NAGARATHNA, J.

1. Bird’s Eye View of the Controversy: ................................................ 6

2. Facts in brief: ................................................................................. 8

3. Writ Petitions filed before this Court: ........................................... 24 a. W.P. (C) No. 699/2014:................................................................ 24 b. W.P. (C) No.748/2015: ................................................................. 26

4. Submissions: ................................................................................ 28 a. Submissions on behalf of Appellants: ........................................ 28 b. Submissions of Respondent-States: ............................................ 51 i. State of West Bengal: ............................................................... 51 ii. State of Uttar Pradesh: ........................................................... 53 iii. State of Odisha: ..................................................................... 54 iv. State of Tamil Nadu: .............................................................. 62 v. State of Rajasthan: ................................................................. 70 vi. State of Punjab: ...................................................................... 71 vii. State of Nagaland: ................................................................ 71 viii. State of Andhra Pradesh: ..................................................... 72 Page 3 of 321 ix. Union of India: ....................................................................... 72 c. Reply Arguments: ....................................................................... 73

5. Points for Consideration: .............................................................. 73

6. Legal Framework: ........................................................................ 75 a. Relevant Entries of the Seventh Schedule of the Constitution: .. 77 b. Finance Act, 1994 with Relevant Amendments: ......................... 78 c. Relevant Provisions of the State Enactments: ............................ 91 i. Assam Amusements and Betting Tax Act, 1939 : ...................... 91 ii. Delhi Entertainments and Betting Tax Act, 1996 : .................. 94 iii. Gujarat Entertainments Tax Act, 1977 : ................................. 96 iv. Jharkhand Entertainment Tax Act, 2012 : ........................... 104 v. Kerala Tax on Luxuries Act, 1976 : ........................................ 108 vi. Orissa Entertainment Tax Act, 2006 : ................................... 117 vii. Punjab Entertainment Duty Act, 1955 : ................................ 120 viii. Rajasthan Entertainments and Advertisements Tax Act, 1957 :

7. Interpretation of Entries of the Lists of the Seventh Schedule of the Constitution: .................................................................................. 142

8. State of Karnataka vs. State of Meghalaya : ............................... 157

9. Meaning and Scope of the expression “Luxuries, Entertainments and Amusements” and Legislative Competence of State Legislatures to impose Entertainment Tax: ............................................................ 162 a. Luxuries: ................................................................................. 162 b. Entertainments and Amusements: ........................................... 168 c. Amusement: ............................................................................. 171

10. Parameters of Taxation: ........................................................... 180

11. Relevant case law: .................................................................... 184 a. Suresh: .................................................................................... 184 b. Vasant Madhav Patwardhan: ................................................... 194

12. Geeta Enterprises vs. Purvi Communication: ............................ 195

13. “Aspect Theory” or Aspect Doctrine: A Discussion .................... 217 Page 4 of 321

14. Criticism of its Use in Indian Context: ...................................... 219

15. Usage of Aspect Theory in the Indian Context: ......................... 222

16. Aspect Theory: Its Extent and Scope in India: .......................... 246

17. Application of Aspect Theory to the Case at hand: ................... 256

18. Modus Operandi of the Assessees and their aspects: ................ 260

19. Allahabad High Court’s Ruling on retrospective operation of the Amendment: ................................................................................... 265

20. State of Kerala vs. Asianet : ...................................................... 277 a. Submissions:............................................................................ 282 b. Judgments relied upon by State of Kerala: .............................. 283

21. Jharkhand High Court’s Ruling: .............................................. 293

22. Summary of Discussion and Conclusions: ................................ 296 a. Constitutional Scheme regarding distribution of Legislative Powers: ........................................................................................ 298 b. Service Tax: ............................................................................. 303 c. Tax on Luxuries: Entertainments & Amusements .................... 305 d. Parameters of Taxation under State Enactments: ................... 307 e. Geeta Enterprises and Purvi Communications:......................... 308 f. Aspect Theory: .......................................................................... 310 Leave granted in Special Leave Petition (Civil) No.9025 of 2023.

1.1 Since common questions of law and facts arise in these civil appeals and writ petitions, they have been heard together and are being disposed of by this common judgment.

1.2 The Civil Appeals arise from the judgments of the High Courts of Allahabad, Delhi, Gauhati, Gujarat, Jharkhand, Kerala, Page 5 of 321 Madras, Orissa, Punjab & Haryana, Rajasthan and Uttarakhand while two writ petitions have been filed before this Court under Article 32 of the Constitution by M/s Tata Play & Another and M/s Tata Play Ltd.

Bird’s Eye View of the Controversy:

2. The assessees have filed these appeals assailing the provisions of the respective State Acts under which tax on entertainment has charged on them on the premise that their activity is relatable to the field of entertainment as envisaged under Entry 62 – List II of the Seventh Schedule to the Constitution. It is their contention that they are not liable to pay entertainment tax (or luxury tax) under the respective provisions of the State enactments. It is further case of the assessee that they are engaged in broadcasting of signals etc. through television channels to the subscribers of those channels hence, possibly they are liable to pay service tax to the Central Government under Entry 97 – List I of the Seventh Schedule of the Constitution. There are however two writ petitions filed by certain assessees who have also ventilated their grievance that they are not liable to pay service tax as well. The question whether the appellants-assessees are liable to pay Page 6 of 321 entertainment tax under the provisions of the respective State enactments which are relatable to Entry 62 – List II of the Seventh Schedule of the Constitution and are also liable to pay service tax under the provisions of the Finance Act, 1994 as amended from time to time as a provider of a taxable service namely broadcasting service within the scope and ambit of Entry 97 – List I which is a residuary entry for the relevant purpose of assessment is the moot question which arises in these appeals.

2.1 The State of Kerala being aggrieved by the striking down of the sub-section (iv) of proviso to Section 4 under which the cable operators who have less than 7,500 connections are being exempt from payment of entertainment tax and whereas those who have over and above 7,500 connections are liable to pay the same tax being discriminatory in nature and being strike down by the Kerala High Court is questioned by the State of Kerala in its appeal. While considering the controversy between the parties, the doctrine of pith and substance in interpreting the entries of the Seventh Schedule of the Constitution as well as the aspect theory as referred to by the learned senior counsel and learned counsel who have appeared for the respective parties shall be dealt with. Page 7 of 321 2.2 Since the fields of legislation are in the Seventh Schedule to the Constitution of India and would be referred to during the course of discussion primarily in List I and List II (Union List and State List respectively) in these cases, it shall be understood that any reference to these Lists is only with reference to the Seventh Schedule to the Constitution of India.

Facts in brief:

3. For the sake of convenience, some of the relevant facts are delineated in the form of a table which is as under:

Arising out of Asianet Satellite 28.06.2012 SLP(C) No. Communications Ltd.

2. C.A. No. Tata Sky Limited Uttarakhand 1629/2020 Versus (Uttar Pradesh Arising out of State of Uttarakhand Entertainment and SLP(C) No. 26.07.2010 Betting Tax Act, 1173/2011 1979) (Amendment) Act, 2009

3. C.A. Nos. 1765- M/s. Tata Sky Ltd. Rajasthan 1766/2020 Versus Entertainments & Arising out of State of Rajasthan Advertisements SLP(C) Nos. Tax Act, 1957 and 19.08.2014 34237 - Rajasthan 34238/2014 Entertainments & Advertisements Tax Rules, 1957 Page 8 of 321 Impugned Name of S.No. Case No. Cause Title order dated enactment

4. C.A. No. Sun Direct TV Pvt. Gujarat 1531/2020 Ltd. Entertainment Tax Arising out of Versus (Amendment) Act, SLP(C) No. State of Gujarat 2009 and Gujarat 17300/2015 Entertainment Tax 12.03.2015 (Exhibition by means of Direct-to-

Appeals have been filed by the assessees while Civil Appeal No. 9301 of 2013 has been filed by the State of Kerala assailing the judgment of the said High Court dated 28.06.2012. 3.2 The Civil Appeals have been filed by the assessees assailing the orders passed by the High Courts referred to above dismissing the writ petitions while the State of Kerala has filed its appeal being aggrieved by some of the findings arrived at by the Kerala High Court in the context of Article 14 of the Constitution vis-à-vis the plea regarding discrimination raised by the respondents in the said Appeal.

3.3 The bird’s eye view of the orders and judgements passed by the Eleven High Courts referred to above can be gleaned as under: Page 17 of 321

Relying on the judgment of this Court in State of West Bengal vs. Purvi Communication Pvt. Ltd. , (2005) 3 SCC 711 (“Purvi Communication”), it was observed that the activity carried on by petitioners therein was not different from that carried out by cable operators in Purvi Communication. To explain the distinctions between the imposition of service tax and entertainments tax the High Court noted that the ‘incidence’ of service tax is on the license agreement obtained from the Ministry of Information and Broadcasting whereas the ‘incidence’ for the levy of entertainment tax is based on the individual contracts executed by the petitioner with its customers.

3.3.2 Similarly, the High Court of Punjab and Haryana High Court in the impugned judgment dated 25.10.2010 held that the Page 18 of 321 levy of entertainment duty falls under Entry 62 - List II which operates in a completely different field from Entry 92C - List I. Affirming the application of aspect theory to the present facts, it was observed that levies of service tax and entertainment tax can co-exist and can be harmonized as they concern different aspects. Therefore, the High Court upheld the vires of the Punjab Entertainment Duty Act, 1955 , as amended in 2010, which levied entertainment duty on DTH services and dismissed the petition. 3.3.3 The impugned judgment dated 05.09.2011 of the Delhi High Court passed in Bharti Telemedia Ltd. vs. Government of NCT of Delhi, W.P.(C) No. 4935/2011 applied aspects theory to the facts in hand and held that the State legislature is competent to levy an entertainment tax on all payments for admission through DTH. It was observed that the transaction in question has an aspect of service which is amenable to service tax and an aspect of entertainment which is amenable to entertainment tax. The writ petitions were dismissed and challenge to Section 7 of the Delhi Entertainments and Betting Tax Act, 1996 was rejected. Page 19 of 321 3.3.4 Subsequently, Gauhati High Court at Guwahati vide impugned judgment dated 22.02.2012 dismissed the petitions challenging the relevant provisions of Assam Amusement and Betting Tax Act, 1939 in terms of the judgments of the Uttarakhand High Court dated 26.07.2010 and Punjab and Haryana High Court dated 25.10.2010. The Gauhati High Court was of the view that the issues raised were already covered by the aforesaid judgments. 3.3.5 By way of impugned order dated 24.04.2012, the High Court of Orissa at Cuttack dismissed the writ petition being M/s. Tata Sky Ltd. vs. State of Orissa, Writ Petition (C) No. 8966 of 2011, and held that the aforesaid decision of the Punjab and Haryana High Court dated 25.10.2010 was squarely applicable to the facts before it.

3.3.6 The High Court of Judicature at Allahabad also dismissed the writ petition preferred before it vide impugned judgment dated 20.07.2012. The High Court thought it fit to respect the broad latitude given to legislature in fiscal legislation and thereby rejected the argument that the rate of entertainment was discriminatory in comparison with cable operators. It also agreed with the findings Page 20 of 321 of the Delhi High Court on the application of aspect theory. In the present batch of petitions, subsequent orders of the Allahabad High Court dated 09.04.2018, 11.04.2019 and 19.04.2018 are also challenged. These orders which were passed in terms of the impugned judgment dated 20.07.2012 are also challenged. 3.3.7 On 19.10.2012, the High Court of Judicature at Madras vide its order and judgment impugned herein held, in principle, that there could be a levy of entertainment tax on entertainment received through DTH services and the pith and substance of the levy contemplated under Entry 62 - List II is a levy on ‘entertainment’ in contradistinction to service tax levy on providing of service. The High Court also rejected the argument that Entry 62 - List II only refers to public entertainment and not entertainment through DTH vis-à-vis public entertainment. However, in the specific facts and circumstances, the High Court also held that the impugned charging provision i.e. Section 4-I of the Tamil Nadu Entertainments Tax Act, 1939 is inadequate due to no explicitly mention of the chargeable event and incidence of tax. Therefore, the writ petitions challenging the levy of entertainment tax were allowed. In so far as the matters arising Page 21 of 321 from Madras High Court are concerned, the questions with regard to legislative competence under Entry 62 – List I and whether DTH services were exclusively within Entry 92C/97 – List I are considered in these appeals. Further, the correctness of the findings of the High Court with regard to the charging section being defective is assailed by the State of Tamil Nadu in separate appeals which are not part of this batch of appeals.

3.3.8 The High Court of Jharkhand at Ranchi vide impugned judgment dated 30.01.2014 held that the Jharkhand Entertainment Tax Act, 2012 levying tax on “entertainment” through DTH, in pith and substance, is on entertainment which falls under Entry 62 - List II. According to the High Court, the aforesaid levy is distinguished from tax on “broadcasting service” under Entry 62 - List II. Having found the State Legislature competent to levy such “entertainment tax” the High Court dismissed all the writ petitions.

3.3.9 Impugned order dated 19.08.2014 passed by Rajasthan High Court conducted a survey of the extant judgments of different High Courts on the issues raised and of Purvi Communication. Page 22 of 321 Finally, the High Court dismissed all three writ petitions by way of the impugned order.

3.3.10 Soon thereafter, the High Court of Gujarat at Ahmedabad by way of impugned judgment dismissed the challenge to the Gujarat Entertainment Tax (Exhibition by means of DTH Broadcasting) Rules, 2010 for similar reasons as other High Courts. The Gujarat High Court relied on Aspect Theory to dissect the two taxable events herein, firstly, the service of enabling flow of content and secondly, entertainment from content. 3.3.11 Finally, vide Impugned judgment dated 28.06.2012, the Kerala High Court allowed WP(C) No.33966 of 2006 (R) on the ground that the provisions of the impugned Act were discriminatory inasmuch as they authorized levy and collection of luxury tax on cable TV operators including petitioners only with connections of 7500 or above as discriminatory. According to the High Court, there could be no reasonable classification between cable TV operators with connections below 7500 and cable TV operators with connections above 7500 with reference to object of legislation.

Page 23 of 321 Writ Petitions filed before this Court:

organization, the State of Telangana adopted the aforementioned Act. The petitioner’s principal contention is that the petitioner cannot be burdened with imposition of ‘service tax’ and ‘entertainment tax’ on the same taxable event i.e. ‘transmission of signals’. It is also contended that the petitioner as a DTH operator does not fall within the ambit of a ‘Master Cable Operator’ within Page 26 of 321 the meaning of the state enactment and therefore no entertainment tax can be levied on the petitioner’s activity. Furthermore, it is argued that the State of Telangana cannot seek to levy Entertainment Tax for the period prior to the existence of the State of Telangana especially for the areas which now form part of the Andhra Pradesh. The prayers sought for in this writ petition read as under:

4. We have heard learned senior counsel and learned counsel appearing for the respective assessees/appellants herein and learned senior counsel and learned counsel for the respective State as well as learned senior counsel appearing for the Union of India at length and on several dates.

Submissions on behalf of Appellants:

Therefore, it was contended that under Article 246(1) read with Page 30 of 321 Article 248 , only Parliament can levy tax on any kind of services after the insertion of Entry 92C.

4.5 Furthermore, Sri Datar highlighted that, even the Negative List under Section 66D of the Finance Act, 1994 in the service tax regime also specifically excludes tax on entertainments, which, according to him, means only public entertainments. Therefore, it was contended that entertainments in public places, theatres, etc. will be subject to State taxes; whereas the same cinema shown on a personal device or on DTH/Cable TV can be taxed only by the Centre as being part of broadcasting service. 4.6 It was also contended by Sri Datar that all the impugned enactments passed by States have merely included “DTH Services” or broadcasting service as part of the definition of entertainment and therefore the tax is levied on the service itself and not on the entertainment, particularly because the entire value is taxed. 4.7 On the application of aspect theory, learned senior counsel Sri Datar’s categorical argument was that “Double Aspect” theory only comes into play when both the Union and States have legislative competence. However, as Parliament in 2001 declared Page 31 of 321 its intent to tax DTH services, the aspect theory will have no application here.

4.8 Furthermore, on the relevancy of Purvi Communication to the matter at hand, it was pointed out by Sri Datar that while Parliament levied a tax in the year 2001, the judgment in Purvi Communication was pronounced in 2005 and has not noted the legislative history of entertainments and also did not refer to any entries pertaining to broadcasting or communications. 4.9 As an argument in the alternative, it was contended that even if the aspect theory was to apply, the impugned enactments are liable to be struck down as they ignore that in all composite transaction with different aspects, the legislature provides for bifurcation; however, herein the State legislatures have not provided for computation of the value attributable to entertainment. Only the States of Delhi and Assam have not levied entertainment tax on the gross consideration. It was contended that taxation on gross value is prohibited in law and the value of entertainment cannot be included in the value of service and vice- a-versa, vide Bharat Sanchar Nigam Limited vs. Union of Page 32 of 321 India , (2006) 3 SCC 1 (“Bharat Sanchar Nigam Limited”); K. Damodarasamy Naidu & Bros. vs. State of Tamil Nadu, (2000) 1 SCC 521.

4.10 In that context, it was also argued that where the services are availed by the weaker section of the society as well, an interpretation that avoids double taxation should be preferred. 4.11 Sri S.K. Bagaria, learned senior counsel appearing on behalf of the appellant in Civil Appeal No.1680 of 2020 and Writ Petition (Civil) No.699 of 2014, contended that the activity of the appellants herein is primarily broadcasting and has been treated and taxed as such under the statutes enacted by the Parliament. To show that the entire field of DTH services is occupied by the Central Government, Sri Bagaria drew our attention to the order dated 15.03.2001 of the Ministry of Information and Broadcasting, Government of India, by which DTH broadcasting was permitted in India.

4.12 According to Sri Bagaria, the fact that neither Entry 62 - List II nor any other entry in the State List explicitly mentions taxes on broadcasting shows that any and all taxes on broadcasting can Page 33 of 321 be imposed exclusively by the Parliament. Reliance in that regard was placed on Article 248(2) of the Constitution which provides for the Parliament to make any law imposing a tax not mentioned either in the Concurrent list or in the State list. Reliance was placed on the dictum of this Court in Association of Leasing & Financial Service Companies vs. Union of India, (2011) 2 SCC

352. 4.13 It was sought to be advanced that the question before this Court was not merely regarding the scope of taxes on entertainments but also about the conspicuous absence of taxes on broadcasting in Entry 62 - List II. In other words, the question is whether the expression ‘taxes on entertainments’ can be construed so broadly as to include taxes on broadcasting within it. The argument advanced was that even a reading of the entries in their widest amplitude would not enable the respondents to read into the entry a subject not covered by it. Succinctly stated, the argument of Sri Bagaria is that giving such a wide interpretation to Entry 62 - List II will nullify Parliament's power and legislative competence to levy taxes on broadcasting service as there can be no overlapping in the field of taxation.

Page 34 of 321 4.14 While Entry 31 - List I is undisputedly acknowledged as a regulatory entry, it was also argued that a construction as argued by the appellants will also be fully in line with the structure of the constitutional scheme, especially that of the Seventh Schedule. As broadcasting and other like forms of communication are covered by Entry 31 - List I and service tax on broadcasting is imposed under Entry 97 - List I, it was argued that there is a discernible constitutional scheme which necessitates the widest possible construction of Entry 31- List I. Additionally, it was advanced that the State List has no mention of broadcasting and other like forms of communication or taxes on broadcasting whereas State List does have regulatory entries in the form of Entry 33 – List II concerning sports, entertainments and amusements, and in the form of Entry 34 – List II for betting and gambling. Thus, Entry 62 – List II relates to taxes on luxuries, including taxes on entertainments, amusements, betting and gambling.

4.15 Sri Bagaria, learned senior counsel, placed significant reliance on the scheme of regulation and definition of broadcasting by Parliamentary statutes and orders. It was argued that the entire contour of broadcasting is a subject matter of parliamentary Page 35 of 321 enactments and, therefore, as all forms, types and varieties of broadcasting are covered by Parliamentary Law, it is evident that every facet of regulation of broadcasting is subsumed under Entry 31 – List I and the taxing power for broadcasting is under Entry 97 – List I. Highlighting the importance of broadcasting, it was also argued that broadcasting and other forms of communication are subjects of national importance which were intended by the constitutional framers to be regulated and taxed by the Central Government only. It is the case of the appellants that upholding such an interpretation of Entry 62 – List II would be to truly and correctly reconcile the same with other entries in List I. According to the appellants, the constitutional scheme is with respect to all forms, types and contents of broadcasting. The consequences and effects of broadcasting are not the same thing as legislative subject matter and, consequently, all forms and attributes of broadcasting also fall within List I. It is Sri Bagaria’s argument that tax is sought to be levied merely with reference to the entertainment - causing attribute of broadcasting and is, therefore, impermissible in law. 4.16 Reliance was placed on the judgment of this Court in Special Reference No.1 of 2001, In Re: Association of Natural Page 36 of 321 Gas vs. Union of India , (2004) 4 SCC 489, wherein the validity of Gujarat Gas (Regulation of Transmission, Supply and Distribution) Act, 2001 was challenged before the Constitution Bench. The issue before the Court was whether the State had legislative competence to make laws on natural gas and liquefied natural gas under Entry 25 – List II, “Gas and Gasworks” or whether the Parliament was competent to make laws under Entry 53 – List I, “Regulation and development of oilfields and mineral oil resources; petroleum and petroleum products; other liquids and substances declared by Parliament by law to be dangerously inflammable”. While the State of Gujarat argued that Entry 25 – List II must be given the widest possible interpretation and that it includes all types of gases especially when there are no words of limitation in the entry itself, this Court considered the consistent legislative practice in various legislations to hold that the term “petroleum” or “petroleum products” has been given a wide meaning to include within itself natural gas and other similar products. Sri Bagaria, learned senior counsel, contended that similarly, central legislations passed by Parliament over several decades included within “broadcasting” any form of Page 37 of 321 communication like signals, images, sounds of all kinds by transmission of electromagnetic waves irrespective of the contents and their natures or types. It was further contended that this reading will not make Entry 62 – List II a “useless lumber” because any or all forms of broadcasting was never intended to be covered by the expression “entertainments”.

4.17 It was categorically argued that the aspect theory has no application to the activity at hand as the activity of broadcasting is taxed by the Parliament and the state legislatures have no legislative competence to tax the same under Entry 62 - List II as tax on ‘entertainments’. Sri Bagaria would argue that even in Federation of Hotel & Restaurant Association of India vs. Union of India , (1989) 3 SCC 634 (“Federation of Hotel & Restaurant Association of India”) this Court rejected the challenge to the central statute impugned therein as it found that the subject matter of the impugned statute was in pith and substance a tax on expenditure and not on luxuries or sale of goods.

Page 38 of 321 4.18 Sri Gulati, learned senior advocate, argued that at a foundational level, far from carrying out any activity of entertainment, the appellant only acts as a conduit in the entire process of transmission of signals to the subscriber of television channels. In this context, he outlined that appellants perceive the nature of their activity as follows:

4.19 It was contended that the said activity is aptly described as only rendering broadcasting service which was earlier amenable to service tax under Section 65(105)(zk) of the Finance Act, 1994 and was specifically expanded in 2005 to include DTH signals. That from the year 2007 onwards, the appellant was discharging service tax on the entire monthly subscription charges under ‘broadcasting services’ without charging any additional consideration for set-top boxes and dish antenna. It was argued Page 39 of 321 that, in substance, this position continued even after the Negative List regime was brought about in 2012.

4.20 Sri Gulati highlighted that States have enacted statutes under Entry 62 – List II intending to tax the very same activity as that of providing “broadcasting service”, which is already amenable to service tax imposed by the Parliament. According to Sri Gulati, the provisions of various State enactments levying Entertainment tax can be categorized as follows:

4.23 In the same vein, reliance was placed on Godfrey Phillips to contend that the word ‘entertainments’ contemplates a tax on ‘activities’ of entertainments and not on any person being entertained or receiving entertainment per se. As no entertainment is inherently embedded in the activity conducted by appellants, namely, broadcasting service, there can be no levy of entertainment tax on them.

Page 41 of 321 4.24 It was also pressed that the position of law permits tax under Entry 62 - List II only on the act of entertaining and not on the consequence of an activity being entertainment vide Western India Theatres vs. Cantonment Board, Poona , 1959 Supp (2) SCR 63 (“Western India Theatres”). Highlighting the multitude of content transmitted by appellants, it was advanced that the activity of appellants cannot be seen as providing entertainment insofar as informational and educational shows, news, etc. as these may not have any element of entertainment at all. 4.25 Another line of argument of appellants advanced before us relates to a distinction between public entertainment and private entertainment. By way of analogy to cinema theaters, it was contended that mere provision of DTH services does not constitute a ticket “for admission to an entertainment”/or provision of “entertainment”. It was also contended that for an entertainment to be taxed as such, it should be open to public where members are invited. That is to say, Entry 62 – List II is restricted to entertainments of a public color. – vide Geeta Enterprises vs. State of Uttar Pradesh , (1983) 4 SCC 202 (“Geeta Enterprises”). However, as DTH service is provided to a subscriber Page 42 of 321 in a private place, the appellants contended that the aspect of providing DTH service levy of entertainment tax is constitutionally impermissible. According to Sri Gulati, learned senior counsel, the words appearing alongside ‘entertainments’ in Entry 62 – List II must also be taken aid of to interpret the entry as having a public colour. It was argued that the juxtaposition of amusements, betting and gambling within one entry indicates that the tax contemplated is on establishments providing entertainment activities. Similarly, it was highlighted that the taxable event in various state legislations is the “admission for an entertainment” and not the consequence of entertainment.

