Proprietors of Vadivel Theatre and Others vs The Commercial Tax Officer and Others

Ramaprasada Rao, J.—In these Writ Petitions legal contentions were raised and argued preliminarily to secure adjudication thereon, leaving for the consideration of this Court, the merits of each petition, to a later date. We shall, therefore, refer the essential facts in so far as they are necessary to refer to the contentions urged by the learned Counsel. The Petitioners are cinema theatre owners, who are aggrieved in the main on the action either proposed or taken by the assessing authority under the Madras Entertainments Tax Act, 1939 (Madras Act X of 1939), hereinafter referred to as the Taxing Act and the Madras Local Authorities Finance Act, 1961 (Act LII of 1961), hereinafter referred to as the Finance Act. In the course of raids, and on surprise inspections conducted by the officers acting under the Acts as above and otherwise the assessing authorities are reported to have secured sufficient incriminating material warranting the re-opening of closed assessments under both the Acts and for the imposition of penalty thereon, on the ground that the assessable turnover or tax or both have escaped assessment. The sheet-anchor of the Petitioners, who seek for a rule of mandamus, prohibition or certiorari as the case may be, is that there is no power to re-open an assessment which has become final and even if such a power is available with the executive under the Taxing Act, it is ultra vires as being indicative of excessive delegation of legislative authority to a subordinate body. It is also contended that such a delegation tantamount to abdication of a normal legislative function. The further case is that the additional surcharge claimed under the Finance Act consequent upon the re-opening of the assessments under the Taxing Act, is illegal and without authority. Before expatiating the contentions of Counsel, we shall summaries the relevant statutory provisions of both the Acts, under which the Respondents claim to have acted and issued the orders impugned.

Section 3(4) of the Taxing Act defines an entertainment. It means, among other things, a cinematograph exhibition, to which persons are admitted on payment. Prescribed means prescribed by rules under the Act [Section 3(8)]. Section 4 is the charging section which levies an entertainment tax on each payment for admission to any entertainment. Certain provisions regarding quantification of tax and levy of additional tax are specially provided for in regard to cinematograph exhibitions, under the proviso to Section 4 and Section 4-A. No person shall be admitted to an entertainment subject to entertainment tax without a ticket issued in such manner and subject to such conditions as may be prescribed [Section 6(1)(a)]. The obligation to submit returns, relating to payment for admission, to the prescribed authority, in the manner and within the period indicated, is on the proprietor of the entertainment. A best judgment assessment is provided, in case there is default in the submission of returns or in case the returns are incorrect or incomplete (Section 7-A). The Taxing Act was amended from time to time. In particular, by Act XX of 1966, Section 7-B was introduced into the Taxing Act for the first time. Section 2of the amending Act which is Section 7-Bof the Taxing Act was made expressly retrospective with effect from April 1, 1960. Section 7-B of the Taxing Act runs as follows:

(1) Where, for any reason:

(i) any payment for admission to any entertainment has escaped assessment to tax u/s 4; or

(ii) any cinematograph exhibition has escaped assessment to tax u/s 4-A, the authority prescribed under Sub-section (1) of Section 7-A may,--subject to the provisions of Sub-section (3) and at any time within such period as may be prescribed, assess to the best of its judgment the tax due on such payment or exhibition under Section4 or 4-A, as the case may be after making such enquiry as it may consider necessary and after giving the proprietor a reasonable opportunity to show cause against such assessment.

(2) Where, for any reason, any payment for admission to any entertainment or any cinematograph exhibition has been assessed at a rate lower than the rate at which it is assessable u/s 4 or 4-A the authority prescribed under Sub-section (1) of Section 7-A may, subject to the provisions of Sub-section (3) and at any time within such period as may be prescribed, reassess the tax due on such payment or exhibition under Section4 or 4-A, as the case, may be, after making such enquiry as it may consider necessary and after giving the proprietor a reasonable opportunity to show cause against such reassessment.

