TaxTMI 
TaxTMI 
TaxTMI 
2014 (9) TMI 109
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....declaring that Section 2 (l) (iii) of the U.P. Entertainment and Betting Tax Act, 1979 as ultra vires and unconstitutional, and from making any assessment orders; creating any demand or coercive step in pursuance to the order dated 11.6.2004. 2. Writ Petition No.1229 of 2007 has been filed by M/s Tata Sky Ltd. against the notices issued by the District Magistrate, Lucknow, dated 17.8.2007, to show cause as to why entertainment tax be not levied and realized on the sale and establishment of set top boxes, and the sale of recharge coupons for various channels including bouque of channels as well as the directions issued by the District Magistrate, Ghaziabad on 17.8.2007, directing the petitioner in pursuance to the interim orders passed by the High Court in Writ Petition No.5309 (MB) of 2007 dated 2.8.2007, for depositing the entertainment tax, directing the petitioner to provide for the entire list of the subscribers in District Ghaziabad and the sale of recharge coupons. The District Magistrate has directed the petitioner to provide for the names of the authorised agency, who will be depositing the entertainment tax and will be providing the requisite information. 3. In Writ Peti....
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....77 of 2009, Reliance Big T.V. Ltd. v. State of U.P. & Ors., the petitioner has challenged the provisions of the U.P. Entertainment and Betting Taxes (Amendment) Ordinance, 2009 (4 of 2009) promulgated on 16.6.2009 including DTH services within the ambit of the Act as unconstitutional and ultra vires of the Constitution and not to levy any duty under the Act on DTH services. 8. In Writ Petition No.833 of 2010, M/s Tata Sky Ltd. has prayed for declaring the U.P. Entertainment and Betting (Amendment) Act, 2009 levying entertainment tax on DTH broadcasting services as ultra vires to the Constitution of India. They have also prayed for directions to declare that the respondents have no right to claim entertainment tax on any amount of installation charges, and set top boxes and issue appropriate writ commanding the respondents not to levy tax, fees or duty under the amended Act, 2009. They have also sought for quashing the notices dated 27.1.2010; 16.2.2010; 8.3.2010 and 26.3.2010 to deposit entertainment tax on DTH subscriptions. The Amendments to the Act 9. The U.P. Entertainment and Betting Tax Act, 1979 was amended by the Second Amendment Act, 1995 (U.P. Act No.28 of 1995) insert....
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....ts not covered by items 1 to 4 (including mimicry, carnival, puppet show, magic show, giant wheel, cabaret or floor show, games of skill and video games). Thirty per cent of each payment for admission. 12. The U.P. Entertainment and Betting Tax (Amendment) Ordinance, 2009 (U.P. Ordinance No.4 of 2009) exhaustively amended U.P. Act No.28 of 1979 providing for imposition of entertainment tax on DTH services. The extract of amendments in Sections 2 and 3 relevant for the purposes of this case are quoted as below:- "THE UTTAR PRADESH ENTERTAINMENT AND BETTING TAX (AMENDMENT) ORDINANCE 2009 U.P. ORDINANCE NO.4 OF 2009 Promulgated by the Governed in the Sixtith Year of the Republic of India An ORDINANCE Further to amend the Uttar Pradesh Entertainments and Betting Tax Act, 1979. WHEREAS the State Legislature is not in session and the Governor is satisfied that circumstances exist which render it necessary for him to take immediate action. NOW, THEREFORE, in exercise of the powers conferred by clause (1) of Article 213 of the Constitution, the Governor is pleased to promulgate the following Ordinance. Short title 1. This Ordinance may be called the Uttar Pradesh Entertainments....
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....any other service by whatever name called, by way of contribution or subscription or installation and connection charges or any charges collected in any manner by whatever name called either directly or through any agency established for the purpose for Direct-to-Home service with the aid of set top box or any other device of like nature which connects television set or any other device at a residential or non residential place of a connection holder directly to the satellite without passing through an intermediary such as cable operator; Explanation- For the purposes of sub clause (vi) and (vii) any expenditure incurred by any co-operative society including a cooperative housing society or by the management of any factory, hotel, lodge bar, permit room, pub or by person or group of persons for the purchase of any type of antenna or any other apparatus for securing transmission through cable television network, Direct-To-Home service or any other service by whatever name called, for the member or for worker or customers or for himself or themselves, as the case may be shall be deemed to be the payment made under the sub clause. (viii) "Where in any entertainment admission has bee....
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.... (P-2) 'television signal receiver agency' means a place of entertainment by whatever name called, where business of selling or letting on hire or distribution or exchange or putting into circulation in any manner whatsoever of television signal receiver. (h) after clause (t) the following clause shall be inserted namely:- "(u) words and expression used in this Act no defined, shall have the same meaning as respectively assigned to them in the Uttar Pradesh Cinema (Regulation) Act 1955 or the rules made thereunder and the Cable Television Network (Regulation) Act 1995 and the rules made thereunder." Amendment of Section 3 3. In Section of the principal Act:- (a) In the marginal hearing for the words "tax on the payment for admission to entertainment" the words "tax on entertainment" shall be substituted. (b) in sub-section (1) (i) for the words "all payment for admission" the words all aggregate payments required for admission to any entertainment" shall be substituted. (ii) after the provision to sub-section (1) the following provisions shall be inserted, namely:- "provided further that in the case of cable service, the proprietor of the cable service control room....
