Judgment :- Viswanatha Iyer, J. The exemption granted by the Government for the Malayalam film' Aroodam', from payment of entertainment tax under S.7(3) of the Kerala Local Authorities Entertainments Tax Act, 1961 (the act) for a period of one year by the proceedings Ext. P5 dated 16-6-1983 was treated as not binding on them by the first respondent Chalakudy Municipality who resolved unanimously not to grant such exemption for the exhibition of the said film within the Chalakudy Municipality. According to the petitioner, who is the producer of the film, an exemption granted by the Government in exercise of the powers under S.7(3) of the Act is binding on all local authorities, and that they have no right to collect entertainment tax in violation of the Government order. The stand of the Municipal Council, on the other hand, is that before the proceedings, Ext. P5 was passed by the Government, there was no consultation with the Municipal Council as envisaged by S.7(3) of the Act and therefore Ext. P5 is null and void. At any rate, it is not binding on the Municipality. This is what they purported to do in their resolution Ext. P6 while deciding not to exempt the said film from payment of entertainment tax for exhibition within the Chalakudy Municipality. A learned Single Judge of this court had in his judgment in a similar case, O.P. No. 7473 of 1982 held that the provision for consultation in S.7(3) was not mandatory, and that non-consultation will not vitiate the exemption. One of us felt doubt about the correctness of this view and the case was accordingly referred for decision by a Division Bench. 2. What the petitioner seeks in this original petition is the quashing of the Municipal Council's resolution Ext. P6 denying exemption, as also a direction to the Municipality to implement the Government order of exemption Ext. P5. On its part, the Municipality has, apart from raising the plea of non-consultation which we have indicated earlier, also relied on a letter dated July 25,1973 from Government (Ext. R2(a)) clarifying that such orders of exemption passed by Government are only "permissive sanctions" to the local authorities for granting exemption, an which they may act, after passing appropriate resolution. P5. On its part, the Municipality has, apart from raising the plea of non-consultation which we have indicated earlier, also relied on a letter dated July 25,1973 from Government (Ext. R2(a)) clarifying that such orders of exemption passed by Government are only "permissive sanctions" to the local authorities for granting exemption, an which they may act, after passing appropriate resolution. The Municipality's contention therefore is that it is open to the local authorities to grant or not to grant exemption depending on their volition, the order of exemption passed by the Government being merely a previous sanction for the purpose of the latter part of S.7(3). 3. S.7 of the Act provides for exemption from payment of tax. Sub-section (1) provides that entertainment tax shall not be levied on the price for admission to any entertainment where the local authority is satisfied that the entertainment is of the nature referred to in clauses (a) to (d). Sub-section (2) provides that any dispute as to whether an entertainment is of the character referred to in any of the clauses of sub-section (1) shall be referred to the District Collector, whose decision shall be final. Sub-section (3) with which we are concerned contains a general power of exemption. It reads: "(3) The Government may in consultation with the local authority concerned, by order, 4 exempt any particular entertainment or class of entertainments from liability to the tax. The local authority shall have power to grant exemption in any other case subject to the previous sanction of the Government". It consists of two parts, the first part conferring a power on the Government to exempt any particular entertainment or class of entertainments from liability to the tax, the power to be exercised in consultation with the local authority concerned. The latter part of the section vests a corresponding power in the local authority to grant exemption in other cases, subject to the previous sanction of the Government. What the Government clarified by the letter Ext. R2(a) was that the passing of a general order like Ext. P5 is to be treated only as the grant of previous sanction to local authorities for exercise of the power vested in them by the latter part of S.7(3), with freedom reserved to them, to grant or not to grant exemption in any given case. R2(a) was that the passing of a general order like Ext. P5 is to be treated only as the grant of previous sanction to local authorities for exercise of the power vested in them by the latter part of S.7(3), with freedom reserved to them, to grant or not to grant exemption in any given case. This was evidently intended to obviate the delay that was otherwise inevitable in the grant of sanction by Government, if the local authority desired