(3) In making an assessment or reassessment under Sub-section (1) or Sub-section (2) as the case may be the authority prescribed under Sub-section (1) of Section 7-A may, if it is satisfied that due to wilful statement or suppression of facts by the proprietor, the tax has not been levied or has been levied at a rate lower than the rate at which it is leviable, direct the proprietor to pay, in addition to the tax assessed or reassessed under Sub-section (1) or Sub-section (2) as the case may be, a penalty not exceeding one and a half times the tax so assessed or reassessed:

Provided that no penalty under this Sub-section shall be imposed unless the proprietor affected has had a reasonable opportunity of showing cause against such imposition.

(4) The powers under Sub-section (1) or Sub-section (2) may be exercised by the authority prescribed under Sub-section (1) of Section 7-A even though the original order of assessment, if any, passed in the matter has been the subject matter of an appeal or revision.

(5) In computing the period of limitation for assessment or reassessment under this section, the time during which the proceedings for assessment or re-assessment remained stayed under the orders of a civil Court or other competent authority shall be excluded.

Section 7-B is a new provision effective from 1st April 1960, providing for the levy of entertainment tax on payments for admission, etc., escaping assessment and authorising the prescribed authority to assess to the best of its judgment the tax due and he can effect such a re-opening at any time within such period as map be prescribed. Attempts were made to re-open assessments and levy tax and penalty on the foot of Section 7-B, without the prescription as to time as contemplated above, being made. In Royappa v. Commercial Tax Officer I.L.R.(1969) Mad. this Court pointed out that such a course was not open to the Revenue. The judgment was pronounced on April 3, 1967. On April 4, 1967, Rule 43-E, reading as under and prescribing the time within which escaped assessment could be brought to tax, was made:

43-E (1) where for any reason any payment for admission to any entertainment has escaped assessment to tax u/s 4 of the Act, or any cinematograph exhibition has escaped assessment to tax u/s 4-A of the Act, the Entertainment Tax Officer may within a period of five years from the expiry of the period to which the tax relates take action under Sub-section (1) of Section 7-B of the Act.

(2) Where for any reason any payment for admission to any entertainment or cinematograph exhibition has been assessed to tax at a rate lower than the rate at which it is assessable u/s 4 or 4-A of the Act, the Entertainment Tax Officer may within a period of five years from the expiry of the period to which the tax relates take action under Sub-section (2) of Section 7-B of the Act.

This rule was strictly one, made in order to complete the processual machinery set up in Section 7-B and to plug the defects therein. Section 10-B created a fiction to treat penalty payable under the Act as tax under it. Section 11 provides for inspection of any place of entertainment by any authorised officer, who shall be deemed to be a public servant. Section 12-A which is again new and introduced in 1961, provides for powers of entry, search and seizure. This enables the officers authorised to enter and search any premises provided a reasonable suspicion about any contravention of the provisions of the Act is entertained. There is provision for compounding offences (Section 15). Section 16 is the general section vesting the State Government with the power to make rules for securing the payment of entertainment tax and generally for carrying into effect the purpose of the Act. It may be noticed that while Section 16 is general in scope, Section 7-B is special in its application, in so far as it provides for prescription of time to reassess escaped assessments which is a purpose connected with the objects of the Act. Section 16 also has been amended by Act XX of 1966. Sub-sections (4) and (5) as amended read:

(4)(a) All rules made under this Act shall be published in the Official Gazette and, unless they are expressed to come into force on a particular day, shall come into force on the day on which they are so published.

(b) All notifications issued under this Act shall, unless they are expressed to come into force on a particular day, come into force on the day on which they are published.

(5) Every rule made or notification issued under this Act shall, as soon as possible after it is made or issued, be placed on the table of both Houses of the Legislature, and if, before the expiry of the session in which it is so placed or the next session, both Houses agree in making any modification in any such rule or notification or both Houses agree that the rule or notification should not be made or issued, the rule or notification shall thereafter have effect only in such modified form or be of no effect, as the case may be, so, however, that any such modification or annulment shall be without prejudice to the validity of anything previously done under that rule or notification.