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....ct, the expression aggregate payment shall mean a sum paid by a person for admission to the entertainment which shall include entertainment tax and any other amount required to be paid under the Act but does not include any fee or other charges which is not a part of entertainment tax under this Act". 13. The State Legislature passed the bill on which the Ordinance amending the Act of 1979 was promulgated into the U.P. Entertainment and Betting Tax (Amendment) Act, 2009 (U.P. Act No.25 of 2009), which was notified on August 27 of 2009 and came into force on June 16th, 2009 with effect from the date, when the Ordinance was promulgated. 14. On September 4th, 2009 a Notification No.1672/XI-Ka.Ni.-6-2009-M. (92)-2009 was issued under sub-section (1) of Section 3, sub-section (1) of Section 4, sub-section (1) of Section 4A and sub-section (1) of Section 4B and in supersession of the Notifications dated 13.4.1989, 27.4.1989, 15.10.1994, 12.12.2000, 15.12.2002, 26.3.2003 and 14.1.2004, notifying the rates of entertainment tax. For DTH Services Item-5 provide that rates of the entertainment tax in schedule as follows:- SCHEDULE Rates of Entertainment Tax Serial No. Classes of Enterta....
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....ission or insures to any place provided by the operator. He views the programmes on his own TV and in his own residence and thus Section 3 of the Act has no application to such activity. 17. The Division Bench, after considering the submissions, held that the Preamble of U.P. Act of 1979 shows that the Act was enacted to consolidate and amend the law relating to taxes on entertainments, amusement and on certain forms of betting in the State of UP. In view of the fact that the Legislature itself had given a different preamble of the UP Act of 1979, the element of admission, which was present in the Act of 1937, cannot be imported for interpreting its provisions. This Court then held in paragraphs 12, 14, 15, 16, 17, 18, 19 and 20 as follows:- "12. Sub-clause (iii) of Section 2 (1) defines "payment for admission" as any payment made for the loan or use of any instrument or contrivance which enables a person to get normal or better view or hearing or enjoyment of the entertainment which without aid of such instrument of contrivance such person would not get. Therefore, if any person charges any money for enabling any person to use any instrument or mechanical device which enables su....
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....ing sub-clause (iii) of Section 2 (1) of the Act, use of the instruments should be in the physical sense of the term namely that the person who goes normal view of the entertainment must himself use the instrument. In our opinion, there is no scope for restricting the meaning of the word "use" to such an extent. The use of instrument can be direct or indirect. Once the instruments of Cable T.V. Operator are connected to the television set of the subscriber by wire or cable the mere fact that someone else is operating the control room can make no difference as the subscriber gets full benefit of the instruments installed therein and it is through those instruments that the wireless signals be amend by the satellites are converted into such type of signals which can be directly received by an ordinary television set. Thus, it cannot be held that a subscriber does not himself use the instruments or devices which have been installed by a Cable T.V. Operator. 15.It is next submitted that the Cable T.V. Operators do not themselves provides an entertainment as the same is provided by the proprietor of the television station from where these programmes are broadcast. The contention is tha....
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....ground that the same was levied on lump sum rate on the basis of Rs. 500/- per machine per month within the limits of Municipal Corporation of Greater Bombay and at the rate of 250/- per machine per month in other areas. It was contended that the tax was payable even in a case where the machine, though could used but in fact was not used and thus depended upon its capacity to provide entertainment. It was also contended that as the tax was levied on the machine it was not on an act of entertainment and consequently the same was illegal. The contention was repelled on the ground that in regulation to taxing statutes the legislature enjoys a large discretion in the matter of classification and it must be given full freedom to determine the manner in which tax should be imposed. The tax levied in lump sum basis on the number of machines was only convenient method to levy the tax in so far as video parlours were concerned. In para 8 of the reports it was observed as follows:- "The tax contemplated by the Act is not a tax on ownership of machine or its possession. In the normal circumstances, when a video game machine is installed in a video parlour, it could safely be inferred that it....
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.... 1962 SC 1733, Federation of Hotel & Restaurant Association v. Union of India, AIR 1990 SC 1637, Ganon Dankarley v. State of Rajasthan, 1993 (1) SCC 364 and also a decision of U.S. Supreme Court in Son Antonto Independent School Rodriquez, (1972) 411 US (1) page 41, wherein, it has been held in the field of taxation the Legislature is permitted to exercise an extremely wide discretion in classifying items for tax purposes so long as it retains from clear and hostile discrimination against particular person or association. 18.Shri Khare has next submitted that in the notification issued by the State Government on April 13, 1989, there is no specific entry regarding rate of tax which is leviable on a Cable T.V. Operator and the respondents are taking recourse to Entry No. 5 which is residuary clause for levying tax. The submission is that a taxing statute cannot be vague and in absence of some definite publication that the activity being carried on by a Cable T.V. Operator is liable to be taxed at a particular rate, the tax cannot be imposed. Entry No. 5 of the notification dated April 13, 1989 regarding rates of entertainment tax reads as follows:- 5. All other classes of entertai....
