TaxTMI 
TaxTMI 
2015 (9) TMI 779
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....n of India and beyond the jurisdiction and power of the State of Gujarat. It is also further prayed to declare that the Gujarat Entertainment Tax (Amendment) Act, 2009 is ultra vires the Constitution of India and beyond the legislative competence of the State of Gujarat and consequently to quash and set aside the same. It is also further prayed for appropriate writ to declare that the Gujarat Entertainment Tax (Exhibition by means of Direct-To-Home (DTH) Broadcasting Service) Rules, 2010, [hereinafter referred to as "Rules, 2010"], particularly Rules 3, 4, 5, 6, 7, 11, 12, 13, 14 and 16 are ultra vires the Constitution of India and are arbitrary, capricious and violative of Articles 14, 19(1)(g) and 21 of the Constitution of India and to quash and set aside the same and restrain the respondents from recovering any amount pursuant to the Rules 6, 7 and 14 thereto. It is further prayed to issue appropriate writ directing the respondents not to levy tax, fees or duty under the Act and the Rules on the DTH Broadcasting Services provided by the respective petitioners in the State of Gujarat and to quash and set aside the impugned notices received by the respondent No.2 for recovery o....
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....e License Agreement for a period of 10 years. That the petitioner has paid Rs. 10 Crores to the Ministry of Information and Broadcasting as an initial nonrefundable entry fee and furnished the Bank Guarantee for an amount of Rs. 40 Crores valid for the duration of the license. That the terms of the license further provided that the petitioner shall pay an annual fee equivalent to 10% of its gross revenue as reflected in the audited accounts of the Company. That the petitioner is also required to pay in addition to the license fee, royalty for spectrum use as prescribed by the Wireless Planning and Coordination Authority (WPC) under the Department of Telecommunications. That the petitioner has been also granted permission on nonexclusive basis for a period of 10 years to establish, maintain and operate uplinking hub (Teleport). That the license granted to the petitioner is for the whole of India and the petitioners are not required to get any permission / any other license from any of the authority for providing DTH Broadcasting services. It is the case on behalf of the petitioner that even otherwise, broadcasting is a subject matter which falls exclusively within the domain of the ....
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....rder of assessment. That the petitioner has been served with the notice at Annexure-C to comply with the provisions of entertainment tax and threatening action unless the notice is complied with. Hence, the respective petitioners have preferred the present Special Civil Applications under Article 226 of the Constitution of India challenging the levy of entertainment tax on the DTH Broadcasting services by the Act, by the State of Gujarat alleging inter alia that the same is ultra vires the Constitution of India inasmuch as it seeks to be imposed as a tax on a subject matter which is covered by Entry 31 and 92C of the List I of Schedule VII of the Constitution, on the ground that the power to impose tax on the subject matter covered by the said Entries is with the Central Government and not the State Government and also on the other grounds which shall be considered hereinafter. [4.0] Shri S.N. Soparkar, learned Senior Advocate has appeared with Shri Amar Bhatt, learned advocate appearing on behalf of the petitioner of Special Civil Application No.3430/2010 - Tata Sky Limited. Shri Sandip Laddha, learned Counsel has appeared with Shri Chetan K. Pandya, learned advocate appearing ....
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....sions of Electricity Act, 2003, Indian Wireless Telegraphy Act, 1933 etc. and the guidelines, policies and notifications issued by the Government of India and such other Acts and the Rules made thereunder are applicable to DTH Broadcasting Services which itself shows that the DTH Broadcasting Services falls under the domain of Union. It is further submitted that in the year 1994, the service tax was introduced under Chapter V of the Finance Act, 1994 with reference to its residuary power under Entry 97 List I [Union List] of the Schedule VII to the Constitution of India and that the DTH Broadcasting Services were included in the service tax net with effect from 16.07.2001 by the Finance Act, 2001 under section 65(105)(zk). It is submitted that the State therefore cannot impose entertainment tax on DTH services, the field having been occupied by the Entry 97 read with Entry 31 of List I of the Constitution of India. It is submitted that therefore the method of entertainment tax would amount to double taxation which is not permissible in law. [5.4] It is further submitted that the State Government has no legislative competence under Entry 62, List II read with Article 246(3) of th....
