The Hyderabad High Court held on Thursday that the Andhra Pradesh government could levy two categories of entertainment tax, with one for films made in the state, and another for films made outside it.
The court was hearing a petition that challenged a 2008 notification by the Andhra government that dictated a 10% tax on Telugu films made in Andhra and 24% on non-Telugu films that were made outside.
Upholding the notification, the court ruled that it was within a state's rights to promote trade, commerce and employment on its soil.
The petition was filed by Rajan Sharma of Aashirvad Films, who argued that the notification was unconstitutional.
Dismissing the petition, the bench reportedly declared, "Such a classification cannot be stated to be unreasonable or arbitrary. It has a clear nexus with the object sought to be achieved, namely to promote trade and commerce and improve the employment potential. Therefore, the classification does not fall foul of Article 14 of the Constitution...this is due to the fact that government had imposed uniform rate of tax on all the films irrespective of language. But it has created two different types of classifications - those produced in the state and those produced outside and secondly the area in which theatres are located."