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....ion as to a tax. Nothing is to be read in, nothing is to be implied. One can only look fairly at the language used." Reference has also been made to Baidyanath Ayurved Bhavan v. Excise Commissioner AIR 1971 SC 478 where similar view has been taken by the Apex Court. The submission is that as the activity of a Cable T.V. Operator is not specifically or directly mentioned in the act, the levy of Entertainment Tax is illegal. 20. We have given our careful consideration to the submission made by the learned counsel. We are unable to accept the submission that in absence of a corresponding amendment the activity carried on by Cable T.V. Operator would not come within the purview of the Act. We have to gather the intention of the Legislature from the provisions of the Act and then to examine whether the petitioners are realising any amount for admission to an entertainment. If they are so doing, they are liable to pay entertainment tax. There can be no quarrel with the proposition of law enunciated by the learned counsel. However, at the same time, we cannot ignore the current thinking with regard to interpretation of statutes where on account of progress being made by the society and ....
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....d's case (supra) that legislative futility is to be ruled out so long as interpretative possibility permits." Similar view has been taken in Municipal Corporation of Greater Bombay v. Indian Oil Corporation, AIR 1991 SC 686 where steel tanks for storing petroleum products were held to be "land" or "building" and exigible to property tax under the Bombay Municipal Corporation Act. In view of the aforesaid authorities the law seems to have been settled that in a fast developing society, it would not be correct to confine the intention of the Legislature to the meaning attributable to the words used at the time of making of enactment. In a scientific age, the legislature must be presumed to be aware of an enlarged meaning of the word which it may attract with the advance in science and technology. Therefore, the contention of the learned counsel not to see the intention of legislature cannot be accepted." 18. The challenge to the levy of entertainment tax on the employers, extending to its employees the cable network at their residence for viewing television programmes and charging Rs. 5/- from the employees, was considered by this Court in Hindalco Industries Ltd and another vs....
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.... a feature film or separately" The High Court has taken the view and in our opinion rightly held that the Cable TV Network run by the petitioners fall within the said definition which is of an inclusive nature. We agree with it. So far as the petitioners are concerned, it is stated that they are providing the said entertainment only to its employees and that too free of cost. Only a nominal sum of Rs. 5/- from each connection is collected - that too for paying part of the maintenance cost payable to the contractors. It is submitted that this is only a welfare measure conceived in the interest of the workers. The High Court has also taken note of this plea and has made the following observation: "The fact that the Hindalco is providing Cable Network facilities to its employees as a welfare measure and not with profit motive, may be a good ground for Hindalco to seek exemption for the payment of entertainment tax under Section 11 (1) of the Act. For that purpose Hindalco is at liberty to file an application before the State Government, but unless such an exemption is granted Hindalco is liable to pay entertainment tax on the Cable TV Network connections, given by it to its employe....
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....Constitution. Such contention was negatived by the Madras High Court and then a S.L.P was filed and the decision of the Madras High Court was challenged before the Supreme Court, which in its judgment reported as A. Suresh Etc. v. State of Tamil Nadu and another Etc. 1996 (8) SCALE 493, held as under: (para 7 at p. 495) "The High Court has dealt with each of these contentions advanced by the writ petitions separately and exhaustively and rejected each of them. Since we agree with the reasoning and conclusions arrived at by the High Court on all the issues, we think it unnecessary to deal with the above submissions except contentions Nos. 3, 4 and 7." 20. The Court did not agree that the notification by Government Order dated 12.4.1989 notifying the rates of entertainment tax is violative of Article 19 (1) (a) of Constitution of India and followed the judgment of Supreme Court in Suresh (supra) that there is no reason as to why the business part of the entertainment cannot be taxed. If the tax can be levied on entertainment provided by cinemas; if taxes can be levied upon the press, it is not understandable why the activity of entertainment by TV network cannot be taxed. While the....
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....f Section 1 of Act No. 28 of 1995, but so long such amended provisions including Section 4-C, brought about by virtue of Ordinance No. 21 of 1995 as re-enacted by Act No. 28 of 1995, are not enforced, the entertainment provided by cable T.V. Network would continue to be taxable under Section 3 of Act of 1979. The net result would thus be that for the brief period during which the Ordinance No. 21 of 1995 remained in force, the opposite parties can levy tax only in accordance with the amended text of the Act of 1979, but before and after that period, the petitioners would be liable to pay entertainment tax in accordance with the notification dated 13.4.1989 issued under Sections 3 (1) and 4 (1) of Act of 1979. The contention thus raised on behalf of the petitioners that they are liable to pay tax only in accordance with the amended provisions, as amended by Ordinance No. 21 of 1995 followed by re-enacted Act No. 28 of 1995, cannot be accepted, except for the period the Ordinance remained in operation i.e. upto the date of re-enactment." 22. In Sharad Traders & anr vs. State of UP and others (Writ Tax No. 702 of 2011) decided on 21.10.2011, a Division Bench of this Court in the writ....