4.26 The next line of contention taken by the appellants is that there is no overlap in taxing entries and that it is settled law that taxing entries must be construed with clarity and precision as to maintain exclusivity. - Commissioner of Central Excise and Customs, Kerala vs. Larsen and Toubro Ltd. , ( 2016) 1 SCC 170 and Hoechst Pharmaceuticals Ltd. vs. State of Bihar , (1983) 4 SCC 45 (“Hoechst Pharmaceuticals”).

Page 43 of 321 4.27 On the question of applicability of aspect theory, which has been relied on by various High Courts, the appellants contend that the activity of broadcasting is only one indivisible transaction which cannot be artificially split into two taxable events and, therefore, the aspect theory would have no applicability here as splitting is permitted only when the activity represents two distinct and separate contracts which are discernible as such. - Bharat Sanchar Nigam Limited.

4.28 In substance, the contention of the appellants was that the provision of providing DTH service is only one taxable event which cannot be split into various aspects to become amenable to taxation as both a broadcasting service and as entertainments. Reliance was also placed on the fact that the appellants are mandated to avail license granted under Section 4 of the Indian Telegraph Act, 1885 for providing telecommunication services. It was also highlighted that this Court in Bharat Sanchar Nigam Limited observed that the license under Section 4 of the Indian Telegraph Act is for providing telecommunication service and not for supply of any goods or transfer of right to use any goods. In furtherance of the same, it was noted by this Court that the Page 44 of 321 integrity of the telecommunication service or license would therefore be mutilated if it were to be broken down into pieces to be taxed as supply of goods or transfer of right to use goods. 4.29 Sri Gulati, learned senior counsel, furthermore argued that there being no divisible event, the correct test to ascertain the true nature of the activity herein is the dominant nature test. Having argued vehemently that the dominant intention of the appellant is to act only as a conduit for receipt and transmission of broadcasting signals, he highlighted that the aspect theory will be of no avail to the States to entrench upon the Union List and tax services by including the cost of such service in the value of the goods, vide Bharat Sanchar Nigam Limited; Imagic Creative (P) Ltd. vs. CCT, (2008) 2 SCC 614 (“Imagic Creative”); Larsen and Toubro Limited vs. State of Karnataka , (2014) 1 SCC 708. 4.30 Sri Gulati took us through the origin of the aspect theory in the Canadian jurisprudence whilst highlighting at the outset a significant distinction between the Canadian and Indian jurisprudence that must be borne in mind. In Lyle Francis Smith vs. Her Majesty the Queen, (1960) SCR 776, and in several Page 45 of 321 decisions since then, it has been observed by the Supreme Court of Canada that within the Canadian constitutional scheme, an overlap is inevitable between the subjects outlining the areas of legislations to be legislated on by the Parliament of Canada and provincial legislatures due to the general wording of the subjects under Sections 91 and 92 of the British North America Act, 1867 respectively. However, it is settled law that in India, there is no overlap between the taxation entries in List I and List II. It was highlighted that the double aspect doctrine has been developed to resolve these situations of inevitable overlap and has been applied to allow both federal and provincial regulation where powers overlap. It was contended that the doctrine has, however, never been allowed to enable the dominion and provincial legislatures to separately tax two aspects of the same transaction. It was therefore contented that any transplantation of the doctrine to the Indian Constitution must be tempered and exercised with caution given that in the Indian constitutional scheme, there cannot be any overlap in respect to the entries pertaining to taxation. 4.31 Furthermore, it was contended that the true nature of the activity of DTH services must be ascertained while keeping in mind Page 46 of 321 that the DTH operator has no control over the content that is broadcast or received. It was contended that as the activity would continue to be a service even if no entertainment value is transmitted, it must be held that the true nature of the activity is predominantly that of a broadcasting service. It was repeatedly and vehemently argued on behalf of appellants that any element of entertainment is purely incidental to the provision of service. 4.32 Sri Gulati further argued that the pith and substance of the state legislations, impugned herein, is in the nature of a broadcasting service. This argument links to the foundational argument that the activity of providing broadcasting services is not in the nature of entertainment, and therefore, the levy imposed on purported entertainment isn't different from service on which service tax is levied by the central government. It was contended that states cannot simply deem the whole activity undertaken by appellant as ‘entertainment’ which in fact is, fundamentally, a broadcasting service.

4.33 The argument further advanced on behalf of the appellants was that there is no machinery to exclude the value of service from Page 47 of 321 the value of entertainment. This was argued as the impugned legislations, except those of the States of Delhi, Gujarat, and Assam, do not exclude the value of service from the value of entertainment before levying entertainment tax. According to the appellants, it is impermissible to levy entertainment tax on the value of the gross amount received by the appellants from its subscribers without segregating the value of service from the value of entertainment. In substance, the contention of the appellant was that in the absence of any machinery to compute the measure of tax for the purpose of levy of entertainment tax, the charge of entertainment tax itself would fall, vide Commissioner of Income Tax, Bangalore vs. B.C. Srinivasa Setty , (1981) 2 SCC 460. 4.34 Notably, a three-judge bench of this Court in Purvi Communication has already found that entertainment tax was leviable against cable operators. However, learned senior counsel Sri K.K. Venugopal argued that the decision of this Court in Purvi Communication failed to consider the tests laid down in Geeta Enterprises and to that extent is per incuriam and sub silentio. Appellants also contended that the decision in Purvi Communication is distinguishable as that case was not concerned Page 48 of 321 with attempts of both Central Government and State Governments to levy a tax on the same activity but instead dealt with the conflict between Entry 62 – List II and Entry 31 – List I i.e. between a taxing entry and a regulatory entry, whereas the conflict herein is between two taxing entries being Entry 97 – List I and Entry 62 – List II. 4.35 The appellants also contended that if the State legislatures are held competent to levy entertainment tax under Entry 62 – List II, then the taxable event would fall within the exclusive jurisdiction of the State legislature and consequently the Central Government would lose competence to levy service tax under Entry 97 – List I. 4.36 Without prejudice to the foregoing arguments, learned senior counsel appearing for the appellants argued that the impugned legislations promulgated by the states of Tamil Nadu, Odisha, Assam and Gujarat fail to provide for a clear and unambiguous taxable event as they only deem the operations of DTH operators as entertainment. Therefore, it was contended that these legislations do not satisfy the test laid down by this Court in Govind Saran Ganga Saran vs. CST, 1985 Supp SCC 205 Page 49 of 321 (“Govind Saran Ganga Saran”) and must be held to be unconstitutional. As only the Madras High Court accepted this argument, learned counsel for the appellants contended that the impugned judgments arising out of the High Courts including Orissa, Gauhati and Gujarat are bad in law.

4.37 It was further contended that Section 3 of the Jharkhand Entertainment Tax Act, 2012, which is the charging section, merely provides a tax on entertainment and lacks any clear and unambiguous stipulation to tax entertainment through DTH. Therefore, in the absence of such express words in the charging section, there cannot be any levy of entertainment tax. It was also contended that the Notification dated 14.05.2012 issued by the State Government under Section 1(3) of the Jharkhand Entertainment Tax Act, 2012 appointing 27.04.2012 as the date of implementation of the Act suffers from the vice of imposing retrospective taxation in the absence of any express legislative provision providing for it.

4.38 Ms. Shirin Khajuria, learned senior counsel appearing on behalf of the subscribers, took us through the scheme of the Page 50 of 321 impugned Act promulgated by the State of Kerala and brought to our attention that there was a stay on the levy of luxury tax for the period 2006 to 2010 and therefore the tax has to be collected only if leviable and not otherwise.

Submissions of Respondent-States:

5. Sri Jaideep Gupta, learned senior counsel appearing for the State of West Bengal in W.P.(C) 699/2014, commenced his arguments by noting that the writ petitioners have not pressed the prayers challenging the constitutional validity of Section 65 (105)(zk) and Section 65(15) of the Finance Act, 1994. Further, arguing in support the constitutional validity of the entertainment tax imposed under the State enactment, he contended that there is no conflict between Entry 62 – List II and Entry 97 – List I. 5.1 According to learned senior counsel, this Court’s approach must be to first interpret Entry 62 – List I, followed by an examination of the scope of Entry 33 – List I. It was argued that the scope of Entry 62 – List II can be informed by the judgment of this Court in Western India Theatres wherein it was held that a Page 51 of 321 State imposition is on the activity of entertainment. In that case, it was on the happening of a show in a theater. Reliance was placed on the following paragraph from Western India Theatres:

State of Uttar Pradesh:

State of Odisha:

versa. It was for this reason that the judgment in Bharat Sanchar Nigam Limited held that value of services cannot be included in the value of goods. By way of analogy, it was contended that had it been the case that electromagnetic waves had also been deemed to be goods and there was an overlap of the entire consideration, only then would the judgment in Bharat Sanchar Nigam Limited be similar to the facts herein.

Page 61 of 321 5.19 It was also contended that the argument of splitting the consideration between services and entertainment is an indirect manner of contending that the entire subscription amount cannot form the measure of tax. It was argued that in case of a composite transaction including services and sale of goods, a measure for one is distinct from the other by virtue of there being two deemed separate transactions. However herein, as the employment of aspect theory as laid down in the Federation is justified, the full subscription amount can indeed constitute the measure for both taxes as the rational nexus between the levy and the measure is maintained. – vide Mineral Area Development Authority vs. Steel Authority of India , 2024 SCC OnLine SC 1796. State of Tamil Nadu:

Promulgated in 1939, the preamble to the Tamil Nadu Entertainments Tax Act, 1939 reflects that the Act was intended “to impose a tax on amusement and other entertainments in the Page 62 of 321 Province of Madras.” Vide Act No.XVII of 1949 w.e.f. 1st August 1949, the words “a tax” was substituted by “taxes” and by Madras Act No.V of 1958, the words “amusements and other entertainments” were substituted by the word “entertainments”. 5.21 Thus, as it stands today, the Tamil Nadu Entertainments Tax Act, 1939 is “an Act to impose taxes on entertainments in the State of Tamil Nadu”. It was shown that Section 3(4) of the Act, which defines “entertainment” was amended to levy tax on gross collection per show made by the theatres-touring, permanent and semi-permanent.

5.22 Of note is the charging section of the Act i.e., Section 4 which sought to tax entertainment provided through cinematograph exhibition in the theatres on payment for admission. The system of levy gradually underwent changes to pay a percentage on gross collection and based on theatre location. Pertinently, it was submitted that in the wake of new age medium of recreation on television screen through a VCR or cable television network, the legislature in its wisdom inserted Section 4-D to the Act w.e.f. 17.05.1984. The aforesaid Section was substituted by Page 63 of 321 Amendment Act 37 of 1994 with effect from 01.09.1994, which inserted a charging provision under Section 4-E to levy tax on entertainment through cable television at 40% of contribution or subscription or installation or connection charges or charges collected in any manner for television exhibition. Similarly, appropriate changes were made to the definition of “entertainment” under Section 3(4) of the Act to include cable TV and another source of entertainment. Thereafter, the State of Tamil Nadu, having taken note of further technological advancement in offering entertainment through DTH and through IPL matches, inserted section 4-I in the said Act to levy tax. Therefore, DTH service and cricket tournaments conducted by the IPL were brought within the definition of the term ‘entertainment’.

5.23 Aggrieved, several DTH service providers preferred Writ Petitions before Madras High Court challenging the levy of entertainment tax. By judgment dated 19.10.2012, the High Court accepted the contention of DTH service providers that the charging section was defective and the levy of entertainment tax is contrary to Article 14; however, the High Court held that the State Page 64 of 321 Legislature was competent to levy tax on the entertainment aspect of the DTH services.

5.24 Learned senior counsel submitted that while construing an entry in a List conferring legislative power, the widest possible construction according to their ordinary meaning must be given to the words used therein. – vide Navinchandra Mafatlal vs. Commissioner of Income-Tax, Bombay City , AIR 1955 SC 58. It was submitted that the most liberal and widest construction must be given to accommodate within an organic Constitution the changing meaning of the text in tune with an evolving society. In that context, it was submitted that in today’s society, it is pedantic to contend that the term ‘entertainment’ does not cover within its ambit DTH service providers. Furthermore, it was argued that merely because individuals can derive entertainment in their private space does not denude the public character of entertainment through DTH services. The facility of choosing the time, place, mode or content does not convert entertainment through DTH into private entertainment and therefore, the subject matter of tax is not a justifiable ground to read any limitation into this expression.

Page 65 of 321 5.25 Learned senior counsel vehemently argued that the theory of occupied field advanced by the appellants herein has already been rejected by this Court. Our attention was drawn to the judgment of Madras High Court dated 30.11.1994 in Tamil Nadu Cable TV Organisers vs. Government of Tamil Nadu, W.P. No. 16237/1994. Therein, Section 4-E of the State legislation which levied an entertainment tax on the entertainment aspect of service provided by cable operators was challenged in the aforementioned petition before the Madras High Court. Rejecting the challenge, it was held that there being nothing in Entry 62 – List II to warrant a restrictive meaning, the definition of entertainment would not be restricted to cinematographic exhibitions alone and would include other forms of entertainment as well. It was submitted that the challenge made therein was most similar to the challenge made here against Section 4-I of the same Act. As noted, the Madras High Court rejected the restricted interpretation of entertainments and rejected the contention based on the theory of occupied field as it found that in pith and substance the impugned legislation fell within Entry 62 - List II. Thereafter, an appeal was preferred before this Court by cable TV operators which was rejected in Suresh, Page 66 of 321 while observing that there was no reason as to why the entertainment aspect of the transaction could not be taxed. 5.26 It was further argued that in India, the subject of tax can be the person, thing or activity on which the tax is imposed and herein the subject of tax is the receiver of entertainment by subscription to DTH: Godfrey Phillips.

5.27 Sri Radhakrishnan referred to the distinct and different senses in which the words ‘levied’, ‘paid’ and ‘recoverable’ are used in Section 4-I of the Act. While the tax is ‘levied’ on entertainment, it is ‘paid’ on all payments for admission to an entertainment and it is ‘recovered’ by the proprietor and paid to the government. Sri Radhakrishnan also agreed that even if the DTH service provider only acts as a conduit between content providers and the subscribers, since it is clarified that the subject matter of the tax is the entertainment derived from the content, there is no scope for confusing the entertainment with the service of enabling the flow of content through the DTH system. It was also argued that there are two aspects of the DTH service; i.e. the service aspect and the entertainment aspect. The taxable event for the former being the Page 67 of 321 flow of content through satellites and for the latter being the entertainment derived from the subscription of the content. 5.28 It was also canvassed that the specific power of taxation within the legislative competence of State of Tamil Nadu cannot be fettered by the general power of regulation or the residuary power of taxation available to the Union Government under Entry 31 or even Entry 97 – List I. It was contended that this Court has already observed that legislative competence of the State to levy entertainment tax could not be fettered by the enactment of any regulatory enactment law, vide Purvi Communication. 5.29 It was therefore contended that the state’s specific power of taxation cannot be cut down by regulatory power of the Union. To assail any question of overlapping in the present case, learned senior counsel submitted that Entry 62 – List II operates in an entirely different sphere to that of Entry 92C or Entry 97 – List I. 5.30 It was further contended that a reading of Entry 33 – List II makes it evident that entertainment and amusement is a class by itself not subject to Entry 60 – List I. Although cinemas mentioned in Entry 33 – List II are made subject to Entry 60 – List I relating Page 68 of 321 to sanctioning of cinematographic films for exhibition, but other forms of entertainment qua which general power of regulation is given to the state are not made subject to any entries in List I. 5.31 It was reiterated that this Court has held that under the Indian Constitution, the scheme of division of taxing powers is not based on any criterion depending on the incidence of the tax. – Chhotabhai Jethabhai Patel and Co. vs. Union of India , AIR 1962 SC 1006. The importance of the doctrine of pith and substance in deciding the scope of legislation qua the entries in the three Lists was also emphasized. - MPV Sundararamier & Co. vs. State of Andhra Pradesh , AIR 1958 SC 468 (“MPV Sundararamier”). It was also contended that to decide the true nature and character of a particular levy with reference to legislative competence, the Court has to look into the pith and substance of the legislation as a whole. - All India Federation of Tax Practitioners. On an application of the aforesaid principles to the facts of these cases, the learned senior counsel concluded that taxes on DTH service is on a different subject when compared to taxes on entertainment as the pith and substance of the relevant state legislation is to tax the subject of entertainment. Page 69 of 321 5.32 Sri Radhakrishnan submitted that the question in Geeta Enterprises was limited to the interpretation of the word ‘entertainment’ as used in Section 2(3) of the United Provinces Entertainment and Betting Tax Act, 1937 and therefore non- consideration of the ratio of the said case does not make the judgment in Purvi Communication bad in law.

5.33 Additionally, it was also argued that DTH operators are not merely engaged as conduits in the service of broadcasting but also create their exclusive content and channels available to their subscribers.

State of Rajasthan:

State of Punjab:

State of Nagaland:

State of Andhra Pradesh:

Union of India:

Reply Arguments:

Points for Consideration:

6. Whether the judgments of the High Courts (Eleven High Courts) impugned in these cases would call for any interference and if so, to what extent?

6.1 Whether Purvi Communications has been correctly decided by this Court?

6.2 Whether the prayers sought for in the writ petitions are to be granted and if so, to what extent?

6.3 What order?

6.4 On 11.09.2024, learned senior counsel Ms. Nisha Bagchi submitted that in view of the dismissal of CA No.261/2013 and CA Page 73 of 321 Nos.1582-1583/2020 by this Court, prayers (a) and (b) in WP Nos.699/2014 and 748/2015 would not survive for consideration. By way of response, learned senior counsel Sri Bagaria has also conceded that the controversy in these writ petitions is essentially on the imposition of entertainment tax and therefore, prayer (a) in the writ petitions would not be pressed.

6.5 His submission is placed on record.

6.6 Learned senior counsel Ms. Bagchi also submitted that in the Civil Appeal which arises from the decision of the Kerala High Court dealing with luxury tax, there is no controversy with regard to the payment of service tax by appellants therein. 6.7 The said position is not disputed at the Bar. 6.8 In view of the aforesaid submissions, the issue regarding the payment of service tax on broadcasting service would be considered only in light of the issue whether the activity of the appellants herein is within the scope and ambit of Entry 62 – List II, namely, providing entertainment to the subscribers or receivers of entertainment by means of broadcasting through television Page 74 of 321 channels and the relevant technology applicable for providing entertainment through television to the subscribers. 6.9 In view of the fact that the correctness of the findings of the High Court of Madras with regard to the charging section of the State enactment being defective is assailed by the State of Tamil Nadu in separate appeals which are not part of this batch of appeals, the question of correctness or otherwise of the finding of the High Court does not come up for our consideration here. Legal Framework:

7. Before proceeding further, it is useful to refer to the relevant provisions of the Constitution, relevant entries of the Seventh Schedule of the Constitution and the relevant provisions of the State Act under considerations. We also would advert to the relevant provisions of the Finance Act, 1994 as amended from time to time having a bearing on the controversy in question. 7.1 The following provisions of the Constitution of India are adverted to as under:

246. Subject-matter of laws made by Parliament and by the Legislatures of States.- (1) Notwithstanding anything in clauses (2) and (3), Parliament has exclusive power to make laws with respect to any of the matters enumerated in List I in the Seventh Schedule (in this Constitution referred to as the “Union List”).

(2) Notwithstanding anything in clause (3), Parliament, and, subject to clause (1), the Legislature of any State also, have power to make laws with respect to any of the matters enumerated in List III in the Seventh Schedule (in this Constitution referred to as the “Concurrent List”). (3) Subject to clauses (1) and (2), the Legislature of any State has exclusive power to make laws for such State or any part thereof with respect to any of the matters enumerated in List II in the Seventh Schedule (in this Constitution referred to as the “State List”). (4) Parliament has power to make laws with respect to any matter for any part of the territory of India not included in a State notwithstanding that such matter is a matter enumerated in the State List.

248. Residuary powers of legislation.- (1) Subject to Article 246A , Parliament has exclusive power to make any law with respect to any matter not enumerated in the Concurrent List or State List.

(2) Such power shall include the power of making any law imposing a tax not mentioned in either of those Lists.

xxx Page 76 of 321

265. Taxes not to be imposed save by authority of law.—No tax shall be levied or collected except by authority of law.” Relevant Entries of the Seventh Schedule of the Constitution:

xxx 92C. Taxes on Services.

[Omitted by the Constitution (One Hundred and First Amendment) Act, 2016 , Section 17(a)(ii) (with effect from 16.09.2016). Prior to omission it read as aforementioned.] xxx

97. Any other matter not enumerated in List II or List III including any tax not mentioned in either of those Lists.

xxx List II – State List

33. Theatres and dramatic performances; cinemas subject to the provisions of entry 60 of List I; sports, entertainments and amusements.

xxx Page 77 of 321

62. Taxes on luxuries, including taxes on entertainments, amusements, betting and gambling.” Finance Act, 1994 with Relevant Amendments:

7.3.1 In view of the aforesaid definition reference has to be made to Section 2 (c) of the Prasar Bharti (Broadcasting Corporation of India) Act, 1990 (“Prasar Bharti Act, 1990”, for short), which define “broadcasting” as under:-

7.3.2 Section 65(63) of the Finance Act, 1994 (amended in 2001) defines "service tax" as under:

7.3.3 Section 65 (72) (zk) defines “taxable service” with regard to “broadcasting agency” as a “service provider” as under:

And the term "service provider" shall be construed accordingly;"

Thus, tax at the rate of five per cent of the value of taxable services was levied on a broadcasting agency (i.e. five per cent of the gross amount charged by the service provider). 7.3.5 The term "broadcasting" was re-defined under Section 65(14) of the Finance Act, 1994 by way of 2002 Amendment which reads as under:-

and in the case of a broadcasting agency or organization, having its head office situated in any place outside India, includes the activity of selling of time slots or obtaining sponsorships for broadcasting of any programme or collecting the broadcasting charges on behalf of the said agency or Page 80 of 321 organization, by its branch office or subsidiary or representative in India or any agent appointed in India or by any person who acts on its behalf in any manner;"

7.3.7 Section 65 (80) defines the term “service tax” by way of an amendment to the Finance Act, 1994 in the year 2002, which reads as under:-

7.3.8 Section 65 (90) (zk) again while defining "taxable services", it included therein a "broadcasting agency" as a "service provider". Section 65 (90) (zk) of the Finance Act, 2002 is reproduced hereunder:-

Explanation.- For the removal of doubts, it is hereby declared that so long as the radio or television programme broadcast is received in India and intended for listening or viewing, as the case may be, by the public, such service shall be a taxable service in relation to broadcasting, even if the encryption of the signals or beaming thereof through the satellite might have taken place outside India;

And the term "service provider" shall be construed accordingly;"

Page 82 of 321

7.3.10 A perusal of the provisions of the Finance Act, 2002 reveals, that as hitherto before (under the Finance Act 2001) service tax at the rate of five per cent of the value of taxable service was leviable on a service provider rendering broadcasting services (i.e. five per cent of the gross amount charged by the service provider) even under the Finance Act, 2002 .

7.3.11 Under the Finance Act, 2003 , the term "broadcasting" was re-defined through Section 65(15) , which is being extracted hereunder:-

Page 83 of 321

and in the case of a broadcasting agency or organization, having its head office situated in any place outside India, includes the activity of selling of time slots or obtaining sponsorships for broadcasting of any programme or collecting the broadcasting charges on behalf of the said agency or organization, by its branch office or subsidiary or representative in India or any agent appointed in India or by any person who acts on its behalf in any manner;"

Section 65 (95) aforesaid is being reproduced hereunder:-

7.3.14 Section 65 (105) (zk) of the Finance Act, 2003 again while defining the term 'taxable service", it included therein a "broadcasting agency" as a 'service provider". Section 65(105) (2k) aforesaid is being extracted hereunder:

Explanation.- For the removal of doubts, it is hereby declared that so long as the radio or television programme broadcast is received in India and intended for listening or viewing, as the case may be, by the public, such service shall be a taxable ser vice in relation to broadcasting, even if the encryption of signals or beaming thereof through the satellite might have taken place outside India;"

7.3.17 The provisions of the Finance Act, 2004 on the subject matter of the controversy in hand were identical to the ones incorporated under the Finance Act, 2002 , and as such, the relevant provisions of the Finance Act, 2004 are not being reproduced here.