to grant any exemption, defeating in the process the very benefit of the exemption. The general order of exemption passed by government was therefore intended to act as a previous sanction for purposes of the latter part of sub-section (3), on which the local authority may or may not act to grant any exemption. Going by this clarification, it was open to the Municipality to grant or not to grant exemption, and it was this option that they exercised by passing the resolution Ext. P6 denying exemption to the petitioner's film for exhibition within the Chalakudy Municipality. The learned V Single Judge who dealt with O.P. No. 7473 of 1982 has held that the letter Ext. R2(a) runs counter to the statutory provision, sub-section (3), and is therefore invalid. 4. Counsel for the petitioner urges that the consultation envisaged by S.7(3) is not mandatory and its absence, or any irregularity therein, will not vitiate the order of exemption. It is not disputed by the respondents that there was no consultation by the Government in this case, with the first respondent Municipality, or, for that matter, with any other local authority before the order Ext. P5 was passed. But; both the Municipality and the Government arc at one in contending that the consultation is mandatory, and non-compliance with it renders the order Ext. P5 not -binding on the first respondent Municipality. Government also points out that the scope and effect of Ext. P5 is only as delineated by them in Ext. R2(a). 5. The Act in question is one intended to provide a source of revenue to the local authorities in the State by imposition and collection of taxes on amusements and other entertainments. Government also points out that the scope and effect of Ext. P5 is only as delineated by them in Ext. R2(a). 5. The Act in question is one intended to provide a source of revenue to the local authorities in the State by imposition and collection of taxes on amusements and other entertainments. S.3 provides that any local authority may levy a tax to be referred to as entertainments tax, on the price for admission to any entertainment, the rate of tax being at the discretion of the local authority, within the limits prescribed in the section. The tax is levied for the benefit of the local authority as is evident from the provisions of Ss.3,4,6,6a,7 and 8. We are unable to agree with the contention of counsel for the petitioner, based on the decision of Balakrishna Eradi, J. (as he then was) in Jose Thomas v. Municipal Council, 1976 KLT255 that the entertainment tax is levied on behalf of the. State and that it does not go to augment the revenues of the local authority. We do not find any warrant for this view in the provisions of the Act which does not provide for making over the collections by way of entertainment tax to the State. The aforesaid decision does not correctly reflect the provisions of the Act on this point. 6. Sub-section (1) of S.7 vests the local authority with the power to exempt entertainments of the nature mentioned in clauses (a) to (d) from the levy of tax. Subsection (3) also vests the local authority with the power to grant exemption in other cases, of course, subject to previous sanction of the Government. Government is also given a power in certain cases to exempt any entertainment or class of entertainments from the liability to tax. A conspectus of these provisions shows that the right to grant exemption is vested mainly in the local authorities with an added power to Government in certain cases. This is rightly so because the exemption from liability to tax affects the revenues of the local authorities who have to depend on this and other limited sources of revenue, for carrying on their multifarious functions and duties under the enactments governing local bodies. It is for this reason that section 7(3) specifically provides for consultation with the local authority before Government grants any exemption. It is for this reason that section 7(3) specifically provides for consultation with the local authority before Government grants any exemption. The purpose of the consultation is a salutary one, to enable the local authorities who are the ones affected by the exemption to have their say in the matter and to obviate exemptions which may vitally affect their revenues. In fact, S.7(3) speaks of consultation with the local authority concerned, and not generally with the local authorities, which itself be speaks the importance of the consultation. Government had also understood the importance of the consultation process, in Ext. R2(a) when they clarified that any order of exemption passed by them will be treated as only previous sanction for the purpose of the latter part of S.7(3) with option to the local authorities to act or not to act on the basis of the permissive sanction. This letter achieved the twin object of providing any deserved exemption without at the same time affecting the local revenues by leaving it to the local authorities to grant the exemption. The