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....ntertainments" had attained nomen juris and was always used as a reference to entertainment in public places. [5.10] It is further submitted that Parliament has refrained from imposing service tax on entertainment in public places recognizing that these fall within Entry 62, List II, but has consistently impose service tax on socalled entertainment in private places, because such activities are not part of Entry 62. [5.11] It is further submitted that the Finance Act, 1994, as amended by the Finance Act, 2002 demonstrates the aforesaid. It is submitted that section 66B of the said Act provides that service tax shall be levied on the value of all services except those specified in the "negative list". It is submitted that the negative list, which is defined in section 66D, inter alia contains "admission to entertainment events or access to amusement facilities". It is submitted that the definition of "entertainment events" in section 66(24) refers to the exhibition of cinematographic films, circus, concerts etc. all of which are events in public places. It is further submitted that the budget speech of the Finance Minister for the year 2012-13 states that the negative list has....
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....even though both cable and DTH are Pay TV services and distributing the same channels, providing services of the same broadcasters, competing in the same market and catering to the same set of consumers, is expressly discriminatory and violative of Article 14. It is submitted that the Madras High Court in its judgment dated 19.10.2012 in Writ Petition Nos.25721/2011 in case of Tata Sky Ltd. vs. State of Tamil Nadu and other allied petitions which was inter alia filed by the very petitioner, challenging the provisions of Tamil Nadu Entertainment Tax Act, 1939 as amended by the Tamil Nadu Tax Act, 2011 discriminated and levied higher percentage of tax for DTH has held the said provisions of law ultra vires and unconstitutional to Articles 14, 19(1)(g) of the Constitution of India. It is submitted that Madras High Court in the aforesaid decision has held that the levy of entertainment tax on DTH Broadcasting services suffers from arbitrariness in classifying DTH as a separate class from Section 4E / Cable TV for adopting a different rate of tax. [5.14] It is further submitted by Shri Soparkar, learned Counsel appearing on behalf of the petitioner that even as held by the Hon'bl....
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....ield of the Central Legislature, which is beyond the Legislative competence of the State. [6.2] It is further submitted by Shri Soparkar, learned Counsel appearing on behalf of the petitioner that Rule 12 of the Rules, 2010 indirectly empowers invasion by the State and its officers without any safeguards as to the probable or reasonable cause or basis, violates right to privacy of the petitioner and its customers and therefore, violative of Article 21 of the Constitution of India. In support of his above submissions, he has relied upon the decision of the Hon'ble Supreme Court in the case of District Registrar & Collector, Hyderabad vs. Canara Bank and Ors. reported in (2005)1 SCC 496. [6.3] It is further submitted by Shri Soparkar, learned Counsel appearing on behalf of the petitioner that Rule 13 of the Rules, 2010 requires that a receipt shall be issued for every payment made towards installation and other charges. However, the DTH operators operates on a prepaid model and therefore, there is no issuance of receipts to the subscribers and the payments are also made by the customers online etc. It is submitted that therefore, the aforesaid Rule has been framed without p....
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....e only with services provided by the petitioner. It can be used by a customer for availing of the services from any DTH service provider. It is submitted that when a new connection is given to the customer, such subscriber gives the petitioner the applicable charges for installation and activation. It is submitted that after the installation and activation the subscriber is required to pay a monthly subscription charges based on his choice of channels. It is submitted that a subscriber may purchase a set top box from a retailer, which becomes the property of the subscriber. It is submitted that the service provided thereafter to the customer is prepaid service wherein a subscriber is required to purchase a recharge voucher to top up his connection balance. It is submitted that therefore the aforesaid cannot be said to be providing entertainment and therefore, the levy of entertainment tax on the DTH broadcasting services is absolutely illegal and arbitrary. [7.2] It is further submitted that section 6E of the Entertainment Tax Act, 2009, which imposes entertainment tax on DTH Broadcasting services can be upheld as a valid piece of legislation only if the incidence of tax is on e....