7.3.18 Insofar as the Finance Act, 2005 is concerned, it re- defined the term "broadcasting" under Section 65(16) . Section 65(16) of the Finance Act, 2005 is being reproduced hereunder:- Page 87 of 321

and in the case of a broadcasting agency or organization, having its head office situated in any place outside India, includes the activity of selling of time slots or obtaining sponsorships for broadcasting of any programme or collecting the broadcasting charges or permitting the rights to receive any form of communication like sign, signal, writing, picture, image and sounds of all kinds by transmission of electro-magnetic waves through space or through cables, direct to home signals or by any other means to cable operator including multisystem operator or any other person on behalf of the said agency or organization, by its branch office or subsidiary or representative in India or any agent appointed in India or by any person who acts on its behalf in any manner;"

7.3.20 The term "service tax" retained the same definition as was assigned to it by the Finance Act, 2003 even for the Finance Act, 2005 . However, sub-clause (zk) as defined in the Finance Act, 2005 was given a different meaning and effect. In this behalf Section 65(105)(zk) of the Finance Act, 2005 is being reproduced hereunder:-

Page 89 of 321

Explanation.- For the removal of doubts, it is hereby declared that so long as the radio or television programme broadcast is received in India and intended for listening or viewing, as the case may be, by the public, such service shall be a taxable service in relation to broadcasting, even if the encryption of signals or beaming thereof through the satellite might have taken place outside India;

and the term "service provider" shall be construed accordingly;"

Page 90 of 321

cable operator through a cable television network otherwise controls or is responsible for the management and operation of a cable television network;

(b) "sub-cable operator" means a person other than any owner or person who is a cable operator referred to in this Explanation who, on the basis of an agreement, contract or any other agreement made between him and such cable operator, receives signal from such cable operator and provides cable service for exhibition of performance, film or any programme to the customers".

(3C) "cable television network" means any system consisting of a set of closed transmission paths and associated signal generation, control and distribution equipment designed to provide cable service for reception by multiple subscribers".

(3CC) "direct to home service" means a service for multi channel distribution of programmes direct to subscribers' premises by up-linking to a satellite system"; (4) "Entertainment" includes any exhibition, performance, amusement, game, sport, music, cultural and dramatic performances, entertainment by electronic devices and entertainment by direct to home service and cable television network or a series of exhibitions, performances, amusements, games, sports, music, cultural and dramatic performances, entertainment by electronic devices and entertainment by direct to home service and cable television network, to which persons are admitted for payment, and the continuity of which is either broken or unbroken as the case may be, or is only broken by such Page 92 of 321 intervals as are in the opinion of the State Government a normal or usual feature thereof.

xxx (8) 'Proprietor' in relation to any entertainment means the owner and shall also include manager, organiser and any person responsible for, or, for the time being, in charge of the management thereof;

xxx (10) "Subscriber" means a person who receives the signal of cable television network or of direct to home service at any place indicated by him without further transmitting to any other person;

Explanation- In case of hotels, each room or premise where signals of cable television network or of direct to home service are received shall be treated as a subscriber"

Delhi Entertainments and Betting Tax Act, 1996 :

residential place of subscriber's premises, directly to the satellite or otherwise.

(s) "subscriber" means a person who receives the signals of television network and value added services from multi-system operator or from cable operator or from direct-to-home (DTH) broadcasting service at a place indicated by him to the service provider, without further transmitting it to any other person; Explanation I: 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;

xxx Page 95 of 321

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, notified in this behalf, which shall be collected by the proprietor and paid to the Government in the manner prescribed.

8. Information before holding entertainment.-

xxx (2) No proprietor of a cable television network or video cinema or Direct-to-Home (DTH) shall provide entertainment unless he obtains permission from the Commissioner in the manner prescribed.” Gujarat Entertainments Tax Act, 1977 :

Explanation.- For the purpose of this clause and clause (g), “Ku Band” ordinarily means the 11.7 – 12.7 GHz (Giga Hertz) frequency band which splits into two segments, viz. the first having the frequency of 11.7 – 12.7 GHz, known as FSS (Fixed Satellite Service) and the other having the frequency of 12.2 – 12.7 GHz, known as BSS (Broadcasting Satellite Service), or it may have such other band width as may be approved by the Government of India from time to time;

2(e) ‘entertainment’ includes any exhibition, performance, amusement, game or sport to which persons are admitted for payment or in the case of television exhibition with the aid of any type of antenna with a cable network attached to it or cable television, for which persons are required to make payment by way of contribution or subscription or installation charges of connection charges or any other charges collected in any manner whatsoever. Explanation. - For the purpose of this clause, the expression “exhibition” includes any 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;

xxx 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;

Page 97 of 321

(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 payment for admission of a motor vehicle into the auditorium of a cinema known as Drive-in-Cinema;

(vii) any payment made by a person by way of contribution or subscription or installation charges or connection charges or any other charges collected in any manner whatsoever for television exhibition with the aid of any type of antenna with a cable network attached to it or cable television;

(viii) any payment made by a person to the proprietor of a Direct-To-Home (DTH) Broadcasting Service by way of contribution, subscription, installation charges or connection charges, or any other charges collected in any manner whatsoever for Direct-To-Home (DTH) Broadcasting Service with the aid of any type of set top box or any other instrument of like nature which connects television set at a residential or non-residential or any other place of connection-holder directly to the Satellite;” 2(gg) ‘place of entertainment’ includes a house, building, tent or any other place where the books of account, ticket books and other relevant records pertaining to the entertainment or pertaining to the management of providing cable connections from any type of antenna or cable television or pertaining to the management of providing Direct-To-Home (DTH) Broadcasting Service are kept or are believed to have been kept;” xxx Page 98 of 321 2(j) ‘proprietor’ in relation to any entertainment, includes the owner thereof, and any person –

(i) responsible for, or for the time being in charge of, the management thereof, or

(ii) connected in whatsoever manner with the organization of the entertainment for any duration, or

(iii) charged or entrusted or authorized with the work of admission to the entertainment, or (iii-a) a company registered under the Companies Act, 1956 , having license to provide Direct-To-Home (DTH) Broadcasting Service by the Government of India under section 4 of the Telegraph Act, 1885 and the Wireless Telegraphy Act, 1933 or;

(iv) responsible for, or for the time being in charge of, management of providing of maintaining or operating cable connection from any type of antenna or cable television;

Whether or not he has obtained license or Certificate of Registration, if any, for such entertainment under any law for the time being in force;

2(jj) ‘set top box’ means an apparatus connected to a television set at a residential or non-residential 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 connection- holder, of the charges collected in any manner whatsoever by the proprietor;

xxx 6C. Registration.- (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. Page 99 of 321 (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 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, 2009, carries on television exhibition with the aid of Direct-To-- Home (DTH) Broadcasting Service.

(3) Every proprietor providing an entertainment with the aid of any type of antenna or cable television or Direct-To- Home (DTH) Broadcasting Service shall apply in such form, in such manner and on payment of such fee as may be prescribed to the prescribed officer.

(4) If the prescribed officer is satisfied that the requirements of provisions of this Act and the rules made thereunder have been complied with, he shall issue a Certificate of Registration.

xxx 6E (1) Notwithstanding anything contained in section 3 , 4 , 6 , 6A or 6B or any other provisions of this Act, there shall be levied and paid, by the proprietor of every Direct-To- Home (DTH) Broadcasting Service, to the State Government, the entertainments tax, per television set which receives radio frequency signals for exhibition of films or moving pictures or series of pictures with the aid of a set top box or any other apparatus attached to it for securing transmission through Direct-To-Home (DTH) Broadcasting Service, a tax at the annual rate of Rs.200 per television set for which such proprietor has provided Direct-To-Home (DTH) Broadcasting Service Connection. Page 100 of 321 (2) Where the number of Direct-To-Home (DTH) connection holders increase in any month during the financial year, the proprietor shall be liable to pay the tax proportionately in the manner as may be prescribed.

(3) The tax leviable under this section shall be paid in advance in quarterly installment of one-fourth of the annual rate within such period and in such manner as may be prescribed.

Explanation. - For the purpose of this section, ‘quarter’ means a period of three months commencing on the 1st day of April, 1st day of July, 1st day of October or the 1st day of January of each year, and the term ‘quarterly’ shall be construed accordingly.” The relevant provision of Gujarat Entertainments Tax (Exhibitions by means of Direct-To-Home (DTH) Broadcasting Service) Rules, 2010 are as under:

Explanation. For the purpose of sub-rule (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 fulfilled, in the certificate.

5. Refusal to Grant Certificate.- The Commissioner shall have absolute discretion to refuse a Certificate of Registration for grounds to be recorded in writing for refusal of granting the Certificate of Registration. The Commissioner before refusing the Certificate shall afford to the proprietor an opportunity of being heard.

6. Fees.- The fees for a Certificate of Registration shall be rupees 10 lacs, the fees for renewal of Certificate of Registration shall be ten thousand and the fees for duplicate Certificate of Registration shall be rupees five thousand.

7. Security Deposits.- Every proprietor shall furnish as required under section 7 , security amount of rupee ten lacs in form of Demand Draft to the Commissioner or shall deposit the National Savings Certificate or furnish Bank Guarantee of a Nationalized Bank in favour of Government of Gujarat, Information and Broadcasting Department on obtaining Certificate of Registration.

11. Applicability of other Acts.- The proprietor shall comply with such of the provisions of the Electricity Act, 2003 (36 of 2003), the Wireless Technology Act, 1933 (17 of 1933), the Telegraph Act, 1885 (13 of 1885), Guidelines, Policies and Notifications issued by Government of India Page 102 of 321 from time to time and such other Acts and the rules made thereunder as are applicable to the Direct-to-Home (DTH) Broadcasting Services.

12. Free access or public servants on duty.- Free access to any place in respect of which a certificate is issued under these rules for Direct-to-Home (DTH) Broadcasting Service shall be given at all hours to the Commissioner or any officer authorized by the Commissioner, the Collector or any other officer as may be authorized by the State Government in the execution of their duties.

13. Receipt for payment.- The proprietor shall give a receipt to the connection holder for every payment and shall also furnish the connection number to such connection holder when he receives payment for installation charges or any other charges by whatsoever it may be called. A copy of the receipt shall be kept in the receipt book by the proprietor till the assessments is completed and thereafter for a period of one year.

14. Return.- (1) The returns under clause (b) of sub- section (1) of section 8 shall be furnished to the prescribed 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 Proforma-3, Proforma-4 and Proforma-5 along with challan within fifteen days of the completion of the respective quarter:

xxx Page 103 of 321

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.” Jharkhand Entertainment Tax Act, 2012 :

For the purposes of this clause -

The expression "exhibition" includes any 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 network as provided by the cable operator incidental to cable service(s);

Explanation. - For the purpose of this provision, exhibition shall include exhibitions in Multiplex Cinema Complex(s). The expression "game" includes video games which are played with the aid of machine which is operated electronically or mechanically or electro-mechanically for the purposes of entertainment or otherwise and; The expression "temporary amusement" means the amusement rides and games which are not provided on fairly permanent basis like in amusement park or meals or fair.

(n)"Entertainment Tax" means a tax levied on "entertainment" under this Act.

xxx 2(s) "Payment for entertainment" includes – xxx

(iv) any payment made by a person by way of contribution or subscription or installation or connection charges or valuable consideration or any other charge collected in any manner whatsoever for television exhibition with the aid of any type of antenna with a cable network attached to it or cable television network as provided by the cable operator; or Page 105 of 321

(v) any payment made by a person to the proprietor of a Direct to Home (DTH) service by way of contribution, subscription, installation or rent or security or activation charges or connection charges, or valuable consideration or any other charges collected in any manner whatsoever for Direct to Home (DTH) service with the aid of any type of set-top box(s) or any other instrument/equipment of like nature, or any other similar devices, which connects television set at a residential/hotels/clubs or non- residential place or a connection holder directly to the Satellite.

Explanation. - For the purposes or this sub-clause any expenditure incurred by any co-operative housing society, residential complexes as valuable consideration or by the management of any factory, hotels, lodge, bar, permit room pub, or by a person or group of persons, for the purchase of any type of antenna or any other apparatus equipments for securing transmission through the cable network of cable television attached to it, for its members, or for workers or customers or for himself or themselves, as the case may be, shall be deemed to be the payment made under this sub-clause for the television exhibition with the aid of any type of antenna with cable network attached to it or cable television network no DTH service provider.

3. Incidence of entertainment tax. - (1) Save as provided in sub- section (2), there shall be levied and paid to the State Government by an assessee: a tax on the entertainment at the rate(s) as specified in the notification issued under this Act.

Provided that the State Government may specify different rate or rates of entertainment tax in respect to different categories of the entertainments for the different specified periods and for different specified areas.

Provided further that the rate of entertainment tax shall not exceed thirty percent of the value of gross collection / admission charge(s) / subscription(s) / contribution(s) / Page 106 of 321 rent / security / sponsorship / activation charges or by any other valuable consideration(s) received or receivable for providing entertainment(s).

(2) Notwithstanding anything contained in sub-section (1), entertainment tax shall be levied in relation to cinematograph exhibition on the proprietor of an entertainment at compounded rate(s) as specified in the schedule.

Provided that the state Government may specify different rate or rates of tax in respect to the different specified areas and for different specified periods.

Provided further the State Government may specify different rates in relation to the separate units of Multiplex Cinema Complex, depending upon their respective sitting capacity.

4. Assesses to collect entertainment tax from persons admitted to entertainment. - Save as provided under sub-section (2) of Section 3 of this Act, every assessee shall be entitled to collect, from persons admitted to the entertainment(s), an amount equal to the entertainment tax payable in respect to the valuable consideration of tickets or complimentary tickets or the sponsorship amount.

5. Payment of tax. - Subject to the provisions of this Act and such rules as may be prescribed, entertainments tax shall be payable by every assessee for the following class of entertainments-

(i) For the cinematograph exhibition falling under sub- section (2) of Section 3 , before commencing of the week;

(ii) For the video exhibition falling under sub-section (2) of Section 3 read with serial number 2 of the schedule, before commencing of the week;

(iii) for the Multiplex Cinema Complex exhibition falling under sub-section (2) of Section 3 read with serial number 3 of the schedule, before commencing of the week; Page 107 of 321

(iv) for the sponsored programmes falling under clause (x) and (ad) of Section 2 , before commencement of such sponsored programmes

(v) for the cable operators, operating cable television network and Direct-to-Home Service Provider, and all other descriptions of entertainment falling under sub- section (2) of Section 3 read with serial number 4, 5 and 6 of the Schedule; by 7th day of the month after the expiry of the respective month.

Explanation. - If the specified date happens to be holiday, the next working day shall be treated to be the payment day.” Kerala Tax on Luxuries Act, 1976 :

recorded video cassettes or disc or both are played or replayed and the films or moving pictures or series of pictures which are viewed and hear on Television receiving set at a residential or a non residential place of a connection holder.

(g) “prescribed” means prescribed by rules made under this Act;

(h) “Proprietor” in relation to a hotel, house boat, hall auditorium, home stay, hospital Kalyanamandapam or place of like nature includes the person who for the time being is in charge of the management of such hotel, house boat, hall, auditorium home stay, hospital or kalyanamandapam or place of like nature as the case may be.

4. Levy and collection of luxury tax. – (1) Subject to the provisions of this Act, there shall be levied and collected a tax, hereinafter called the ‘luxury tax’ in respect of any luxury provided, -

(i) in a hotel, house boat, hall, auditorium or kalyanamandapam or including those attached to hotels, clubs, Kalyanamandapam and places of the like nature which are rented for accommodation for residence or used for conducting functions, whether public or private, exhibition;

(ii) by cable operators;

(iii) in a hospital; and

(iv) in a home stay Page 109 of 321 Provided that the sub-section shall not apply to halls and auditoriums located within the premises of ‘places of worship’ owned by such institutions;

Provided that the sub-section shall not apply to halls and auditoriums located within the premises of ‘places of worship’ owned by such institutions.

(2) Luxury tax shall be levied and collected, -

(d) in respect of a cable TV operator at the rate of rupees five per connection per month, and shall be collectable from the person enjoying the luxury:

xxx Page 110 of 321

5. Returns. – Every proprietor liable to pay luxury tax under this Act shall submit such return in such manner and within such period as may be prescribed.

xxx The Kerala Finance Act , 2006

3. Amendment of Act 32 of 1976.- In the Kerala Tax on Luxuries Act, 1976 (32 of 1976), -

(1) in Section 2 , -

(c) after clause (f), the following clause shall be inserted, namely:-

recorded video cassettes or disc or both are played or replayed and the films or moving pictures or series of pictures which are viewed and heard on Television receiving set at a residential or a non-residential place of a connection holder;";

xxx The Kerala Tax on Luxuries Rules, 1976

3. Filing of return. – (1) The return referred to in section 5 shall be xxx

(b) in Form 1A in the case of cable TV Operator;

xxx Page 111 of 321 The Kerala Tax on Luxuries Act, 1976 (Act 32 of 1976) (Incorporating Amendments up to the Finance Act, 2010 )

2. Definitions: - In this Act, unless the context otherwise requires: -

means, a company registered under the Companies Act, 1956 (Central Act 1 of 1956) having granted license to provide Direct-To-Home (DTH) Broadcasting Service by the Government of India under section 4 of the Telegraph Act, 1885(Central Act 13 of 1885) and Indian Wireless Telegraphy Act, 1933 (Central Act 17 of 1933) and providing such service within the State.

xxx Page 112 of 321 (ee) "luxury" means a commodity or service that ministers comfort or Pleasure:

recorded video cassettes or disc or both are played or replayed and the films or moving pictures or series of pictures which are viewed and heard on Television receiving set at a residential or a non-residential place of a connection holder;

xxx "(fd) "Luxury provided by Direct-To-Home (DTH) Broadcasting Service Provider" means any service by means of transmission of television signals and the films or moving pictures or series of pictures which are viewed and heard on television receiving set or other devices through a Direct-To-Home (DTH) service at a residential or a non-residential place of a subscriber, providing pleasure, comfort and entertainment to the subscribers and viewers.";

xxx "(l) "subscriber" means a person who enjoys the luxury by receiving the signal of cable television network or a direct- to-home service at a place indicated by him to the cable operator or the Direct-To-Home (DTH) Service Provider, without further transmitting it to any other person.";

xxx Page 113 of 321

4. Levy and collection of luxury tax: (1) Subject to the provisions of this Act, there shall be levied and collected a tax, hereinafter called the 'luxury tax', in respect of any luxury provided,-

(ii) by cable operators; ("and by Direct-to-Home (DTH) Service Providers") xxx Provided that the sub-section shall not apply to,-

(iv) to cable operators whose total number of connections, including those given through franchisees, is seven thousand and five hundred or less:

Home(DTH) Broadcasting Provider") at the rate of rupees five per connection per month, and shall be collectable from the person enjoying the luxury :

Explanation: For the purpose of this section, 'club' means a club which provides more than two facilities like card room, bar, billiard rooms, snooker room, tennis court, swimming pool, Sauna Jacuzzi and the like, gymnasium, golf course, internet facility, video, video compact disk, digital video disk and computer games and having a membership strength of at least twenty five.

xxx (4) In computing the luxury tax, a fraction of a rupee, which is not a multiple of five paise, shall be rounded of to the next higher multiple of five paise.

“(5) Every Direct-To-Home (DTH) Broadcasting Service Provider in the State shall pay luxury tax at the rate of two per cent on the gross charges received or receivable by him every month in any manner including installation charges, subscription charges, recharges, or other charges by whatever name called from the subscribers in the State in respect of the luxury provided by him.";” xxx Page 115 of 321 4D. Registration of cable operators and Direct-to- Home(DTH) Broadcasting Service Provider.- Every cable operator ("and Direct-to-Home(DTH) Broadcasting Service Provider") shall get himself registered with such authority and in such manner, as may be prescribed and the application for registration shall be accompanied by a registration fee of Rupees one thousand. The registration shall be for a period of one year and shall be renewed annually.

5. Returns: - Every proprietor liable to pay luxury tax under this Act shall submit such return in such manner and within such period as may be prescribed.

ACT 10 of 2010 THE KERALA FINANCE ACT, 2010

6. Amendment of Act 32 of 1976. In the Kerala Tax on Luxuries Act, 1976 (32 of 1976),-

(1) in section 2 ,-

(i) after clause (d), the following clauses shall be inserted, namely:-

channel television programmes in ku band using a satellite system of providing television signals direct to the subscriber's premises in an encrypted form which will be received by an antenna and decrypted by an electronic device, thus providing television signals to the television set or other viewing devices of the subscriber, without passing through an intermediary such as cable operator.

xxx Page 116 of 321 (2) in section 4 ,-

(i) (a) in sub-section (1), in item (ii), the words, symbols, brackets and letters "and by Direct-To-Home (DTH) Service Providers" shall be added at the end:

(i) clause (ca) shall be omitted;

(ii) clause (fa) shall be omitted;

Orissa Entertainment Tax Act, 2006 :

(Gigahertz) frequency band which splits into two segments viz. the first having the frequency of 11.7-12.2 Ghz. Known as FSS (Fixed Satellite Service) and the other having the frequency of 12.2-12.7 Ghz. Known as BSS (Broadcasting Satellite Service), or it may have such other brand width as may be approved by the Government of India from time to time.”

(f) “entertainment” means any cinematographic exhibition including exhibition of news reels, documentaries, cartoons, advertisement shots or slides, whether before or during exhibition of a feature film or separately, and includes any other exhibition, performance, amusement and entertainment through cable service (or Direct-to- Home (DTH) Broadcasting Service);

xxx Page 118 of 321

7. Tax on cable and DTH service. - (1) The proprietor of a cable television network providing cable service (and of a Direct-to-Home (DTH) Broadcasting Service) shall be liable to pay entertainment tax at such rate as specified in Part II of the Schedule.

(2) The tax payable under this section shall be paid, collected or realised in such manner as may be prescribed.

9. Intimation before holding entertainment.- (1) No entertainment on which tax is leviable shall be held without prior information being given to the Commissioner in the manner prescribed.

(2) No proprietor of a cable television network (or Direct- to-Home (DTH) Broadcasting Service) shall provide entertainment, unless he obtains permission from the Commissioner in the manner prescribed.

xxx (3a) Notwithstanding anything contained in sub-sections (2) and (3) where any proprietor of a Direct-to-Home (DTH) Broadcasting Service is providing entertainment immediately before the commencement of the Orissa Entertainment Tax (Amendment) Act, 2010 he may continue to provide entertainment,—

(a) for a period of three months from the date of commencement of said amendment Act; or

(b) till the permission under sub-section (2) is granted by the Commissioner, if an application to that effect is made in the prescribed manner within the period specified in clause (a).” Page 119 of 321 The relevant provisions of Orissa Entertainment Tax Rules, 2006 are as under:

residential place are linked by metallic coaxial cable or optio-fibre cable to a central system called the head-end, on payment by the connection holder of any contribution or subscription or installation and connection charges or any other charges collected in any manner whatsoever. (aaa) 'cable television’ means a system organised on payment by a connection holder of any contribution or subscription or installation and connection charges or any other charges collected in any manner whatsoever, for exhibition of films or moving pictures or series of pictures by means of transmission of television signals by wire where subscriber's television set is linked by metallic coaxial cable or optio-fibre cable to a central system called the head-end, by using a video cassette or disc or both, recorder or player or similar such apparatus on which prerecorded vide cassettes or discs or both are played or replayed and the films or moving pictures or series of pictures which are viewed and heard on the television receiving set at a residential or non-residential place of a connection holder.

(b) 'Commissioner' means the Excise and Taxation Commissioner, Punjab, for the time being;

(bb) “direct-to-home television” means the reception of satellite programmes with the aid of a dish by a subscriber in his home or any other place for exhibition of films or moving pictures or series of pictures on payment basis; Page 121 of 321 (bbb) “dish” means a large circular antenna for receiving television signals from a satellite;”;

(c) 'Entertainment Tax Officer' means the officer appointed as such under this Act;

(d) 'entertainment' includes any exhibition, performance, amusement, game, sport or race to which persons are ordinarily admitted on payment for exhibition of films or moving pictures or series of pictures which are shown in a cinema house or on the television receiving set, with the aid of any type of antenna with a cable net work attached to it or cable television or dish relating to direct-to-home television network for which persons are required to make payment by way of contribution or subscription or installation and connection charges or any other charges collected in any manner whatsoever.

Explanation.- For the purpose of this clause, the expression “Cinema house” shall have the same meaning as has been assigned to it in the Punjab Entertainments Tax (Cinematograph Shows) Act, 1954 (Punjab Act 8 of 1954).

(e) 'payment for admission' includes –

(i) any payment made by a person admitted to any part of a place of entertainment and in a case where such person is subsequently admitted to another part thereof for admission to which an additional payment is required, such additional payment, whether actually made or not;

(ii) in cases of free, surreptitious, unauthorised or concessional entry, whether with or without the knowledge of the proprietor, the payment which would have been made if the person concerned had been admitted on payment of the full charges ordinarily chargeable for such admission;

(iii) any payment for any purpose whatsoever connected with an entertainment which a person is required to make as a condition of attending or continuing to attend the Page 122 of 321 entertainment in addition to the payment, if any, for admission to the entertainment;

(iv) any payment made by a person by way of contribution or subscription of installation and connection charges or any other charges collected in any manner whatsoever for television exhibition with the aid of any type of antenna with a cable network attached to it or cable television or a dish relating to direct-to-home television network.