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....esh Jolly (Supra) in the year 1997 and in Sharad Traders v. State of U.P. (Writ Petition No.702 of 2011 decided on 21.10.2011) that in a modern progressive society it would be unreasonable to confine the intention of the legislature, to the meaning attributable to the words used at the time, when the law was made. For a modern legislature, making laws to govern a society, which is fast moving, must be presumed to award an enlarged meaning, the same concept might attract with the march of time, and with the revolutionary changes brought about in social, economic, political and scientific and other fields of human activity. Unless a contrary intention appears an interpretation should be given to the words used, to take in new facts and situation. Even prior to the promulgation of the U.P. Entertainments and Betting Tax (Amendment) Ordinance, 2004, this High Court had interpreted the provisions of the unamended Act to include within the definition:- "payment for admission" in sub-clause (iii) of Section 2 (l), as any payment made for the loan or use of any instrument or contrivance, which enables a person to get normal or better view or hearing or enjoyment of the entertainment, which....
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....er v. Cantonment Board (Supra); Y.V. Shrinivasamurthy v. State of Madras (Supra) and Ramesh Sippy v. State (Supra) in support of its decisions. 25. In M/s Universal Communication System (Supra) the Division Bench did not accept the argument that the Act, as it was enacted in 1979 could not have possibly taken into consideration the advent of video cinema and cable TV and with that end in view Section 4A and 4B were added by UP Act No.12 of 1989. The Court did not accept the argument that since there was no corresponding amendment for making a cable TV operator liable to entertainment tax, the tax cannot be imposed unless intendment is provided by the amendment. The same argument has now been raised in respect of DTH services. The Judgments of other High Courts 26. The High Court of Bihar at Patna and the High Court, Uttarakhand, have quashed the levy of entertainment tax on DTH services. In Sky Vision T.V. v. State of Bihar & Ors., 1995 (2) BJLR 845 and in Dish T.V. India Ltd. v. State of Uttarakhand & Ors., Writ Petition (M/S) No.2562 of 2007 the imposition of entertain tax on cable operators was set aside in the absence of specific charging section and relevant specific entry ....
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....lms and programmes shown to the viewers is entertainment and therefore within the legislative competence of the State Legislature under Entry 62 of List-II of the 7th Schedule to make law for the levy and collection of tax on such entertainment and that the tax is paid on all payments for admission to an entertainment. The tax is levied on entertainment. It is paid on all payments for admission to an entertainment, and is collected by the proprietor and paid to the government in the manner prescribed. The tax is neither on the provider of DTH services nor on the DTH services nor on the person entertained, that the question of tax may fall on the ultimate subscriber and the tax may have to be collected by the DTH service provider and paid to the Government. Those are matters consisting instance and measure of tax, which is irrelevant for determining the subject matter of tax. It was further held that the entertainment through DTH broadcasting service or distribution of television signals, and value added services with the aid of any type of addressable system, which connects television set, computer system at a residential or non-residential place of subscriber's premise, direct....
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....true nature and character of the tax and is, therefore, within the legislative field of Entry 62 of List II of the VIIth Schedule to the Constitution. 33. Let us understand the role played by the petitioners in delivering entertainment directly into the homes of individual subscribers or rooms of hotel guests. The petitioners downlink the signals from various satellites of various TV channels at their hub stations. From there they uplink the signals to their own Ku Band designated transponders which are then transmitted in Ku Band through satellites. Dish antennae installed by the petitioners at their subscribers' premises pick up these Ku Band signals which are then decrypted by the set-top boxes and viewing cards provided by the petitioners. These decrypted signals are then viewed by the subscribers on their TV sets. Apart from installation charges, the subscribers have to pay a monthly subscription ranging from Rs. 99/- to Rs. 400/- depending on their choice of channels. The payment for subscription is like the payment for a cinema ticket or a theatre ticket. Since the "admission" to entertainment in the case of entertainment through DTH service is continuous (i.e., 24 x 7 ....
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....007 issued by the District Magistrates in the State of UP demanding entertainment tax from the petitioners on the Direct To Home (DTH) Services; seeking to impose entertainment tax on DTH services @ 30% under the residuary entry in the Schedule setting out the rate of entertainment tax. The District Magistrates have also demanded entertainment tax on the sale proceeds of the set top boxes and installation charges, on which it is alleged that the petitioners have paid Value Added Tax (VAT). 31. It is submitted by Shri D.K. Singh, that the DTH services were not covered under the U.P. Entertainment and Betting Tax Act, 1979 either prior to its amendment by UP Act No. 25 of 2009, or that even after the amendment the entertainment tax cannot be levied on DTH services. The levy and demand of entertainment tax prior to 16.6.2009 is unconstitutional, and this is clear from the very fact, that the State had to bring specific amendment to levy entertainment tax on DTH services. The issue has been decided in favour of the petitioners by Uttrakhand High Court as well as the Patna High Court. Both these judgments have been upheld by the Supreme Court. Shri D.K. Singh submits that the basic iss....
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....ing a taxing statute, equitable considerations are entirely out of place. The taxing statutes cannot be interpreted on any presumption or assumption. A taxing statute has to be interpreted in the light of what is clearly expressed; it cannot imply anything, which is not expressed; it cannot import provisions in the statute to supply the deficiency. Before taxing any person, it must be shown that he falls within the ambit of charging section by clear words used in the section; and if the words are ambiguous and open to two interpretations, the benefit of the interpretation is given to the subject. There is nothing unjust in the tax payer escaping, if the letter of law fails to catch him on account of legislature's failure to express itself clearly. 34. Shri D.K. Singh submits that DTH broadcasting service is neither defined nor there is any charging provision for DTH service in the unamended UP Act of 1979. There is no provision/entry with respect to DTH services in the unamended Act. The charging section providing for the taxing event occurs on 'Admission to Entertainment' which only means admission to any place where the entertainment is held. The DTH services are pro....