Section 7 of the amending Act XX of 1966 of the Taxing Act validated certain assessment and collection of taxes made earlier.

The Finance Act defines in Section 2(a) Entertainments Tax Act to mean the Taxing Act. Section 2(e) reads:

All words and expressions used but not defined in this Act and defined in the Entertainments Tax Act shall, in relation to tax leviable u/s 3, have the meanings respectively assigned to them in that Act.

Section 3 is the charging section which enables the local authority, as defined in the Act, to levy a tax as surcharge on entertainment tax and on tax on cinema exhibitions. Such a levy should be inducted by a resolution of the local authority. Section 4 of the Finance Act reads as under:

(4)(1) Any tax payable u/s 3 shall be assessed and collected by the Government in the manner provided in Sub-section (2).

(2) The authorities for the time being empowered to assess, collect and enforce payment of any tax under the Entertainments Tax Act shall, subject to any rules made under this Act, assess, collect and enforce payment of any tax payable under Clause (a), or Clause (b) or Sub-section (1) of Section 3 (including any penalty payable in respect thereof) in the same manner as the tax u/s 4 or Section 4A as the case may be, of the Entertainments Tax Act is assessed, paid and collected; and for this purpose they may exercise all or any of the powers they have under the Entertainments Tax Act; and the provisions of that Act including the provisions relating to composition of tax, returns, appeals, revisions, offences, penalties and the compounding of offences, shall apply accordingly.

Thus, there is an assimilation of the entire scheme of taxation as set out in the Taxing Act, in the Finance Act.

It is in such a fascicules of the statutory provisions both in the Taxing Act and the Finance Act that the contentions of the Counsel for the Petitioners and the Revenue have to be considered. Mr. Chandrasekhara Sastry and Mr. Chellaswami would say that the Legislature in directing the executive to fix the period within which the prescribed authority can assess escaped assessment, has abdicated one of its essential legislative functions in the teeth of established legislative practice. They would urge that, even otherwise, the delegation is unguided and Rule 43-E is ultra vires and has to be struck down. According to them, the control envisaged by the Legislature in Section 16(5) of the Taxing Act is insipid and ineffective. Mr. Vedantachari and Mr. Srinivasan would urge that Rule 43-E even if effective, can act only prospectively. Regarding Section 4 of the Finance Act, it was said that its scope and content is not wide enough to enfold within its sphere of activity, the levy of surcharge with retrospective effect for any period, as on the date when the Finance Act was passed, there was no provision in the Taxing Act to re-open escaped assessment. According to the learned Counsel, the mechanics adopted by the Finance Act at best amounted to legislation by incorporation and not legislation by reference to another Act (in this case the Taxing Act) and, therefore, Section 7-B and Rule 43-E cannot be availed for the imposition of the additional surcharge under the Finance Act for a back period of 5 years.

Mr. R.S. Venkatachari would say that surcharge under the Finance Act is virtually tax on income of the exhibitor and so outside the competence of the State Legislature. Mr. K.N. Mudaliyar, the then Advocate-General and Mr. P.R. Gokulakrishnan, the present Advocate-General appearing for the State, well brought out the distinction, on both the occasions when each of them appeared for the State, between legislating by reference and legislating by incorporation and maintained that there is a totality of assimilative of the procedural apparatus set up in the Taxing Act with the Finance Act and that the latter is inextricably knit with the former. They urge that the delegation by the Legislature is proper and within the bounds of legislative practice and is not an abdication of legislative duty as contended.

We have already pointed out that we are called upon to consider only the legal contentions argued before us without touching the facts and merits of each of the Petitioner�s cases.