(f) 'prescribed' means prescribed by rules made under this Act;

(g) 'proprietor' in relation to any entertainment includes the owner, partner or a person responsible for the management thereof and any person responsible for or for the time being incharge of the management for providing cable connection from any type of antenna or cable television or for providing direct-to-home television service.

3. Duty on payments for admission to entertainments. (1) A person admitted to an entertainment shall be liable to pay an entertainment duty at a rate of twenty-five per centum, which shall be collected by the proprietor and rendered to the Government in the prescribed manner. (1-A) Notwithstanding anything contained in sub-section (1), the Government may, by notification, levy lumpsum entertainment duty at a rate not exceeding, -

(a) eight thousand rupees per annum in the local area of a City constituted as such under the Punjab Municipal Corporation Act, 1976 , or of a Municipality declared as such under the Punjab Municipal Act, 1911 ; and

(b) Six thousand rupees per annum in areas other than the local areas specified in clause (a);

in respect of entertainments arranged by a proprietor by replay of video cassette player or video record player and the lumpsum duty so levied shall be recoverable from the proprietor, (1-B) Notwithstanding anything contained in sub-section (1), a proprietor may, at his option, pay in lump sum entertainment duty on an amusement park at the rates, Page 123 of 321 specified in the Schedule appended to this Act, per annum per ride.

(1-B) (a) Notwithstanding anything contained in sub- section (1) Government may, by notification, levy lump- sum entertainment duty of amusement park at a rate not exceeding rupees sixty thousand per annum.

Page 126 of 321

(b) A proprietor may, however, opt to pay an entertainment duty either under sub-section (1) or he may pay lump-sum entertainment duty under the proceeding clause (a).

(2) A draft of the proposed order specifying the rate of entertainments duty referred to in sub-section (1) shall be notified for the information of all persons likely to be affected thereby and it shall take effect only after the Government has considered all objections received within a period of thirty days from the date of such publications, and has notified the same again, with or without modification:

sections (1) and (2) has been finally notified, the entertainments duty shall be levied at the rates in force in this behalf immediately before the commencement of this Act.

(3-A) Notwithstanding anything in this section, the amount of duty shall be calculated to the nearest multiple of 5 naye paise by ignoring 2 naye paise or less and counting more than 2 naye paise as 5 naye paise.

(4) The final notification specifying the rates of entertainment duty shall be laid before the Legislature at the session immediately following its publication.

3.A. Entertainment duty is not leviable in case tax is paid under Punjab Act 8 of 1954.- Notwithstanding anything contained in this Act, no entertainment duty shall be leviable on the proprietor who is able to pay entertainment tax under the Punjab Entertainment Tax (Cinematograph Shows) Act, 1954 .

Page 127 of 321 (3B) Notwithstanding anything contained in sub-

sections (l), (1-A), (2) and (3), in the case of entertainment provided with the aid of antenna or cable television to a connection holder, the proprietor of such entertainment shall pay entertainment duty of fifteen thousand rupees per annum at a time.

(3C) Notwithstanding anything contained in this section, in the case of entertainment, provided with the aid of dish, relating to direct-to-home television, the proprietor of such entertainment shall pay entertainment duty at the rate of ten per cent of the charges, received by such proprietor from the subscriber. The entertainment duty shall be paid by the proprietor by the 10th day, commencing from the close of the concerned calendar month.” Rajasthan Entertainments and Advertisements Tax Act, 1957 :

(4AAA.)- “levy of tax on direct to home broadcasting service”- The proprietor of a direct to home broadcasting service shall be liable to pay entertainment tax at such rates, not exceeding twenty percent of the monthly subscription charges per subscriber, as the State Government may from time to time, notify in the Official Page 128 of 321 Gazette, in this behalf and different may be notified for different categories of subscribers (5) “entertainment” includes –

(i) any exhibition, (show), performance, amusement, game or sport to which persons are admitted for payment.

(ii) providing cable service to a subscriber.

(iii) providing direct to home broadcasting service and, (6) “entertainment tax” means the tax levied and charged under section 4 , 4AA and 4AAA and the expression 4AA shall be deemed to have been inserted with effect from 26.03.1999 and the expression 4AAA shall be deemed to have been inserted with effect from 25.02.2008 and includes the additional tax payable under section 6A, xxx (8) “proprietor” in relation to an entertainment includes any person responsible for, or for the time being in-charge of the management thereof;

xxx (11A) “subscriber” means a person who receives the signals of cable television network at a place indicated by him to the proprietor of the cable television network without further transmitting it to any other person; Explanation : In case of hotels each room or premises where facility for receiving signals of cable television network have been attached shall be treated as a subscriber.” The relevant provisions of the Rajasthan Entertainments and Advertisements Tax Rules, 1957 are as under

Rules 18BBBBB.- Payment of tax for direct to home broadcasting service.

(1) The proprietor of a direct to home broadcasting service liable to pay tax in accordance with section 4AAA of the Act, shall maintain a true and correct record of the number of subscribers, the amount received from each subscriber and the amount of tax.

(2) The proprietor of a Direct to Home broadcasting service shall be required to deposit tax payable within seven days of the close of each calendar month. (3) The proprietor of a Direct to Home broadcasting service shall file quarterly return in Form S-7 in duplicate, within fifteen days of the end of each quarter along with proof of deposit of tax payable under the Act.” Tamil Nadu Entertainments Tax Act, 1939 :

channel television programmes by using a satellite system by providing television signals direct to subscribers’ premises without passing through an intermediary such as cable operator;

xxx 3(4) “entertainment” means a horse race or cinematograph exhibition to which persons are admitted on payment; or television exhibition for which persons are required to make payment by way of contribution, or subscription, or installation or connection charges or any other charges collected in any manner whatsoever or an amusement or a recreation parlour where a game such as bowling, billiards, snooker or the like is provided or direct to home service or a cricket tournament conducted by the Indian Premier League.

xxx 3(9) “proprietor” in relation to any entertainment means a licensee of Cinematograph exhibition under the Tamil Nadu Cinemas (Regulation) Act, 1995 (Tamil Nadu Act No.IX of 1955) or the licensee of an Exhibition of Cinematograph film on Television Screen through Video Cassette Recorder or through Cable Television Network under the Tamil Nadu Exhibition of Films on Television Screen through Video Cassette Recorders and cable Television Network (Regulation) Act, 1984 (Tamil Nadu Act No. VII of 1984) or any person providing Television exhibition or any person providing amusement or any person providing recreation parlour or any person providing direct to home service or the Indian Premier League and includes the State Government, any local authority or any person responsible for the management thereof.

xxx 3(11) “Television exhibition” means an exhibition with the aid of any type of antenna with a cable network attached Page 131 of 321 to it or a cable television, of a film or moving picture or series of moving pictures, by means of transmission of television signals by wire where subscribers’ television sets at residential or non-residential place are linked by metallic coaxial cable or optic fibre cable to a central system called the head-end.

xxx 4-I. Tax on direct to home service.—(1) Notwithstanding anything contained in Sections 4 and 7 , there shall be levied and paid to the State Government a tax (hereinafter referred to as the “entertainment tax”) calculated at the rate of thirty per cent of the gross charges excluding the service tax, received by the provider of a direct to home service.

(2) The tax levied under sub-section (1) shall be recoverable from the proprietor.

(3) The provisions of this Act (other than Sections 4 , 7 and

13) and the rules made thereunder shall, so far as may be, apply in relations to the tax payable under sub-section (1).

xxx 4-E. Tax on television exhibition.- (1) Notwithstanding anything contained in Sections 4 and 7 , there shall be levied and paid to the State Government a tax (hereinafter referred to as the entertainment tax) on television exhibition at the following rates namely:-

(2) The tax levied under sub-section (1) shall be recoverable from the proprietor.

(3) The provisions of this Act other than Sections 4 , 4-B, 4-D, 4-F, 4-G, 5-F, 5-G, 6(1) , 7 and 13 and the rules made there under shall, so far as may be, apply in relation to the tax payable under sub- section (1).

Uttar Pradesh Entertainment and Betting Tax Act, 1979 :

xxx (f-1) ‘Direct-to-Home service’ means a system of distribution of multi-channel television programmes in Ku band by using a satellite system, by providing television signals direct to the subscriber’s premises without passing through an intermediary such as cable operator.”

(g) ‘entertainment’ includes any exhibition, performance, amusement, game, sport or race (including horse rase) to which persons are admitted for payment and in the case of cinematograph exhibition, includes exhibition of news-real, documentaries, cartoons, advertisement shorts or slides, whether before or during the exhibition of a feature film or separately,; It also includes any activity notified as entertainment by the State Government from time to time.” Page 134 of 321 xxx (i-1) ‘Ku Band’ ordinarily means the 11.7 to 12.7 Gigahertz frequency band which splits into two segments namely Fix Satellite Service having the frequency of the 11.7 to 12.2 Gigahertz and Broadcasting Satellite service having the frequency of 12.2 to 12.7 Gigahertz, or any other band of width as may be approved by the Government of India and from time to time.” xxx (k.1) “Multi System Operator” means a cable operator who receives a programming service from a broadcaster or his authorized agencies and retransmits the same or transmits his own programming service for simultaneous reception either by multiple subscribers directly or through one or more local cable operators, and includes his authorized distribution agencies by whatever name called.

(l) ‘payment for admission’ includes-

(i) any payment for seats or other accommodation in any form in a place of entertainment;

(ii) any payment for a programme or synopsis of an entertainment;

(iii) any payment made for the loan or use of any instrument or contrivance which enables a person to get a normal or better view of hearing or enjoyment of the entertainment, which without the aid of such instrument or contrivance such person would not get;

(iv) any payment, by whatever name called or any purposes whatsoever, connect with an entertainment, which a person is required to make in any form as a condition of attending or continuing to attend the entertainment, either in addition to payment, if any, Page 135 of 321 entertainment or without any such payment for admission.

(v) 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.

Explanation.-Any subscription raise or donation collected in connection with an entertainment in any form shall be deemed to be payment for admission;

(vi) Any payment made by a person by way of contribution or subscription or installation and connection charges or any other charges collected in any manner whatsoever, by whatever name 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 Page 136 of 321 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 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 its member or for workers or customers or for himself or themselves, as the case may be shall be deemed to be payment made under the sub-clause;

(viii) Where in any entertainment admission has been allowed on a gross payment, such gross payment shall be deemed to be aggregate payment”.

(l-l) 'Place of entertainment includes-

(i) a house, building, tent, site to be used for purpose of cinema building or other structure and description of transport whatsoever;

(ii) any addition to the place of entertainment;

(iii) a house building, tent or any other place where the books of account, ticket books or any other relevant records pertaining to the entertainment or pertaining to the management of providing cable service or Direct-to-Home service or Broadband service or any emerging transmission services, by whatever name called, are kept or purported to have been kept;.

(m) 'proprietor' in relation to any entertainment includes any person-

(i) connected with the organisation of the entertainment, or

(ii) charged with the work of admission to the entertainment, or

(iii) responsible for, or for the time being in-charge of the management thereof, or

(iv) any cable operator registered under Section 4 of the Cable Television Network (Regulation) Act, 1995 (Act Page 137 of 321 No. 7 of 1995) or any person responsible for or for time being in charge of management of providing cable connection through cable television network or any other emerging technology; or

(v) any company registered under the Company Act, 1956 having license to provide Direct-to-Home service or any other emerging transmission services by whatever name called by the Government of India under Section 4 of the Telegraph Act, 1985 and the Indian Wireless Telegraph Act, 1933 or any agent thereof appointed for the purpose of sale, letting on rent or distribution of equipment related thereto;".

xxx (p-1) television signal receiver' means any device, by whatever name called, used to receive and/or decode the transmission programme of particular channel and without which no person is able to see a particular channel programme."

(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.".

(t) Words and expressions used in this Act but not defined, shall have the meaning respectively assigned to them in the Cable Television Networks (Regulation) Act, 1952 . (u) Words and expression used in this Act not 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.

3. Tax on entertainment. - (1) Subject to the provisions of this Act, there shall be levied and paid on all Aggregate payments required for admission to any entertainment Page 138 of 321 other than an entertainment to which Section 4 or Section 4-A or Section 4-B applies or a compounded payment is made under the proviso to this sub-section an entertainment tax at such rate not exceeding one hundred and fifty per cent of each such payments as the State Government may form 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 in a local area having a population not exceeding one lac. 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 collect 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:

(2-a) It shall be lawful for the State Government to notify lump sum rate of entertainment tax for any entertainment or class of entertainments or for different payment for admission to entertainment or for different area; (3) Where the aggregate payment required for admission to an entertainment together with any other charge leviable under this Act, is not a multiple of one rupee then notwithstanding anything to the contrary contained in sub-section (1) or sub-section (2) or any notification issued thereunder, the tax shall be increase to such extent and be so computed that the aggregate of such aggregate payment and other charges is rounded off to the next higher multiply of one rupee and such increased tax shall also be collected by the proprietor and paid to the State Government in such manner as may be prescribed, (4) If in any entertainment, referred to in sub-section (1), to which admission is generally on payment, any person is admitted free of charge or on a concessional rate, the same amount of tax shall be payable as would have been payable had such person been admitted on full payment. (5) Where the Aggregate payment required for admission to an entertainment, referred to in sub-section (1), is made wholly or partly, by means of a lump sum paid as subscription, contribution, donation or otherwise, the tax shall be paid on the amount of such lump sum and on the amount of Aggregate payment required for admission if any made otherwise.

(6) Where in hotel or a restaurant, entertainment by way of cabaret or floor show (by whatever name called, by excluding a mere band in attendance or recorded music) is provided alongwith any meal or refreshment with a view to attracting customers, whether or not Aggregate payment required for admission is charged distinctly for such entertainment, Thirty per cent of the amount payable by the customer such meal or refreshment or the amount charge distinctly for such entertainment, whichever is higher, shall be deemed to be the Aggregate payment Page 140 of 321 required for admission to such entertainment and the tax shall be levied and pain accordingly.

(7) Where in a hotel, entertainment by way of cable service is provided in rooms or other places, the entertainment so provided in each room or other place shall be deemed to be a separate entertainment and the subscription for admission to each such entertainment shall be deemed to be equal to the amount of subscription charged from a subscriber in the vicinity of the hotel by the cable operator providing cable service in the hotel, and the tax shall be levied and paid on the basis of such subscription:

reel, documentaries, cartoons, advertisement shorts or slides, whether before or during the exhibition of a feature film or separately.” Interpretation of Entries of the Lists of the Seventh Schedule of the Constitution:

The entries in the Lists are fields of legislative powers conferred under Article 246 of the Constitution. In other words, the entries define the areas of legislative competence of the Union and the State Legislature. (vide: State of Karnataka). 8.1 The legislative power to impose a tax or impost can be traced to either List I - Union List or List II - State List. List III - Concurrent List which gives powers to both Union as well as the States to legislate on a subject does not contain any taxation entry. Entry 47 - List III states that fees in respect of any of the matters in that List but not including fees taken in any Court could be levied and collected by an authority of law either by the Union or the State Legislature. Similarly, Entry 66 - List II states that fees in respect of any of the matters in List II but not including fees taken in any Court could be collected by the State Legislature. In Page 143 of 321 a similar vein, Entry 96 - List I gives power to levy fee in respect of subjects enumerated in List I but not including fees taken in any Court.

8.2 On the aspect of interpretation of legislative entries in the three Lists, the principles are apposite as discussed in State of Karnataka:

But if a legislation in pith and substance falls within any of the entries of List II, the State Legislature's competence cannot be questioned on the ground that the field is covered by Union list or the Concurrent list (vide Prafulla Kumar Mukherjee vs. Bank of Commerce, Khulna , AIR 1947 P.C. 60). It was further observed that in distinguishing between the powers of the divided jurisdictions under Lists I, II and III of the Seventh Schedule to the Government of India Act, 1935 , it is not possible to make a clean cut between the powers of the various legislatures. They are bound to overlap from time to time, and the rule which has been evolved by the Judicial Committee whereby an impugned statute is examined to ascertain its pith and substance or its true character for the purpose of determining in which particular list the legislation falls, applies to Indian as well as to Dominion legislation. 8.2.4 The Privy Council quoted with approval, the observations of Gwyer, CJ in A.L.S.P.P.L. Subrahmanyan Chettiar vs. Muttuswami Goundan, AIR 1941 FC 47 wherein it was observed Page 146 of 321 that overlapping of subject-matter is not avoided by substituting three lists for two, or even by arranging for a hierarchy of jurisdictions. It was observed that “Subjects must still overlap, and where they do the question must be asked what in pith and substance is the effect of the enactment of which complaint is made, and in what list is its true nature and character to be found. If these questions could not be asked, much beneficent legislation would be stifled at birth, and many of the subjects entrusted to provincial legislation could never effectively be dealt with”. In the said case, it was further observed that the dominant position of the Central Legislature (Parliament) with regard to matters in List I and List III is established. But the rigour of the literal interpretation is relaxed by the use of the words “with respect to” which signify “pith and substance”, and do not forbid a mere incidental encroachment. The learned Chief Justice Gwyer further added as under:

8.2.10 Lists I and II are divided essentially into two groups :

Entries 43 and 44 relate to incorporation, regulation and Page 151 of 321 winding up of corporations. Entry 85 provides separately for corporation tax. Turning to List II, Entries 1 to 44 form one group mentioning the subjects on which the States could legislate. Entries 45 to 63 in that List form another group, and they deal with taxes. Entry 18, for example, is “Land” and Entry 45 is “Land revenue”. Entry 23 is “Regulation of mines” and Entry 50 is “Taxes on mineral rights”. The above analysis—and it is not exhaustive of the entries in the Lists—leads to the inference that taxation is not intended to be comprised in the main subject in which it might on an extended construction be regarded as included, but is treated as a distinct matter for purposes of legislative competence. And this distinction is also manifest in the language of Article 248 clauses (1) and (2) and of Entry 97 in List I of the Constitution. Construing Entry 42 in the light of the above scheme, it is difficult to resist the conclusion that the power of Parliament to legislate on inter-State trade and commerce under Entry 42 does not include a power to impose a tax on sales in the course of such trade and commerce.” On the above analysis, it was categorically inferred in MPV Sundararamier that taxation was not intended to be comprised in the main subject in which it might, on extended construction, be regarded as included but is to be treated as a distinct matter for the purpose of legislative competence. But while saying so, in the said case, reliance was also placed on Article 286 of the Constitution.

8.2.13 It was observed in H.S. Dhillon that Entry 97 - List I conferred the residuary powers on Parliament. Article 248 of the Page 152 of 321 Constitution which speaks of residuary powers of legislation confers exclusive power on Parliament to make any law with reference to any matter not enumerated in the Concurrent List or the State List. But at the same time, it provides that such a residuary power shall include a power of making any law imposing a tax not mentioned in either of those Lists. It is thus clear that if any power to tax is clearly mentioned in List II, the same would not be available to be exercised by Parliament based on the assumption of a residuary power.

8.2.14 In fact, the judgment in H.S. Dhillon was by a majority of 4 : 3 to the effect that the power to legislate in respect of a matter does not carry with it a power to impose a tax under our constitutional scheme. Thus, there is nothing like an implied power to tax. The source of power to legislate on a subject which does not specifically speak of taxation cannot be so interpretated by expanding its width as to include therein the power to tax, by implication or by necessary inference. Reliance was also placed on Cooley on Taxation to the following effect:

Although legislative power includes incidental and subsidiary power under a particular entry dealing with a particular subject, the power to impose a tax is not such a power which could be implied under our Constitution. Therefore, it was held that the power to legislate in respect of inter-State trade and commerce (Entry 42 -List I) did not carry with it the power to tax the sale of goods which are subject of inter-State trade and commerce, before the insertion of Entry 92-A - List I and such power belonged to the States under Entry 54 - List II subject to Article 286 of the Constitution. (See: Builders’ Association of India vs. Union of India , (1989) 2 SCC 645) 8.2.16 Delving further on the distinction between the power to regulate and control and the power to tax, it has been observed by this Court that there is a significant distinction between the two primary purposes of legislation. The primary purpose of taxation is to collect revenue. Power to tax may be exercised for regulating an industry, commerce or any other activity. The purpose of levying Page 154 of 321 such tax is the exercise of sovereign power for effectuating regulation although incidentally, the levy may contribute to the revenue. Taking a leaf from Cooley on his work on taxation, it was observed that the distinction between a demand of money under the police power and one made under the power to tax, is not so much one of form as of substance.

8.2.17 In view of the detailed discussion made above, we find that the dictum of this Court in MPV Sundararamier analysing the entries in Lists I and II dealing with various subjects of legislation and entries concerning taxation being separate and distinct must be borne in mind while interpreting the impugned provisions of the State Acts. That is the constitutional scheme. In this regard, we reiterate what has been observed in Hoechst Pharmaceuticals, to the effect that taxation is considered to be a distinct matter for purposes of legislative competence and the power to tax cannot be deduced from the general legislative entry as an ancillary power. Also, a power to legislate as to the principal matter specifically mentioned in the entry shall also include within its expanse legislation touching only upon incidental and ancillary matters. But the power to levy tax cannot be considered to be an Page 155 of 321 incidental and ancillary matter while interpreting an entry in the Lists concerning legislative competence of Parliament or legislature of any State to enact laws on the subjects mentioned in the entry. 8.2.18 As a sequitur, it is observed that Entry 97 - List I which is the residuary entry relatable to Article 248 of the Constitution cannot be invoked or pressed into service when a specific entry empowering Parliament or the Legislature of a State to pass laws regarding the taxation on any subject is specifically enumerated either in List I or List II.

8.2.19 It would also be useful to mention that since the legislative competence to pass a law relating to taxation being specific and distinct in List I or List II, such an entry is not found in List III. In other words, both Parliament as well as the Legislature of a State cannot have the competence to levy tax on a particular subject and hence, there is no specific entry regarding taxation in List III or the Concurrent List. In fact, Entry 47 - List III refers only to power to impose “fees in respect of any of the matters in the List but not including fees taken in any court”. The distinction between the power to levy fees and the power to levy a tax is well known and Page 156 of 321 it would not be necessary to go into that aspect of the matter in the present cases except to highlight that there is no entry for taxation in the Concurrent List. Therefore, while interpreting a taxation entry in List I or List II, all efforts must be made to interpret them in such a way as to give content and meaning to the same having regard to the constitutional scheme under which the distribution of legislative powers have been envisaged in the Seventh Schedule and bearing in mind and the object and intent behind them. State of Karnataka vs. State of Meghalaya :

Consequently, the question in these cases was, whether, the Legislatures of the States of Karnataka and Kerala had the legislative competence to enact the Karnataka Act, 2004 and the Kerala Act, 2005 respectively.

8.3.1 After examining the entries in List I and List II, it was observed that the expression “betting and gambling” finds a mention in Entry 34 – List II and taxes on, inter alia, betting and gambling are leviable having regard to Entry 62 – List II. Thus, the activity of betting and gambling and taxes on betting and gambling are subjects falling within List II i.e. they are State subjects. If conduct of lotteries is held to come within the scope of the expression ‘betting and gambling’ then the regulation and control of the said activity as well as the taxation on lotteries are squarely within the contours of the legislative powers of the State. However, only lotteries organised by the Government of India or the Government of a State, even though, they come within the scope of the expression ‘betting and gambling’ have been carved out of Entry 34 - List II dealing with betting and gambling inasmuch as Page 158 of 321 Entry 40 - List I (Union List) deals with lotteries organised by the Government of India or the Government of a State. This implies that conduct of lotteries by the Government of India or the Government of a State, even though, is betting and gambling within the meaning of Entry 34 and Entry 62 - List II, nevertheless, those entries are denuded inasmuch as the State Legislature has no legislative powers to pass any law on the subject lotteries organised by the Government of India or the Government of a State. If such is the simplistic interpretation to be given, the matter would rest. However, that is not so. This Court observed that:

Meaning and Scope of the expression “Luxuries, Entertainments and Amusements” and Legislative Competence of State Legislatures to impose Entertainment Tax:

Thus, the aforesaid four expressions have been brought under the umbrella of the word “luxuries” so as to enable a State Legislature to tax these activities. Therefore, it is necessary to understand the meaning and content of the expression “luxuries, entertainments and amusements”.

8.7 In Express Hotels, this Court observed that luxury connotes extravagance or indulgence as distinguished from the needs and necessities of life. Taxes on luxuries is not limited to things tangible and corporeal but the entry encompasses all the manifestations and emanations which comprehend the elements of extravagance and indulgence that differentiates luxury from necessity. There can Page 163 of 321 be elements of extravagance or indulgence in the quality of service as well as activities.