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....up, entertainment tax cannot be imposed on service element because, it would amount to levy of entertainment tax on service. [7.4] It is further submitted that assuming for the sake argument and without admitting it that the transaction of DTH broadcasting is not an indivisible one but a composite one, the service element of a transaction cannot be taxed by the State Legislature. In support of his above submissions, he has heavily relied upon the decision of the Hon'ble Supreme Court in the case of Bharat Sanchar Nigam Limited v. Union of India reported in (2006) 3 SCC 1 (Paras 87 and 88). It is submitted that applying the law laid down by the Hon'ble Supreme Court in the case of BSNL (Supra), if the transaction of DTH broadcasting service is recognized to have two separate elements called service and entertainment, no service tax can be levied by including value of entertainment in service and conversely, no entertainment tax can be levied by including the cost of service in the value of entertainment. It is submitted that in the present case section 6E hits the service itself by charging entertainment tax on the service attribute, viz. TV set of the subscribers which r....
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.... of the said Act, 2003. It is submitted that therefore the reliance on Entry 92C by the petitioners is totally misconceived. [9.2] Now, so far as the Entry 97 of List I is concerned, the same is a residual entry, which empowers the Parliament to enact law in respect of any other matter not enumerated in List II or List III including any tax not mentioned in any of those lists. It is submitted that in the present case, the Act is directly relatable to Entry 62 of List II, falling within the legislative competence of the State Legislature and hence, on the said subject of Entry 62 of List II, the State Legislature has rightly enacted the Act and hence, residual Entry 97 of List I has no applicability in the present case. It is submitted that as such the petitioners have rightly not invoked the applicability of the said Entry 97 of List I in their pleadings. [9.3] It is further submitted that similarly the applicability of Entry 31 of List I to the subject of Entry 31 of List I to the subject of "entertainment" is only with reference to the power of "regulation and control" of the Central Government by virtue of the Indian Telegraph Act, 1885 and Indian Wireless Telegraphy Act, ....
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....edule of the Constitution. [9.6] It is further submitted by Shri Trivedi, learned Advocate General appearing on behalf of the State that the High Court of Punjab & Haryana in the case of Tata Sky Ltd. v. State of Punjab reported in (2011)37 VST (PH); High Court of Delhi in the case of Bharti Telemedia Ltd. v. Government of NCT of Delhi & Anr. reported in (2011)44 VST 262 (Delhi); High Court of Orissa in its judgment dated 24.04.2012 in Writ Petition (C) No.8966/2011 rendered in the case of M/s. Tata Sky Ltd. v. State of Orissa and the Allahabad High Court vide judgment and order dated 28.07.2012 in Writ Tax No.1819/2009 and other cognate matters in the case of Sun Direct TV Pvt. Ltd. & Ors. v. State of Uttar Pradesh have upheld the respective entertainment tax legislations levying tax on entertainment through DTH service, within the legislative competence of the State legislature under Entry 62 of List II of the Constitution of India. [9.7] It is further submitted by Shri Trivedi, learned Advocate General appearing on behalf of the State that in the present case "Aspect Theory" as originally propounded by the Courts in Canada and thereafter followed by Courts in India, would ....
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....nt derived from the content that is the subject matter of tax under the Act and not the service of enabling the flow of content to DTH System and that even while assuming without admitting that the said two concepts are intertwined, the strands easily be separated by employing the aspect theory and in respect of the service aspect, the taxable event is entertainment from the content. [9.9] It is submitted that in the case of Bharat Sanchal Nigam Ltd. (Supra), the petitioner Company was providing service to its subscribers through SIM Card, where, the service tax was liable on the cost of SIM Card whereas, Sales Tax was also leviable on the sale price of SIM Card including value of activation charge. It is submitted that in the said case it was alleged that if the SIM card is not sold by the assessee to the subscribers but is merely part of the service rendered by the service providers, then in that case, the SIM card cannot be charged separately to Sales Tax, since it would ultimately depend upon the intention of the parties. It is submitted that therefore the decision of the Hon'ble Supreme Court in the case of BSNL (Supra) has no applicability of whatsoever nature, to the ....
