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9. Merely because the 1987 Act as well as the State Acts levy taxes which have ultimate impact on persons who enjoy certain luxuries, the pith and substance of both cannot be considered to be the same. The object of a tax on luxury is to impose a tax on the enjoyment of certain types of bene- fits, facilities and advantages on which the legislature wishes to impose a curb. The idea is to encourage society to cater better to the needs of those who cannot afford them. Such a tax may be on the person offering the luxury or the person enjoying it. It may be levied on the basis of the amount received for providing, or the amount paid for or expended for enjoying, the luxury. Conceivably, it could be on different bases altogether. The object of an expenditure tax is to discourage expenditure which the legislature considers lavish or Ostentatious. The object of the first would be to discourage certain types of living or enjoyment while that of the second would be to discourage people from incurring expenditure in unproductive or undesirable chan- nels. If a general Expenditure Tax Act, like that of 1957, had been enacted, no challenge to its validity could have been raised because it incidentally levied the tax on ex- penditure incurred on luxuries. The fact that there will be some overlapping then or that here there is a good deal of such overlapping, because the States have chosen to tax only some types of luxuries and the Centre to tax, atleast for the time being, only expenditure which results in such luxuries, should not be allowed to draw a curtain over the basic difference between the two categories of imposts. [968E-H; 969A-B] This distinction is not obliterated merely because of the circumstances that both legislatures have chosen to attack the same area of vulnerability, one with a view to keep a check on 'luxuries' and the other with a view to curb undesirable 'expenditure'. [969C] Kerala State Electricity Board v. Indian Aluminium Co., [1976] 1 SCR 562; In the Central Provinces & Berar Sales of Motor Spirit and Lubricants Taxation Act, 1938, [1939] FCR 18; Province of Madras v. Boddu Paidanna & Sons, [1942] FCR 90; G.G.-in-Council v. Province of Madras, [1945] FCR 179; Ralla Ram v. East Punjab, [1948] FCR 207; Bhagwan Dass Jain v. Union, [1981] 2 SCR 808; Hingir-Rampur Coal Co. Ltd. v. State of Orissa, [1961] 2 SCR 537 and Sainik Motors v. State of Rajasthan, [1962] 1 SCR 517, referred to. A.H.F. Lefroy: Canadian Constitution and Laskin: Canadi- an Constitutional Law, referred to.

(a) The 'Act', in its true nature and character, is not one imposing an 'Expenditure-Tax', as known to Law, accepted notions of Public Finance, and to legislative practice but is, in pith and substance, either a tax on Luxuries falling within Entry 62 of List II of the Seventh Schedule; or a tax on the consideration paid for the purchase of goods consti-

tuting an impost of the nature envisaged in entry 54 of List II, and clearly outside the legislative competence of the Union Parliament;

6. Re.' Contention (a):

Sri Palkhivala, learned Senior Counsel for the petition- ers, contended that the appellation of 'Expenditure Tax' given to the impost is a misnomer as the concept of "Expend- i-

ture-Tax" as known to law and recognised by the theorists of public finance is not a tax on a few stray items of expendi- ture but is a term of Art which has acquired a technical import as 'nomen-juris' and that the import envisaged by the Act, in its true nature and character, is no more and no less than a tax on Luxuries under Entry 62 list II within the State's exclusive power. Learned Counsel urged that the delicate balance in the demarcation in a federal polity of legislative powers between the Union and the States would impose on the Union, the repository of the residuary power, the sensitive task of recognising both the line of demarcation as well as the constitutional mandate--and a disciplined reluctance--not to cross it. The contention as to lack of legislative-competence emphasises two aspects--one with a negative implication and the other of a positive import. Negatively, it is urged that the impost is not, and does not satisfy the concept of an "Expenditure tax" which has a technical connotation both in law and in public finance. A tax on certain stray items of expenditure is not, it is contended, a general "expenditure tax". The nomenclature of the levy is really a mere iII- fitting legal mask for what is really a tax under Entry 62 list I. The nomenclature of the tax, it is urged, is irrele- vant in deciding its true nature and character. It belongs to the rudiments of the subject, says the learned counsel, that a constitutional-grantee of a power cannot enlarge its own by choosing for the legislation enacted in exertion of that power, a nomenclature that corresponds to and semanti- cally subsumes with the grant. Shri Palkhivala submitted that the true nature and concept of "expenditure tax", as known to the theories of public finance has a specific, well accepted legal connotation and is a tax levied on income or capital spent or "consumed" in distinguishment of income or capital "saved". It is this concept of 'expenditure tax', as a fiscal tool, which has certain social and economic objec- tives informing its policy. The present impost and its incidents, it is urged, have no rational connection with the concept of "expenditure tax" known to and accepted by the principles of public finance and recognised by established Legislative practice.

22. The Hingir -Rampur Coal Co. case [1961] 2 SCR 537 was concerned with the validity of an Orissa Act which sought to levy a cess not exceeding 5% of the valuation of the coal stacked at pit's mouth. The question was whether this was in pith and substance a duty of excise (Entry 84 of List I) or a fee to regulate and control the coal mining industry (Entry 66 and 23 of List II). Here again though the method adopted for recovering the impost was the same as that of an excise duty, the validity of the tax was upheld as it relat- ed to the aspect of control over the industry rather than to the aspect of an impost on production of coal.