TaxTMI 
TaxTMI 
2017 (4) TMI 3
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....l addressable system mode and works as distributor of various cable television channels. It has been issued a licence as a multi system operator, permitting it to receive cable television services from the broadcaster and distribute the same directly to the subscribers or through local cable operators. The provisions of Cable Television Networks (Regulation) Act, 1995 readwith U.P. Cable Television Network (Exhibition) Rules, 1997 are also attracted upon the activity undertaken by the petitioner. Petitioner under the relevant provisions was required to maintain details of cable services provided to subscribers, for the purposes of payment of tax, but such details were allegedly not submitted and notices issued in that regard were not responded. No assessment could thus be made. A surprise inspection was ultimately carried out on the petitioner's premises on 15.10.2014 by a team headed by Additional District Magistrate alongwith Cyber Experts, and various data/details were obtained. It was found that petitioner till August, 2013 had installed 49012 Set Top Box (hereinafter referred to as 'STB'), whereas entertainment tax deposited by it till month of October, 2014 was on....
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....ls are available with them only. So far as deposit of outstanding of Rs. 1,16,321/- is concerned, the same was accepted. Explanation that 3330 STBs were being run through other multi system operator was rejected on the ground that at the time of survey, 49012 set top boxes were found to be functional through petitioner's network, and any diversion, as alleged, may have been in addition to such numbers. Further explanation that STBs in excess of number installed were availed, was also rejected, as it was found that 49012 STBs were in fact operational at the time of inspection. The claim of subscription amount being Rs. 100/- instead of Rs. 150/- was also rejected. So far as petitioner's contention about receiving of entertainment tax from the local cable operator is concerned, the same was turned down on the ground that by virtue of amendment introduced in Section 3 on 16th June, 2009, it is the multi system operator, which was liable to deposit entertainment tax. Since such amount had already been realized from the franchise local cable operator, accordingly, after adjusting the amount already deposited, a sum of Rs. 1,52,13,055/- was assessed as the amount payable towards ....
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....ee1), (ee2), (eee), (g), (k-1), (l), (m) & (oo) of the Act of 1979 are reproduced:- "2. Definitions.- In this Act,- (a) 'admission to an entertainment' includes admission to any place in which [the entertainment is held or any place wherefrom entertainment is provided by means of the cable television network or Direct to Home service or any other emerging transmission by whatever name called;] XXXXX XXXXX XXXXX 1[(ee) 'cable operator' means any person who provides cable service through a cable television network or otherwise controls or is responsible for the management and operation of cable television network and includes the proprietor of a hotel who provides cable service in the hotel through his own cable television network;] 2[(ee) 'cable service' means the transmission by cables of programmes including retransmission by cables of any broadcast television signals;\ (eee) 'cable television network' means any system consisting of a set of closed transmission paths and associated signal generation, control and distribution equipment, designated to provide cable service for reception by multiple....
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....oever, by whatever named called, for television exhibition through cable television network or any other such network by whatever name called, attached to television set or any other device at a residential or non-residential place of a connection holder; or (vii) 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 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-clauses (vi) and (vii) any expenditure incurred by any co-operative society including a co-operative housing society or by the management of any factory, hotel, lodge, bar, permit room, pub or by a person or group of persons for the purchase of any type of an....
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....icate under the Cinematograph Act, 1952 (Act No.3 of 1952), and in any other case at such rate not exceeding one hundred and fifty percent] of each such payment as the State Government may from time to time notify in this behalf, and the tax shall be collected by the proprietor from the person making the payment for admission and paid to the Government in the manner prescribed: Provided that a proprietor of a cinema or cable operator may, in lieu of payment under this sub-section, pay a compounded payment to the State Government on such conditions and in such manner as may be prescribed and at such rate, as the State government may from time to time notify, and different rates of compounded payments may be notified for different categories of local areas: Provided further that in the case of cable service, the proprietor of the cable service control room/multi system operator shall be liable to pay the tax, irrespective of the fact whether he collects it directly from the person making the payment for admission or indirectly through an associate or franchise cable operator or an agent, who in turn collects it from the person making the payment:" 10. It is clear....
