Multi system operator tax liability extends to cable connections routed through associates, while undecided subscription rate requires reconsideration.

The U.P. Entertainments and Betting Tax Act, 1979 fastens entertainment tax liability on the proprietor of a cable service control room or multi system operator, and that liability applies whether the tax is collected directly from subscribers or indirectly through an associate, franchise or agent. On the facts discussed, the absence of specific material showing that any connections were operated outside that statutory reach meant the challenge to liability failed. The subscription-rate issue, however, remained undecided because the appellate authority did not determine whether the correct monthly charge was Rs. 150 or Rs. 100, so that computation question required fresh consideration on remand.

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Issues: (i) Whether, under the second proviso to Section 3(1) of the U.P. Entertainments and Betting Tax Act, 1979, the proprietor of a multi system operator is liable to pay entertainment tax in respect of cable connections provided directly or indirectly through associate, franchise or agent; (ii) Whether the appellate authority's omission to decide the subscriber charge/rate issue required remand.

Issue (i): Whether, under the second proviso to Section 3(1) of the U.P. Entertainments and Betting Tax Act, 1979, the proprietor of a multi system operator is liable to pay entertainment tax in respect of cable connections provided directly or indirectly through associate, franchise or agent.

Analysis: The statutory scheme treats entertainment tax as leviable on admission to entertainment, but the second proviso to Section 3(1) specifically fastens liability in cable service cases on the proprietor of the cable service control room or multi system operator. The liability is attracted irrespective of whether the tax is collected directly from the subscriber or indirectly through an associate, franchise cable operator or agent. In the absence of factual particulars showing which connections were exclusively operated through independent local cable operators and in the absence of any supporting material identifying such operators, the challenge to liability could not be accepted.

Conclusion: The multi system operator was held liable to pay entertainment tax in respect of the 49,012 set top boxes operated through its network.

Issue (ii): Whether the appellate authority's omission to decide the subscriber charge/rate issue required remand.

Analysis: The petitioner had consistently disputed the department's assumption that subscription was collected at Rs. 150 per subscriber and maintained that the correct rate was Rs. 100. The appellate order noticed this contention but did not return any finding on it. Since the issue went to computation of tax and remained unadjudicated, fresh consideration by the appellate authority was necessary.

Conclusion: The issue of subscription rate was remitted to the appellate authority for fresh consideration.

Final Conclusion: The challenge to the assessee's liability failed, but the computation aspect relating to subscription rate was reopened for reconsideration, resulting in a partial success of the writ petition.

Ratio Decidendi: Where the charging provision expressly makes the multi system operator liable for cable service tax irrespective of collection through franchise or agent, liability cannot be avoided absent specific factual material showing that the relevant connections were outside that statutory reach; however, a computation issue not decided by the appellate authority must be remanded for decision.

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