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....the legislature found that Section 3 read with Section 2 (l) did not cover cable TV operations, the same cannot possibly be considered to cover DTH operations or services. Similarly entertainment provided through video cinema was not covered by the Act and therefore, the Act was amended and specific charging Section 4A and 4B were enacted for levying entertainment tax on video cinema. It is submitted that 'payment for admission' defined in various clauses of Section 2 (l) is only the measure of the tax and is not part of the charge which is imposed by Section 3. The question of going into the measure of the tax arises only, if it is first found that the charge of tax is attracted. Since the charging section with the aid of Section 2 (g) and Section 2 (a) is confined to entertainment in a particular place or location, and persons are admitted to such place on payment of charge, the DTH operations are not included within the meaning of charging Section and consequently Section 2 (l) is not attracted as the measure of tax cannot expand or change the scope and ambit of the charge. Even if Section 2 (l) is to be read into Section 3, it does not make any difference because Sectio....
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.... authorities. From the very beginning the charge of tax under Section 3 was only on place related entertainment. In Deshbandhu Gupta vs. Delhi Stock Exchange 1974 (4) SCC 565 and K.P. Verghese vs. ITO 1981 (4) SCC 173 the doctrine of contemporaneous exposition was explained and it was laid down that the Courts would not ordinarily depart from the contemporaneous understanding of the provisions and the working of the Act by the authorities. 40. Shri D.K. Singh further submits that the Amending Act of 2009, which came into force on 16.6.2009 amending the UP Act of 1979 including DTH services, is not clarificatory in nature inasmuch as the Act was substantially implied to include DTH broadcasting services. The substantive amendments are not held to be clarificatory and do not have retrospective operations, vide Union of India vs. Martin Lottery Agencies Limited (2009) 12 SCC 209. 41. It is submitted that the entertainment tax is consumption based in direct tax. It is charged on the person, who subscribes the entertainment or is admitted to entertainments. The DTH service providers have not been charging any entertainment tax from their subscribers as there were no provisions for lev....
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....ment. Under the Up-linking and Down Linking Guidelines issued by the Union of India applications have to be made for entertainment channels and sports channels. For each type of channels a broadcaster is proposed to show the terms and conditions for grant of licence, including the restrictions by the Government on foreign investments in each of these types of channels. As a service provider the petitioner carries all the types of channels licenced as non-entertainment and sports channels. The petitioners as such as licencees are not providing entertainment and thus are not liable to pay entertainment tax on the non-entertainment channels, which are mandatory, the State cannot levy or collect tax by which its very own enactment cannot impose the tax. 44. It is submitted that the DTH service otherwise also cannot be taxed by the State Government applying the aspect theory inasmuch as the Finance Act defines the broadcasting service as a service in such a manner that no aspect of it is left out from the scope and ambit of the Finance Act which can be said to be entertainments. The pith and substance theory, which is applicable and not the aspect doctrine borrowed from Canadian Consti....
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....y show that they relate to a place/situs of entertainment for the entertainment. Section 2 (l) provides for the definition of payment for admission. It is to be read with the other provisions including Section 2 (a), Section 2 (g) and Section 3 of the Act. The phrase 'admission to an entertainment' and 'payment for admission' clearly denote entry into physical premises. The entertainment, which does not contemplate admission or entry into a physical premises, where such entertainment is provided, is not covered by the Act. 47. It is submitted that the petitioner is only providing services and providing of such services by no stretch of imagination comes within the ambit of entertainment. It is against the spirit of physical statutes that all services, which may have some connection with the entertainment, can be burdened by the entertainment tax. In order to bring any activity/service to be taxed by the State Government there must be sufficient machinery provisions for computation of the same. The charging section and computation/machinery provisions together construe an integrated code and where computation/machinery provisions are found to be inapplicable or unwo....
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.... Court clearly held that the activity to fall under the definition of entertainment must contain a public colour and the show should be open to public in a hall, theatre or any other place where members of the public are invited or attended the show. In paragraph-13 the Supreme Court held:- "13. Thus, on a consideration of the legal connotation of the word 'entertainment' as defined in various books, and other circumstances of the case as also on a true interpretation of the word as defined in Section 2 (3) of the Act, it follows that the show must pass the following tests to fall within the ambit of the aforesaid Section: 1.That the show, performance, game or sport, etc. must contain a public colour in that the show should be open to public in a hall, theatre or any other place where members of the public are invited or attend the show. 2. That the show may provide any kind of amusement whether sport, game or even a performance which requires some amount of skill." 49. Shri Bharat Ji Agrawal submits that in Universal Communication's case this Court had overlooked the aspect of the judgment passed by the Supreme Court in Geeta Enterprises and accordingly the opinion....