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.... Limited Vs. Government of NCT of Delhi and others, delivered in Writ Petition (C) No.427 of 2014 & CM No.851 of 2014, decided on 9th March, 2017. The respondents, however, resists applicability of the judgment, on account of the provisions contained in the Delhi Act, and submit that the provision existing in this State is similar to the one that fell for consideration of Apex Court in State of West Bengal and others Vs. Purvi Communication (P) Ltd. And others, reported in (2005) 3 SCC 711. 12. The issue that arose for consideration before the Delhi High Court was in the context of a challenge laid to a circular and notices issued, requiring the multi system operator to pay entertainment tax. The provision of the Delhi Act, which fell for consideration got noticed in para-24 of the judgment in Siti Cable Networks Limited (supra), and is reproduced:- "24. Before we analyse and discuss the submissions of the parties, it would be necessary to set out the relevant provisions of the said Act and Rules: Provisions of the said Act: 2. Definitions In this Act, unless the context otherwise require,- xxxx xxxx xxxx xxxx "(fb) "cable operator" m....
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....y other person; Explanation In case of hotels each room or premises where signals of cable television network are received shall be treated as a subscriber. Explanation II: In case of direct-to-home (DTH), every television set or computer set receiving the signals shall be treated as a subscriber;" xxxx xxxx xxxx xxxx "7. Tax on cable, video service and direct-to-home (DTH) service (1) Subject to the provisions of this Act, there shall be levied and paid an entertainment tax on all payments for admission to an entertainment through a direct-to-home (DTH) or through a cable television network with addressable system or otherwise, other than entertainment to which section 6 applies, at such rates not exceeding rupees six hundred for every subscriber for every year, as the government may, from time to time, notify in this behalf, which shall be collected by the proprietor and paid to the Government in the manner prescribed. (2) Nothing in sub-section (1) shall preclude the government from notifying different rates of entertainment tax for household, or for different categories of hotels, (3) Where the subscriber is a hotel....
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....and challan of payment shall be furnished to the assessing authority within seven days from the end of the month for which tax is due and the provisions of sub-rules (2) and (3) of rule 25 shall mutatis mutandis apply. (3) Where the subscriber is a restaurant, the entertainment tax shall be paid as per the provisions of sub-section (3) of section 7 of the Act and each room and premises where signals of cable television network are received, shall be treated as a subscriber. The provisions of sub-rules (2) and (3) of rule 25 shall mutatis mutandis apply." The Court then proceeded to hold as under:- "40. To be clear, MSOs to the extent that they directly provide cable service to the subscribers without the intervention of any LCO, would be regarded as the 'proprietors' under Section 7(1) and would be liable to collect and pay the entertainment tax to the Government. However, where the MSOs provide the service through the LCOs, the individual LCOs having their own subscriber networks, would be regarded as the proprietors in respect of their individual networks and would be liable to collect the entertainment tax and pay the same to the Government." 13. ....
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.... (ii) transmits such signal to a sub-cable operator, who in turn provides cable service for exhibition of such performance, film or programme to the customers, such owner or person shall be liable to pay tax from the month in which he exhibits such performance, film or programme or transmits such signal to a sub-cable operator on the basis of his monthly gross receipt at such rate, not exceeding twenty five per centum of the monthly gross receipt, as may be specified by the State Government by notification published in the Official Gazette." 38. It will be seen that the expression 'cable operator' has been referred to in the said provision. 'Cable operator' was, under the West Bengal act, defined to mean any person who provides cable service 'directly to customers or transmits signals to a sub-cable operator through a cable television network and otherwise controls or is responsible for the management and operation of a cable television network". It is, therefore, clear that the 'cable operator' referred to in the West Bengal Act, which is sought to be equated to an 'MSO' under the said Act, was entirely different. Under the West Beng....
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....e such claim as to who offered admission to entertainment, so as to recover tax from it. In the absence of any such factual plea taken, the petitioner cannot dispute its liability under the second proviso to Section 3(I) of the Act. Moreover, in the absence of specific details, the authorities were justified in treating the petitioner to have offered admission to entertainment to 49012 STBs directly or through associate etc. This, in my opinion, would be the reasonable construction of section 3(1) read with second proviso. 17. In the facts of the present case, I find that the petitioner has, at no stage, furnished details of the local cable operator, which according to it, had offered admission to entertainment. Petitioner was expected to furnish details of the total STBs installed, number of STBs for which subscription was directly realized by it or through its associates, agents and franchisees as well as details of those connections, which were offered through local cable operators. It is to be noticed that neither before the assessing authority, nor before the appellate authority or even before this Court, any details have been furnished of the local cable operators, who are....
