No Service Tax exemption to Film Actors

In this case Petition was filed  under Article 226 of the Constitution of India,  praying for the issuance of a writ of Declaration, declaring that Notification No.25/2012 dated 20.06.2012 (Entry 16) in so far as it provides for an exemption in respect of services provided by a performing artist in folk or classical art forms of music, dance or theatre from service tax leviable under Section 66-B of the Finance Act 1994 as discriminatory and violative of Articles 14 and 19(1)(g) of the Constitution of India in the absence of the same benefit being extended to other performing artist namely film actor.
The petitioner has filed the present writ petition seeking to  assail the notification No.25/2012 dated 20.06.2012 (1960) providing for an exemption in respect of services provided by performing artist or folk or classical  art forms of music, dance or theatre from the liability towards service tax under Section 66-B of the Finance Act, 1994.

This notification is assailed on the ground that it is  discriminatory and violative of Articles 14 and 19(1)(g) of the Constitution of India  inasmuch as the same benefit is not extended to other performing artistes namely film actors.

The petitioner claims to be an actor in movies and submits that  his job involves skills to display different kinds of emotions, dialogue delivery skills and acting characters specified by film Director.  These skills are stated to be not different from an actor  who performs with similar skills in theatre or drama.
In a nutshell, the plea is that the impugned notification is arbitrary and discriminatory as it extends only to performing artistes in theatre and drama and not artistes in films.  The submission is that there is no reasonable basis behind such a classification.
In the counter affidavit filed by the respondents, it is pleaded that  the difference is based on the valid differentia between two categories
(i) film artistes and
(ii) native artistes and culture in theatre form.  In fact, one of the glaringly distinct factors pointed out is the huge expenditure involved as well as the earnings qua film artistes, as observed in AGS Entertainment Private Ltd., v. Union of India and two others reported in (2013) 32 STR 219. This is distinct from native  art and culture and the requirement to protect the same being more in the nature of a non-profit activity.  This is in furtherance of Article 29 of the Constitution of India seeking to give protection to cultural and educational rights and by preserving the rich heritage of composite culture.  Article 29 of the constitution of India reads as under:
29.Protection of interests of minorities:
(1) Any section of the  citizens residing in the territory of India or any part thereof having a distinct language, script or culture of its own shall have the right to conserve the same.
It has been stated that the Legislature has in fact classified the two groups of assessees.  The services rendered by performing artistes in folk or classical art forms of music or dance or theatre, excluding services provided by the brand  ambassador are specifically exempted by way of statutory notification, which exemption is not made applicable to other service providers.

A reference has been made to the Judgment of the Honourable Supreme Court in M/s. Anant Mills Co., Ltd., v. State of Gujarat (1975) 2 SCC 175,  to substantiate the plea that Article 14 forbids class legislation, but does not forbid classification based on intelligible differentia.

We may add that the petition and the counter affidavit seek to refer to a number of pronouncements broadly on the same parameters.  Suffice to say that the principles are well established and matters of tax legislation are to be dealt with in a different context.

State of U.P. v. Kamla Palace reported in (2000)1 SCC 557,  the Hon”ble Supreme Court  in paragraph-11 with reference to the observation made by Frankfurter, J. in Morey v. Dound observed in the following terms:
    11………. In the utilities, tax and economic regulation cases, there are good reasons for judicial self-restraint if not judicial deference to legislative judgment.  The legislature after all has the affirmative responsibility.  The courts have only the power to destroy, not to reconstruct.  When these are added to the complexity of economic regulation, the uncertainty, the liability to error, the bewildering conflict of the experts, and the number of times the Judges have been overruled by events self-limitation can be seen to be the path to judicial wisdom and institutional prestige and stability.
This was followed by the observations of the Hon’ble Supreme Court in the said Judgment in paragraph-12 in the following terms:
12. The legislature gaining wisdom from historical facts, existing  situations, matters of common knowledge and practical problems and guided by considerations of policy must be given a free hand to devise classes whom to tax or not to tax, whom to exempt or not to exempt and whom to give incentives and lay down the rates of taxation, benefits or concessions.  In the field of taxation if the test or Articles 14 is satisfied by generality of provisions the courts would not substitute judicial wisdom for legislative wisdom.

In Aashirwad Films v. Union of India reported in (2007) 6 SCC 624, the Hon’ble Supreme Court has observed as follows:
14. It has been accepted without dispute that taxation laws must also pass the test of Article 14 of the Constitution of India.  It has been laid down in a large number of decisions of this Court that a taxation statute for the reasons of functional expediency and even otherwise, can  pick and choose to tax some.  Importantly, there is a rider operating on this wide power to tax and even discriminate in taxation that the classification thus chosen must be reasonable.  The extent of reasonability of any taxation statute lies in its efficiency to achieve the object sought to be achieved by the statute.  Thus, the classification must bear a nexus with the object sought to be achieved.  (See Moopil Nair v. State of Kerala; East India Tobacco Co. v. State of A.P.; N.Venugopala Ravi Varma Rajah v. A.B.Shanthi and Associated Cement Companies Ltd., v. Govt. of A.P).

The aforesaid Judgments clearly establish, in our view, that taxation statutes have to be dealt with on a different plank with due deference to the legislative intent.  Much latitude is allowed to the  State for classification upon a reasonable basis, and what is reasonable is a question of practical details and variety of factors which the Court would be reluctant and ill-equipped to investigate.

It is in the aforesaid context of a taxing statute that the principles of Article 14 of Constitution of India are sought to be applied to claim relief by the writ petitioner, while, in our view, the two categories are clearly different and distinguishable and cannot be treated at parity. The mere fact that there is an element of drama or acting both in case of  theatre and in case of films does not mean that the two activities are identical, taking into consideration the circumstances in which films are made and theatre is performed. In fact we asked the learned counsel for the petitioner as to whether the petitioner would perform at the rates at which theatre artistes perform.  It is towards  the object of Article 229 of the Constitution of India that a salutory endeavour has been made to give support to native art and culture and encourage them as they suffer from financial constraints.  This is not the position of films.

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