We shall now take up the question whether by the scheme adopted by the Legislature in generally referring to the Taxing Act in the fiscal Act, it intended to legislate by incorporation or by reference. Whether a statute is adopted by incorporation or by reference is a question of intention which has to be found from the peculiar circumstances of each case. Legislation by incorporation is a device by which the inconvenience and the necessity to repeat ipsissima verba the provisions of the Act sought to be incorporated, is avoided. It is more to be viewed as a process of convenient guidance. On the other hand, legislation by reference is wider in scope and ordinarily adopted in a case where the Legislature is aware of the ambulatory nature of the provisions to be preferred to and to be treated as part and parcel of the Act legislated upon. These two aspects of legislative process have vital distinctions of their own which are to be borne in mind in interpreting a particular statute which attempts to assimilate certain or all provisions of another Act. The incorporated Act or some provisions thereof may be literally transplanted into the incorporating Act resulting in legislation by incorporation. In the words of Lord Esher in The Queen v. Smith (1873) 3 Q.B. 146 the legal effect of that process is to write those sections into the new Act just as if they had been actually written in it with the pen or printed in it. It can happen that in order to avoid repetition of a complicated law and tendentious procedure in the incorporated Act, the incorporating Act may by a general reference adopt such law and procedure in order to facilitate the working and implementation of the incorporating Act. Such a general adoption of the law and procedure in another enactment with its attendant scope for adoption of subsequent amendments therein, terminologically would be legislation by reference. No doubt, it is unwise to boggle with the intention of the Legislature. But if it becomes necessary to crack the shell of form to find the substance it can be done and the putative facts may be scrutinized to find what the intention of the Legislature was in referring to an Act and adopting the same in another Act. Herein the purpose aimed at, looms large. If in the name of expediency the provisions in the incorporated Act are generally brought into the incorporating Act, then it is indisputably a case of legislation by reference and any subsequent amendment of the former can be availed of by persons administering it and persons affected by it. No doubt, in a case where the doctrine of incorporation was resorted to by the Legislature, then the incorporating Act cannot take in the later amendments of these provisions so incorporated, for, the purpose and intendment of such legislation by rating would be exceeded and transgressed. Success clear cut line has to be drawn while expatiating a problem in a given case whether the process adopted by the Legislature is one of incorporation or reference.

The learned Advocate-General has brought out this distinction between the two accepted processes adopted by the Legislature according to its exigencies. He has relied upon the authoritative exposition of the aspect by eminent authors and, in our view, successfully established that in the instant case the Legislature has adopted the process of legislation by reference and not by incorporation.

As is often said, legislation is a process of the action and reaction between constitutionally authorized initiative and social forces. Being a technical minutia of the law, the Legislature adopts the best method to achieve its objects. Sometimes it incorporates in one Act the provisions of another Act and at other times adopts another by general reference. According to eminent authors:

When a statute adopts the general law on a given subject, the reference is construed to mean that the law is as it reads thereafter at any given time including amendments subsequent to the time of adoption. This is to be contrasted with the adoption by reference, of limited and particular provisions of another statute, in which case the reference does not include subsequent amendments....A statute which refers to the law of a subject generally adopts the law on the subject as of the time the law is invoked. This will include all the amendments and modifications of the law subsequent to the time the reference statute was enacted.

In juxtaposition to the above proposition, whether Legislature attire incorporates another Act or some of its provisions for convenience or brevity, the amendments thenceforward made in the incorporated Act cannot enter into the incorporating Act. Earned Counsel for the Petitioners strongly relied upon Secretary of State for India in Council v. Hindustan Co-operative Insurance Society Limited ILR (1931) Cal. 55. In that case certain provisions, of the Land Acquisition Act were incorporated by a reference into the Calcutta Improvement Act of 1911. By an amendment of 1921, the right of appeal to the Privy Council from the decision of the High Court was provided in matters falling under the Land Acquisition Act. It was held that the right of appeal so given was not applicable to the award of a Tribunal under the Calcutta Improvement Act assessing compensation in respect of land acquired under the provisions of the Land Acquisition Act. Dealing with this, SIR GEORGE LOWNDES observed (at page 64).