8.8 It was observed that luxuries covered both corporeal and incorporeal services and thus refers to goods and services as noted above. Further, there are two aspects of luxury, the first being objects and services which are intrinsically capable of fostering a sense of luxury and second, the recipient of such articles or services who consumes them experiences such gratification. Since “luxuries” can be both goods and services, what is relevant is the common denominator of the luxury element/potential of goods and services.

Reference could be made to Oxford English Dictionary, (Second Edition, Volume IX), wherein it is stated that luxury could among other things be defined as –

(i) abundance, sumptuous enjoyment;

(ii) the habitual use of, or indulgence in, what is choice or costly;

(iii) refined and intense enjoyment; means of luxurious enjoyment;

Page 164 of 321

(iv) in a particularised sense: something which conduces to enjoyment or comfort in addition to what are accounted as the necessaries. Hence, in recent use, something which is desirable but not indispensable; and

(v) as an attribute such as luxury coach, cruise duty, edition, flat, liner, shop, tax, trade.

8.9 In short, the connotation of the word luxury is something which conduces enjoyment over and above the necessities of life to which one takes with a view to enjoy, amuse or entertain oneself. 8.10 In the same vein, in A.B. Abdul Kadir vs. State of Kerala , (1976) 3 SCC 219 (“A.B. Abdul Kadir”), it was observed that the connotation of the word “luxury” is something which conduces enjoyment over and above the necessities of life. It denotes something which is superfluous and not indispensable and to which one takes with a view to enjoy, amuse or entertain oneself. An expenditure on something which is in excess of what is required for economic and personal well-being would be expenditure on luxury although the expenditure is of a nature which is incurred Page 165 of 321 by a large number of people, including those not economically well off.

8.11 Further, in Godfrey Phillips, it was observed that the expression “luxury” must be understood in a sense analogous to that of the less general words such as entertainments, amusements, gambling and betting which are clubbed with it. This is by way of the application of the principle of interpretation known as noscitur a sociis. Thus, luxuries is also capable of meaning an activity and has primarily and traditionally been defined as such. It is only derivatively and recently used to connote an article of luxury. If luxuries is understood as meaning something which is purely for enjoyment and beyond the necessities of life, then, entertainments, amusements, betting and gambling would come within its scope and ambit. Further, these are all activities. 8.12 In Western India Theatres, this Court observed that the ordinary meaning has to be given to the word “luxury”. This means that it would refer to goods and services which foster “luxury”, a sense of abundance, enjoyment and gratification. Further taxes on luxuries, entertainments or amusements cannot have a restricted Page 166 of 321 meaning so as to confine the operation of the law only to taxes on persons receiving the luxuries, entertainments or amusements. The entry contemplates luxury, entertainments and amusements as objects on which the tax is to be imposed, if so there can be no reason to differentiate between the giver and the receiver of the luxuries, entertainments and amusements and both may, with equal propriety be made amenable to the tax. Thus luxury tax can be imposed on those who provided it also. It was further observed that the concept of luxuries in the legislative entry takes within it everything that can fairly and reasonably be said to comprehended in it. The actual measure of the levy is a matter of legislative policy and convenience so long as the legislation has a reasonable nexus with the concept of luxuries in the broad and general sense in which the expressions in legislative list are comprehended, the legislative competent extends to all matters “with respect to” that field of topic of legislation.

It was further observed that the taxable event need not necessarily be the actual utilization or the actual consumption, as the case may be, of the luxury. Once the legislative competence and the nexus between the taxing power and the subject of taxation is Page 167 of 321 established, the other incidence are matter of fiscal policy behind the taxing law. The measure of the tax is not the same thing as and must be kept distinguished from the subject of the tax. 8.13 In Federation of Hotel & Restaurant Association of India, the concept of luxuries in Entry 62 – List II was also considered and in the said case, the aspect theory was also applied. Entertainments and Amusements:

It also means “work in connection with, or for the purposes of, any cinema, exhibition or entertainment”. The expression ‘entertainment’ includes hospitality of any kind and also expenditure on business gift with the aim of advertising to the general public. It is an activity that provides amusement and would include public performances including games and sports, exhibition, amusement to which persons are admitted for payments.

Page 168 of 321 8.15 Readers Digest’s Family Word Finder defines the word “entertainment” to mean amusement, diversion, distraction, recreation, fun, play, good time, pass time, novelty, pleasure, enjoyment and satisfaction. Entertainment denotes that which serves for amusement and ‘amusement’ is defined as a pleasurable occupation of the sense or that which furnishes it as sports or music.

8.16 Webster’s Third New International Dictionary has defined ‘entertainment’ as an act of diverting, amusing or causing someone’s time to pass agreeably.

8.17 According to Concise Oxford English Dictionary, 11th Edition (Revised) as cited in Bangalore Turf Club Ltd. vs. Regional Director, ESI Corporation , (2014) 9 SCC 657 (paragraph 43.1), “entertainment” means ‘the action of providing or being provided with amusement or enjoyment. An event or performance designed to entertain’.

8.18 In State of Karnataka vs. Drive-in Enterprises , (2001) 4 SCC 60, it was observed that the word “entertainment” is wide enough to comprehend in it, the luxury or comfort with which a Page 169 of 321 person entertains himself. It includes viewing a cinema film inside a driving theatre along with a car/motor vehicle. 8.19 In Purvi Communication, the expression “entertainments” under Entry 62 – List II was held to include performance, film or programmes shown to the viewers through the cable television network.

8.20 Thus, the expression “entertainments” is a word of general import and in common parlance, it includes cinema shows, dramatic performances, etc. The expression ‘entertainments’ used in Entry 62 - List II does not draw a distinction between one who derives amusement and one who caters to it. It covers both categories.

8.21 This Court has interpreted the expression “entertainments” in a broad and wide manner and not restricted to entertainment in a public place. With the advancement of technology, there can be entertainment provided within the private space or the household also by means of television or other electronic gadgets as well as in a motor vehicle. The growth of technology is such that there is now entertainment available even on a mobile phone (cell phone or even Page 170 of 321 on a smart watch). Thus, the expression “entertainments” cannot be interpreted in a narrow, pedantic or in a myopic way. With the advancement in technology, there can be several modes in which the activity of entertainment can be provided or received. However, what is essential is the object of providing or receiving signals etc. which must be for the purpose of entertainment. Amusement:

List II. Therefore, the State legislature has the competence to tax the activities enumerated in Entry 33 - List II. 8.23.5 Fifth, the contention of the assessees that the subject being placed in Entry 31 - List I would also empower only Parliament to impose a tax on the same by way of implication under Page 173 of 321 the said entry itself is not a correct interpretation of the entries in the Lists.

8.23.6 Sixth, Entry 97 - List I can be invoked only when any matter is not enumerated in List II or List III including any tax not mentioned in the said Lists. There is no specific entry for levy of tax on entertainments and amusements in List I. It is only in Entry 62 - List II. Thus, Entry 62 - List II gives legislative competence to a State Legislature to levy a tax on, inter alia, “entertainments and amusements”. This would also include a tax on organisation and conduct of entertainments and amusements within the State when permission has been given by a State Government to conduct such an activity of entertainments and amusements in whatever form it may be. Thus, Entries 33 and 62 of List – II which, inter alia, deal with “entertainments and amusements” have to be interpreted identically and the expressions given an identical meaning. 8.23.7 Seventh, when the State Government has the legislative competence to levy a tax on, inter alia, entertainments and amusements (as a specific taxation entry is provided to levy tax on the said activity under Entry 62 - List II), the said entry must be Page 174 of 321 interpreted comprehensively and not in a restricted or narrow manner by excluding from the purview of the said entry, taxation on entertainments and amusements conducted through television by the medium of broadcasting.

8.23.8 Eighth, such a power to levy taxes on entertainments and amusements cannot be read into Entry 31 - List I by implication or into Entry 97 - List I as a residuary power. Such interpretation, if endorsed, would do violence to the manner of interpretation of entries in the Lists and prove to be contrary to the Articles of the Constitution and judgments of this Court cited above.

8.23.9 Ninth, if the State Government permits any species of entertainments or amusements activity within the State in terms of Entry 33 - List II, then the State also has legislative competence to tax such an activity as per Entry 62 - List II. 8.23.10 Tenth, Entry 31 - List I is meant only for the purpose of regulation. The said entry cannot be expanded to cover the power to levy taxes on entertainments and amusements by Parliament when such a power is envisaged in Entry 62 - List II. Parliament, Page 175 of 321 therefore, cannot tax an entertainment or amusement activity, on the strength of Entry 31 - List I. It may however regulate the said activity to the extent permissible under Entry 31 – List I. Any impost strictly for the purpose of regulation of broadcasting is permissible so long as it is not a tax on entertainment or amusement which is only within the ambit of only Entry 62 - List II.

8.23.11 Eleventh, any entertainment or amusement activity conducted by a private entity in a State or authorised by a State Government can be regulated only by the State Legislature. This is because Entry 33 - List II which deals with, inter alia, entertainments and amusements, also includes television entertainment. The regulation could be of Cable Television operators in the State.

8.24 The definition of broadcasting in Section 65(13) of the Finance Act, 1994 as amended in 2001 is as per the meaning assigned to it in clause (c) of Section 2 of the Prasar Bharti Act, 1990. The said Act is made pursuant to Entry 31 – List I which deals with posts and telegraphs; telephones, wireless, broadcasting Page 176 of 321 and other like forms of communications. The quintessence of Entry 31 – List I is communication which could be through various modes as referred to above . However, Entry 62 – List II deals with taxes on luxuries which is a totally distinct entry as opposed to communication which is the subject-matter of Entry 31 – List I and within the nomenclature of the expression “luxury”, is included inter alia entertainments and amusements.

8.24.1 Therefore, on a plain reading of the said entries, it is very apparent that broadcasting is a form of communication and entertainment is a species of luxuries under Entry 62 – List II. There is no doubt that there are various modes of entertainments. Geeta Enterprises is a case which is restricted to certain modes of entertainments but with the advancement of technology, we have noted that entertainment could be through television and other digital devices including cell phone or smart phone. The expression “entertainments” in whatever mode it may be, come within the nomenclature or genre of luxuries which totally distinct from the expression “communication”. It may be that the activity of entertainment is achieved through communication and in that sense could be through the mode of broadcasting and in that Page 177 of 321 sense, broadcasting and communication is for the purpose of the entertainment. Hence, in our view, the State Legislature were fully justified in imposing entertainment tax under Entry 62 – List II. That broad casting through T.V. cable network and cable operators is for carrying out the activity of entertainment and in pith and substance falls within the scope and ambit of Entry 62 – List II. However, the means adopted is through broadcasting which is a means of communication under Entry 31 – List I and therefore incidentally touches upon the subject under Entry 31 – List I. 8.24.2 Insofar as the argument that broadcasting falls only within the scope and ambit of Entry 31 – List I is concerned, it has to be viewed only as a form of communication and for the purpose of imposition of service tax, broadcasting is given meaning which is attributed to clause (c) of Section 2 of the Prasar Bharti Act, 1990 which as already noted as a regulatory entry. A regulatory entry cannot be a basis for imposition of a tax as this Court way back in MPV Sundararamier expressed. That a taxation entry is exclusive and de hors a regulatory entry and cannot be read by way of an implication into a regulatory entry. That apart, in H.S. Dhillon, this Court has specifically stated that if a tax falls within the scope Page 178 of 321 and ambit of an entry in a particular list then the same cannot be read into the residuary list, namely, Entry 97 – List I. In the circumstances, we find that the borrowing of the definition “broadcasting” from the Prasar Bharti Act, 1990 for the purpose of imposition of service tax on a broadcaster and thereby including a person who is in the entertainment industry to also liable to pay service tax, is not a levy in the nature of entertainment tax. Thus, a levy of service tax on a broadcaster is not a levy on an activity which is in the realm of entertainment. Conversely, a levy of entertainment tax by a State under Enter 62 – List II is not a levy on the activity/service of broadcasting but on the activity of providing and receiving entertainment.

8.25 In conclusion we hold that the tax sought to be imposed by the State Legislatures by way of the impugned Acts, is traceable to the power conferred on the State Legislatures under Entry 62 - List II. The said entry contemplates imposition of taxes, inter alia, on the entire genus of “entertainments and amusements”. The pith and substance of the provisions of the State Act referred to above are in the realm of taxation of providers/receivers of entertainment/amusement as luxuries within the said Entry Page 179 of 321 through the medium of television which involves broadcasting service which is regulated under Entry 31 – List I as a form of communication in accordance with Prasar Bharti Act, 1990. Parameters of Taxation:

8.27 The said parameters are each distinct and must not be conflated with the others. The components of tax, as stated above have been characterised in Govind Saran Ganga Saran. In the said case, it was also laid down that a legislative scheme which seeks to impose a tax, ought to define each of the aforestated components with certainty and precision. The observations of Pathak, C.J. in the aforesaid case can be extracted as under : (SCC pp. 209-10, para 6) Page 180 of 321 “6. The components which enter into the concept of a tax are well known. The first is the character of the imposition known by its nature which prescribes the taxable event attracting the levy, the second is a clear indication of the person on whom the levy is imposed and who is obliged to pay the tax, the third is the rate at which the tax is imposed, and the fourth is the measure or value to which the rate will be applied for computing the tax liability. If those components are not clearly and definitely ascertainable, it is difficult to say that the levy exists in point of law. Any uncertainty or vagueness in the legislative scheme defining any of those components of the levy will be fatal to its validity.” 8.28 This Court, in State of Karnataka, applied the aforesaid parameters of taxation in the context of the State enactments for collection of tax on conduct of lotteries that is encompassing the activity of betting and gambling. Paragraphs 111.1 – 111.4 are apposite to the present case and they read as under:

Similarly, in the Kerala Act, 2005, the rate of tax is Rupees ten lakhs in respect of a bumper draw and Rupees two lakhs and fifty thousand in respect of any other draw. 111.4. The incidence of the tax is on the promoters of the lotteries i.e. on the Government of India or a the Government of a State or a Union Territory or any country organising, conducting or promoting a lottery, within the State of Karnataka or Kerala, or any person or entity appointed by the said Government or country in this behalf. The impugned Acts require registration of promoters and all provisions requiring filing of the returns of draws and payment of tax, are to operate in relation to promoters. Therefore, the incidence of the tax, falls on the promoters of the lotteries.” 8.29 The above analogy be applied in the context of the legislative enactments of the States under consideration and the following table would bring out the aforesaid parameters of taxation in the context of the activity of providing and receiving entertainment: Page 182 of 321

Relevant case law:

9. The judgment of this Court in Suresh is relevant to the issues herein and deserves deliberation. Suresh arose from an appeal against the judgment of the High Court of Judicature at Madras in Tamil Nadu Cable TV Organisers Association vs. Government of Tamil Nadu, W.P. No.10013/1994 dt. 30.11.1994 (“Tamil Page 184 of 321 Nadu Cable TV Organisers Association”). In the aforesaid case, the constitutional validity of sub-sections (2A), (2-B), (11) of section 3 and section 4-E of the Tamil Nadu Entertainments Tax Act, 1939 as amended by Act 37 of 1994 (“1994 Act”) with the relevant Rules in G.O.P. No.265 dt. 18.08.1994 was under challenge. The purpose of the 1994 Act was to levy entertainment tax on exhibition of films or moving pictures or series of pictures through cable television.

“Cable television” was defined in clause (2-B) of section 3 as follows:

It then opined that the Indian Constitution has always been held to be an organic instrument and the expressions used in the Constitution cannot be restricted to the facts and circumstances which prevailed at the time of the passing of the Constitution. By relying on cases such as Geeta Enterprises and Express Hotels, the High Court held that the meaning of the word ‘entertainments’ used in Entry 62 - List II is not confined to the definition of the said word as found in the Madras Entertainments Tax Act, 1939 and that the impugned Act falls within Entry 62 - List II. 9.4 With regard to Issue II dealing with repugnancy and occupied field, the Court rejected the argument of petitioners that the impugned Act is repugnant to the provisions of the Central Page 190 of 321 Ordinance 9 of 1994 since it had found that the subject-matter fell within Entry 62 - List II.

9.5 On the contention regarding violation of Article 19(1)(a) of the Constitution, the Court also rejected the argument that the taxation curtails the freedom of expression of the various national and international television operators by holding that the Cable TV Operators are not prevented from expressing their views on any particular matter.

9.6 As regards Issue IV(a), petitioners contended that the charges for installation or connection are only for the purpose of laying own connecting wires and cables which will not be a recurring expenditure and they cannot be termed as charges paid for the enjoyment of entertainment. The High Court rejected this contention, noting that whatever amount was paid by the viewer to the Cable TV Operator for installation or connection or for transmission of different programmes, all that was intended as payment for enjoying the entertainment. It also decided Issue IV(b) in favour of the State noting that the incidence of tax was on entertainment as such and not on any individual. As regards Issue IV(c), the Court rejected the contention of the petitioners that the Page 191 of 321 tax was mostly on non-entertainment programmes which were of high educational value, and since it was not possible to apportion the tax between entertainment programmes and non- entertainment programmes, the entire levy had to be struck down as unconstitutional. It held that if the pith and substance of the Act brought an enactment within the scope of a particular legislative entry, it could neither be dissected into different parts nor could it be held that the major part of it fell outside the scope of the entry. It rejected the contention of the petitioner as regards Issue IV(d) at the very outset.

9.7 Issue V dealt with Article 14 and the Court reiterated the principles of law relating to classification in a fiscal enactment that the legislature has wide latitude in such matters. It noted that the classification was based on intelligible differentia having nexus with the object of the enactment and that there was no hostile discrimination whatsoever against Cable TV operators. As regards the urban/rural classification, the Court noted that merely because the operators in rural areas may not get as many customers as the operators get in urban areas, it cannot be a ground to provide differential rates, as the incidence of tax was on Page 192 of 321 entertainment and it was the same whether the viewer was in a village or a town or a city.

9.8 Issue VI invoked a right to privacy argument. According to the petitioners, due to the imposition of tax, the charges for getting such connections became out of reach for ordinary people and hence were deprived of watching programmes on the television in the privacy of their respective abodes. The Court dismissed this contention as far-fetched. It also noted that the tax was imposed only on the proprietor, and the law does not mandate that the same be passed on to consumers.

9.9 With regard to Issue VII, the Court reiterated the well- settled principle that it has no concern with the wisdom of the legislature in prescribing the rate of tax. It opined that when there was no prohibition in the Act against the proprietor passing on the tax liability to the customers, there was nothing wrong in the taxing enactment to prescribe the furnishing of security for the proper payment of tax. It also held as regards provisions for inspection that the Legislature was always entitled to make provisions to enable the proper enforcement of the levy. Holding so, it dismissed all the petitions.

Page 193 of 321 9.10 The Supreme Court in Suresh upheld this decision of the Madras High Court. It felt unnecessary to deal with all its conclusions except the submissions relating to i) freedom of speech and expression; ii) colourable legislation; and iii) the rate of tax. It noted that the activity of the appellants therein was a combination of two rights i.e. business and speech – sub-clause (g) and (a) of clause (1) of Article 19 and that there was no reason why the business part of it could not be taxed. It also noted that the State had duly explained its reasons for imposing tax at the rate of 40% and that since the appellants also carried on business, it was their duty to share the burden of the State by paying taxes like any other business.

Vasant Madhav Patwardhan:

Consequently, it upheld the competence of the State to levy the tax. An appeal against this judgment before the Supreme Court in Civil Appeal No. 7167 of 2000 was dismissed on the ground that the “point involved in this appeal is squarely covered by the judgment of this Court in Suresh”.

Geeta Enterprises vs. Purvi Communication:

10. During the course of the arguments, learned senior counsel Sri KK Venugopal submitted that the three Judge Bench judgment of this Court in Purvi Communication is per incuriam as it did not follow the reasoning of the coordinate Bench judgment in Geeta Enterprises and therefore, the correctness of Purvi Page 195 of 321 Communication must be examined by a larger Bench of five judges.

10.1 While the three judge bench in Geeta Enterprises held that the levy of entertainment tax necessitates that the entertainment in question have a public colour, the coordinate bench deciding Purvi Communication did not take note of the same and erred in holding that state legislatures are competent to impose entertainment tax under Entry 62 – List II on the services rendered by Cable TV Operators. In that regard, Sri Venugopal placed reliance on the judgment of the Constitution Bench of this Court in State of M.P. vs. Abha Sethi , (1999) 4 SCC 32 wherein Geeta Enterprises was cited with approval and its correctness affirmed. 10.2 Learned senior counsel further argued that the 1979 Act was amended in 2009 to introduce entertainment tax on DTH services. Our attention was drawn to the charging section of the 1979 Act i.e. Section 3 , which, according to Sri Venugopal, predicates the levy of entertainment tax upon “admission to an entertainment”. It was argued that watching television within the boundaries of one’s home cannot be considered “admission to an entertainment”. Page 196 of 321 Therefore, it was contended that the charging section does not apply to the activity of the assessees herein. Placing reliance on Bharat Sanchar Nigam Limited, it was further argued that the dominant nature of the activity of the assessees is that of broadcasting and this Court must be circumspect in holding otherwise.

10.3 The crux of the submission was that in Geeta Enterprises, the word ‘entertainment’, as used in section 2(3) of the Uttar Pradesh Entertainment and Betting Tax Act, 1937 impugned therein, was interpreted to require a ‘public colour’. He submitted that such an interpretation was in line with the meaning of the word ‘entertainments’ in Entry 62 - List II, which has historically required a ‘public colour’. The relevant paragraphs in Geeta Enterprises are as follows (p.818):

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.

39. In the tax matters, the State Legislature is free to, 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 Seventy Schedule.” (emphasis supplied) 10.6 We are of the view that Purvi Communication is not per incuriam and need not be referred to a larger Bench. To substantiate our reasons, let us revisit Geeta Enterprises and Purvi Communication in light of Entry 62 - List II. 10.7 In Geeta Enterprises, the petitioner therein permitted persons to enter the premises without any charge to view a show on the video which consisted mainly of sports, games etc. played on the screen of the video. Electronic machines were imported from Japan and the mechanism for playing the machine was so designed Page 199 of 321 that a coin of fifty paise was to be inserted into a strong box built within the machine, the keys of which was with the manufacturer. After the show was over, a representative of the manufacturing company would come, open the box collect the money and pay the share of the hire-petitioner therein out of the collected sale proceeds. The charge of inserting the coin was released only from those who wanted to operate the video machine at the rate of fifty paise for a show lasting up to thirty seconds. 10.8 In Geeta Enterprises, the applicability of entertainment tax on the video game installed by the petitioner therein was under

10.8.1 This Court went into the different meanings of ‘entertainment’ to arrive at a conclusion that it has been used in a very wide sense to include within its ambit, entertainment of any kind including one which may be purely educative. It rejected the contention of the petitioner therein that video games do not fall into the definition as no admission fee was charged from the viewers. It held that (at p.817), “…when a number of people without any admission fee enter a hall for entertainment and enjoy the games it becomes a public show and the hall where the video is played becomes a public hall and· amounts therefore to a public exhibition which is squarely covered by the first limb (exhibitional) of the definition of entertainment in Sub- section 3 extracted above.” (emphasis supplied) 10.8.2 Finally, the Court affirmed the views of the Allahabad High Court in Gopal Krishna Agarwal vs. State of Uttar Pradesh , (1982) All. L.J. 607 which held that entertainment tax was leviable on video games. It approved the High Court’s reasoning that, Page 201 of 321 “With the advance of civilization ·and scientific developments new forms of entertainment have come into existence. Video Games are probably the latest additions to the means of entertainment. These games require skill and precision as so many other games do. They are a source of amusement and enjoyment to those who participate in the games. Others who stand by and watch also derive some pleasure and amusement though not to the same degree. Admission to the premises where the Video Machines are installed may be free but payment is admittedly made if one wants to play the game. The money charged for use of the Video Machine is an admission to entertainment and the payment made by the person who uses the Machine is the payment for admission. In any case it is a payment for admission.” Section 3 of the 1937 Act, i.e. the charging section imposed tax on all payment for admission to any entertainment (entertainment tax). The question was, whether or not the aforesaid show would fall within the four corners of the expression “entertainment” which was defined to include any exhibitional, performance, amusement, game or sport to which persons are admitted for payment under the said statute. Having regard to the aforesaid definition and bearing in mind the varying definitions of the expression entertainment, it was observed that Section 2(3) of the said Act required certain tests to be applied in order to ascertain whether the activity fell within the aforesaid section. It Page 202 of 321 was in the context of the definition of the expression entertainment in the Act under consideration therein that this Court laid down the test. Ultimately, this Court observed that the video show in the instant case was exigible to tax under Section 3 of the Act considered therein and the Writ Petitions filed were dismissed. This decision pertains to the period prior to the ushering of television in the country.

