Pith and substance barred service tax on amusement access because the State already occupied the taxing field for entertainments.

Service tax on access to amusement facilities was held unconstitutional because the real subject of taxation overlapped with the State's power to tax entertainments and amusements under Entry 62 of List II. Applying pith and substance, the Court found that both the State law and the Finance Act, 1994 taxed the same activity of admission to entertainment and amusement, so the Union could not rely on the aspect theory to treat it as a distinct service. Residuary power under Entry 97 of List I was unavailable where the field was already specifically covered by the State entry, and the absence of machinery provisions to isolate any service element reinforced the overlap.

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Issues: Whether the levy of service tax on access to amusement facilities was constitutionally valid or whether the subject was already occupied by the State's power to tax entertainments and amusements under Entry 62 of List II.

Analysis: The service tax levy under the Finance Act, 1994 was examined against the Kerala Local Authorities Entertainments Tax Act, 1961 and the constitutional distribution of taxing power. The State enactment was found to impose tax on admission to entertainment and amusement, including the price for admission and payments connected with the entertainment itself. The Finance Act, 1994 sought to tax the same activity through the concept of service. Applying the doctrine of pith and substance, the Court held that the real subject of taxation in both enactments was entertainment or amusement. The aspect theory could not save the levy because the activity sought to be taxed under the Union law was not a distinct aspect but the very same aspect already covered by the State taxing field. The residuary power under Entry 97 of List I was held unavailable where the subject was specifically covered by Entry 62 of List II. The Court further held that the subject of tax and the measure of tax are distinct, but here even the taxing subject substantially overlapped. Machinery provisions were also found absent for isolating any alleged service element.

Conclusion: The levy of service tax on access to amusement facilities was held unconstitutional and beyond Parliament's residuary competence, and the challenge succeeded.

Ratio Decidendi: Where the State Legislature is specifically empowered to tax a subject under a taxing entry in List II, Parliament cannot invoke residuary power under Entry 97 of List I to levy tax on the same subject merely by characterising it as a different aspect of the same activity.

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