question as to whether a statutory provision is mandatory or directory depends upon the intent of the legislature and not upon the language in which the intent is couched. The meaning and intention of the legislature must govern, and these are to be considered, not only from the phraseology of the provision, but also by considering its nature, its design and the consequences which follow from construing it one" way or the other (Crawford: Statutory Construction: Article 261). Where a power or authority is conferred with a direction that certain regulations or formalities shall be complied with, it is neither unjust nor incorrect to exact a rigorous observance- of it as essential to the acquisition of the right or authority (Maxwell 6th Edn. pages 649-650). The object of the consultation, the depletive impact of any exemption on the revenues of the local authorities, the mutuality apparent in sub section (3) of consultation on one side and of previous sanction on the other before any exemption is granted, all lead us to conclude that the provision for consultation contained in sub-section (3) is imperative, non-compliance with which vitiates the Government action, and makes it not binding on the local authority. Though we feel no doubt on the question, we shall refer to a few decisions cited at the Bar for the sake of completeness. 7. The question as to whether requirement of "consultation" as such could be mandatory has been the subject of discussion by the Supreme Court in various decisions. We may refer to a few which we feel are apposite. In Chandramuleshwar Prasad v. Patna High Court AIR 1970 SC 370 the court was concerned with Article 233 of the Constitution which requires consultation with the High Court in the matter of appointment of a District Judge. The Court held, having regard to the purpose behind the consultation, that it is not an empty formality, and that failure to consult the High Court before the appointment rendered the Government action invalid. Union of India v. sankalchandhimathalsheth, AIR 1977 SC 2328 was concerned with Article 222(1) of the constitution which requires the President of India to consult the Chief Justice of India before transferring a judge from one High Court to another. The court was of the opinion that having regard to the importance of the matter as one concerning the judiciary vitally, the Artic cast an absolute obligation on the President to consult the Chief Justice of India before transferring a judge from one High Court to another. It was in the nature of a condition precedent to the actual transfer of a Judge. (See also S.P. Gupta v. President of India, AIR 1982 SC 149). 8. The matter had come up under other statutes as well. In Banwarilal v. State of Bihar, AIR 1961 SC 849, the question was whether the provision in S.59 (3) of the Mines Act, 1952 which required the Government to consult the Mining Board before A framing regulations was mandatory. The court observed that an examination of all the relevant circumstances, namely the language used, the scheme of the legislation, the benefit to the public on insisting on strict compliance with it, as well as the risk to public interest, and the like, lead to the inevitable conclusion that the legislative intent was to insist on the provision for consultation with the Mining Board as a pre-requisite for the validity of the regulations. Incidentally the court referred to and distinguished its earlier decision in State of U.P. v. ManbodhanLal Srivastava, AIR 1957 SC 912, regarding consultation under Article 320(3) of the Constitution, a decision cited and relied on by counsel for the petitioner in support of his contentions. 9. In Haridwar Singh v. Begun Sumbrui, AIR 1972 SC 1242 the question was whether the award of a contract by Government without prior consultation with the Finance Department as required by the Rules of Executive Business of the State of Bihar rendered the award invalid. Mathew J speaking for the court observed that no universal rule can be laid down to determine whether a provision is mandatory or directory. In each case, one must look to the subject matter and consider the importance of the provision disregarded and the relation of that provision to the general object intended to be secured. It was accordingly held that non-consultation with the Finance Department rendered the award an invalid exercise of power. 