10.8.3 On a reading of this judgment, it becomes clear that the interpretation of the word ‘entertainments’ includes newer forms of entertainment such as video games, while at the same time it viewed entertainment to have a public character. 10.9 Let us now consider Purvi Communication. In this case, the respondent therein was carrying on business as a multi-system operator (MSO) and engaged in receiving and providing TV signals to individual cable operators of various localities. Communication signals known as TV signals broadcasted by various satellite channels were received and distributed to sub-cable operators. The process involved in the business consisted of establishment of the state-of-the-art control rooms and spreading the cable networks. The said network signals were being given to various sub-cable Page 203 of 321 operators with whom the respondents had franchise agreement. According to the respondents therein, the object of the MSOs was to capture signals from various satellites and to put all of them in proper format/frequencies so that all those signals can travel together in cables without encroaching upon and interfering with other signals for the reception and distribution by the so-called cable operators. The signals are transmitted through the satellites by the various broadcasters from their earth up-linking stations in various parts of the world.

Respondent No.1 therein entered into franchise agreement with the individual cable operator of various localities and on the basis of the said agreement, it transmitted the said signals to the said individual sub-cable operators against a price. The individual sub-cable operators on the basis of the monthly subscription provided the said TV signals to the individual subscribers of the locality.

10.9.1 The State of West Bengal sought to impose a tax on MSOs engaged in receiving and providing television signals to individual cable operators of various localities by amending the Page 204 of 321 West Bengal Entertainment-cum-Amusement Tax Act, 1982 (“the 1982 Act”). Some of the relevant definitions under the Act were with regard to the expressions “cable operators”, “sub-cable operators”, “cable service”, “cable television network”, “subscriber” and “gross receipt”. The said Act was amended in 1998 by omitting sub-section (4) of Section 4A and inserting a new sub-section (4a) which provided that, “(4a) Where any owner, or any person for the time being in possession, of any electrical, electronic or mechanical device, is a cable operator and receives through such device the signal of any performance, film or any other programme telecast, and thereafter such owner or person, against payment received or receivable,-

i. exhibits such performance, film or programme through cable television network directly to customers, or 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.” 10.9.2 Aggrieved by the imposition of entertainment tax and the demand notices issued, the respondents therein challenged the Page 205 of 321 vires of the 1998 Amendment made to the 1982 Act as well as the demand notices before the Taxation Tribunal and being aggrieved by its decision approached the High Court under Article 226 of the Constitution.

10.9.3 It was contended on behalf of the sub-cable operators that they were not providing any entertainment within the meaning of Entry 62 – List II as providing the cable link up to the viewers was the only role. That the sub-cable operator was merely transmitting the signals received by the cable operator which were in the form of audio-video signal. Per contra, the State of West Bengal in the said case submitted that the cable operators were engaged in receiving and providing TV signals to individual sub- cable operators of various localities and such cable operators on their part transmit the signals to their respective subscribers, who are the actual consumers who get the benefit of the entertainment from the signals. That the signals received by the sub-cable operators are utilized for providing information and entertainment to their customers. That respondent No.1 before this Court was a cable operator and the MSOs like the respondent company were not only providing the input to the localized cable operators in their Page 206 of 321 business of providing cable TV connections and transmission or programme through cables but the MSOs were also concerned with value added services like internet, telephone and transmission of data. It was argued that the respondent therein did not carry on any activity which constituted entertainment or amusement. That the MSOs were different from sub-cable operators. It was contended that a cable operator in a locality who is actually providing the entertainment to his subscribers may be liable to pay tax but those who function at an intermediary stage cannot be held liable to pay the said tax.

10.9.4 It was further submitted that the taxable event, namely, the act or activity of entertainment must have a direct and proximate connection with the assessee on which it falls and must itself constitute entertainment. That unless an activity in question qualifies as entertainment itself, the taxable event of entertainment cannot arise. If the activity in question is not the taxable event (entertainment), the levy cannot be sustained. 10.9.5 The High Court of Calcutta allowed the writ petition filed by the MSO and declared section 4A(4a) of the 1982 Act as ultra vires the Constitution.

Page 207 of 321 10.9.6 On appeal by the State, the MSO submitted that they merely capture signals from various satellites and put all of them in proper format/frequencies for the reception and distribution by the sub-cable operators. However, the Court allowed the appeal by the State. While considering Section 4-A (4-a) of the State Act, it was observed that the purpose of the said provision was to levy and collection of the tax from any person who provides cable service directly to consumers or transmits to a sub-cable operators through a cable television network and otherwise controls or is responsible for the management and operation of a cable television network and such person has been defined as cable operator being a taxable person exclusively for the purpose of levy and collection of entertainment tax. Only when a cable operator so defined receives through any electrical, electronic and mechanical device, the signal of any performance, film or any other programme telecast and provides cable service directly to consumers 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 cable television network, he would be liable. Therefore, a cable operator is the source of entertainment Page 208 of 321 to the individual subscribers because, it is he who receives the signal of performance, film, and any programme which is transmitted or given to a large number of sub-cable operators (although they call them as cable operator). The viewers enjoy, or are entertained by such performance, film, or programme because of receiving and transmitting video or audio-visual signals through coaxial cable or any other device by the respondents. No entertainment can be presented to the viewers unless a cable operator transmits the video and audio signals to a sub-cable operator for instantaneous presentation of any performance, film or any programme on their TV screen. The sub-cable operators are mere franchisees who receive signals for transmission to the viewers only on payment of a price promised or paid in terms of agreements entered by and between them. Therefore, the respondents as a cable operator have direct and proximate nexus with the entertainment provided by them through their cable television network and as such, they are the taxable person in respect of their gross receipts in relation to any month for providing entertainments to the individual viewers. This Court observed that the respondents therein as cable operators for the purpose of levy Page 209 of 321 and collection of tax had 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 - List II to make law for the levy and collection of tax on such entertainments. This Court further observed in paragraphs 38 and 39 is as under:

section (4-a) of Section 4-A of the said 1982 Act which has a direct and sufficient nexus with the entertainments.” Page 211 of 321 10.9.7 It is thus clear that the cable operator, respondent No. 1 is the exhibitor in this case and also the provider of the entertainment to the customer. Hence, he alone can be asked to pay the tax on the entertainment that has resulted from this exhibition. This provision, therefore, does not cross the bounds of Entry 62 - List II and is intra vires. Providing a cable link up to the viewers' end is the only role of sub-cable operator. It is, therefore, inconceivable that despite putting forth the ready entertainment in the form of signal on the cable line, the cable operator cannot be said to be providing the entertainment within the meaning of Entry 62 - List II. So long as the State Act remains within the ambit of Entry 62 - List II and is not offending the provisions of Article 286 of the Constitution or the laws made thereunder, the State Act's validity is beyond question.

10.9.8 This Court further observed that in the said case, respondent No.1 therein sends visual images and audio signals for presentation to the individual subscribers in their 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 Page 212 of 321 by respondent No.1. Therefore, it cannot be disputed that the price or prices received or receivable by 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 respondent No.1 in relation to any month or part thereof. 10.9.9 It was observed with reference to Western India Theatres that existence of means or providing entertainment would be sufficient to support a law imposing tax thereon and that the means of providing entertainment provides the nexus between the taxing power and the subject of tax. It was further observed that if one is looking at the means of providing entertainment, both the cable operator and the sub-cable operator play equally significant role in providing such means of entertainment, namely, transmission of signals received from the satellites. In one sense the cable operator plays a more pivotal role than the sub-cable operator since the signals are received by him through his devices and transmitted while a sub-cable operator makes provision for continued instantaneous transmission of the signals. Page 213 of 321 10.9.10 It was further observed that the impugned legislation was in pith and substance not relating to broadcasting but one relating to entertainment within the scope and ambit of Entry 62 – List II. Accordingly, the appeals filed by the State of West Bengal were allowed by setting aside the judgment of the Calcutta High Court.

10.9.11 On a perusal of the judgment in Purvi Communication, it can be observed that there was no specific question raised as to, whether, the act of transmission by MSO has a ‘public colour’ to it. In fact, the Court was never required to go into such a question, for the impugned provision, i.e. section 4A(4a) of the 1982 Act, did not require such a ‘public colour’ to the activities of MSO. 10.10 There are other substantial differences between Geeta Enterprises and Purvi Communication as the table below enumerates due to which Geeta Enterprises and Purvi Communication cannot be compared.

Definition of ‘entertainment’ Amended section 4A(4a) of the under section 2(3) of the 1937 1982 Act (West Bengal Act) Act (UP Act) Page 214 of 321 Activity subject to taxation Video game operated on Transmission of signals by payment, in a parlour whose MSOs of any performance, film admission is free to public or any other programme telecast.

Date of Enactment of the provision impugned therein 1937 1998 Discussion on Entry 62 - List II No Yes 10.11 It was submitted by Sri Venugopal, learned Senior Counsel that the interpretation of the word ‘entertainments’ in Entry 62 - List II is restricted to ‘public entertainments’ and this Court was not right in Purvi Communication to hold that the impugned provision therein was constitutionally valid without determining whether that provision fell within the restricted interpretation of ‘entertainments’.

10.12 We do not agree with this limited interpretation of the word ‘entertainments’. We hold in line with the principle that words in entries must be given a broad, liberal and expansive interpretation. As discussed above, the impugned activity of transmission in Purvi Communication would still fall under its ambit.

Page 215 of 321 10.13 It is true that in the earlier times, many people did not have access to personal devices through which they could be entertained. The entertainments, therefore, were mostly restricted to those performed or displayed in public. With developments in technology, it has become possible for such entertainments to be experienced / enjoyed directly at home. In other words, what has changed is the manner in which entertainments are accessed or consumed. Nowadays, entertainment is available on a cell/mobile phone in our hands. The forum or platform for entertainment as well as the manner of perception has changed, namely, from direct/live viewing to digital viewing but the content is essentially the same, of course, with varieties of programmes, having regard to the target viewers/audience of such entertainment, etc. That, however, does not change the fact that such entertainment is curated and transmitted for the benefit of the public at large. Therefore, interpreting the activity taxed in Purvi Communication in this manner, we hold that television viewing via DTH would still fall within the ambit of “public entertainments”. 10.14 We also take note that the question of interpretation of ‘entertainments’ in Geeta Enterprises pertained to the Page 216 of 321 interpretation of the 1937 Act and not Entry 62 – List II as it appears in the Constitution. The judgment in Geeta Enterprises can never be a binding precedent for the question raised before this Court in Purvi Communication. Therefore, whereas the scope of interpretation for Geeta Enterprises was limited to interpretation of a provision in a statute we would be remiss to hold Purvi Communication as per incuriam for its failure to take note of Geeta Enterprises. Therefore, we find no reason to doubt the correctness of Purvi Communication.

“Aspect Theory” or Aspect Doctrine: A Discussion

11. In Canada, the distribution of legislative powers is provided in Sections 91 and 92 of its Constitution Act, 1867, dividing entries between the Federal Government (under section 91 ) and the Provincial Government (under section 92 ). The ‘Aspect’ theory, also known as the ‘double aspect doctrine’, is a tool of constitutional interpretation used in Canada to resolve issues which arise when both the Federal and the Provincial Governments have the right to legislate on a subject matter.

Page 217 of 321 11.1 Lord Haldane, in Union Colliery Co. of British Columbia vs. Bryden, 1899 AC 580 at 587, commented on the ‘aspect theory’ as follows:

The Bench noted as under:

Therefore, the scope for the use of ‘Aspect theory’ in taxation matters is limited in Canada. This distribution of taxation powers in Canada is markedly different from that in India. Under our Constitution, the subject matters of taxation available to Parliament are enumerated in Entries 82 to 97 - List I and those available to the State legislatures are in Entries 45 to 63 - List II. There is no taxation entry in List III or the Concurrent List. 11.6 There are also alternate propositions as regards this theory. For e.g., Sri Karthik Sundaram, in the book ‘Tax, Constitution and the Supreme Court’ (OakBridge Publishing Pvt. Ltd. 2024, p.112), argues that “the ‘aspect theory’ can, in some cases, be viewed as Page 220 of 321 an exception to the doctrine of ‘pith and substance’”. Contrarily, Sri V Niranjan, K.C. in Chapter 26 titled ‘Legislative Competence’ in the Oxford Handbook of the Indian Constitution, argues that there is no distinction between the doctrine of pith and substance and the aspect theory in the Indian context.

11.7 Despite the above observations, on a perusal of the cases in India which have referred to this theory, it would be evident that the use of ‘aspect theory’ in the Indian jurisprudence differs from its usage in Canada and that it is home-grown and innovated to suit the Indian context particularly in matters relating to taxation. In other words, while we may have borrowed the theory from Canada, its application in the Indian context has been within the context of the framework of the Indian Constitution. The theory is applied so as to save a provision of taxation rather than to a situation where a legislature’s competence to tax is determined. In other words, the aspect doctrine is applied to ascertain whether a legislature can tax on a particular aspect of a transaction/activity rather than on competence of a legislature vis-à-vis the scope of entries in List I or List II.

Page 221 of 321 11.8 To elaborate, it is necessary to revisit some significant judgments which have dealt with the concept of ‘Aspect theory’ and some judgments that have laid down principles for interpretation of entries governing taxation in the Seventh Schedule to the Constitution.

Usage of Aspect Theory in the Indian Context:

It is relevant to note here that a tax on luxuries is an exclusive subject matter of States under Entry 62 - List II. The other contention was that the particular impost under the impugned law, having regards to its nature and incidence, is really not an “expenditure tax” at all as it does not accord with the economists’ Page 223 of 321 notion of such a tax. The question therefore was whether the economists’ concept of such a tax qualifies and conditions the legislative power and whether “expenditure” laid out on what may be assumed to be “luxuries” or on the purchase of goods admits of being isolated and identified as a distinct aspect susceptible of recognition as being distinct field of tax legislation. 11.10.2 This Court referred to the ‘Aspect theory’ used in Canada by quoting Lefroy’s ‘Canada’s Federal System’ who opined that “one of the most interesting and important principles which have been evolved by judicial decisions in connection with the distribution of legislative power is that subjects which in one aspect and for one purpose fall within the power of a particular legislature may in another aspect and for another purpose fall within another legislative power.

“… that by ‘aspect’ must be understood the aspect or point of view of the legislator in legislating the object, purpose and scope of the legislation that the word is used subjectively of the legislator, rather than objectively of the matter legislated upon.” This Court further opined that, “Indeed, the law 'with respect to' a subject might incidentally 'affect' another subject in some way; but that is not the same thing as the law being on the latter Page 224 of 321 subject. There might be overlapping; but the overlapping must be in law. The same transaction may involve two or more taxable events in its different aspects. But the fact that there is an overlapping does not detract from the distinctiveness of the aspects.” (emphasis supplied) 11.10.3 Reference was made to Lord Simonds in Governor General in Council vs. Province of Madras, (1945) FCR 179:

In this case, the Hotel Receipts Tax Act, 1980 imposed a special tax of 15% on the gross receipts of certain hotels, where the room charges for residential accommodation provided to any person during the previous year was Rs.75 or more per day per individual. The petitioners therein argued that the reliance on Entry 82 – List Page 226 of 321 I in support of the tax was wholly misconceived and the tax in pith and substance was an impost under Entry 62 – List II reserved to the States. The respondents however submitted that the word ‘income’ in Entry 82 – List I should not be read in a narrow and pedantic sense, but must be given its widest amplitude. The Court agreed with the respondents therein and opined that, “The cardinal rule of interpretation is that the entries in the legislative lists are not to be read in a narrow or restricted sense and that each general word should be held to extend to all ancillary or subsidiary matters which can fairly and reasonably be said to be comprehended in it…In construing the words in a constitutional document conferring legislative power the most liberal construction should be put upon the words so that the same may have effect in their widest amplitude.” (emphasis supplied) 11.11.1 While this Court herein did not explicitly use the ‘aspect doctrine’, it is implied from its reasoning that by interpreting the word ‘income’ liberally, the impugned legislation had an aspect of ‘income’ and hence the Union had the legislative competence to impose tax on the subject-matter.

11.12 In State of West Bengal vs. Kesoram Industries Ltd. , (2004) 10 SCC 201, the Constitution Bench of this Court summarised the principles as regards interpretation of taxation Page 227 of 321 entries in List I and List II. While it did not explicitly refer to the ‘aspect theory’, it opined on different aspects of a transaction as follows:

This Court held that Entry 60 – List II which refers to ‘professions’ cannot be extended to include services and opined, “this is what is called as an Aspect Theory”. But it said no more on the theory. However, from its reasoning that Entry 60 - List II concerns a tax on the status and cannot be read to include every activity undertaken or service rendered by a chartered accountant/cost accountant/ architect, this Court suggested that the activity in question i.e. service rendered by such professionals did not have an aspect that can be covered by Entry 60 - List II which was only regarding being a part of a particular profession. It was further observed that a tax cannot be levied under the Finance Act, 1994 and its amendments without service being provided whereas a professional tax under Entry 60 - List II is a tax on his status. It is the tax on the status as a Cost Accountant or a Chartered Accountant. As long as a person or a firm remains in the profession, he/it has to pay professional tax. That tax has nothing to do with the commercial activities which he undertakes for his client. Even if the chartered accountant has no work throughout the accounting year, still he has to pay professional tax. He has to pay the tax till he remains in the profession. This is the ambit and Page 229 of 321 scope of Entry 60 - List II which is a taxing entry. Therefore, Entry 60 contemplates tax on professions, as such. 11.13.1 Referring to Western India Theatres Ltd. it was observed that Entry 50 of the Provincial List of the Government of India Act, 1935 contemplated a tax on entertainment or amusement as objects on which a tax was to be imposed and therefore it was not possible to differentiate between the entertainment provider and the entertainment receiver. 11.13.2 It was also highlighted that the importance of the judgment in Western India Theatres Ltd. was in the fact that it made a distinction between tax imposed for the privilege of carrying on any trade or calling on one hand and a tax on every show, that is to say on every incidence of the exercise of the particular trade or calling. It was held that if there was no show, there was no tax. It was held that the impugned tax on entertainment levied by the Cantonment Board was a tax on the act of entertainment resulting in a show and, therefore, the impugned law imposing tax on entertainment fell under Entry 50 of the Provincial List in Schedule VII to the Government of India Act, 1935 and not under Entry 46 of the Provincial List (similar to Entry 60 - List II). Therefore, it was Page 230 of 321 held that Bombay legislature had power to enact the law imposing tax on entertainment which had nothing to do with the law imposing tax on the privilege of carrying on any profession, trade or calling under Entry 46 (similar to Entry 60 - List II in the present case). Therefore, this Court had clarified the dichotomy between tax on privilege of carrying on any trade or calling on one hand and the tax on the activity which an entertainer undertakes on each occasion. The tax on privilege to practise the profession, therefore, falls under Entry 60 - List II. It is quite different from tax on services. Keeping in mind the aforestated dichotomy, it is clear that tax on service does not fall under Entry 60 - List II. Therefore, Parliament has absolute jurisdiction and legislative competence to enact the law imposing tax on services under Entry 97 - List I. 11.14 In Union of India vs. Mohit Minerals Pvt. Ltd. , (2018) 13 SCR 139 (“Mohit Minerals Pvt. Ltd.”), this Court explicitly held that, “the principle is well settled that two taxes/imposts which are separate and distinct imposts and on two different aspects of a transaction are permissible as “in law there is no overlapping”.” In this case the bone of contention between the parties was whether an Indian importer can be subject to the levy Page 231 of 321 of Integrated Goods and Service Tax (“IGST”) on the component of ocean freight paid by the foreign seller to a foreign shipping line, on a reverse charge basis. The notifications impugned in the said case whether amounted to leading to double taxation was considered.

11.14.1 The contention of the respondents therein was that the transaction between the foreign exporter and the respondents was already subject to IGST under Section 5 of the IGST Act read with Section 3(7) and 3(8) of the Customs Tariffs Act as “supply of goods”, and an additional levy of IGST on imported goods, that is on the supply of transportation service, by designating the importer as the recipient could amount to double taxation. The transaction involved three parties, namely the foreign exporter, the Indian importer and the shipping line. The first leg of the transaction involved a CIF contract, wherein the foreign exporter sells the goods to the Indian importer and the cost of insurance and freight are the responsibility of the foreign exporter. In other words, the foreign exporter is liable to ensure that the goods reach their place of destination and the Indian importer pays the transaction value to the exporter. The second leg of the transaction involved an Page 232 of 321 agreement between the foreign exporter and the shipping line (whether foreign or Indian) for providing services for transport of goods to the destination i.e., in the territory of India. The appellant- Union of India contended that the contract between the foreign exporter and the foreign shipping line – of which the Indian importer is not a party – cannot be deemed to be a part of “composite supply” within the meaning of Section 2(30) of the Central Goods and Service Tax Act (“ CGST Act ”). It was contended that while the first leg of the transaction, between the foreign exporter and Indian importer, is (according to the submission) a composite supply, the second leg is an independent transaction. In this regard, the Union of India relied on the decision of this Court in State of Andhra Pradesh vs. Mc Dowell & Co , (1996) 3 SCR 721 (“Mc Dowell”) to contend that a single element can constitute a levy and a part of the value for another transaction. Further the Union Government urged that the levy is on different aspects of the transaction.

11.14.2 This contention was not acceded to by this Court. It was ultimately held that the impugned levy imposed on the “service” aspect of the transaction is in violation of the principle of Page 233 of 321 “composite supply” enshrined under Section 2(30) read with Section 8 of the CGST Act. Since the Indian importer is liable to pay IGST on the “composite supply”, comprising of supply of goods and supply of services of transportation, insurance, etc. in a CIF contract, a separate levy on the Indian importer for the “supply of service” by the shipping line would be in violation of Section 8 of the CGST Act. Hence the appeal filed by the Union of India was dismissed.

11.15 The judgment of this Court in Bharat Sanchar Nigam Limited appears to have approached the application of ‘aspect theory’ differently. The principal issue which arose therein was, whether, the nature of transaction by which mobile phone connections (through SIM cards) are enjoyed is a sale or a service or both. If it is a sale then the States are legislatively competent to levy sales tax on the transaction under Entry 54 – List II but if it is a service, then the Parliament alone can levy service tax under Entry 97 – List I but if the nature of the transaction partakes of the character of both sale and service, then the moot question would be whether both legislative authorities could levy their separate taxes together or only one of them. The contention of the appellants Page 234 of 321 therein was that the transaction in question was merely a service and therefore only the Union had the competence to levy tax thereon. However, the respondents States argued that the transaction was a deemed sale under Article 366(29A)(d) of the Constitution read with the charging sections in their various sales tax enactments and therefore they were competent to levy sales tax on the transactions.

11.15.1 The impugned judgments therein had held that there was a sale of SIM cards by the service providers to the subscribers and that it is factually and legally distinct from the activity of giving connection or activation of SIM cards. However, this Court held that the expression ‘goods’ do not include electromagnetic waves or radio frequencies for the purpose of Article 366(29A)(d) and that the goods in telecommunication are limited to the handsets supplied by the service provider.

11.15.2 This Court clarified that what a SIM card represents is ultimately a question of fact. That in determining such an issue, the Assessing Authorities had to keep in mind the principle that if the SIM card was not sold by the assessee to the subscribers but was merely part of the services rendered by the service providers, Page 235 of 321 then a SIM card could not be charged separately to sales tax. However, if the parties intended that the SIM card would be a separate object of sale, only then it would be open to the Sales Tax Authorities to levy sales tax thereon. Therefore, the Court held that, as far as SIM cards were concerned, the issue was left for determination by the Assessing Authorities. 11.15.3 Further, this Court noted that the State would have had the power to separate the agreement to sell from the agreement to render service and impose tax on the sale, only if the transaction in truth represents two distinct and separate contracts and is discernible as such. It held that the test for composite contracts, other than those mentioned in Article 366(29A) , would be the intention of the parties and if there was no intention of sale of goods, then the State cannot impose a sales tax even if the contract could be disintegrated. Furthermore, the Court held that it would be possible for the State to tax the sale element provided there is a discernible sale and only to the extent relatable to such sale. 11.15.4 As regards the ‘aspect theory’, this Court noted that the High Court in the impugned judgment therein could not have used the theory to “enable the value of the services to be included in the Page 236 of 321 sale of goods or the price of goods in the value of the service” and that the ‘aspect theory’ merely deals with legislative competence. It further noted, observing on the judgment of this Court in Federation of Hotel & Restaurant Association of India that:

11.15.5 It further held that no one denies the legislative competence of States to levy sales tax on sales provided that the necessary concomitants of a sale are present in the transaction and the sale is distinctly discernible in the transaction. After narrating the Constitutional history which led to the amendment of Article 366 by insertion of clause (29-A) by the Forty Sixth Amendment to the Constitution, it was observed that of all the different kind of composite transactions, the draftsman of the Forty Sixth Amendment chose three specific situations namely, a works contract, a hire-purchase contract and a catering contract to bring them within the fiction of a deemed sale. Of these three, the first Page 237 of 321 and third involve a kind of service and sale at the same time. Apart from these two cases where splitting of the service and supply has been constitutionally permitted in sub clause (b and f) of Clause (29-A) of Article 366 , there is no other service which has been permitted to be so split. It was further observed that if there is an instrument of contract which may be composite in form in any case, other than the exceptions in Article 366 (29-A) , unless the transaction in truth represents two distinct and separate contracts and is discernible as such, then the State would not have the power to separate the agreement to sale from the agreement to render service and impose tax on the sale. The test therefore for the composite contract other than those mentioned in Article 366 (29- A) continues to be: did the parties have in mind or intend separate right arising out of the sale of goods? If there was no such intention there is no sale even if the contract could be disintegrated. The test for deciding whether a contract falls into one category or other is to ask what is the substance of the contract. In other words, the court termed it ‘the dominant nature test’.