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.... delivered by the cable operators, the entertainment as contemplated by the Act is being provided. The respondents have equated the DTH services to cable services in which the delivery is made through cable. The respondents, however, seek to levy tax at the rate of 30% on DTH services as against 10% to 15% levied on cable services. The inequality in the matter of imposing differential rates/quantum of tax is violative of Articles 14 and 19 (1) (g) of Constitution of India and amounts to hostile discrimination. He relies upon Aashirwad Films vs. Union of India 2007 (6) SCC 624 in submitting that the taxation laws must pass test of Article 14 of Constitution of India and that there should be reasonable classification, which should bear a nexus with object sought to be achieved. A statute must be held invalid unless the classification is clearly unreasonable and arbitrary and that the clause legislative is such which makes an improper discrimination by conferring particular privileges. Shri Agrawal has relied upon the passage from Weaver's Constitutional Law, page 379 as follows:- "Class legislation is that which makes an improper discrimination by conferring particular privilege....
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....e entertained without a television set, would not mean that even the price of television set be included under Section 2 (l) (iii), which includes any payment made for the loan or use of any instrument or contrivance, which enables a person to get a normal or better view or enjoyment of the entertainment, which without the aid of such instrument or contrivance such person would not get. Shri Tripathi submits that on the same logic even spectacles or hearing aid without which a person may not get normal or better view or hearing or enjoyment of the entertainment would be taxable. He submits that any payment would not include the price of dinner, if the entertainment is held in hotel. Any charge, which is not connected with admission should not be treated as payment for admission. 55. It is submitted by Shri K.N. Tripathi that Section 4C was inserted by U.P. Act No.28 of 1995 to include tax on cable service. The tax was to be paid by the proprietor of a cable television network providing cable service. He submits that the principles of law in M/s Universal Communication System (Supra) are not applicable in as much as DTH service was not even conceived in India in the year 1995. The ....
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....d deficiency. In CST v. Modi Sugar Mills Ltd., AIR 1961 SC 1047 the Supreme Court held that the Court must look squarely at the words of the statute and interpret them. It must interpret a taxing statute in the light of what is clearly expressed, it cannot imply anything, which is not expressed, it cannot import provisions in the statute so as to supply any assumed deficiency. In Bansal Wire Industries Ltd. & Anr. v. State of Uttar Pradesh & Ors., (2011) 6 SCC 545 (para 30), a cardinal principle of construction of a statute was reiterated namely that when the language of the statute is plain and unambiguous, the Court must give effect to the words used int he statute. Besides, in a taxing Act one has to look merely at what is clearly said and there is no room for any intendment. In a taxing statute nothing is to be read in, nothing is to be implied, one can only look fairly at the language used. 59. Shri K. N. Tripathi submits that in Bharti Telemedia Ltd. v. Government of NCT of Delhi & Anr. decided on 5.9.2011 and reported in 182 (2011) DLT 665 the Delhi High Court was considering the provisions of Delhi Entertainment and Betting Tax Act, 1996 and the Delhi Entertainment and Bet....
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....ntest, if not a race. The assessee entered the contest to win it and to win the first prize. What he got was a 'return' for his skill and endurance. As such it is income. Word 'income' must be construed in its widest sense. In Lucknow Development Authority vs. M.K. Gupta (supra) the Supreme Court explained the reasons as to why certain words are added by way of abundant caution and held in paragraph-7 that a perusal of the definition of 'service' as it stood in the Consumer Protection Act prior to 1993 would indicate that the word 'facility' was already there. The legislature while amending the law in 1993 added the word in clause (d) to dispel any doubt that consumer in the Act would mean a person who not only hires but avails of any facility for consideration. These words were added more to clarify than to add something new. 61. In State of West Bengal & ors v. Purvi Communication Pvt. Ltd and others, JT 2005 (3) SC 339 the Supreme Court held that the State Legislature is free to the tax matters, on which it has legislative competence, to choose the persons from whom the tax levied on entertainments is to be collected. What are taxed are the enter....
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....ning, or the subject of entertainment. It is well settled by this Court that such tax may be levied on the person offering or providing entertainment or the person enjoying it. The respondents admittedly engaged in the business of receiving broadcast signals and the instantaneously sending or transmitting such visual or audio visual signals by coaxial cable, to subscribers homes through their various franchise. It has been made possible for the individual subscribers to choose the desired channels on their individual T.V. sets because of cable television technology of the respondents and of sending the visual or audio visual signals to sub-cable operators, and instantly re-transmitting such signals to individual subscribers for entertaining them through their franchise. The respondents' act is, no doubt, an act of offering entertainment to the subscribers and/or viewers. The respondent is very much directly and closely involved in the act of offering or providing entertainment to subscribers who are on his record. For the fact of offering or providing entertainment to the subscribers and/or viewers, the respondents receive charges, which are realised or collected by their franc....
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.... programme through his cable television network directly to customers he is liable to pay tax. Except that owner or person of the class referred to in sub-section (4a) of Section 4A of the said 1982 Act, no other person can be held liable to pay such tax. There is clear indication of the character of tax from the incidence of such tax or taxable event which takes place on the happening of the event of offering entertainments to the subscribers. The person on whom the legal liability to pay tax falls he has also been clearly and unambiguously mentioned in the charging section. The rates of tax has been sought to be specified by the notification. The measure of tax is the "gross receipt" on the basis of which the person is saddled with the liability to pay tax. There is no uncertainty or vagueness of the legislative scheme. The tax levied by sub-section (4a) of Section 4A of the said 1982 Act does not interfere with the fundamental rights guaranteed under Article 19(1)(g) of the Constitution or is violative of Article 19(1)(g). 40. We also see no substance in the submission that the impugned legislation impinges on the field occupied by the central legislation. The aforesaid central....