It seems to be no less logical to hold that where certain provisions from an existing Act have been incorporated into a subsequent Act, no addition to the former Act, which is not expressly made applicable to the subsequent Act, can be deemed to be incorporated in it, at all events if it is possible for the subsequent Act to function effectually without the addition.

It has to be noted that the ratio in this case is only applicable to a case where a statute is incorporated by the Legislature into another. This is not a case where the Legislature adopted the process of legislating by general reference and adoption of law and procedure of another Act. It is unexceptionable that where a statute attracts the provisions of another by a specific and descriptive reference to the statute or provisions therein, such adoption takes the statute as it exists at the time of adoption and does not include subsequent additions or modifications of the statute so taken unless it does so by express intent: Section 82 Lawyer''s edition 303. The decisions Kareem v. Deputy Commercial Tax Officer ILR (1967) Mad. 720 and Shah and Co. v. State of Madras (1967) 20 S.T.C. 146 quoted by the Petitioners are not apposite. There this Court was considering the competency of the Parliament to adopt the provisions of a local law as part of the central legislation without repeating those provisions in the central Act. In such circumstances this Court held that Parliament cannot make law adopting the provisions of a local law which did not exist at that time. This is not the case here. Both the Taxing Act and the Finance Act spring from the same source namely, State Legislature. By Act XXII of 1966, Section 7-B of the taxing Act is made specifically retrospective from April 1, 1960. u/s 4 of the Finance Act, all the provisions of the taxing Act and the relative processual law allied thereto are attracted and made applicable in the same manner as provided for in the taxing law. By such a general reference to law and procedure, the Finance Act made it clear that the provisions of Section 7-B of the taxing Act could be attracted, applied and implemented as if it was in the statute book from April 1, 1960. If Section 7-B of the taxing Act is so woven by general reference into the texture of the Finance Act by the application of the doctrine of legislation by reference, then it necessarily follows that Section 7-Bof the taxing Act and Rule 43-E made thereunder are provisions, which are to be deemed to have been assimilated into the Finance Act as well. At any rate from April 1, 1960, the above provisions are to be telescoped into the Finance Act and applied as such. Learned Advocate-General rightly referred to certain passages in Mohamed Kasim v. Assistant Collector of Central Excise ILR (1961) Mad. 1041 to bring out the essential distinction between legislation by reference and legislation by incorporation. The learned Judges said (at page 1043):

Referential legislation is a very wide subject, of increasing importance in the proliferation of enacted law. But, obviously, this includes many forms, from bare citation, reference, application, and application by means of legal fiction to statutory incorporation. Incorporation is only a part of this wide sphere, and it is essential that the ambit of statutory incorporation should be clearly defined. In English law and precedent, we see the ebb and flow of several ideas upon the topic, but, more and more, the Legislature and the Courts have attempted to define and delimit statutory incorporation.

Either the ipsissima verba are set forth in the incorporating statute or an almost unvarying formula is employed to indicate actual incorporation. But citation, reference and application stand on a different footing altogether; in recent statutes we see the two processes side by side. But statutory incorporation has certain incidents and legal consequences, which ought to be clearly distinguished, and which ought not to be invoked in matters of mere reference or application of the principles of one statute to another.

Thus viewed, and after weighing the contentions urged before us, we have no hesitation to accept the argument of the learned Advocate-General that in the instant case the Legislature intended to adopt the process of legislation by reference, with the result that both the law and the procedure of the taxing law have been set into the pattern of the fiscal Act and both the Acts have to be read together in that context and in that light. Thus understood, it is clear that the levy of surcharge under the Finance Act on and after April 1, 1960, under the provisions of the Finance Act would be valid since Section 7-B of the taxing Act should be deemed to be part and parcel of the Finance Act as well.