10. The recent decision of the Supreme Court in Municipal Corporation of Greater Bombay v. New Standard Engineering Co. Ltd. AIR 1991 SC 1362 is very much in point and according to us strikes at the very basis of the petitioner's case. The respondent in the case, an industrial concern, constructed a building for accommodating its workers with the aid of subsidy obtained from the Government of Maharashtra, under a scheme known as the "Government Subsidized Scheme for Industrial Workers". The agreement entered into with the Government, for the purpose, barred the respondent from charging anything more than Rs. 26/50 per month from the occupant workers. The Municipal Corporation of Bombay however fixed the annual letting value of the building at an amount which far exceeded the amount of rent that could be collected under the agreement. The respondent challenged the fixation with the plea that the annual letting value had to be fixed in accordance with S.154(3) of the Bombay Municipal Corporation Act, 1988, which dealt with buildings constructed under any recognised Scheme of subsidized housing. The Explanation to this sub-section gave a definite connotation to such a scheme as meaning a scheme recognised by the State Government after consultation with the Municipal Corporation'. The scheme under which the respondent constructed its building Was one with regard to which the Government had not consulted the Municipal Corporation before sanctioning it. The Explanation to this sub-section gave a definite connotation to such a scheme as meaning a scheme recognised by the State Government after consultation with the Municipal Corporation'. The scheme under which the respondent constructed its building Was one with regard to which the Government had not consulted the Municipal Corporation before sanctioning it. The Corporation therefore took up the stand that the limitation on the annual letting value prescribed by S.154(3) could not be availed by the respondent. The question thus arose as to what was the effect of the non-consultation. The court observed that the Corporation had numerous obligatory functions to perform, like provision of drains, drainage works, scavenging, and removal and disposal of refuse and rubbish, water supply, construction and maintenance of public streets, bridges, etc. All these require funds. Property tax appeared to be a major source of the Corporation revenue. The consultation envisaged by the Explanation to S.154(3) was therefore definitely a matter of importance and consequence to the Corporation. The preparation of a scheme for subsidized housing by Government affects the financial interest of the Corporation. The consultation provided was a safeguard in favour of the Corporation; the right to be consulted in opposition to a claim or proposal which adversely affected the financial interests of the Corporation was mandatory. 11. Coming to the facts of this case, a perusal of S.7 shows that the competent authority thereunder to decide on the question of exemption is primarily the local authority whose revenues are sought to be augmented by the entertainment tax. The local authority has to depend on the funds received by it by the levy of various taxes including entertainment tax for carrying out the numerous obligations cast on it by the statute governing it. Any erosion of these sources will affect its functioning materially. Entertainment tax is also a ma jo source of revenue for the local authorities. It is for this reason that S.7(3) provides for consultation with the local authority before an exemption is granted by the Government, lest their programmes and projects arc affected materially by an unexpected exemption emanating from Government without consultation. The intention evident from sub-section (3) is that revenues of the 'local authority are safeguarded, and available source of funds not dried up, by exemptions granted either by the Government or by the local authority. The intention evident from sub-section (3) is that revenues of the 'local authority are safeguarded, and available source of funds not dried up, by exemptions granted either by the Government or by the local authority. The provision for consultation, just like the provision for previous sanction in the latter part of the sub-section, cannot but be treated as mandatory. We express our dissent from the view taken by the learned judge in O.P. No. 7473 of 1982. 12. We have already pointed out that Government itself understood it only this way -vide Ext. R2(a). Consultation with the numerous local authorities, be it Municipal Corporations, Municipalities, Panchayats or townships, every time an exemption is proposed will be an enormous and time consuming task, which may well defeat a deserving exemption, by the delay in granting it. ft was therefore that Government adopted the via media of issuing Ext. R2(a) by treating orders of exemption like Exl. P5 as "previous sanctions"' with option to any local authority to grant or not to grant exemption in a given case. That really subserves the purpose of section 7(3) and we do not find anything in it obnoxious to the section as held by the learned judge in O.P. No. 7473 of 1982. Ext. R2(a) contains a salutary working rule to avoid delay in deserving cases. 13. Ext.P5 was not therefore binding on the respondent Municipality and they were well justified in passing the resolution Ext. P6. There is no case that the resolution Ext. P6 was based on any irrelevant or extraneous circumstances. Petitioner is not therefore entitled to any relief. The original petition is therefore dismissed, without however any order as to costs.