1997 (8) TMI 518 - HC - Indian Laws

Court upholds entertainment tax validity under Section 12(1)

Hukum Singh Versus State Of U.P. And Ors.

The court dismissed all writ petitions, upholding the validity of assessment orders under Section 12(1) of the U.P. Entertainment and Betting Tax Act, ... - Issues Involved:1. Validity of assessment orders under Section 12(1) of the U.P. Entertainment and Betting Tax Act, 1979.2. Impugned Government Order (G.O.) dated 12-4-1989 notifying the rates of tax.3. Competence of State Legislature to levy entertainment tax on Cable T.V. Network.4. Alleged violation of Article 19(1)(a) of the Constitution.5. Principles of natural justice in the assessment process.6. Rights of a subscriber to challenge the entertainment tax.Issue-wise Detailed Analysis:1. Validity of Assessment Orders:The petitioners sought quashing of assessment orders made under Section 12(1) of the U.P. Entertainment and Betting Tax Act, 1979. The court referenced a previous case involving Hindalco Industries Ltd., where it was held that any sum realized from viewers for entertainment creates a liability to pay entertainment tax, irrespective of the amount or the name given to it. The Supreme Court upheld this view, stating that unless exempted by the State Government, entities providing entertainment are liable to pay entertainment tax.2. Impugned Government Order (G.O.) dated 12-4-1989:The petitioners challenged the G.O. notifying the rates of tax. The court referenced the Supreme Court's decision in A. Suresh v. State of Tamil Nadu, which upheld the State's competence to levy entertainment tax on Cable T.V. Networks. The court found no merit in the petitioners' argument that the G.O. was violative of Article 19(1)(a).3. Competence of State Legislature:The petitioners argued that the State Legislature was incompetent to levy entertainment tax on Cable T.V. Network, claiming it fell under Entry 31 of List I of the 7th Schedule of the Constitution, which pertains to telecasting. The court rejected this argument, clarifying that taxation is a distinct matter and must be separately set out in the legislative entries. The court cited previous judgments, including Sundararamier & Co. v. State of Andhra Pradesh, to support the view that the State Legislature has the competence to levy entertainment tax under Entries 33, 34, and 62 of the State List.4. Alleged Violation of Article 19(1)(a):The petitioners claimed that the impugned G.O. violated their freedom of speech and expression under Article 19(1)(a). The court dismissed this claim, referencing the Supreme Court's decision in A. Suresh v. State of Tamil Nadu, which held that while providing entertainment may involve freedom of speech, the business aspect of it can be taxed. The court noted that the petitioners failed to provide evidence showing how the tax directly affected their freedom of speech and expression.5. Principles of Natural Justice:The petitioners contended that the assessment orders were made in violation of principles of natural justice, as the District Magistrate estimated the number of connections and amounts charged without proper evidence. The court observed that this issue is a question of fact better addressed by the appellate authority. The petitioners were advised to file an appeal against the impugned orders in accordance with the law.6. Rights of a Subscriber:A subscriber filed a writ petition seeking to restrain the respondents from realizing entertainment tax from him. The court noted that the assessment is made on Cable T.V. operators, not subscribers. The demand is raised against the operators, who can challenge the assessment. The subscriber has no right to challenge the assessment order as no order was made against him directly. Consequently, this petition was dismissed.Conclusion:All writ petitions were dismissed. The court upheld the validity of the assessment orders, the competence of the State Legislature to levy entertainment tax, and the impugned G.O. The court found no violation of Article 19(1)(a) and advised the petitioners to seek remedy through the appellate process for any alleged procedural violations.