This leads on to the question, whether inflaming Rule 43-E of the Madras Entertainments Tax Rules, 1939, pursuant to the authority expressly conferred on it by Section 7-B of the taxing Act, the executive has exceeded the delegated authority, as contended by the Petitioners. Rule 43-E, no doubt, fringes on the region of limitation. But in modern unceasing activity, the Legislature has entered many a sphere and domain. Delegation of power to Sub-legislate is often resorted to because the Legislature has no time, being in a stream of multifarious and variegated activities and also for the reason the Executive, being in touch with the needs of the community and being capable of securing expert advice will be in a position to achieve the purpose and object of an enactment, as the exigencies of circumstances required. Such is the source of administrative law. But there is no yardstick to measure the limits of such delegation, for problems manifested by experiences are solved according to their needs and requirements. Such delegation should not be arbitrary and ought not to amount to abdication of legislative function. By Section 7-B of the taxing Act, the Legislature in its wisdom thought that it should be left to the Executive or the delegated authority to prescribe the time limit, within which such a re-opening can be effected. There is nothing uncommon in this at all. The policy having been declared by the Legislature, its chosen instrumentality has been asked to do an ancillary thing, namely, to prescribe a time limit to re-open escaped assessment. The very policy of bringing to tax escaped assessment inheres an element of time limit. As pointed out by the Supreme Court in re Article 143 Constitution of India, etc. (1) where delegated legislation has been accepted as an inevitable and indispensable method in the present day.

The Legislature cannot part with its essential legislative function which consists in declaring its policy and making it a binding rule of conduct. A surrender of this essential function would amount to abdication of legislative powers in the eye of law. The policy may be particularized in as few or as many words as the Legislature thinks proper and it is enough if an intelligent guidance is given to the subordinate authority. The Court can interfere if no policy is discernible at all or the delegation is of such an indefinite character as to amount to abdication, but as the discretion vests with the Legislature in determining whether there is necessity for delegation or not, the exercise of such discretion is not to be disturbed by the Court except in clear cases of abuse.

The power of the delegated authority in the instant case having thus been canalized within banks and not being vagrant and unconfirmed does not savour of arbitrariness or unreasonableness. In fact, it is not suggested at the Bar that to re-open for a period of five years by itself is oppressive or unreasonable. To say as contended that the Legislature has abdicated its function, is an extreme contention, which ignores accepted legislative practice. So long as the authority conferred is not to neutralize or contradict the provisions of the main statute, the rule making authority, if it makes a rule conformably with the intention, purpose and text of a statute, then it is well settled that in such a case there is no abdication of legislative function. The subordinate Legislature when it made Rule 43-E which prescribed the time limit, as directed by the Legislature, has acted within its powers. The rule is not partial or unequal in its operation; it is not manifestly unjust; it does not disclose bad faith; it does not involve such oppressive or gratuitous interference with the rights of parties subject to therein. In fact, the rule achieves one of the purposes of taxation and the taxing Act, namely, to bring to tax escaped assessment, and, therefore, clearly within the periphery of the power conferred. It is not unconstitutional for the Legislature to leave to the Executive to determine details regarding the working of taxation laws--see Pandit Banarsi Das Bhanot Vs. The State of Madhya Pradesh and Others, As in the instant case, the rule making authority was asked to do something ancillary to the avowed policy as indicated in Section 7-B of the taxing Act, there is neither abdication of legislative function nor excessive delegation.

One other limp of the argument is that the delegation is unguided. We do not think so. The Legislature has expressed its mind and laid threadbare its policy to bring into the net of taxation escaped assessment. But it placed reliance on its chosen instrumentality to fix and prescribe the time within which it can be done, as apparently it was a matter of detail. Though, therefore, the delegation is outwardly general in scope, yet having regard to the instant case, it cannot be characterized as an abuse of power. As the Supreme Court said in Municipal Corporation of Delhi Vs. Birla Cotton, Spinning and Weaving Mills, Delhi and Another, .

What guidance should be given and to what extent and whether guidance has been given in a particular case at all depends on a consideration of the provisions of the particular Act with which the Court has to deal including its preamble. Further the nature of the body to which delegation is made is also a factor to be taken into consideration in determining whether there is sufficient guidance in the matter of delegation.