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.... presentation to the individual subscribers at various homes through their Feeder Line i.e. coaxial cable or any other device used for transmitting audio and visual signals in terms of clause 2 of the said agreement. The franchisee has access to the signals provided by respondent No.1. Therefore, it cannot be disputed that the price or prices received or receivable by the respondent No. 1 is the amount received or receivable by him for transmitting the signal for exhibition of any performance, film or any other programme telecast and the aggregate of such prices or amounts is the gross receipt of the respondent No.1 in relation to any month or part thereof. 42. We do not find any reason to consider the sub-cable operator as the only giver. Even though the sub-cable operator may be the giver of the entertainment in as much as he has a direct connection with the viewer, still in cases like the present where he does not select the show, or make the show ready, or does not put the show on and the exhibition is done by the cable operator through mere franchisees it cannot be said that the cable operator is not the giver. It is true that the cable used to get in touch with the TV set of....
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.... the maintenance of cinema premises, abolishing the maximum limit of tax on interior cinemas, making the permission of the District Magistrate necessary for holding entertainment, making the Multi System Operator/ Proprietors of cable control room responsible for the payment of tax due on the cable connection issued by their defaulter franchise cable operators and entertainment of appeal by the State Government only after payment of undisputed amount of tax and one-third of the disputed amount of tax. Since the State Legislature was not in session and immediate legislative action was necessary to implement the aforesaid decision, the Uttar Pradesh Entertainment and Betting Tax (Amendment) Ordinance, 2009 (U.P. Ordinance no.4 of 2009) was promulgated by the Governor on June 16, 2009. This Bill is introduced to replace the aforesaid Ordinance." 64. The petitioners have challenged the levy of entertainment tax under the Act of 1979 on the legislative competence of the State of U.P. in including DTH services by the Amendment Act of 2009. They have also challenged the levy of entertainment tax on DTH services on the ground that prior to its amendment and even after the amendment the ....
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....ltimate economic result matters. The subject of tax is different from the measure of the levy. Further the measure of the tax is not determinative of its essential character or the competence of the legislature. The same transaction may involve two or more taxable events in its different aspects. The fact that there is an overlapping does not detract from the distinctiveness of the aspects. For deciding the true character and nature of a particular levy, with reference to the legislative competence, it was held in All India Federation of Tax Practitioners (Supra) that the Court has to look into the pith and substance of the legislation. The Court must bear in mind that, where the application of a parliamentary and a legislative act comes up for consideration, endeavour shall be made to see that the provisions of both the Acts are made applicable. 68. In Purvi Communication (Supra) the Supreme Court dealing with the entertainment tax on cable television network held that the performance, film, or programmes shown to the viewers through the cable television network fall within the meaning of entertainments and therefore the State Legislature is competent under Entry 62 of List-II of....
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....asting Centres are in encrypted format. They are decrypted/ decoded by the set top box, with the help of the viewing card inside the set top box for the customers to be able to view the service. The subscribers have to obtain a connection for which they pay monthly charges. The set top boxes are provided to the customers free of cost without any consideration, for facilitating effective receipt and entertainment of DTH service. The set top boxes were earlier sold but that thereafter under the new schemes they continue to be the property of the petitioners' broadcasting DTH services. When a new connection is given, the subscriber gets the applicable charges for occupation and is thereafter required to pay subscription charges based on his choice of channels, apart from free channels. The service provided, thereafter, is a pre-paid service, wherein the subscriber is required to purchase recharge vouchers for the choice of channels with convenient mode of payment, to which he subscribes on his request. 72. The Chelliah Committee (1991) made recommendations on which the service tax was introduced in the budget of 1994-95 through the Finance Act, 1994 under Residuary Entry 97 of Li....
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....s to look into the pith and substance of the legislation. The powers of the Parliament and the State Legislatures are subject to constitutional limitations. The tax laws are governed by Part- XII and Part-XIII. Art.265 takes in Art.245, when it says that the tax shall be levied by the authority of law. Various entries of the 7th Schedule shows that the powers to tax is treated as a distinct matter for the purpose of legislative competence. The underlying principle is to differentiate between the two groups of entries namely general entry and taxing entry. The tax on services is a different subject as compared to tax on profession, trust and calling etc. The Supreme Court held that in that respect Entry 60 of List-II and Entry 92C of List-I operate in different spheres. In Imagic Creative Communications Pvt. Ltd. v. CCT, (2008) 2 SCC 614, the Supreme Court while considering the question whether the charges collected towards the services for evaluation of prototype conceptual design on which service tax has been paid under the Finance Act, 1994 were liable to tax under the Karnataka Value Added Tax Act, 2003 observed:- "28. ..... In the matter of interpretation of a taxing statute, ....
