HIGH COURT OF MADRAS
Tata Sky Ltd.
Versus
State of Tamil Nadu
Mrs.CHITRA VENKATARAMAN AND K. RAVICHANDRABAABU, JJ.
W.P. Nos. 25721, 25872, 25873, 25927 to 25929, 25986, 25987, 27070 to 27072, 28978 & 28979 of 2011
M.P. Nos. 1,1,1,1,1,1,1,1,1,1,1, 283 of 2011
OCTOBER 19, 2012
ORDER
Mrs. Chitra Venkataraman, J.
The batch of Writ Petitions filed before this Court challenge the provision contained under Section 4-I of the Tamil Nadu Entertainments Tax Act, 1939, (hereinafter referred to as ‘the Act’), as inserted under Amendment Act 25 of 2011, with effect from 27.09.2011, levying entertainment tax at 30% of the gross charges, excluding service tax on Direct to Home Services, popularly called as DTH, received by the provider of DTH. The contentions taken by the various petitioners in a nutshell are as follows:
2. Writ petitioners in W.P. Nos. 25721 of 2011 M/s. Tata Sky Limited, W.P. Nos. 27070 to 27072 of 2011 M/s. Dish TV India Limited and W.P. No 25873 of 2011 – M/s. Bharat Business Channel Limited, challenge the levy of entertainment tax under Section 4-I of the Tamil Nadu Entertainments Tax Act, 1939, on the ground that the service provided by the petitioners therein are in the nature of service only and hence, amenable to levy of service tax alone, as falling under Entry 92C List I of VII Schedule to the Constitution of India. Entry 62 List II of Seventh Schedule to the Constitution of India is confined to taxing public entertainment; hence, the said Entry cannot be artificially extended to include private entertainment provided through the DTH services.
3. Referring to the Constituent Assembly discussions, the petitioners in W.P. Nos. 25721 and 27070 to 27072 of 2011, contend that Entry 62 List II of VII Schedule to the Constitution of India covers taxing public entertainment only. Thus, even if the Entries in the Lists are to be given a liberal meaning, the tax to be levied under Entry 62 List II of VII Schedule to the Constitution of India on entertainment has its own limitations, as referable to entertainment offered on payment for admission in the public places. DTH, in pith and substance, is a type of activity, amenable to levy under the service tax provisions. In the case of private entertainment, levy of tax, at best, could come only under Entry 97 List I of VII Schedule to the Constitution of India, which fits in with the federal polity.
4. The petitioners contend that in the name of levying entertainment tax, Section 4-I of the Act seeks to levy tax on the service part of providing DTH service. In any event, even if it be construed that the services offered have an element of entertainment in it, as in the case of hotels and in the works contract, there being no specific rule on apportionment of the charges collected with reference to service and entertainment, the Section is unworkable. Referring to the decisions of the other High Courts dealing with similar provisions under the respective Entertainments Tax Acts, the petitioners contend that apart from the issues raised by the petitioners before those High Courts, which were considered and rejected by the other High Courts, the petitioners have also challenged the vires of Section 4-I of the Act as a colourable one, since Section 4-I of the Act, as it stands, seeks to tax the service aspect in DTH services. It is further contended that as a charging Section, Section 4-I of the Act fails to lay down in clear and explicit terms as what the taxable event is. Consequently, the charge under Section 4-I of the Act, fails.
5. The petitioners contend that the amendment brought under the Tamil Nadu Act 25 of 2011, by insertion of Section 4-I of the Act, is arbitrary, discriminatory and violative of Article 14 of the Constitution of India. There is no rational basis for treating DTH as a separate class for differential tax treatment from cable TV, taxed under Section 4-E of the Act.
6. Making particular reference to the decision reported in State of West Bengal v. Purvi Communication (P) Ltd. [2005] 140 STC 154 (SC), the petitioners further contend that the above decision by the Apex Court was prior to the service tax levy. Hence, the issue herein on the levy of entertainment tax on DTH requires fresh consideration in the light of the service tax levy available today. In short, the petitioners contend that DTH is an activity attracting service tax under Entry 92C List I of VII Schedule to the Constitution of India. In the guise of taxing the entertainment provided through DTH, all that the State has done is to levy tax on service. Hence, Section 4-I of the Act is a colourable legislation and the State has no legislative competence to enact a law under Entry 62 List II of VII Schedule to the Constitution of India, taxing a service.
7. The petitioners in W.P. Nos. 25872 and 25873 of 2011, viz., M/s. Bharat Business Channel Limited, contend that the services rendered by the petitioner therein cannot be subjected to entertainment tax. Contending that DTH service is essentially an activity and hence a service, the petitioner states that DTH is a form of telecommunication similar to mobile phone. Learned counsel appearing for the petitioners in these writ petitions adopted the submissions made in the other writ petitions.