11.15.6 It was further observed that what a SIM Card represents is ultimately a question of fact. It was also observed that the States Page 238 of 321 have the power to levy sales tax on sales provided the necessary concomitants of a sale are present in the transaction and the sale is distinctly discernible in the transaction. This does not however allow the State to entrench upon the Union List and tax any 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 divisible under Article 366 (29-A) , the value of the goods involved in the execution of the whole transaction cannot be assessed to sales tax. For the same reason the Centre cannot include the value of the SIM Card, if they are found ultimately to be goods, in the cost of the service.

11.15.7 Therefore, this Court did not apply the aspect theory in the aforesaid judgment because it did not find an aspect of sale in the activity of mobile phone connections. It was observed 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.

11.15.8 In the aforesaid case, reference was made to Gujarat Ambuja Cements Ltd. vs. Union of India , (2005) 4 SCC 214. In this case, the writ petitions were filed challenging the Page 239 of 321 constitutional validity of Sections 116 and 117 of the Finance Act, 2000 and Section 158 of the Finance Act, 2003 by which the decision of this Court in Laghu Udhyog Bharti vs. Union of India , (1999) 6 SCC 418 (“Laghu Udhyog Bharti”) striking down Rules 2 (1)(d)(xii) and (xvii) of the Service Tax Rules, 1994 (as amended in 1997) was sought to be overcome. The writ petitioners were the customers or the clients of goods transport operator and of forwarding and clearing agents. One of the contentions raised was that the Parliament was not competent to levy the service tax as it encroached upon the States Government power as defined in Entry 56 – List II which pertains to “taxes on goods and passengers carried by road or an inland waterways”. That Parliament could not by resorting to the residuary Entry 97 – List I circumvent Entry 56 – List II and in the guise of levying service tax in fact, levy a tax on transport of goods. The imposition of service tax on the customers was challenged by many of the writ petitioners in Laghu Udhyog Bharti but in the later case the legislative competency to levy service tax on carriage of goods by transport operators was not considered. It was contended that the subject fell under Entry 56 – List II and therefore could not come within Entry 23 read with Page 240 of 321 Entry 97 – List I. This contention was not accepted. In paragraph 27 of this judgment, it was observed that there is a distinction between the object of tax, the incidence of tax and the machinery for the collection of the tax. The distinction is important but is apt to be confused. Legislative competence is to be determined with reference to the object of the levy and not with reference to its incidence or machinery. There is a further distinction between the objects of taxation in our constitutional scheme. The object of tax may be an article or substance such as a tax on land and buildings under Entry 49 - List II, or a tax on animals and boats under Entry 58 - List II or on a taxable event such as manufacture of goods under Entry 84 - List I, import or export of goods under Entry 83 - List I, entry of goods under Entry 52 - List II, or sale of goods under Entry 54 - List II to name a few. Dealing with Entry 56 – List II it was held that the subject matter of taxation under that entry are goods and passengers. The phrase “carried by road or natural waterways” carves out the kinds of goods or passenger which or who can be subject to tax under the entry. After making an analysis of the entry with reference to the dictum in Rai Ramakrishna vs. State of Bihar , AIR 1963 SC 1667, it was observed that entry 66 Page 241 of 321 read with Section 65 (41)(j) and 67 (m-a) in Chapter V of the Finance Act, 1994 did not seek to levy tax on goods or passengers but the service of transportation itself which is a distinct levy from what is envisaged under Entry 56 – List II. It may be that both the levies are to be measured on the same basis but that does not make the levy the same. Placing reference on Federation of Hotels and Restaurant Association of India, it was observed that service tax is not a levy on passengers and goods but on the event of service in connection with the carriage of goods; it is not therefore, possible to hold that the Act in pith and substance is within the States’ exclusive power under Entry 56 - List II. It was further observed that the point at which the collection of the tax is to be made is a question of legislative convenience and part of the machinery for realisation and recovery of the tax. The manner of the collection has been described as “an accident of administration; it is not of the essence of the duty”. It will not change and does not affect the essential nature of the tax. Subject to the legislative competence of the taxing authority, a duty can be imposed at the stage which the authority finds to be convenient and the most effective, whatever stage it may be. The Central Government is therefore legally Page 242 of 321 competent to evolve a suitable machinery for collection of the service tax subject to the maintenance of a rational connection between the tax and the person on whom it is imposed. By Sections 116 and 117 of the Finance Act, 2000, the tax is sought to be levied on the recipients of the service. They cannot claim that they are not connected with the service since the service is rendered to them. It was observed that if in substance, the statute is not referrable to a field given to the State, the Court will not by any principle of interpretation allow a statute not covered by it to intrude upon this field.

11.16 It is relevant at this juncture to discuss the judgment of this Court in Imagic Creative. In that case, the appellant- company was an advertising agency which used to create original concept and design advertising material, brochures, annual reports etc. for its clients. It used to file its returns for service tax under Finance Act, 1994 and also for sales tax under Karnataka Sales Tax Act, 1957. There was no express contract between the appellant and their clients. But their purchase order and invoice showed three categorical divisions; i) the amount of service tax on the specific design and production; ii) the amount of sales tax on Page 243 of 321 the specified item on the first sale; and iii) when certain items are outsourced, the tax payable on resale of the said goods in terms of section 6(4) of the Karnataka Sales Tax Act, 1957. The assessing authority concerned, however, held that the entire activity undertaken by the appellant therein was a comprehensive contract and hence the entire sale value including the creation of concept and design, formed part of the value of sale and was accordingly liable to tax. The said order was confirmed by Tribunal as well as High Court.

11.16.1 The question before this Court was, whether, the charges collect towards the services for the evaluation of the proto- type conceptual design (that is creation of concept), on which service tax has been paid under the Finance Act, 1994 as amended from time to time are liable to tax under Karnataka Value Added Tax Act, 2003 . This Court allowed the appeal filed by the appellant therein. It held that payments of service tax as also Value Added Tax are mutually exclusive and therefore, they should be held to be applicable having regard to their respective parameters. It noted that a distinction must be borne in mind between an indivisible contract and a composite contract and that if in a contract, an Page 244 of 321 element to provide service is contained, the purport and object for which the Constitution was amended so as to insert Article 366(29A) must be kept in mind.

11.16.2 It was observed that the appellant in the said case (Imagic Creative) admittedly was a service provider and therefore was assessable to a service tax under the Finance Act, 1994 which is a Parliamentary statute. That while interpreting a taxing statute under Article 246 of the Constitution read with Seventh Schedule thereof, the Court may have to take recourse to various theories including “aspect theory”, as was noticed by this Court in Federation of Hotels and Restaurant Association of India. It was further observed that where a Parliamentary and State Act come up for consideration, an endeavour has to be made to see that provisions of both the Acts are made applicable. That payment of service tax and also VAT are mutually exclusive, they should be held to be applicable having regard to the respective parameters of service tax and the sales tax as envisaged in a composite contract as contradistinguished from an indivisible contract. It may consist of different elements providing for attracting different nature of levy. It is, therefore, difficult to hold that in a case of this nature, Page 245 of 321 sales tax would be payable on the value of the entire contract, irrespective of the element of service provided. Aspect Theory: Its Extent and Scope in India:

Some of the relevant principles are reiterated as follows:

The aspect theory has no relevance in determining the constitutionality of any provision on the ground of legislative competence. Rather, aspect theory concerns the relation between the legislation which seeks to impose a tax on a subject-matter and the activity sought to be taxed. In other words, the constitutional validity of a taxing statute on the grounds of legislative competence has to be examined in the context of the doctrine of pith and substance as envisaged under Article 246 of the Constitution of India to ascertain whether a particular legislature i.e., Parliament or a State Legislature, as the case may be, has the competence to legislate in relation to the particular field of legislation while interpreting the field of legislation as epitomised in the respective entries in the three Lists. A broad perspective of the entries must be envisaged. Once the contours of the entry under which a Page 249 of 321 legislation is made is ascertained, the next step is to study the legislation in question in order to ascertain whether it is covered or falls within the contours of an entry. If it does fall within the contours of a particular entry in a particular List, then that particular legislature which has enacted it would have the legislative competence to enact such a legislation. If it incidentally touches upon an entry in another List, it does not render it invalid. That means that so long as a piece of legislation is in pith and substance coming within an entry in a particular List, it would be valid as the legislature which has enacted, has the legislative competence to do so.

11.21 The aspect theory has really no role to play as regards determining legislative competence of a particular legislation, since the Constitution does not envisage such a test. However, in the Indian context, the ‘aspect theory’ is relevant to determine the applicability of a taxing statute on the activity sought to be taxed i.e., whether the statute covers a transaction/activity which falls within a specific taxation entry either in List I or in List II. An activity may have multiple aspects on which different legislatures can impose a tax falling within its legislative competence. In such Page 250 of 321 a situation, the courts would save the tax from a challenge on the basis of the aspect theory by discerning which aspect of the activity falls within the subject matter of tax under a legislation relatable to a particular entry of a List in the Seventh Schedule. Such a determination of the aspects which are present in an activity is a factual inquiry. Thus, an activity could be taxed by two different legislatures on the basis of the entries in the respective Lists without there being a clash and within their legislative competence. However, the aspect of the activity which is being taxed must be relatable to the legislation under a specific entry of a particular List so as to be within legislative competence of a particular legislature. 11.22 This is in contrast to the applicability of this theory in Canada, where this theory is used therein to determine legislative competence of a federal or provincial legislature to enact a particular law. The reason why we observe that the aspect theory has no relevance in determining the constitutional validity of a legislation is that such a ground is not prescribed anywhere in the Constitution. This Court in Mc Dowell held that the power of the Parliament or, for that matter, the State legislature, to legislate can be struck down by Courts on two grounds and two grounds alone, Page 251 of 321 viz., (i) lack of legislative competence; and (ii) violation of any of the fundamental rights guaranteed in Part-III of the Constitution or any other constitutional provision. This Court was categorical in noting that there was no third ground. Similarly, in Anjum Kadari vs. Union of India , 2024 INSC 831, this Court had to decide whether a statute can be struck down for violation of basic structure of the Constitution, and based on a survey of prior judgments, held as follows:

However, as regards SIM card, it observed that “what a SIM card represents is ultimately a question of fact as has been correctly submitted by the States”. It held that if the parties intended that the SIM card would be a separate object of sale, only then it would be open to the Sales Tax Authorities to levy sales tax thereon. Therefore, as far as SIM cards were concerned, the Court left the issue for determination by the Assessing Authorities. 11.27 If we proceed to understand the above facts from the perspective of aspect theory enunciated above, it would be clear that the question in essence in Bharat Sanchar Nigam Limited was whether there was an aspect of sale in the activity of the petitioners therein and consequently, whether the States could validly impose sales tax thereon. This is nothing but a question of the applicability of the various state enactments on the activity in question, rather than a question of the validity of the enactment. Page 255 of 321 The Court ultimately held that electromagnetic waves were not ‘goods’. However, it left the issue of SIM cards to the determination of Assessing Authorities. This meant that, on a case-to-case basis, the Assessing Authorities had to determine whether there was an aspect of sale in the activity they sought to bring to tax, by examining whether the parties intended that the SIM card was a separate object of sale. In other words, the Assessing Authorities had to make a factual enquiry as to whether there was an aspect of sale in the activity they sought to tax under the relevant sales tax legislation. If there was an aspect of sale, then sales tax was leviable but if it was purely service then sales tax could not be levied. But what would be the position if an activity has an aspect of sale as well as service? Applying the said analogy to the instant case, the question is, what is the consequence if an activity has an entertainment aspect as well as a service aspect/element. Application of Aspect Theory to the Case at hand:

12.1 Section 66 (5) of the Finance Act, 1994 as amended from time to time is the charging section and service tax at the rate of 5% of the value of the taxable service (broadcasting service in the instant case) as defined above is chargeable to tax. Thus, the tax is 5% of the value of taxable services levied on the service provider rendering broadcasting services.

12.2 The expression “broadcasting” has been expanded from time to time to include not only dissemination of any form of communication but also programme selection, scheduling or presentation of sound or visual matter on a radio or a television channel that is intended for public listening or viewing, as the case may be, irrespective of where the location of the broadcasting agency is. In the year 2002, Section 65 (90) (zk) was amended whereby the “broadcasting agency” could provide service by its representative in India or any agent appointed in India or by any person appointed to act on his behalf in any manner. This is Page 258 of 321 irrespective of whether encryption of the signals of beaming thereof through satellite might have taken place outside India or not. 12.3 The definition of “broadcasting” read with “broadcasting agency or organization” was amended in the year 2003, wherein it said that a “broadcasting agency” or organization means any agency or organization engaged in providing service in relation to broadcasting in any manner irrespective of its location and includes inter alia a representative in India or any agent appointed in India engaged in the activity of selling of time slots for broadcasting of any programme or obtaining sponsorships for programme or collecting the broadcasting charges on behalf of the said agency or organisation.

12.4 In the year 2005, the Finance Act, 1994 was again amended to define “broadcasting” to include a broadcasting agency or an organization collecting the broadcasting charges for transmission of electromagnetic waves through space or through cables, direct to home signals or by any other means to cable operator including multisystem operator or any other person on behalf of the said agency or an organization through any representative or agent Page 259 of 321 appointed in India. Thus, service tax was levied on direct to home (DTH) broadcasting services.

Modus Operandi of the Assessees and their aspects:

13. As regards the business of the assessees herein, they are DTH broadcasting service providers licensed by the Central Government in terms of the provisions of Section 4 of the Indian Telegraph Act, 1885 and Section 5 of the Indian Wireless Telegraphy Act, 1933. Their modus operandi is that they set up a hub which enables them to downlink signals from the satellites of various broadcasters of TV channels (Star, BBC, etc.), then they uplink those signals to their own Ku Band (such as INSAT 4CR satellite) designated transponders for transmission of the signals in Ku band. These signals are received by the dish antennae which are installed at the subscribers’ premises. Since these signals are in encrypted form they are decrypted by the Set-Top Boxes and the viewing cards inside these boxes enable subscribers to view the various TV channels on their TV sets. Invariably, the set-top boxes are installed without any consideration and remain the property of the assessees.

Page 260 of 321 13.1 If we closely examine the modus operandi of the activity undertaken by the assessees, it would be evident that their activity involves at least two aspects: the first, is the act of relaying the signals from the satellites of various broadcasters of TV channels, and the second, is the object of such relaying of the signals, which is the effect of the content delivered to the subscriber. This effect is nothing but the entertainment of the subscribers. In other words, the activity of the assessees involves at least two aspects which correspond to the subject-matter of the levy under the Central Finance Act, 1994 , namely, broadcasting service and the respective State enactments as providing entertainment to the subscribers. 13.2 It is the contention of the assessees that their activity merely involves the relaying of the signals and they are in no way related to the content that these signals carry and are not concerned with providing entertainment. However, as held in Purvi Communication, no entertainment can be presented to the viewers unless the broadcaster transmits the signals for instantaneous presentation of any performance, film or any programme on their T.V. screen. The second aspect here concerns not the kind of content of the signals, rather it is the effect of the Page 261 of 321 decryption of the signals by the Set-Top Boxes and the viewing cards inside these boxes provided by the assessees. Without the apparatus provided for by the assessees to decrypt the signals, the subscriber would not be able to watch the content that is transmitted, the content being for the purpose of entertainment. In other words, the State enactments are concerned about broadcasting for the purpose of entertainment. It makes an assumption that whatever be the content, the very act of presentation of any performance, film or any programme on the T.V. screen leads to entertainment which is reckoned to be a luxury. Therefore, the assessees as DTH operators have direct and proximate nexus with Entry 62 – List II. The entertainment provided by them through their modus operandi is a luxury within the meaning of that entry.

13.3 Although, the case at hand is different from Purvi Communication in two respects; however, in our view, these differences are immaterial and only support the view that the observations in Purvi Communication are squarely applicable to the modus operandi of the assessees and the second aspect herein. Firstly, in the present case, the mode of transmission is through Page 262 of 321 DTH broadcasting services and not transmission via cable. Secondly, the present is a case of direct transmission by the assessees to the customers and not through a hierarchical network of cable operators. In our view, both these differences do not detract from the view of this Court in Purvi Communication that the activity of providing and receiving broadcast signals and then relaying them ahead is ‘no doubt, an act of offering entertainment to the subscribers and/or viewers’ and, consequently, the State legislatures are competent to enact laws under Entry 62 – List II imposing taxes on entertainment. The first difference noted above merely speaks to the difference in medium of transmission and does not deviate from the essential nature of the activity, as discussed in Purvi Communication. The second differentiation, again, only makes clearer the proximity of the assessees herein with the act of entertainment. In some manner, it is fair to suggest that the defence of lack of remoteness to the act of entertainment taken by the cable-operators in Purvi Communication is, in fact, not available to the assessees herein and therefore they are not on a better footing, at least on this limited question. Page 263 of 321 13.4 Furthermore, with reference to our semantical survey of ‘entertainments’ above, the assessees are clearly engaged in ‘work in connection with, or for the purposes of, any cinema, exhibition or entertainment.’ Juxtaposing our view with the observations of this Court in Purvi Communication, we also find that the activity of the assessees is an ‘action of providing or being provided with amusement or enjoyment’.

13.5 The first aspect discussed above correlates with the imposing of service tax by the Parliament, and the second aspect correlates with the imposition of entertainment tax by the States, through their respective enactments. Thus, the activity of entertainment falls within the scope and ambit of Entry 62 – List II as being a specie of luxury. The service of broadcasting rendered falls under Entry 97-List I. Therefore, both the taxes, one, by the State Legislature and the other, by the Parliament are leviable on the activity of the assessees herein. This is because by rendering the service of broadcasting, the assesses are entertaining the subscribers within the meaning of Entry 62-List II. There may be an overlapping, in fact, inasmuch as different aspects of the same activity is being taxed under two different legislations by two Page 264 of 321 different legislatures. But, there is no overlapping in law. This is because the activity of broadcasting is a service and liable to service tax imposed by the Parliament (Entry 97 – List I) and the activity of entertainment is a subject falling under Entry 62-List II and therefore, the assessees herein are liable to pay entertainment tax as well. Hence, the State Legislatures as well as the Parliament, both have the legislative competence to levy entertainment tax as well as service tax respectively on the activity carried out by the assessees herein.

Allahabad High Court’s Ruling on retrospective operation of the Amendment:

14. Another question which arises in relation to the Impugned Judgment dated 27.07.2012 of the Allahabad High Court is whether notices issued before the Amendments of 2009 came in force could demand entertainment tax for the period before express provisions in respect of DTH services were inserted in the U.P. Entertainment and Betting Tax Act, 1979 (‘the 1979 Act’). In other words, whether the amendments were merely clarificatory in nature and entertainment tax on DTH services could be levied Page 265 of 321 retrospectively? A brief legislative history of the 1979 Act is relevant for our consideration:

ii. In 1995, to bring cable services within the scope of the Act, the State Legislature vide U.P. Act No. 28 of 1995 amended the 1979 Act by defining ‘cable services’ and ‘cable television network’ and inserting Section 4C, a separate charging section for levying entertainment tax on cable services. Sub- section (2) of Section 4C provided that the tax payable under this section shall be paid, collected and realized in such manner as may be prescribed. Therefore, the collection machinery was prescribed within the section itself. Page 266 of 321 iii. In 2001, the State Legislature by way of U.P. Act No. 15 of 2001 amended the 1979 Act again by inserting the definition of ‘cable operator’.

iv. Pertinently, the U.P. Ordinance No. 4. Of 2009 dated 16.06.2009 amended several provisions of the 1979 Act to provide for imposition of entertainment tax on DTH services. Sub-clause (a) was amended to broaden ‘admission to entertainment’ to include entertainment provided by means of cable television network or DTH. After sub-clause (f) to Section 2 , sub-clause (f-1) was inserted defining ‘Direct-to- Home service’ to effectively expand the scope of the charging section to include direct to home services. The definition of ‘payment for admission’ in Section 2(l) was expanded by inserting sub-clause (vi) and sub-clause (vii) which included ‘contribution or subscription or installation and connection charges or any other charges’ collected for television exhibition though cable television network or for the purpose of DTH service. The State Legislature passed the bill by which the Ordinance was promulgated into the Act which was Page 267 of 321 notified on 27th August 2009 and came into force w.e.f. on 16th June 2009.

v. On September 4th, 2009, a Notification No. 1672/XI-Ka.Ni.-6- 2009-M.(92)-2009 was issued under the Act notifying the rates of entertainment tax. For DTH Services, Item No. 5 provided a levy of 25 per cent out of each aggregate payment. 14.1 We may note that we are concerned only with the period prior to 16.06.2009 i.e. the day prior to coming into force of the express provisions for DTH services inserted in the 1979 Act. 14.2 The impugned judgment took note of the view of Patna High Court in Sky Vision T.V vs. State of Bihar , 1995 (2) BJLR 845 which had held that the imposition of entertainment tax on cable operators was liable to be set aside in the absence of specific charging section and relevant specific entry for cable services. Impugned Judgment also noted the judgment of the Uttarakhand High Court in Dish TV India Ltd. vs. State of Uttarakhand, W.P. (M/S) No. 2562/2007 wherein the learned Single Judge allowed a batch of writ petitions preferred by service providers by holding that in absence of any specific provision in the 1979 Act – the State Page 268 of 321 of Uttarakhand had adopted the 1979 Act - no entertainment tax can be levied on DTH services. The Uttarakhand High Court also negatived the argument that merely because express provisions to tax cable services were present on the statute book they could be broadly read to tax DTH Services. The learned Single Judge had, despite holding in favour of the service providers, observed that it was open to the legislature to introduce appropriate amendments. Aggrieved, an appeal was preferred by the State of Uttarakhand before the Division Bench in, inter alia, Special Appeal No. 21/2009 which was also dismissed on the ground that DTH services were not covered under the Act. Aggrieved by the decision of the Division Bench, the State had preferred SLP(C) No. 14605/2009 which was dismissed in limine by this Court vide order dated 16.07.2009. 14.3 On the other hand, the Impugned Judgment cited with approval the judgment of Madhya Pradesh High Court at Jabalpur in Tata Sky Ltd. vs. State of M.P., W.P. No.10148/2009 which had upheld the levy of entertainment tax on DTH services even for the period when no specific provision was present in the Madhya Pradesh Entertainments Duty and Advertisements Tax Act, 1936 (‘M.P. 1936 Act’) for levy of entertainment tax on DTH Page 269 of 321 services. Some sections of the M.P. 1936 Act are relevant to extract herein. Section 2(b) defined "entertainment" as:

14.4 Section 2(d) defined "payment for admission". At the time of consideration by the Madhya Pradesh High Court, Section 2(d) read as under :

Explanation I.—Any subscription raised or donation collected in connection with an entertainment in any form shall be deemed to be payment for admission.

Explanation II.—Where entertainment is provided as part of any service by any person, whether forming an integral part of such service or otherwise the charges received by such person for providing the service shall be deemed to include charges for providing entertainment or access to entertainment also."

14.5 Section 4 provided the machinery for effectuating the charge. Pertinent for our interest is that Section 3-B, which was inserted in the M.P. 1936 Act with effect from 01.04.2000, dealt with cable operators. Sub-section (1) of Section 3-B dealt with entertainment duty payable by cable operator and it made a cable operator, providing access to entertainments through cable service to subscribers of such service, not being owner or occupants of rooms of hotel or lodging house, liable to pay duty at the rate of twenty rupees per month per subscriber in urban and cantonment areas.

Page 271 of 321 14.6 The High Court, after surveying observations of this Court on the scope of ‘entertainment’, held that even in the absence of a specific section the inclusive definition of "entertainment" under section 2(b) would subsume the "entertainments" provided by DTH services and tax on DTH services can, therefore, be realised from the service provider the said expression in any case used in a plural sense under the Constitution.

14.7 Significantly, the aforesaid judgment of the Madhya Pradesh High Court was overruled by this Court in Tata Sky Ltd. vs. State of M.P. , (2013) 4 SCC 656 ( “Tata Sky v. M.P.” ) holding that DTH services are not covered by the provisions of Section 3 read with Sections 2(a) , 2(b) and 2(d) of the M.P. 1936 Act. It was noted that the history of legislative amendments showed that the M.P. Act of 1936 was inadequate to bring shows by video cassette recorder or video cassette and player and cable T.V. operations within the tax net, and hence specific sections were brought in. It was also noted by this Court that the collection machinery for levy of entertainment tax on cable TV operations was in-built and provided within the respective provisions of Section 3-B and lay not within Section 4 , which provided the general collection machinery. Page 272 of 321 Holding that as the M.P. Act of 1936 was concerned only with place-related entertainment, DTH services could not be brought within the tax net.