What form the guidance should take is again a matter which cannot be stated in general terms. It will depend upon the circumstance of each statute under consideration. In some cases guidance in broad general terms may be enough; in other cases more detailed guidance may be necessary.

We had occasion to consider the validity of this very rule in V. Periaswamy v. Deputy Commercial Tax Officer Bhavani. Writ Appeal No. 471 of 1968. My very learned brother speaking for the Bench said:

...there is a specific power provided by Section 7-B(ii) to make a rule prescribing limitation for the exercise of the power. This power is to be found in the words "within such period as may be prescribed". ''Prescribed'' is defined by Section 3(8) as meaning prescribed by rules made under the Act. It is a familiar feature in fiscal statutes to provide for rule making power by a specific section which is usually in two parts, the first the power being given in general terms for purposes of carrying out the purposes of the Act, and the second, enumerating matters with reference to which rules can be made, and quite apart from such delegation of rule making power, similar delegation is often made by other provisions in the Act and the delegation is contained in the power to prescribe which is usually defined as the power to make rules under the Act. That is what is seen in the Madras Entertainments Tax Act as well. The rule is, therefore, perfectly valid.

In the light of the above ratio, it is unnecessary to decide whether the control reserved by the Legislature u/s 16(5) is effective. We, however, express our view that such a reservation obviously made in the public interest is a badge of superintendence by the Legislature, which is obliged to consider the rule made by the delegated authority and accept it or modify it. It is not in dispute in this case that both the Houses of Legislature have accepted Rule 43-E, in the manner envisaged in Section 16 of the taxing Act.

In fact, the power of the rule making authority to make a rule having retrospective operation is unquestionable. We are unable to countenance the argument that the rule should, if it is effective and implement able, be applied prospectively.

Mr. Vedantachari urged that the rule making power cannot embrace within it the power to levy a tax and a fortiori with retrospective effect. Reliance was sought to be placed on India Sugars and Refineries Ltd. v. State AIR 1960 Mys. 326. M.R. Raghavaswami Iyengar v. State of Madras Writ Petition Nos. 441 etc. of 1964. Those cases are easily distinguishable. In the respective Acts with which the learned Judges were concerned, there was no power in the enactment itself to levy a cress, but there was a guideline fixed therein, enabling the levy after a notification was issued by the named and concerned authority specified therein. When, therefore, the levy was sought to be imposed prior to the issuance of the material notification but after the date when the main Act came into force, which in turn did not create the levy proprio vigor, the learned Judges in the cases cited, struck down the rule as there was a total absence of power to levy the concerned cress. Section 2 of Act XX of 1966, made Section 7-B of the Madras Entertainments Tax Act expressly retrospective from 1st April 1960. This meant that the power to reopen escaped assessment was available from April 1, 1960. While providing for such a substantive availability of the power to levy tax on escaped turnover, the Legislature, in its wisdom left it to the subordinate legislation to prescribe the time within which such an escapement may be made eligible to tax. In the instant case, it is not a retrospective levy at all by reason of Rule 43-E. It only illustrates how the pre-existing power to levy is being exercised in a limited way. The delegation of the existing power to the Executive is only to prescribe the dates and the period within which and within which alone the levy can be made. The rule prescribes the procedure and the Act enables the levy. The procedure may result in retroactivity. This is not unusual nor such a procedure be condemned as illegal. Thus viewed, the argument of Mr. Vedantachari could not be accepted.

There is no substance in the vague contention of Mr. R.S. Vedantachari that the tax on entertainments is tax on income. Neither the provisions of the taxing Act nor the Finance Act lend support to this. Excepting for stating it, even the learned Counsel did not expatiate it.

We, therefore, answer the contentions raised in favour of the State. Under the finance Act the surcharge can validly be levied and Rule 43-E of the Madras Entertainments Tax Rules, is valid and operative and intra vires of the delegated authority.

The batch of cases will now be posted for hearing Counsel on the merits of each case, which has been reserved for consideration at a later date.