Jodhpur Chartered Accountants Society ... vs Union Of India (Uoi) And Ors. on 22 April, 2002

[Cites 60, Cited by 1]

Rajasthan High Court - Jaipur

Jodhpur Chartered Accountants Society ... vs Union Of India (Uoi) And Ors. on 22 April, 2002

Equivalent citations: [2003]264ITR529(RAJ), 2006[3]S.T.R.344, 2002WLC(RAJ)UC708

1. By this judgment three writ petitions filed under article 226 of the Constitution of India challenging the constitutional validity of the provisions of the Finance Act by which service offered by the chartered accountants, real estate agents (property dealers) and the architects have been brought under the tax net, which is to be charged at 5 per cent. of the value of the taxable services provided by them are being disposed of. Since the question involved in all the three writ petitions is identical, all the petitions are being disposed of by this common judgment.

2. The first writ petition being D. B. Civil Writ Petition No. 4018 of 1998 has been filed by the Jodhpur Chartered Accountants Society. The society is aggrieved by the levy of service tax on persons belonging to the profession of chartered accountants. The second writ petition being D. B. Civil Writ Petition No. 4263 of 1998, has been filed by an association of property dealers in Jodhpur known as the Jodhpur Property Dealers Association. It is claimed that the members of the petitioner-association are doing property business without rendering any service to the customers. They simply introduced purchasers, sellers, if anybody approaches them. The third writ petition has been filed by Annu Mridul, an architect practising at Jodhpur. According to the petitioner the service or work undertaken by the practising architect cannot be categorised as service much less a taxable service which may attract service tax. The common ground of challenge in all the three writ petitions is the constitutional validity of the provisions of the Finance Act by which the services offered by professionals like chartered accountants, architects and property dealers have been brought under the tax net on the ground of lack of legislative competence of Parliament and discrimination inasmuch as the Legislature has picked and chosen some professions and left out the others. The case set out by the respondents is that the services rendered by the professions to which each of the petitioners belonged an imposition of tax as service tax on services rendered by them does not fall under entry 60 of List II of Schedule VII to the Constitution of India whereas such a tax can only be imposed by Parliament under the residuary entry, viz., entry No. 97 of the Union List of Schedule VII and article 248 of the Constitution of India. Parliament has exclusive power to make any law with respect to any matter not enumerated in the Concurrent List or the State List. According to the respondents, the service tax is levied on services rendered by the chartered accountants, architects and property dealers and not a tax on profession. As regards the ground of discrimination, it is submitted that it is prerogative of Parliament to decide whom to tax or whom not to tax so long as the tax is not discriminatory.

3. Mr. Rajendera Mehta with his usual fairness has brought to our notice that the impugned challenge in the instant writ petitions has been decided against the petitioners by the High Courts of Gujarat, Bombay, Madras and Kerala. The judgment of the Gujarat High Court in Chartered Accountants' Association and Gujarat Institute of Civil Engineers and Architects v. Union of India [2001] 252 ITR 53 deals with the case of chartered accountants so as the Bombay High Court in All India Federation of Tax Practitioners v. Union of India [2002] 256 ITR 401. The case of the Madras High Court pertains to architects reported in Indian Institute of Architects v. Union of India [2002] 258 ITR 209 (Mad); 139 ELT 245. The Kerala High Court in All Kerala Chartered Accountants' Association v. Union of India [2002] 258 ITR 679. We have perused the judgments of all the four High Courts. We are in respectful agreement with the views expressed therein upholding the constitutional validity of the service tax so far as the persons belonging to the professions of chartered accountants, architects and property dealers are concerned. However, we propose to give reasons in brief for the view we have taken.

(A) Emergence of concept of service tax :

It was felt that while on the manufacture of goods tax is levied in the name of excise duty and on sale of goods tax is levied in the name of sales tax, still there are number of activities falling in the category of "service sector" which constitutes 40 per cent. of national GDP not subjected to tax. This has kept a number of activities, which in fact are an important part of the national economy, outside the tax net. It is of course true that the persons rendering such services are subjected to income-tax covered by entry 83 in List I, but that itself is not sufficient as the persons manufacturing goods pay excise duty on the manufacture of goods and pay sales tax on the sale of goods and also liable to pay income-tax on the income earned by them. The professionals rendering services for remuneration and similarly other persons rendering service in a larger number of fields for remuneration can only be subjected to professional tax by the State Legislature by virtue of entry 60 in List II but subject to the maximum limit of Rs. 2,500 per annum in view of the provisions of article 276(2) of the Constitution of India. Such tax is on profession/trade/calling/employment irrespective of the fact whether they were earning any income or not.' In these circumstances, Parliament decided to tax the services being rendered by the professionals and by other trades and callings. Thus, the service tax is absolutely distinct and separate from the tax on profession/trade/calling/employment. Thus, in February, 1994, the Finance Minister in his speech introduced the concept of service tax. He emphasised for the need of taxing the "service sector" distinct from the profession, trade, calling, employment, etc. (B) Legislative history :

Parliament introduced service tax by the Finance Act, 1994, which received the assent of the President of India on May 13, 1994 (hereinafter referred to as "the Act of 1994"). Chapter V of the Act of 1994 relates to service tax and the same applies to the taxable services enumerated therein. In exercise of powers conferred by Section 94 of the Act of 1994, the Central Government has enacted the Service Tax Rules. Initially service tax was imposed at the rate of 5 per cent. on the amount of telephone bills, the net premium charged by the insurance companies and the brokerage and commission charged by stock brokers in relation to their services. The provisions relating to service tax as originally enacted were amended to some extent by the Finance (No. 2) Act,1996. and some more services, namely, radio, pager service, advertising service and courier services were covered. The Finance Act, 1997 (hereinafter referred to as "the Act of 1997"), made substantial changes in relation to service tax. The service tax net was widened and the same was extended to a number of services. Section 66 of the Act of 1994 as amended by the Act of 1997, which is a charging section provides for the charge of service tax at the rate of 5 per cent. of the value of the taxable service provided to any person by the person responsible for collecting the service tax. Section 68 of the Act of 1994 (as amended by "the Act of 1997"), provides for collection and recovery of service tax. By Finance (No. 2) Act, 1998 (hereinafter referred to as "the Act of 1998"), the service tax net has been extended to various others including architects, interior decorators, practising chartered accountants, property dealers (real estate agents), market research agencies, etc. Section 65(31) has been substituted which defines "practising chartered accountants" as a person, who is a member of the Institute of Chartered Accountants of India and is holding a certificate of practice granted under the provisions of the Chartered Accountants Act, 1949, including any person engaged in rendering services in the field of chartered accountancy. The expression "taxable service" has been defined in Section 65(48) which means any service provided to a client by a chartered accountant in his professional capacity in any manner has been included in Sub-clause (s) of Section 65(48) as substituted by the Act of 1998. Section 66 continues to be the charging section. Section 66(4) provides that with effect from the date notified under Section 116 of the Finance (No. 2) Act, 1998, there shall be levied a service tax at the rate of 5 per cent. of the value of the taxable service, inter alia, referred to in Sub-clause (s) of Clause (48) of Section 65. Sections 68 to 71 as originally enacted by the Finance Act, 1994, have also been substituted by the Finance (No. 2) Act, 1998. The substituted Sections 68 to 70 are reproduced as under :

"68. Payment of service-tax.--(1) Every person providing taxable service to any person shall pay service-tax at the rate specified in Section 66 in such manner and within such period as may be prescribed.

(2) Notwithstanding anything contained in Sub-section (1) in respect of any taxable service notified by the Central Government in the Official Gazette, the service tax thereon shall be paid by such person and in such manner as may be prescribed at the rate specified in Section 66 and all the provisions of this Chapter shall apply to such person as if he is the person liable for paying the service tax in relation to such service.

69. Registration.--Every person liable to pay the service tax under this Chapter or the rules made thereunder shall, within such time and in such manner and in such form as may be prescribed, make an application for registration to the Central Excise Officer.

70. Furnishing of returns.--Every person liable to pay the service tax shall furnish or cause to be furnished to the Central Excise Officer, a return in such form and in such manner and at such frequency as may be prescribed."

4. Section 93 as substituted by the Finance (No. 2) Act, 1998, provides for power to grant exemption from service tax.

5. The Government of India has notified service tax on 12 new services added in the service tax net by the Finance (No. 2) Act, 1998, vide Notification dated October 7, 1998. The liability has been made effective from October 16, 1998. Further, in exercise of the powers conferred by Section 93 of the Finance Act, 1994, the Central Government has exempted in the public interest the taxable services other than of auditing and accounting provided by a practising chartered accountant in his professional capacity to a client from the whole of service tax leviable thereon vide Notification dated October 7, 1998. In supersession of the aforesaid exemption Notification dated October 7, 1998, vide another Notification dated October 16, 1998, certain exemptions have been given to chartered accountants, company secretaries and cost and works accountants. Thus, the net result is that after the aforesaid exemptions the service tax is leviable on chartered accountants in relation to accounting, auditing and certification services provided by them in their professional capacity. For convenience some of the relevant provisions of the Finance (No. 2) Act, 1998, are extracted as follows :

"65. Definitions.--In this Chapter, unless the context otherwise requires,--. . .

(5) 'architect' means any person whose name is, for the time being, entered in the register of architects maintained under Section 23 of the Architects Act, 1972 (20 of 1972), and also includes any commercial concern engaged in any manner whether directly or indirectly, in rendering services in the field of architecture ; ...

(31) 'practising chartered accountant' means a person who is a member of the Institute of Chartered Accountants of India and is holding a certificate of practice granted under the provisions of the Chartered Accountants Act, 1949 (38 of 1949), and includes any concern engaged in rendering services in the field of chartered accountancy ; . .

(35) 'real estate agent' means a person, who is engaged in rendering any service in relation to sale, purchase, leasing or renting of real estate and includes a real estate consultant; . . .

(48) 'taxable service' means any service provided,--. . .

(g) to a client, by a consulting engineer in relation to advice, consultancy or technical assistance in any manner in one or more disciplines of engineering ; . . .

(p) to a client, by an architect in his professional capacity in any manner ; . . .

(s) to a client, by a practising chartered accountant in his professional capacity, in any manner.

66. Charge of service tax.--. . .

(3) With effect from the date notified under Section 88 of the Finance Act, 1997 (26 of 1997), there shall be levied a service tax at the rate of five per cent of the value of the taxable services referred to in Sub-clauses (g), (h), (i), (j), (k), (1), (m), (n) and (o) of Clause (48) of Section 65 and collected in such manner as may be prescribed.

67. Valuation of taxable services for charging service tax. --For the purposes of this Chapter, the value of taxable services,-- . . .

(f) in relation to service provided by a consulting engineer to a client, shall be the gross amount charged by such engineer from the client for advice, consultancy or technical assistance in any manner in one or more disciplines of engineering ;

(o) in relation to the service provided by an architect to a client, shall be the gross amount charged by such architect from the client for services rendered in professional capacity in any manner. . .

(r) in relation to the service provided by a practising chartered accountant to a client, shall be the gross amount charged by such accountant from the client for services rendered in professional capacity in any manner.

68. Payment of service tax.--(1) Every person providing taxable service to any person shall pay service-tax at the rate specified in Section 66 in such manner and within such period as may be prescribed ;

(2) Notwithstanding anything contained in Sub-section (1), in respect of any taxable service notified by the Central Government in the Official Gazette, the service tax thereon shall be paid by such person and in such manner as may be prescribed at the rate specified in Section 66 and all the provisions of this Chapter shall apply to such person as if he is the person liable for paying the service tax in relation to such service,"

6. Thus, Section 66 is the charging section. It provides for levy of service tax at the rate of 5 per cent. of the value of the taxable services. Section 67 indicates the manner of valuation of taxable service. Section 68 makes it obligatory on every person providing taxable service to pay service tax at the rate specified in Section 66. Section 69 requires every service provider to pay service tax to register with the appropriate authority, the Superintendent of Central Excise. Section 70 provides for rendering of periodical returns. Sections 71, 72, 73 and 74 provide for the procedure for assessment and rectification of assessment. Section 75 deals with interest for delayed payment. Sections 75A, 76, 77, 78, 79 and 80 provide for penalties ; Section 81 fixes the liability for offences by companies. Section 82 deals with the powers to search premises. By virtue of Section 83 the provisions of Sections 9C, 9D, 11, 11B, 11BB, 12A, 12B, 12C, 12D, 12E, 14, 15, 35F to 35-0, 35Q, 36, 36A, 36B, 37A, 37B, 37C, 37D and 40 of the Central Excise Act, 1944, as in force from time to time have been made applicable, so far as they relate to service tax as they apply in relation to a duty of excise. It is significant to notice that as Section 12B has been made applicable in relation to the impugned service tax, the direct, legal consequence is that there is a presumption that service tax has been passed on to the customer, who is the beneficiary of the service, and that is the reason why the service tax is levied on the service provider himself. It is open to the service provider to pass on the tax to the beneficiary of the service and reimburse himself. Thus, it is evident that service provider does not pay the tax and the tax falls on the service receiver.

The core question which arises for consideration is whether the tax envisaged by the Act under challenge is within the legislative competence of Parliament ? The subject-matter of taxation available to Parliament are enumerated in entries 80 to 97 of List I. Entries 45 to 66 of List II are available to the State Legislature. Under article 246(1) Parliament has exclusive power to make laws with respect to any of the matters and those included the powers to impose tax enumerated in List I. Where the case does not fall either in the State List or the Concurrent List, Parliament has residuary power under entry 97 of List I. The apex court has dealt with the scope of the residuary power under entry 97 of List I in Union of India v. Harbhajan Singh Dhillon [1972] 83 ITR 582; AIR 1972 SC 1061. In the said case the validity of the Central legislation namely, the Gift-tax Act was challenged on the ground that the Legislature encroached upon the State legislative power under entries 18 and 49 of the State List. The question posed before the court was as to whether in pith and substance the Gift-tax Act falls within entry 49 of the State List or not. The court formulated the test to determine the question as follows (page 610) :

"Be that as it may, we have the three Lists and a residuary power and, therefore, it seems to us that in this context if a Central Act is challenged as being beyond the legislative competence of Parliament, it is enough to enquire if it is a law with respect to matters or taxes enumerated in List II. If it is not, no further question arises."

Thus, the moot question is as to whether there is tenable and true distinction between tax on service and a tax on profession envisaged by entry 60 of the State list. It would be convenient to refer to articles 246 , 248 , 276 and the relevant entries of the Seventh Schedule :

"246. Subject-matter of laws made by Parliament and by the Legislatures of States.--(1) Notwithstanding anything in Clauses (2) and (3), Parliament has exclusive power to make laws with respect to any of the matters enumerated in List I in the Seventh Schedule (in this Constitution referred to as the 'Union List')-

(2) Notwithstanding anything in Clause (3), Parliament, and, subject to Clause (1), the Legislature of any State also, have power to make laws with respect to any of the matters enumerated in List III in the Seventh Schedule (in this Constitution referred to as the 'Concurrent List').

(3) Subject to Clauses (1) and (2), the Legislature of any State has exclusive power to make laws for such State or any part thereof with respect to any of the matters enumerated in List II in the Seventh Schedule (in this Constitution referred to as the 'State List').

(4) Parliament has power to make laws with respect to any matter for any part of the territory of India not included in a State notwithstanding that such matter is a matter enumerated in the State List.

248. Residuary powers of legislation.--(1) Parliament has exclusive power to make any law with respect to any matter not enumerated in the Concurrent List or State List.

(2) Such power shall include the power of making any law imposing a tax not mentioned in either of those Lists.

276'. Taxes on professions, trades, callings and employments.--(1) Notwithstanding anything in article 246, no law of the Legislature of a State relating to taxes for the benefit of the State or of a municipality, district board, local board or other local authority therein in respect of professions, trades, callings or employments shall be invalid on the ground that it relates to a tax on income.

(2) The total amount payable in respect of any one person to the State or to any one municipality, district board, local board or other local authority in the State by way of taxes on professions, trades, callings and employments shall not exceed two thousand and five hundred rupees per annum.

(3) The power of the Legislature of a State to make laws as aforesaid with respect to taxes on professions, trades, callings and employments shall not be construed as limiting in any way the power of Parliament to make laws with respect to taxes on incomes accruing from or arising out of professions, trades, callings and employments.

Seventh Schedule List I. Union List.

Entry 82. Taxes on income other than agricultural income.

Entry 84. Duties of excise on tobacco and other goods manufactured or produced in India except.

Entry 97. Any other matter enumerated in List II or list III including any tax not mentioned in either of those Lists.

List II. State List.

Entry 54. Taxes on the sale or purchase of goods other than newspapers subject to the provisions of entry 92A of List I.

7. Entry 60. Taxes on professions, trades, callings and employments." It is evident that Parliament has power to levy tax on manufacture of goods as per entry 84 in the Union List, Parliament also has power to levy tax on the services being rendered by a professional. -Thus, if the tax on a trade or calling would also include the power to tax the transactions being entered into by a person carrying on any trade or calling, there would not have been a separate entry to confer the power to levy tax on sale of goods. A trader carrying on his business of buying and selling goods and subjected to tax under entry 60 in the State List is also liable to pay taxes on the sale or purchase of goods under entry 54 in the State List. Thus, it is evident that the two taxes are separate and distinct and they cannot be merged into each other merely because a person is liable to pay tax under entry 60 in the State List and also liable to collect and pay tax on sale of goods under entry 54 in the said List is one and the same person in both the cases.

8. In the instant case, a practising chartered accountant has been defined under Section 65(31) to mean a person, who is a member of the Institute of Chartered Accountants of India and is holding a certificate of practice granted under the provisions of Chartered Accountants Act, 1949, and includes any concern engaged in rendering services in the field of chartered accountancy ; so as the architect and real estate agent has been defined under Sub-clause (5) and Sub-clause (35), respectively, of Section 65. Sub-clause (48) defines a "taxable service" as meaning the service provided to a client by an architect or by a practising chartered accountant in his professional capacity in any manner. Section 66 is the charging section, which provides for levy of service tax at the rate of 5 per cent of the value of the taxable service provided in Sub-clauses (g), (h), (i), (j), (k), (1), (m), (n) and (o) of Clause (48) of Section 65. Section 2(2) of the Chartered Accountants Act lays down as to when a member of the Institute of Chartered Accountants of India shall be deemed to be in practice and enumerates the various services for the rendering of which the practising chartered accountant shall receive remuneration, which includes, inter alia, the services of accounting and auditing. Further notification dated October 16, 1998, also specifies the various services rendered by a practising chartered accountant which shall attract the levy of service tax. It is only those taxable services which the Institute of Chartered Accountants of India have stated to be the ones rendered by practising chartered accountants that have been enumerated in the said notification.

9. The apex court in Laghu Udyog Bharati v. Union of India [1999] 115 STC 616; [1999] 112 ELT 365 (SC) pointed out that Section 66 which is the charging section has to be read with Section 65(41)(d) (now Section 65(48)) that the charge of the tax is on the person, who is responsible for collecting the service tax. It is he, by virtue of Section 65(5), who is regarded as an assessee. He is the person, who provides the services. After examining the Finance Act under challenge the apex court with regard to the service tax observed as follows (page 623 of [1999] 115 STC) :

"The service tax is levied by reason of the services which are offered. The imposition is on the person rendering the service. Of course, it may be an indirect tax, it may be possible that the same is passed on to the customer but as far as the levy and assessment is concerned it is the person rendering the service who alone can be regarded as an assessee and not the customer. This is the only way in which the provisions can be read harmoniously."

10. A chartered accountant or an architect who is paying profession tax may not give any service though he chooses to be on the roll of architects or chartered accountants would not be required to pay the service tax. The apex court in Kamta Prasad's case, AIR 1974 SC 685 has observed that a tax on profession is not necessarily connected with income, which is evident from the fact that the tax on profession is imposed by several municipal authorities at certain rates mentioned in the relevant statutes, but a tax can be imposed if there is an income. The court observed as follows (page 686) :

"A tax on profession can be imposed if a person carries on a profession. Such a tax on profession is irrespective of the question of income."

11. Thus, it is clear from any manner of doubt that a tax on profession can be imposed if a person carries on a profession and that such tax on profession is irrespective of the question of income. This clinches the issue in so far as the nature of the profession tax is concerned, which is covered by entry 60 of the Act. Even if the service tax is linked with the professional income or the professional service even then, it had a distinct aspect of the services. A tax which the professional had to pay because he has had the privilege to carry on the profession or because he was carrying on the profession in a particular State is totally distinct and separate from the tax which he has to pay on service and which tax he would be able to pass on to the customer who has had the advantage of his professional services. Thus, a profession tax covered under entry 60 cannot be transferred in sharp contradiction with the present service tax, which is capable of being transferred to the customer, who has the advantage of enjoying the services. A profession tax has to be paid whether a professional actually has given the professional service or not whereas, the service tax will not be payable if a professional like a chartered accountant or architect has in reality not rendered any professional services to a customer. Thus, in our opinion, the service rendered by a professional as a chartered accountant or an architect in spite of there being a nexus between the profession and the service rendered, there is a distinct aspect of service which can be legitimately taxed by Parliament under entry 97 of List I. Therefore, there should not be any confusion between the tax on profession as covered by entry 60 and the service tax introduced by the Finance Act under challenge by virtue of residuary entry 97,

12. We have referred to the speech of the then Finance Minister for convenience, evolving the concept of service tax. It is true that the speech made by the member of the Legislature on the floor of the House when a Bill enacting a statute being debated is not admissible but as held by the apex Court in K. P, Varghese v. ITO [1981] 131 ITR 597, the speech made by the mover of the Bill explaining the reasons for introduction of the Bill can certainly be referred to for the purpose of ascertaining the object and purpose for which the Legislature is enacting the Bill. A few cases in which the speech made by the concerned minister moving the Bill have been referred to in the pronouncement of the judgments of the apex court. Reference may be made to Sole Trustee, Loka Shikshana Trust v. CIT [1975] 101 ITR 234 (SC); Indian Chamber of Commerce v. CIT [1975] 101 ITR 796 (SC) and Addl. CIT v. Surat Art Silk Cloth Manufacturers Association [1980] 121 ITR 1 (SC). It is evident from the speech that "tax on service" is distinct from the existing taxes covered by the taxes provided in List II. This in itself is a clear indication that the impugned tax is not covered by the subject and listed in the State List. Thus, service tax levied on a practising chartered accountant, architect and property dealer does not relate to entry 60 in List II. The impugned levy is not on profession but on the service rendered by professionals. Parliament has acted perfectly within its jurisdiction to legislate the impugned Act.

13. The reading of entry 60 along with article 276 also throws sufficient light on the controversy involved in the instant case. Article 276 is specifically enacted to validate a law made by the Legislature of a State relating to tax in respect of profession, trade, calling or employment, and to immunize it against challenge on the score of being a law relating to tax on income, a subject in the exclusive purview of the Central Government. Clause (2) of article 276 imposes a ceiling of Rs. 2,500 on such tax. The Kerala High Court in All Kerala Chartered Accountants' Association v. Union of India [2002] 258 ITR 679, while applying the doctrine of "aspect legislation" has observed as follows (page 689) :

"The confusion arises because of not keeping in mind the distinction1 between the 'taxable event' and the 'measure of tax' contemplated under a taxing statute. The taxable event determines the true nature of the tax, while the measure of tax does not determine the nature of the tax but the quantum of tax which can be levied and collected. . . . The apparent conflict in interpreting the tax entries results from the fact that the tax has two elements; the person, thing or individual on which the tax is imposed (taxable event) and the amount of the tax. The quantum of tax may be measured in many ways, but a clear distinction between the subject-matter of tax and the standard by which the quantum of tax is measured must be maintained in mind. Once the perspective is clear as to what is the subject of tax and the measure of the tax, much of the confusion from which the challenge has emanated would clear away. In interpreting a taxing statute, the doctrine of 'aspect legislation' must be kept in mind."

14. Thus, examining from the aforesaid angle also the challenge to the impugned Finance Act does not survive.

(D) Discrimination :

Turning to the contention with regard to discrimination, it'is well estab lished that the Legislature enjoys a wide latitude in the matter of selection of persons, subject-matter, events, etc., for taxation. The tests of the vice of discrimination in a taxing law are less rigorous. It is well established that the Legislature is promulgated to exercise an extremely wide discretion in clas sifying items for tax purposes, so long as it refrains from clear and hostile discrimination against particular persons or classes. In Jaipur Hosiery Mills (P.) Ltd, v. State of Rajasthan [1970] 26 STC 341; [1970] 2 SCC 26, the apex court while upholding the classification made on the basis of the value of sold garments, held that the statute is not open to attack on the mere ground that it taxes some persons or objects and not others. The same view has been taken in State of Gujarat v. Shri Ambica Mills ltd. [1974] 45 FJR 381; [1974] 4 SCC 656.

In JTO v. N. Takin Roy Rymbai [1976] 103 ITR 82 (SC); [1976] 1 SCC 916, the apex court held that the 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. A reference may be made to the decision of the apex court in Mafatlal Industries Ltd.'s case [1998] 111 STC 467; [1997] 5 SCC 536, 618. The Supreme Court has observed, thus (page 532 of [1998] 111 STC):

"... laws relating to economic activities should be viewed with greater latitude than laws touching civil rights such as freedom of speech, religion, etc. It has been said by no less a person than Holmes J. that the Legislature should be allowed some play in the joints, because it has to deal with complex problems which do not admit of solution through any doctrinaire or straitjacket formula and this is particularly true in the case of legislation dealing with economic matters, where, having regard to the nature of the problems required to be dealt with, greater play in the joints has to be allowed to the Legislature. The court should feel more inclined to give judicial deference to legislative judgment in the field of economic regulation than in other areas where fundamental human rights are involved. . . . The court must always remember that legislation is directed to practical problems, that the economic mechanism is highly sensitive and complex, that many problems are singular and contingent, that laws are not abstract propositions and do not relate to abstract units and are not to be measured by abstract symmetry 'that exact wisdom and nice adoption of remedy are not always possible' and that 'judgment is largely a prophecy based on meagre and uninterrupted experience'."

15. Thus, the impugned challenge on the ground of discrimination also fails.

16. In view of aforesaid discussion, we find no merit in any of these three writ petitions. All the three writ petitions are dismissed. No order as to costs.

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