Legislature considers lavish or ostentatious. object of first would be to discourage certain types of living or enjoyment while that of second would be to discourage people from incurring expenditure in unproductive or undesirable channels. If general Expenditure-tax Act, like that of 1957, had been enacted, no challenge to its validity could have been raised because it incidentally levied tax on expenditure incurred on luxuries. fact that there will be some overlapping then or that here there is good deal of such overlapping, because States have chosen to tax only some types of luxuries and Centre to tax, at least for time being, only expenditure which results in such luxuries, should not be allowed to draw curtain over basic difference between two categories of imposts. For instance, if conflict alleged had been between present State Acts and Act of Parliament taxing expenditure incurred in construction of theatres or maintenance of race horse establishments or like, there would have been no overlapping at all and pith and substance of Central tax could well be described as "expenditure" and not "luxuries". This distinction is not obliterated merely because of circumstance that both Legislatures have chosen to attack same area of vulnerability, one with view to keep check on "luxuries" and other with view to curb undesirable "expenditure". For these reasons, I agree with my learned brother, Venkatachaliah J., that validity of three impugned enactments has to be upheld and these writ petitions and appeals dismissed. Petitions dismissed. *** Federation of Hotel & Restaurant Association of India v. Union of India