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....le to such sale. This, however, does not allow the State to entrench upon the Union List and to tax service by including the cost of such service in the value of the goods. Even in those composite contracts, which are by legal fiction deemed to be visible under Art.366 (29-A) the value of the goods involved in the execution of the sale transaction cannot be assessed to sales tax. By way of clarification it was added that the 'aspect theory' would not apply to enable the value of the services to be included in the sale of goods or the price of goods in the value of the service. 76. In Purvi Communication (Supra) the Supreme Court considered the question as to whether Section 4A (4-a) (ii) of the West Bengal Entertainment-cum- Amusement Tax Act, 1982 was beyond the legislative competence of the State Legislature. The Supreme Court clarified that the levy in collection of tax under Section 4A (4-a) from any person, which provides cable service directly to consumers or transmits to a sub cable operator through a cable television network, can otherwise controls or is responsible for the management and operation of cable television network is defined as cable operator being a ta....
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....n entertaining, or the subject of entertainment. It is well settled by this Court that such tax may be levied on the person offering or providing entertainment or the person enjoying it. The respondents are admittedly engaged in the business of receiving broadcast signals and then instantaneously sending or transmitting such visual or audio-visual signals by coaxial cable, to subscribers' homes through their various franchisees. It has been made possible for the individual subscribers to choose the desired channels on their individual TV sets because of cable television technology of the respondents and of sending the visual or audio-visual signals to sub-cable operators, and instantly retransmitting such signals to individual subscribers for entertaining them through their franchisees. The respondents' act is, no doubt, an act of offering entertainment to the subscribers and/or viewers. The respondent is very much directly and closely involved in the act of offering or providing entertainment to subscribers who are on his record. For the fact of offering or providing entertainment to the subscribers and/or viewers, the respondents receive charges, which are realised or col....
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....t to which Section 4 or Section 4A or Section 4B applies or a contended payment is made under the provisions of the Act. Section 4A levies entertainment tax on video cinema and Section 4B on video show in public service vehicle or hotels. Under Section 4C the entertainment tax is on cable service, after the amendment w.e.f. June 16th, 2009, the words 'tax on payment for admission to entertainment' have been substituted with the words 'tax on entertainment' and for the words 'all payment for admission' the words 'aggregate payments required for admission to any entertainment' have been substituted. The inclusion of the words direct to home service in Section 2 (c) (f-1) and Section 2 (c) (f) (vi) is only by way of clarification to include direct to home and further inclusion of direct to home or broad band service or any emerging transmission service by whatever name called under Section 2 (h) (l-l) as it may be seen from the objects and reasons is only by way of clarification. 78. The charging section (Section-3) stipulates that there shall be levy and paid on all payments for admission to any entertainment, such payment as the State Government may ....
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.... any change after amendment. A new sub-clause (vi) has been added, which includes the subscription or installation or charges or any other charges collected in any manner whatsoever by whatever name called for television, through cable television network or any such network of whatever name called, attached to television set or any other device at a residential or non-residential place. A further sub-clause (vii) has been added to make a clarification for any payment made by person to the proprietor of a direct to home service or any other service by whatever name called, by way of contribution or subscription or installation and connection charges, or any charges collected in any manner of whatever name called either directly or through any agency established for the purposes of direct to home service with aid of set top box or any other device of like nature, which connects television set or any other device at a residential or non-residential place of connection holder directly to the satellite without passing through an intermediary such as cable operator. 81. The amendments in the Act as explained in the Objects and Reasons, is by way of clarification to include the DTH servi....
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....hod by which such entertainment is provided. 84. The method by which the flow and content may be provided by the infrastructural set up, and for which the petitioner may be subjected to service tax under the service tax regime put in place by Parliament in exercise of its legislative powers under Art.246 of the Constitution read with Entry 92C of List-1. The service provider will in that sense only act as a link between the content provider and the content viewers. It is ultimately the entertainment, which cannot be treated as a good, but a feeling, which may be subject matter of tax under the Act. In such case it would not be the service of enabling the flow of content, which is taxed by the State Act. We do not find that there is any scope of overlapping or confusing one with the other. 85. We entirely agree with the opinion of the Delhi High Court that the DTH system has two aspects namely service aspects and entertainment aspect, which are clearly separated and distinguishable. The former is taxed under the service tax regime and the later is subjected to tax as an entertainment under the U.P. Act of 1979 read with Entry 62 of List-II. These are two separate and distinct taxa....
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.... meaning attributed to the word must be presumed to have a larger meaning while preserving the same concept and such interpretation, unless a contrary intention appears, should be given to the words used to take in new facts and situation. If the words are capable of comprehension, there is no reason to have an restrictive interpretation. The changing concepts and values, without doing any violence to the object and reasons, and where language permits and rather does not prohibit after adjustment through general interpretation must be adopted. The Court followed the opinions expressed in S.P. Gupta v. Union of India (Supra) and S.P. Jain v. Krishna Mohan Gupta (Supra) that the law takes pragmatic view of the matter and should be allowed to be recipient to the purpose for which it was made and also take cognizance of the current capabilities of technology and lifestyle of the community. The legislative futility is to be ruled out so long as interpretative possibility permits. In scientific age as it was held in Municipal Corporation of Greater Bombay v. Indian Oil Corporation (Supra), the legislature must be presumed to be aware of the large meaning of the word, which it may approve....