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....t relatable to Entry 60 in List II of the 7th Schedule to the Constitution and, therefore, beyond the competence of Parliament. It is submitted that in the aforesaid decision it is held that there is a crucial difference between the tax levied for being in the profession and the tax levied on the value of service rendered in the profession and not the fact of belonging to the profession or the income derived therefrom and that therefore, as per the aspect theory, it is open to the different Legislatures to legislate with regard to different aspects of the same subject matter. [9.11] Now, so far as the contention on behalf of the petitioners that while interpreting Entry 62 of List II, one cannot go off the limit and one cannot define the term "entertainment" used in the Act so as to inflate the ordinary meaning of the term "entertainment" used in the Entry, because the term "entertainment" used in Entry 62 of List II means "entertainment" in public place, a public show and not within the precincts of a private person's home and the contention on behalf of the petitioners that DTH entertainment is not the placerelated entertainment and hence, levy of Entertainment Tax under t....
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....ll fall under Entry 62 of List II. [9.13] Now, so far as the submissions and contentions made on behalf of the petitioners with respect to violation of Article 14 of the Constitution of India on the ground that there is a distinction in levy of entertainment tax at Rs. 200 per TV set for connection sought to be charged from DTH operators and whereas only Rs. 6 per month is charged from cable operators, though the entertainment being provided is the same and reliance placed upon the decision of the Hon'ble Supreme Court in the case of Ashirwad Films (Supra) and the decision of the Madras High Court in the case of Tata Sky Ltd. (Supra) is concerned, it is submitted that the decision of the Hon'ble Supreme Court in the case of Ashirwad Films (Supra) would not be applicable to the facts of the case on hand. It is submitted that in the case of Ashirwad Films (Supra), the Hon'ble Supreme Court was dealing with the classification only the basis of language. It is submitted that in the present case the distinguishing features between two classes i.e. DTH operators and cable operators have been clearly mentioned in the further affidavit, which clearly go to show that the diff....
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....e pales into insignificance inasmuch as the points of distinguishing features brought about in the present case were never agitated before the Hon'ble Madras High Court, with the result the Hon'ble High Court had to observe that "while Cable TV programmes reach the person entertained through analogue system linked by metallic coaxial cable or optic fibre cable of Central System without headend, in DTH Service, the subscribers receive the content by using antenna, receiving signals through satellite system and that beyond that, no difference is found in the content of entertainment provided by means of Cable television or through DTH." It is submitted that however further observations of the Hon'ble Madras High Court to the effect that mere difference in technology and quality of presentation, number of channels available, possibility of recording facility or payment facility, are per se not legally sustainable and run contrary to the following judgments, according to which, such differences can always justify the classification being not in contravention of Article 14 of the Constitution. [9.16] It is submitted that in the case of Prakashchand Anand v. State of Himac....
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.... a television set as wide as we usually find in a cinema theatre exhibiting film through a projector. This being the position, it is difficult to say that the two exhibitions stand on similar footing and, therefore, need similar treatment and that if by Regulations different and lenient treatment is shown to exhibition of films by video cassette recorder, those Regulations violate the principle underlying Art.14." (Emphasis supplied) "9. It will thus appear that while the entertainment through exhibition of films has been subjected to entertainment duty, the difference in levying of such entertainment duty in these two cases is on a very sound footing and in no case can be said to be unreasonable. Interest of cinematograph exhibitors has been amply safeguarded. It will not only be inconvenient but also unjust to charge entertainment duty on every admission to the entertainment by video cassette recorder. The challenge to the constitutionality of the M.P. Entertainments Duty and Advertisements Tax (Amendment) Act, 1983 must, therefore fail." [9.18] It is further submitted that in the case of Ramesh Sippy v. State of Maharashtra reported in AIR 1989 Bombay 260 (Paras 7 an....
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.... of the Court".In the present case classification is areawise. It has a rational basis. Duty is charged upon the entertainment received. It is the case of the respondents that even after the amendment of the Bombay Entertainment Duty Act there is increase in the number of video game parlours in the Municipal Limits of Greater Bombay and elsewhere.In Greater Bombay video game parlours have increased from 119 in January 1984 to 174 in June 1984. Since Bombay is a commercial town and its population is larger than elsewhere in Maharashtra, video game parlours in Bombay are making more profits than the video game parlours elsewhere.Therefore since the takings in Bombay from the video game parlours are larger, a flat rate of duty at the rate of Rs. 500/- per month per machine is charged whereas having regard to the takings in places other than Bombay a flat rate of only Rs. 200/- per month per machine is charged. Thus a reasonable classification is made in that behalf. The micro classification within the metropolitan city of Bombay was neither called for nor possible. Therefore the classification made is wholly reasonable and it is not possible for us to accept the challenge of ....
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....f regulatory measures require a license under the Indian Telegraphy Act, 1885 to be granted by the Central Government and for that purpose, merely because DTH Broadcasting service is covered by Entry 31 List I, it cannot be contended that for all purposes, it is the Union Parliament which has legislative competence to enact a law and that therefore, the Act enacted by the State Legislature in the present case is constitutionally valid. It is submitted that there may be cases where regulatory control may lie with the Central Government, which can exercise the powers in that behalf, but at the same time, taxation powers may be there with the State Legislature, if the nature of tax is relatable to any of the entries of List II of the 7th Schedule to the Constitution, where the State Legislature has exclusive power to enact law. In support of his above submissions, he has heavily relied upon the decision of the Hon'ble Supreme Court in the case of State of West Bengal v. Kesoram Industries Ltd. reported in (2004)10 SCC 201 more particularly 129 of the said decision. [10.0] Now, so far as the challenge to Rules 3, 7, 11, 14 and 16 of the Rules, 2010 by some of the petitioners on ....
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....] It is submitted that in view of the above, provisions or Rules, 2010 are absolutely legal, valid, reasonable and in consonance with the provisions of Articles 14, 19(1)(g) and 21 of the Constitution of India. It is submitted that merely because the compliance of the Rules is likely to cause some inconvenience or hardship, the same cannot be invalid on that ground alone. [10.3] It is further submitted that similarly Rule 12 cannot be said to be violative of Article 21 of the Constitution of India merely because it empowers the authority under the Act to have free access to any place in respect of which, a Certificate of Registration is used, in execution of their duties under the Act. Making above submissions and relying upon above decisions, it is submitted by Shri Trivedi, learned Advocate General appearing on behalf of the State that the provisions of the Act and the Rules are not violative of Articles 14, 19(1)(g), 265, 300A, 301 of the Constitution of India as alleged. It is submitted that the Act is a competent legislation enacted by the State Legislature and therefore, the petitioners are not entitled to any reliefs as prayed for or otherwise and therefore, all the pe....
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....exhibition by cinematograph including video exhibition or television exhibition with the aid of any type of antenna with a cable network attached to it or cable television; or Direct-To-Home (DTH) Broadcasting System;" 2(g) 'Payment for admission' includes (i) any payment made by a person who, having been admitted to one part of a place of entertainment, is subsequently admitted to another part thereof for admission to which a payment involving tax or more tax is required; (ii) any payment for seats or other accommodation in a place of entertainment; (iii) any payment for a programme or synopsis of an entertainment; (iv) 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 hearing of the entertainment which, without the aid of such instrument or contrivance, such person would not get; (v) any payment for any purpose whatsoever connected with an entertainment which a person is required to make a condition of attending or continuing to attend the entertainment in addition to the payment, if any, for admission to the entertainment; (vi) any payme....
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....vision set at a residential or nonresidential or any other place which receives encrypted television signals through dish antenna from satellite directly and provides decrypted television signals to the television set, which enables the viewers to tune into multi channel television programmes in Ku Band, on payment, by the connectionholder, of the charges collected in any manner whatsoever by the proprietor; 6C (1) No proprietor providing an entertainment with the aid of any type of antenna or cable television or Direct-To-Home (DTH) Broadcasting Service shall carry on television exhibition without obtaining a valid Certificate of Registration from the prescribed officer. (2) The provisions of sub-section (1) shall not be deemed to have been contravened if the proprietor having applied for such registration as provided in this section within three months from the date of the commencement of the Gujarat Entertainments Tax (Amendment) Act, 1993, carries on television exhibition with the aid of any type of antenna with a cable network attached to it or cable television. (2A) The provisions of sub-section (1) shall not be deemed to have been contravened if th....
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....ection 6C in ProformaI in triplicate I and shall be renewable after every twelve months. 4. Granting of Certificate of Registration.- (1) The Commissioner may, on receipt of an application in ProformaI under rule 3 and having satisfied that all the rules have been complied with, grant Certificate of Registration to the proprietor. The Commissioner shall, while deciding whether to grant or refuse such a certificate shall have regard to the following matters namely: (i) the interest of the public generally; (ii) status of antecedents and the previous experience, if any, of the proprietor; (iii) the adequate precaution made for safety, convenience and comfort of the persons covered under Direct-To-Home (DTH) Broadcasting Service as per the guidelines issued by the Government of India from time to time. Explanation.- For the purpose of subrule (1) the expression 'antecedents' means the conduct of the applicant in relation to the regular payment of any tax or other dues payable by him. (2) The Certificate of Registration under section 6C shall be issued Proforma-2 and the Commissioner may prescribe special condition or conditions to be fu....
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....officer. (2) The returns relating to the payment of tax under section 6E shall be furnished quarterly in every financial year by the proprietor to the prescribed officer in Proforma3, Proforma-4 and Proforma-5 along with challan within fifteen days of the completion of the respective quarter: Provided that the return relating to the second and third quarter of the financial year 2009-10 shall be furnished within fifteen days from the publication of these rules in the official Gazette. (3) Every proprietor shall maintain a register in Proforma-6 for each financial year. 16. Order of Assessment. - (1) The assessment of tax in the respect of an entertainment shall be made within thirty days after the return in respect of such entertainment is furnished. (2) After the assessment is made, the prescribed officer shall serve a notice upon the proprietor for payment of tax, if any additional amount of tax is found to be due." [11.2] In view of section 6(e) of the Act, entertainment tax is leviable / imposed on per television set on the entertainment by Direct-To-Home (DTH) Broadcasting Service. Section 6(e) of the Act is very exhaustive and i....
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....f sections 4A and 4 of the W.B. EntertainmentcumAmusement Tax Act, 1982 was challenged. Before the Hon'ble Supreme Court the legislative competence of State to levy tax on luxuries including taxes on entertainments, amusements, etc. falling under Entry 62 of List II of Sch. VII was also challenged. In the case of Purvi Communications (P) Ltd. (Supra), the Hon'ble Supreme Court has held the performances, films, programmes shown to viewers through the television network (Cable Service) as falling within the meaning of "entertainment" and therefore it is within the legislative competence of the State Legislature under Entry 62 of List II of the 7th Schedule to the Constitution to make a law for the levy and collection of tax on such entertainments. In the aforesaid decision the Hon'ble Supreme Court has also further held that power of the State to levy tax on luxuries including taxes on entertainment, amusement etc. falling under Entry 62 of List II of the 7th Schedule is not fettered by the enactment of Cable TV Network (Regulation) Act, 1995 by Parliament. It is specifically observed and held that the power of regulation or control under the said central enactment is sep....
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....of taxation by the State legislature under Entry 62 of List II being a specific power, the power of taxation cannot be cut down or fettered by the general power or regulation as exercised by the Parliament in enacting the said 1995 Act. Under the Legislative field exclusively reserved for the State Legislature, the levy of tax by more than one statute on different taxable objects and taxable persons is not prohibited by the Constitution of India. The Bengal Amusement Act, 1922 and the West Bengal Entertainment and Luxurious (Hostel and Restaurants) Act, 1972 are two statutes which have been enacted under the same legislature field i.e. Entry 62 of List II of Seventh Schedule to the Constitution of India, and the two statutes apply admittedly to levy of tax on amusements, entertainments and luxuries in their respective area but the area of application of the said 1982 Act is different as would evident from the provisions of 1922 Act and the 1972 Act as aforesaid. The said 1982 Act was, for the first time, enacted by the State Legislature in 1982 and its area of application was initially confined to levy and collection of tax from the holders of television set or sets under Section 4....
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....ted to the viewers unless a cable operator transmits the video and audio signals to a subcable operator for instantaneous presentation of any performance, film or any programme on their T.V. screen. The subcable operators are mere franchisees who receives signals for transmission to the viewers only on payment of price promised or paid in terms of agreements entered by and between them. This is clear from the below set out terms of the Franchise Agreement: Grant The NETWORK hereby grants to the FRANCHISEE and the FRANCHISEE accepts the right to receive signals through a Feeder Line for further instant transmission/communication in the TERRITORY on the terms and conditions set out in this agreement. Price The price payable by the FRANCHISEE for access to the signals provided by the NETWORK shall be as follows: (a) Rs. 25/per subscriber per month to be paid before the 7th day of the month. (b) The FRANCHISEE will keep an interest free deposit of Rs. 50/per subscriber with the NETWORK. (c) The price mentioned in (a) above is liable to change depending upon the market conditions and by mutual understanding between the parti....
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....he franchisee has saved by not paying the requisite amount to the respondents in respect of such subscriber. 37. In our view, the respondents as a cable operator, for the purpose of levy and collection of tax under sub-section (4a) of Section 4A of the Act have direct and close nexus with the entertainments made available to the viewer through their cable television network. The performance, film or programmes shown to the viewers through the cable television network come within the meaning of entertainments and therefore within the legislative competence of the State Legislature under Entry 62 of List II of Seventh Schedule to the Constitution of India to make law for the levy and collection of tax on such entertainments. 38. A tax under Entry 62 of List II of Seventh Schedule to the Constitution of India may be imposed not only on the person spending on entertainment but also on the act of a person 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 admittedly engaged in the business of receiving broadcast signals a....
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....such entertainments is taxable under sub-section 4(a) of Section 4A of the said 1982 Act which has a direct and sufficient nexus with the entertainments. 40. The charging section is very clear and unambiguous in as much as there is no vagueness about the incidence of tax and the person who is liable to pay tax. So far as the declaration of liability to pay tax is concerned, the charging section does not suffer from any vagueness. The provision does not lead to any discrimination amongst persons. There is no scope of any discrimination in as much as either an owner, or person who having in possession of electrical, electronic or mechanical device receive signals and instantly transmits such signals of visual image and audio to a subcable operator for presentation of any performance, film or any other programme to the subscriber and/or viewers against payment, and as such owner or person exhibits such performance, film or any other 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 su....
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....meaning of Entry 62 of List II of the Seventh Schedule of the Constitution. So long as the State Act remains within the ambit of Entry 62 of List II and is not offending the provisions of Article 286 of the Constitution or the laws made thereunder, the State Act validity is beyond question. Thus, respondent No.1 who is engaged in receiving and providing TV signals to individual cable operators is liable to pay tax under clause (ii) of sub-section (4a) of Section 4A of the Act. From the definition of "Communication network" given in the agreement between the cable operator and subcable operator (termed as Franchise in the agreement), will be clear that the service rendered by respondent No.1 is not restricted only to receiving signals but also extends to sending visual images and audio and other information by means of telecommunication network for presentation to members of public. In the present case, respondent No.1 sends visual images and audio signals for 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 franch....
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.... Indian Telegraphic Act, 1885 and the Guidelines, Policies and Notifications issued by the Government of India and such other Acts and the Rules made thereunder as are applicable to Direct-To-Home (DTH) Broadcasting Services and therefore, the Direct-To-Home (DTH) Broadcasting Services fall under the domain of the Union and as the Direct-To-Home (DTH) Broadcasting Services are included in the Service Tax Act and State therefore cannot impose entertainment tax on Direct-To-Home (DTH) Broadcasting Services, the field having been occupied by Entry 97 read with Entry 31 of List I of the Constitution of India, cannot be accepted in view of the decision of the Hon'ble Supreme Court in the case of Purvi Communications (P) Ltd. and Ors. (Supra). Once it is held that Direct-To-Home (DTH) Broadcasting Services would fall within the meaning of "entertainment", in light of Entry 62 of the 7th Schedule to the Constitution of India, levy of entertainment tax on providing Direct-To-Home (DTH) Broadcasting Services is permissible within the legislative competence of the State. [11.6] Now, so far as the reliance placed upon the decision of the Hon'ble Supreme Court in the case of Bharat ....
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.... a transaction being indivisible or composite, in the context of "sale" and "service". The same shall not be applicable in the context of "entertainment" and "service", which are present in the instant case. While applying the "Aspect Theory" in the present case, the subjects which in one aspect and for one purpose fall within the powers of a particular Legislature, may in another aspect and for another purpose, fall within another legislative power. Thus, the decision of the Hon'ble Supreme Court in the case of Bharat Sanchar Nigam Ltd. (Supra) would have no applicability of whatsoever nature. [11.7] At this stage the decision of the Kerala High Court in the case of All Kerala Chartered Accountants' Association (Supra) is required to be referred to wherein the constitutional validity of the service tax levied under the Finance Act, 1998 for taxable service rendered by practicing Chartered Accountants was challenged on the ground that the impugned service is, in pith and substance, a tax on the practice of a "profession" and "trade", falling within employment relatable to Entry 60 in List II of the 7th Schedule to the Constitution and, therefore, beyond the competence of....
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....he Court would interfere only where a clear infraction of constitutional provision is established. In catena of decisions the Hon'ble Supreme Court has expressed a note of caution that the burden is all the heavier when the legislation under attack is a taxing statute, since the power of the legislature in classifying objects for the purposes of taxation are wide. It is observed that the Court must make every effort to uphold the constitutional validity of a statute, even if that requires giving the statutory provision a strained meaning, or narrower or wider meaning, than what appears on the face of it. It is further observed and held that it is only when all efforts to do so fail should the Court declare a statute to be unconstitutional. [11.9] The Hon'ble Supreme Court in catena of decisions has held that while deciding the constitutionality of the tax, oppressiveness; wisdom of advisability or expediency of a tax as measure of revenue; hardship; are not relevant. The Hon'ble Supreme Court has further observed and held that the Court is not concerned with the wisdom or unwisdom, justice or injustice of the law as the legislature is alive to the need of the people.....
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....the people whom they represent and they are the best judge of the community by whose suffrage they come into existence (iv), hardship is not relevant in pronouncing on the constitutional validity of a fiscal statute or economic law and (v), in the field of taxation, the Legislature enjoys greater latitude for classification." [11.11] In the case of State of Bihar vs. Sachchidanand Kishore Prasad Sinha and Ors. reported in AIR 1995 SC 885, the Hon'ble Supreme Court has observed that mere possibility of better classification is no ground to strike down classification made by statutory authority more particularly in taxing enactment. [11.12] In the case of M/s. Murthy Match Works vs. The Asstt. Collector of Central Excise reported in AIR 1974 SC 497 , the Hon'ble Supreme Court has observed and held that the Court cannot strike down a law because it has not made the classification which commends to the Court as proper. Nor can the legislative power be said to have been unconstitutionally exercised because within the class a subclassification was reasonable but has not been made. It is further observed that the modern State, in exercising its sovereign power of taxation, h....
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....f the challenge to the provisions of the Act on the ground that it is violative of Article 14 of the Constitution of India is concerned, it is required to be noted that before the Hon'ble Supreme Court the classification was made with respect to the rate of tax solely on the basis of language and it was found that the classification solely on the basis of the language, fails in its initiative to be called reasonably and thus the classification was found to be arbitrary and violative of Article 14 of the Constitution of India. Therefore, on facts, the decision of the Hon'ble Supreme Court in the case of Ashirwad Films (Supra) would not be applicable to the facts of the case on hand. However, in para 22, the Hon'ble Supreme Court has specifically stated that the Court is not concerned with the rate of tax. Now, so far as the reliance placed upon the decision of the Madras High Court in the case of Tata Sky Ltd. rendered in Writ Petition No.25721/2011 and other cognate matters is concerned, with respect, for the reasons above, we are not in agreement with the view taken by the Madras High Court on the alleged violation of Article 14 of the Constitution of India. [12.....