14.8 Coming back to the impugned judgment, it was argued before the Allahabad High Court that DTH services were not covered under the U.P. Entertainment and Betting Tax Act, 1979 prior to the 2009 amendments, and this was apparent from the fact that the State had to bring in specific amendments to levy entertainment tax on DTH services as well as to prescribe a charging machinery for such a levy, which was earlier absent. Additionally, it was argued that there is no taxation by implication and therefore the express provisions for levy of entertainment tax on cable operators in the 1979 Act cannot be given a reading so broad to also include DTH services. Summarily, it was argued that substantial amendments were brought in the Act which cannot be given retrospective effect. However, this argument was negatived by the High Court by observing that inclusion of the words ‘Direct- to-Home service’ in Section 2 (f-1) and Section 2(l)(vi) and (vii) was only by way of clarification to include DTH services. Page 273 of 321 14.9 According to the High Court, Section 3 i.e. the charging section made it clear that the tax is on entertainment and when viewed broadly, the emphasis of the Act was on entertainment and not the means through which such entertainment was being provided to the subscriber. Furthermore, the High Court did not accept the contention of the writ petitioners therein that there is a difference between cable services and DTH services. Reliance was placed on the judgment of this Court in Purvi Communication to observe that the tax is not on the vehicle for transporting the contents and the method, but is on the entertainment itself. Noting that as modern technologies develop ‘it will not be necessary for the Act to be amended again to impose entertainment tax on such entertainments’ as the principal activity will continue to remain entertainment and not the method by which the entertainment is provided, the High Court held that entertainment tax on DTH service is liable to be paid both for pre-amended period as well as after the amendments discussed above.

14.10 Useful to note is that both the learned Single Judge and the Division Bench of the Uttarakhand High Court had concluded that the State could not treat DTH service providers on par with Page 274 of 321 cable operators for levy of entertainment tax due to the stark technological differences between the two. It stands to reason that these technological differences also manifest into the specificity and operations of these services. Similar provision for taxing cable operations was also present in the M.P. Act of 1936. 14.11 As the Impugned Judgment was pronounced on 27.07.2012 and the judgment of this Court was pronounced on 16.04.2013, the High Court did not have the benefit of this Court’s opinion in Tata Sky v. M.P. Even otherwise, in our view, there needs to be a specific inclusion of DTH services within the ambit of entertainment in the charging provision of the relevant taxing statute. In the absence of specificity, the lacuna of a missing taxable event persists insofar as bringing DTH services within the taxing net is concerned. It is trite law that no vagueness can be permitted in taxing statutes neither can a tax be levied by implication. Precisely this lacuna was sought to be filled by way of substantial amendments brought in by Amending Act of 2009. Furthermore, when the charging Section 4C levied entertainment tax on a ‘cable television network’ providing cable service, the statutory definitions of ‘cable service; and ‘cable television network’ Page 275 of 321 could not be so broadly read to include DTH services. Inserted in 1995, Section 2(ee) , in essence, defined cable service to mean the ‘transmission by cables of programmes’ and Section 2(eee) , in essence, defined ‘cable television network’ to mean a system designed to provide ‘cable service for reception by multiple subscribers;’. In our view, to countenance reading in DTH service in the aforesaid carefully incised definitions would be to militate against the literal meaning of words. We need not reiterate that the activity of the DTH service does not involve transmission by cables of programmes. For these reasons, we are of the view that the State of U.P. cannot take strength from the unamended 1979 Act to levy entertainment tax for any period before the amendments came in force. Consequently, the conclusion of the Allahabad High Court that the entertainment tax on DTH service is thus liable to be paid both for pre-amended period as well as after the amendment is not correct. The amendments made cannot be construed to be a clarification to include the DTH service as a new technology and method within the purview of the Act. Hence, in the above context and to the limited extent, the appeal filed against the judgment of the Allahabad High Court is allowed.

Page 276 of 321 State of Kerala vs. Asianet :

15.8 Therefore, in sum and substance, the provisions of the state Act authorizing levy and collection on Cable TV Operators with connections of 7500 or above was declared as unconstitutional for being discriminatory and violative of Article 14 of the Constitution. Submissions:

Judgments relied upon by State of Kerala:

As further held in Federation of Hotel & Restaurant Association of India, the test of the vice of discrimination in a taxing law are, therefore, less rigorous.

15.11 On the question of the constitutionality of classification on the basis of criterion such as scale of operations, profits of businesses, etc., the following judgments were cited:

15.16 Pertinently, the Finance Act, 2011(Act No. 16 of 2011) deleted all cable operators from the purview of the Kerala Act of 1976. Therefore, the impugned judgment dated 28.06.2012 is only concerned with the levy of luxury tax on only on cable TV operators from 2006-2010.

Page 288 of 321 15.17 In our view, the High Court erred in holding that the classification was unreasonable and lacked any rational nexus with the objects of the Kerala Act of 1976. Indeed, the intent of a taxing statute is to broaden the tax base and raise revenue for the State, however it is also settled law that the judiciary will ordinarily allow for greater latitude to be given to the legislature and defer to its economic wisdom in taxing statutes. In Income Tax Officer, Shillong vs. R. Takin Roy Rymbai , (1976) SC 670, this Court had usefully held that:

Even if the statistics presented before the High Court regarding the cable TV operators and their subscribers evinced that the exemption given by the amendment and retrospective exemption granted by the proviso pushed 90% of the operators outside the scope of taxation, the High Court ought to have taken note of the apparent intent of the legislature to tax only those with more than 7500 connections. The High Court was obligated to glean the intent of the legislation by accounting for the exemption provided and not by masking it. The exemption and the proviso, inserted by way of an amendment, was clearly a statutory tool employed by the legislature to give effect to its conscious decision to levy tax only on the cable operators with more than seven thousand and five Page 290 of 321 hundred connections. Furthermore, there is no reason for striking down a law as unconstitutional merely on the premise that the subscriber could evade or avoid tax liability simply by taking services of an operator with less than seven thousand and five hundred connections. Where the legislation is passed in accordance with constitutional prescriptions, a good faith presumption is accorded to the legislature. Similarly, it is presumed that the legislature acted with due and elaborate understanding of the societal context for which it legislates. Herein, the legislature perhaps factored that operators with more than 7500 connections ordinarily give add-on features that closely relate to the character of luxury. Be that as it may. Unless a violation of fundamental rights or lack of legislative competence is proved, Courts must be circumspect in interfering with the validity of legislations. It is trite law that this threshold is even stricter in economic legislations.

15.20 In any event, if the High Court was of the view that the exemption created was unconstitutional then the correct course would have been to strike down the exemption and direct recovery of tax payable from all assessees for the relevant time period in Page 291 of 321 accordance with sub-section (1) of Section 4 . Instead, the High Court has done the opposite. It declared as unconstitutional the provisions of the Kerala Act of 1976 authorizing levy and collection on Cable TV Operators with connections of seven thousand and five hundred and above. As a result, the revenue payable by a category of assessees who do not fall within the exemption clause is stalled. This not only affects the State’s exchequer but also does not further the plea of equality pressed into service by the assessees. The High Court could have struck down the exemption and directed all cable TV Operators to pay the tax. Instead, while holding that there was a discrimination and violation of Article 14 of the Constitution the High Court has granted an exemption to even the assessee who was liable to pay the entertainment tax under the Kerala Act . By placing the assessee on par with those exempted from payment of entertainment tax, the principle of equality is not applied in its true spirit to the facts of the case. Rather, the High Court has treated unequals as equals, which is in fact a detriment to the plea of equality raised by the petitioner assessee. Rather than striking down the proviso, if the High Court was of the opinion there was a violation of the equality clause under Page 292 of 321 the Constitution, the High Court has extended the exemption clause to the assessee also, which is impressible. As a result, no cable TV operator would have to pay any entertainment tax. This lacuna in the judgment requires a course connection and hence that portion and particularly paragraph No.6 of the judgment of Kerala High Court dated 28.06.2012 is set aside. The writ petition filed by the assessee is dismissed and the civil appeal filed by the State of Kerala is liable to be allowed and is allowed. 15.21 For the aforesaid reasons, the judgment of the Kerala High Court is liable to be set aside only on the question of holding that the levy of luxury tax on cable TV operators above 7500 connections being discriminatory and violative of Article 14 of the Constitution of India and thereby declaring it to be unconstitutional.

Jharkhand High Court’s Ruling:

16. The Jharkhand Entertainment Tax Act, 2012 was published in the Gazette on 27.04.2012. It was however, under Section 1(3) , to come into force on such date as the State Government might, by notification, direct. The Act was notified by the State Government only on 14.05.2012 with effect from 27.04.2012 i.e. the date of Page 293 of 321 publication. We do not find any merit in the argument of the appellants that the State Government could not have directed the Act, a taxing statute, to come into force with effect from a date anterior to the date of the notification.

16.1 It was contended before the High Court that the Notification dated 14.05.2012 issued by the State Government under Section 1(3) of the Jharkhand Entertainment Tax Act, 2012 appointing 27.04.2012 as the date of implementation of the Act suffers from the vice of imposing retrospective taxation in the absence of any express legislative provision providing for it. This argument was rejected by the High Court vide the impugned judgment. The High Court speaking through Bhanumati, C.J. (as Her Ladyship then was), vide the impugned judgment, has relied on the decision of this Court in A. Thangal Kunju Musaliar vs. M. Venkatachalam Potti , (1956) 29 ITR 349 (“A. Thangal Kunju Musaliar”), wherein the controversy concerned The Travancore Taxation on Income (Investigation Commission) Act, 1949 (“Travancore Act”) passed by the Travancore legislature on 07.03.1949. The Act was, under Section 1(3) , to come into force on such date as the Travancore Government might have by notification in the Page 294 of 321 Government Gazette appointed. No notification was issued by the Travancore Government up to 01.07.1949 when the Travancore State and the Cochin State integrated into the United State of Travancore and Cochin. On 01.07.1949, the United State of Travancore and Cochin promulgated an ordinance whereby all existing laws of Travancore were continued in force till altered, amended or repealed by competent authority and the “existing law of Travancore” was therein defined to mean any law in force in the State of Travancore immediately prior to 01.07.1949. On 26.07.1949, a notification was issued under Section 1(3) bringing the Travancore Act into force retrospectively from 22.07.1949. It was contended before the Constitution Bench of this Court that the notification dated 26.07.1949 could not be given retrospective effect from 22.07.1949, in absence of any express provision. 16.2 We are conscious the enactment concerned therein did not impose a tax. However, the question herein simply is, whether, the Notification dated 14.05.2012 was bad in law for bringing the Act into operation with effect from the date of publication. In A. Thangal Kunju Musaliar, this Court had repelled a similar argument observing that in exercise of the power conferred by Page 295 of 321 Section 1(3) , the Government had the power to issue the notification bringing the Act into force on any date subsequent to the passing of the Act. To give retrospective operation would be to commence the Act from a date prior to the date of its passing which was not the case in either A. Thangal Kunju Musaliar or is before us. For these reasons, we find that the High Court was correct in observing that even though the date of commencement as fixed in the notification might be anterior to the date of notification, the State Government had the power to bring into force the Act from the date of Gazette publication.

Summary of Discussion and Conclusions:

17. We summarise our discussion and conclusions as under:

Punjab Entertainment Duty Act, 1955 (Amendment in 2010); Delhi Entertainment and Betting Tax Rules, 1997; Assam Amusements and Betting Tax Act, 1939 ; Orissa Entertainment Tax Rules, 2006, along with the Orissa Entertainment Tax (Amendment) Tax Rules, 2010 are upheld. The correctness of the findings of the High Court of Madras with regard to the charging section in the State enactment being defective is assailed by the State of Tamil Nadu in separate appeals which are not part of this batch of appeals, Page 297 of 321 and accordingly have not been taken up for our consideration herein.

Insofar as the Andhra Pradesh Entertainment Tax Act, 1939 (as adopted by State of Telangana) is concerned, we do not express any opinion as the challenge and applicability of the same is pending before the High Court of Andhra Pradesh. All contentions regarding the assessment orders arising under the Andhra Pradesh State enactment are kept open to be advanced before the appropriate forum. 17.3 The Writ Petitions filed before this Court under Article 32 of the Constitution of India are accordingly disposed of.

Constitutional Scheme regarding distribution of Legislative Powers:

However, occasionally a levy may be imposed as a regulatory measure. Thus, the taxation entries under List I and List II (there being no taxation entry in the Concurrent List) are clearly demarcated within the scope of the entries in the aforesaid respective Lists. The effect of this principle is that the subject of taxation is considered to be a distinct matter for the purposes of legislative competence and the power to tax cannot be deduced from the general legislative entry as an ancillary power.

17.8 Also, a power to legislate as to the principal matters specifically mentioned in the entries shall also include within its expanse, a legislation touching upon Page 300 of 321 incidental and ancillary matters. This principle is derived from the use of the expression “with respect to” in Article 246 of the Constitution.

17.9 As a sequitur, reliance can be placed on the dictum of this Court (majority opinion) in H.S. Dhillon to observe that Entry 97 - List I which is a residuary entry relatable to Article 248 of the Constitution cannot be invoked or pressed into service when a particular entry empowering the Parliament or the Legislature of a State to pass laws regarding the taxation on any subject is specifically enumerated either in List I or List II.

17.10 Consequently, as there is no taxation entry in List III, both the Parliament as well as the Legislature of the State cannot have competence to levy tax on any one subject of a List.

17.11 Fee in respect of any of the matters in the three Lists does not include the power to levy tax. The distinction between the levy of fee and levy of tax is clear and it is Page 301 of 321 not necessary to go into that aspect in these cases, except to reiterate that there is no entry for taxation in the Concurrent List - List III.

17.12 While interpreting taxation entries in List I or List II, i.e., while determining the legislative competence to levy a tax, all efforts must be made to interpret them in such a way as to give expansive content and meaning to the same having regard to the constitutional scheme under which the distribution of legislative powers has been envisaged in the Seventh Schedule and bearing in mind the object and intent behind them and also the advances made in human thought and technology.

17.13 The expression “subject to” and “with respect to” in Article 246 of the Constitution aids the applicability of the doctrine of pith and substance to find out the true character of the enactment and the entry within which it would fall. The said doctrine is applied to resolve an issue regarding legislative competence of a legislature Page 302 of 321 to enact a particular law in relation to a subject relatable to an Entry in a List under the Seventh Schedule of the Constitution. Any apparent conflict with respect to an entry in another List is resolved on the basis of the pith and substance doctrine. Service Tax:

magnetic waves through space or through cables, Direct to Home signals or by any means to cable operator, including multi-system operator or any other person acting on behalf of the said agency or organisation through its branch office, agent, representative appointed in India or by any person who acts on its behalf.

17.17 Section 65(72) (zk) defines “taxable service” to include broadcasting agency as a service provider. Thus, if any service is provided to a client by a broadcasting agency or organization in relation to broadcasting in any manner, it would be a taxable service.

Page 304 of 321 17.18 The expression “broadcasting agency or organization” means any agency or organization engaged in providing service in relation to broadcasting in any manner either having its place of business in India or outside India, through its branch office, subsidiary or representative in India or any agent appointed in India or any person acting on their behalf.

17.19 Section 66 provides for the charge of service tax which is a charging section. The service tax on a broadcasting agency is at the rate of five per cent of the value of taxable services i.e., five per cent of the gross amount charged by the service provider. Broadcasting service is a taxable service and the broadcasting service provider is required to pay service tax under the provisions of the Finance Act, 1994 as amended from time to time.

Tax on Luxuries: Entertainments & Amusements 17.20 Bearing in mind the meaning of “entertainments” and “amusements” and since they come within the scope Page 305 of 321 of “luxuries”, therefore, the State legislature has legislative competence to impose entertainment tax under Entry 62 - List II as a tax on luxuries.

17.21 The expression “tax on luxuries” has been discussed, inter alia, in Express Hotels, A.B. Abdul Kadir, Godfrey Phillips, Western India Theatres, Federation of Hotels and Restaurant Associations of India.

17.22 The expression “entertainments/ entertainment” has been discussed in the cases of Geeta Enterprises, Drive-in Enterprises and Purvi Communications. The expression “entertainments/entertainment” includes within its scope and ambit not only the provider of entertainment but also the receiver, inter alia, through the medium of television. Thus, entertainment through television network either through cable television or DTH through set-top box with the object of providing entertainment to the viewer can be taxed in terms of Entry 62 - List II. Page 306 of 321 Parameters of Taxation under State Enactments:

Aspect Theory:

One of the reasons being that in India, both the Parliament as well as the State Legislature do not have powers to levy tax on the same subject. The aspect theory has been applied in India essentially to ascertain whether an activity would fall within the scope and ambit of an enactment and whether the said enactment in pith and substance would fall within an Entry of a particular List of the Seventh Schedule so as to confer legislative competence to tax that aspect of the activity. As a result it can be said that one aspect of an activity, say broadcasting service, can be amenable to service tax, while the other aspect of the same activity, namely, providing (of) entertainment to television viewers (as that is the object of broadcasting) can be amenable to “luxury tax” under Entry 62 List – II of the Constitution which could be levied on the recipients of such entertainment or on the service providers who are essentially broadcasters. Page 311 of 321 Broadcasting service being a taxable service under the provisions of the Finance Act, 1994 , read along with the amendments made from time to time would enable both the Parliament to impose service tax on broadcasting service and the State Legislatures having the legislative competence to levy entertainment tax on those who provide entertainment to the recipients (television viewers) to impose a luxury tax. 17.28 We follow the judgment of this Court in Western India Theatres Ltd. in observing that Entry 62 - List II contemplates a tax on entertainments or amusements as objects on which a tax can be imposed and therefore it is not possible to differentiate between an entertainment provider and an entertainment receiver. 17.29 If the above reasoning is applied, then both entertainment tax as well as service tax can be imposed on the activity of broadcasting through television for the purpose of entertainment of the subscriber or the receiver thereof. The two taxes are Page 312 of 321 different aspects of the same activity which enable two different legislatures to impose tax under distinct taxation entries in two different Lists.

17.30 The principle is well settled that two taxes which are separate and distinct imposed on two aspects of an activity are permissible, as in law, there is no overlapping. This is because the taxes are relatable to distinct taxation entries in separate legislative Lists. 17.31 In the instant case, the Parliament under the Finance Act, 1994 and its amendments is not imposing a tax on entertainment. Such a tax is being imposed by the State Legislatures as entertainment is a luxury within the meaning of Entry 62 - List II. In the same way, the Finance Act along with its amendments seeks to impose a tax on the service rendered by the broadcasting agency which is imposed under Entry 97 List – I. In the same vein, under Entry 62 List – II, the State Governments are not imposing any service tax on the assessees.

Page 313 of 321 17.32 While applying the aspect theory on any activity from the point of view of two legislatures (Parliament and State Legislature), in the instant case, imposing tax on an activity, the following well established principles of interpretation of tax may as stated in paragraph 11.18 be borne in mind:

“11.18 To appreciate the extent and the context of the use of ‘aspect theory’ in India, it would be instructive to reiterate some well- established principles of interpretation of taxation entries. Some of the relevant principles are reiterated as follows:

i. In interpreting expressions in the Legislative Lists of the Seventh Schedule of the Constitution, a wide meaning should be given to the entries.

ii. In the scheme of the Lists in the Seventh Schedule, there exists a clear distinction between the general subjects of legislation and heads of taxation. They are separately enumerated.

iii. As the fields of taxation are to be found clearly enumerated in Lists I and II, there can be no overlapping in law. There may be overlapping in fact, but there can be no overlapping in law.

iv. In the first instance, the pith and substance or true nature and character of the legislation must be determined with reference to the legislative subject matter and the charging section;

Page 314 of 321 v. The measure of tax is not a true test of the nature of tax;

vi. The same transaction may involve two or more taxable events in its different aspects. Merely because the aspects overlap, such overlapping does not detract from the distinctiveness of the aspects.” 17.33 The doctrine of pith and substance is applied to consider the vires of a legislation impugned on the basis of the principle of legislative competence in the context of legislative relationship between the Centre and the State. We observe that the aspect theory has no relevance, as such, in determining the constitutionality of any provision on the ground of legislative competence in India. Thus, the constitutional validity of a taxing statute on the ground of legislative competence has to be examined in the context of the doctrine of pith and substance as envisaged under Article 246 of the Constitution of India read with the respective entries in the List. Once the contours of an entry under which a legislation is sought to be made is ascertained, the next step is to Page 315 of 321 study the legislation in question in order to ascertain whether it falls within the contours of that Entry. If it does fall within the contours of a particular entry in a particular List, then that particular legislature which has enacted it would have the legislative competence to enact such a legislation. But a legislation incidentally touching upon an entry in another List does not render it invalid, it means that so long as a piece of legislation is in pith and substance falling within an entry in a particular List, it would be valid as the legislature which has enacted it, has the legislative competence to do so.

17.34 On the other hand, the aspect theory is relevant to determine the applicability of a taxing statute on the activity or transaction sought to be taxed i.e., whether the statute covers an activity which falls within a specific taxation entry, either in List I or in List II. Thus, an activity could be taxed by two different legislatures on the basis of the entries in the respective Lists without there being a clash and within their Page 316 of 321 legislative competence. However, the aspect of the activity which is being taxed must be relatable to the legislation under a specific entry of a particular List so as to be within the legislative competence of a particular legislature.

17.35 Thus, the aspect theory is used to determine if, in fact, there are different aspects within the activity sought to be taxed and whether the taxable event which forms the basis of the levy in a legislative enactment corresponds to any aspect in the activity sought to be taxed.

17.36 This is in contrast to the applicability of this theory in Canada, where this theory is used therein to determine legislative competence of a federal or provincial legislature to enact a particular law.

17.37 While applying the aspect theory to the present case, it is noted that the activity of broadcasting is for the purpose of entertainment of the subscriber as held in Purvi Communications. No entertainment can be Page 317 of 321 presented to the viewers unless the broadcaster transmits the signals for instantaneous presentation of any performance, film or any programme on their television. Thus, there are two aspects in this activity; the first is the act of transmission of signals of the content to the subscribers. The second aspect here concerns not only the content of the signals, but the effect of the decryption of the signals by the Set-Top Boxes and the viewing cards inside these boxes provided by the assessees to the subscribers, which is providing and receiving of entertainment through the television. Without the apparatus provided for by the assessees to decrypt the signals, the subscriber would not be able to watch the content that is transmitted, the content being for the purpose of entertainment. The television entertainment provided by them through their modus operandi i.e., by broadcasting, is a luxury within the meaning of Entry 62 - List II. The assessees who are engaged in the activity of providing entertainment are liable to pay service tax on the Page 318 of 321 activity of broadcasting under the provisions of the Finance Act, 1994 read with relevant amendments and are also liable to pay entertainment tax in terms of Entry 62 - List II as being a specie of luxuries. Therefore, both the taxes, one by the State Legislature and the other, by the Parliament are leviable on the activity of the assessees herein. This is because by rendering the service of broadcasting, the assesses are entertaining the subscribers within the meaning of Entry 62 - List II.

There is no overlapping in fact or in law, inasmuch as different aspects of the same activity are being taxed under two different legislations by two different legislatures. This is because the activity of broadcasting is a service and liable to service tax imposed by the Parliament (Entry 97 – List I) and the activity of entertainment is a subject falling under Entry 62 - List II and therefore, the assessees herein are liable to pay entertainment tax as well. Hence, the State Legislatures as well as the Parliament, both have Page 319 of 321 the legislative competence to levy entertainment tax as well as service tax respectively on the activity carried out by the assessees herein.

17.38 As far as the judgment of the Allahabad High Court dated 20.07.2012 is concerned, we observe that the High Court could not have construed the amendments made to the UP Act of 1979 as a clarification to include the DTH service which is a new technology, within the purview of the original Act. Hence, to that limited extent, the appeal filed against the judgment of the Allahabad High Court is allowed in part.

17.39 The judgment dated 28.06.2012 passed by the Kerala High Court which declared the levy and collection of luxury tax on cable TV operators with connections of 7500 or above as unconstitutional for being discriminatory is incorrect.

17.40 The Kerala High Court could have struck down the exemption granted and directed all cable TV operators to pay the tax instead of holding that there is Page 320 of 321 discrimination and violation of Article 14 of the Constitution against the assessees herein. As a result, the High Court has granted an exemption to the assessee who is liable to pay entertainment tax under the Kerala Act . As a result, unequals have been treated as equals which is detrimental to the plea of equality sought to be raised by the assessee.

17.41 In the circumstances, paragraph 6 of the judgment of the Kerala High Court dated 28.06.2012 is set aside. The Writ Petition filed by the assessee before the High Court is dismissed and the Civil Appeal filed by the State of Kerala is allowed.

Parties to bear their respective costs.

…..………………………………….………..J. (B.V. NAGARATHNA) …..………………………………….………..J. (NONGMEIKAPAM KOTISWAR SINGH) NEW DELHI;

MAY 22, 2025.

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