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....t the tax directly or indirectly under the provisions of Uttar Pradesh Entertainment and Betting Tax Act, 1979? or b) Whether a Multi System Operator has any right or duty to collect the tax directly or indirectly with respect to those subscribers who has taken their connections through L.C.O. under any provision of law? or c) Whether a Multi System Operator can be held liable to pay the entertainment tax which has been collected by the L.C.O.'s? d) Whether two different set of Assessment procedure are permissible under Section 12 of the Uttar Pradesh Entertainment and Betting Tax Act, 1979 one observed by the Entertainment Authorities in Allahabad and other observed by Entertainment Authorities in entire Uttar Pradesh, excluding Allahabad?" 19. Even before this Court, submissions are advanced on behalf of the petitioner to the effect that the multi system operator is not liable to be taxed in respect of a cable connection offered by local cable operator. This argument, however, needs to be considered and examined only in a case where petitioner furnishes details of local cable operator, who are stated to have offered admission to....
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...., express or implied, in the name of or on behalf of the other Party nor shall either Party have any authority to act for or on behalf of the other Party to enter into any kind of contract undertaking or agreement or make a promise, warranty or representations with respect to the other Party." 21. It is suggested on behalf of the State that the cable operator is an associate and for any collection made by it also the petitioner alone is liable to be taxed. On the other hand, petitioner contends with reference to clause 24 of the agreement that the cable operator and petitioner have separate and distinct businesses and operate on principal to principal basis and not on agency basis. Learned counsels have also referred to certain decisions as to in what manner the clauses of affiliation agreement have to be read. These arguments, however, need not be examined in the absence of details furnished by the petitioner of the cable connections provided by the cable operators. The initial burden to pay tax is upon the multi system operator and such responsibility could be shifted upon a cable operator only when details are furnished by multi system operator of cable connections distribute....
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....nd provides cable service for exhibition of performance, film or any programme to the customers; (e) ''gross receipt', in relation to any month or part thereof, shall mean the aggregate of amounts received or receivable by an owner, or a person for the time being in possession, of any electrical, electronic or mechanical device who exhibits any performance, film or any other programme through cable television network directly to customers or who transmits the signal for exhibition of any performance, film or any other programme telecast to a sub-cable operator." 24. A dispute was raised as to whether the cable operator, which is a multi system operator, could be taxed for the cable connections provided by sub cable operator. Para 39 to 44, 52 & 53 of the judgment in State of West Bengal vs. Purvi Communication (P) Ltd. (supra) is reproduced:- "39. In the tax matters, the State Legislature is free, if it has legislative competence, to choose the persons from whom the tax levied on entertainments is to be collected. In other words, what are taxed are the entertainments, which is very much within the ambit of Entry 62 of List II of the Seventh Schedule....
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....82 Act does not interfere with the fundamental rights guaranteed under Article 19(1)(g) of the Constitution nor is violative of Article 19(1)(g). 41. We also see no substance in the submission that the impugned legislation impinges on the field occupied by the Central legislation. The aforesaid Central legislation has been enacted to regulate the operation of cable television network in the country and matters connected therewith or incidental thereto whereas the State legislation is for levy of entertainment tax on entertainment within the legislative field exclusively assigned to the State Legislature under Entry 62 of List II of the Seventh Schedule of the Constitution. Thus the objects sought to be achieved by two different Acts enacted under two different legislative fields exclusively assigned to the respective legislatures are entirely distinct and separate. The Cable Television Networks (Regulation) Act, 1995 of the Union Legislature does not denude the State Legislature of the power of levying entertainment tax on entertainment. 42. It is thus clear that the cable operator, Respondent 1 is the exhibitor in this case and also the provider of the entertainm....
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....e 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 the consumer has been provided by the sub-cable operator, but that fact alone by itself cannot make the sub-cable operator, the only exhibitor or the giver, of the entertainment. In a world of indirect links between individuals made possible by the electronic age, the indirect meeting between the cable operator and the consumer through a technical link has been made possible. 44. Sub-section (4-a) of Section 4-A of the Act recognises the reality that entertainment is possible through such contact. Clause (i) of sub-section (4-a) speaks of a situation where the cable operator "exhibits directly". Clause (ii) speaks of the situation where the cable operator does not exhibit directly, but transmits the signals to the sub-cable operator. Significantly, the clause does not say that the sub-cable operator exhibits, it rather says that the sub-cable operato....