8. The third set of writ petitions viz., W.P.Nos.27070 to 27072 of 2011 are filed by M/s. Dish TV India Limited; W.P.No.25987 of 2011 are filed by M/s. Sun Direct TV Private Limited and W.P.No.28978 of 2011 are filed by M/s. Reliance Big TV. The petitioners challenge the provisions under Section 4-I of the Tamil Nadu Entertainments Tax Act, introduced under the Tamil Nadu Act 25 of 2011, on the ground of discrimination. While conceding that the State has the jurisdiction to tax the entertainment content in DTH service, it is contended that the classification made, treating DTH as a distinct and separate class from cable TV, is violative of Article 14 of the Constitution of India. Comparing the entertainment content through cable TV and DTH and the treatment under the service tax provisions on cable TV operators and DTH providers, the petitioners contend that given the fact that the provisions of the Telecom Regulatory Authority of India Act, 1987, treat both the services alike in the matter of tariff fixation, taking note of the self-same entertainment content, there can be no such discriminatory/ arbitrary classification under Section 4-E and Section 4-I of the Act. Referring to Tariff Order No. 4 of 2008 dated 26.12.2008, Tariff Order No.5 of 2008 dated 26.12.2008 and the structure indicated in Tariff Order, 2010 and 2011, the petitioners pointed out to the detailed consultative process among the various stake-holders, that, ultimately, the Telecom Authority had fixed a uniform rate for DTH as well as for cable TV. It is stated that taking note of the viewing public interests and the content availability, the Central Government has fixed uniform rate, apart from the fact that the Telecom Authority have recommended digitalisation of cable TV with an addressable system, to bring about transparency in the conduct of business for the purposes of service tax levy as well as for better quality delivery to the subscribers. This indicates that there is no difference between DTH and Cable TV in the matter of providing entertainment. In other words, the content of entertainment under DTH is no different from those presented through cable TV services. Thus, in terms of content, rate and class of subscribers/viewers, DTH broadcasting services is similar to cable television services. Even though the mode of dissemination of information may be different between DTH broadcasting services and cable TV operators, both media are similarly placed in terms of content, information/ entertainment provided, rates charged and class of viewers. Referring to the Cable Television Network Regulation Amendment Ordinance, 2011, and presently the Act of 2012, issued by the Government of India, the petitioners pointed out that the drive in telecasting programmes today is through digitalisation. Cable TV analog services are stated to have given rise to many complaints, particularly as regards the escapement of the levy of service tax, by reason of there being no accounts maintained as to the number of subscribers catered to by the TV operators. Thus the Telecom Authority has issued directives to switch over to digital technology. In terms of the tariff treatment thus maintaining parity, the new Section 4-I, inserted by Act 25 of 2011, meeting out differential treatment, taxing DTH as distinct and separate class, is arbitrary, discriminatory and violative of Article 14 of the Constitution of India. The classification is not based on any intelligible differentia for adopting different rate of tax under Section 4-E and Section 4-I of the Act, thereby discriminating between the levy of tax on entertainment provided through Cable TV and the one through DTH. There is no rational nexus in classifying DTH as distinct and separate class from Cable TV with the object sought to be achieved by the law. Apart from that, the said levy is also violative of Article 19(1)(a) of the Constitution of India, since the tax imposed has a direct and immediate negative effect in restricting the use of DTH broadcasting services as a medium of dissemination and receipt of information, ideas and expression. The petitioners contend that if the incidence of levy under Section 4-I of the Act is passed on to the subscribers, that would decrease the subscriber base of the broadcaster; consequently, the imposition is a burdensome one. The petitioners have also challenged Section 4-I of the Act that insofar as the charging Section fails to specify the chargeable event, the Section is vague and fails to achieve the purpose of the enactment. Further, going by the language of Section 4-I of the Act, the levy is more in the nature of service tax.
9. Apart from the DTH provider in W.P. No. 25986 of 2011, there is yet another petitioner in the said writ petition, who is a subscriber to the services of the first petitioner company. Complaining about the dramatic increase in cost by reason of the heavy dose of taxation, the petitioner contends that he would have no other choice but to discontinue the DTH broadcasting services and opt for those provided by the cable TV operator. Referring to the rates fixed by the Arasu Cable TV Corporation Limited, which has started cable TV operation as a multi-system operator in Chennai Metropolitan area and cable operators in other areas in the State, the petitioner contends that the subsidized rate fixed by the said Corporation had already created a disparity, carving for itself, a monopoly in television exhibition. The rate fixed by the Corporation is wholly unrealistic and grossly subsidized. Thus the classification made between cable TV exhibition, which enjoys exemption under the notification issued by the State and DTH broadcasting exhibition attracting 30% levy, is irrational and unreasonable and does not have any nexus to the object sought to be achieved by the amendment made inserting Section 4-I of the Act. The petitioners also challenge the levy under Articles 301 and 304B of the Constitution of India.
10. Apart from the challenge to Section 4-I of the Act on the ground of arbitrariness and hence, violative of Article 14 of the Constitution of India, the petitioner also challenges the levy of service tax as an alternative prayer that in the event of this Court upholding the levy under the Tamil Nadu Entertainments Tax Act, the levy of service tax on DTH services has to be held as bad and beyond the competence of the Parliament to levy tax on entertainment. Thus the imposition of service tax on DTH broadcasting exhibition would be unconstitutional and violative of Articles 245 and 246 of the Constitution of India, read with Entry 62 List II of VII Schedule to the Constitution of India. Entertainment tax being a State subject and DTH broadcasting being an entertainment, falling for tax treatment under Entry 62 List II of VII Schedule to the Constitution of India, the levy of service tax lacks legislative sanction. The petitioner further states that given the constitutional position, imposition of service tax as well as entertainment tax on the same subject, namely, DTH broadcasting services, is unconstitutional; hence, there cannot be two taxes levied on DTH broadcasting services and one will have to give way to the other. Thus, as far as this batch of writ petitions is concerned, we have an alternate prayer that in the event of this Court upholding the constitutionality of Section 4-I of the Act, there could be no levy under the Service Tax Act under Section 66 or Section 65(1)(105)(zk) of Chapter V of the Finance Act of 1994. We must herein point out that except for making a faint plea, no serious arguments are placed in support of this contention.
11. In the course of hearing, the petitioners in W.P. