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(Emphasis Supplied) Sri Palkhivala also referred to certain passages of Nicholas Kaldor "On Expenditure Tax" and the same eminent economists report on "Indian Tax Reform", to reinforce the submission that the conceptualisation of 'Expenditure-Tax', as a fiscal tool for economic regulation, has a specific and definite connotation and the "Tax" so conceptualised by experts on public finance is an entirely different idea from the one--built into the present legislation. The very concept of 'Expenditure Tax' envisaged in the impunged legislation, it is urged, is unknown to accepted principles of public fi- nance and is the result of a grave misconception as to the essential nature and incidents of what in law and legisla- tive practice is recognised as 'Expenditure Tax'. The whole exercise, learned counsel said, is a draft on credibility and that the Finance Minister's speech on the Bill leaves no doubt that what the Government wanted from the law was really a tax on "Luxuries". The impost, it is urged, is not susceptible of any other legitimate understanding than that it is in substance and effect, a tax on "Luxuries" within the States' power. Sri Palkhivala emphasised the relevance of what was implicit in the observations of this court in Azam Jha Bahadur v. Expenditure Tax Officer, [1972] 1 SCR 470 made while upholding the legislative competence of the Union Parliament to enact the Expenditure Tax Act 1957, as referable to the residuary Entry 97 of List I. The implica- tion of the observations of this Court at page 479 of the report, according to learned counsel, is that what distin- guished an "expenditure-tax" from a levy under Entry 62 of List II, was that the scheme of taxation took into account the total- ity of expenditure over a unit of time, as distinct from sums laid out on stray purchases of luxuries.

5. The relief conferred by the withdrawal of the 1980 Act was, however, short-lived; it was only a "lull before the storm" which descended on all hoteliers in the form of the Expenditure Tax Act, 1987 (hereinafter referred to as 'the 1987 Act'). Before referring to this enactment, the validity of which has been challenged in writ petition no. 1393 of 1987, it will be convenient to run back on the time machine by a period of three decades.

6. Mr. Nicholas Kaldor, Reader in Economics in the University of Cambridge, was the proponent of a levy styled as "Expenditure Tax". When the Government of India requested him, sometime in the firties, 10 have a look at the system of direct taxation prevailing in this country and make his recommendations for a comprehensive scheme of tax reform, he suggested, inter alia, the levy of an "expenditure tax". His opinion was that such a levy, supple- menting an income tax levy at rates lower than those preva- lent then, would enable the Government to more effectively harness its resources. In the course of arguments before us, copious references have been made to passages from Nicholas Kaldor's book ('An Expenditure Tax' published by George Allen & Unwin Ltd. of U.K.) and his 'Survey Report on Indian Tax Reform' (published by the Government of India) out it will be sufficient to mention here that Prof. Kaldor's report was implemented by Parliament by enacting the Expend- iture Tax Act, 1957 (hereinafter referred to as 'the 1957 Act'). The validity of the above Act was challenged before this Court but unsuccessfully. The decision of this Court is reported as Azarnjah v. E.T.O., [1972] 1 SCR 470. The nature and scope of the Act have been dealt with in the above decision and it is unnecessary to repeat the same here.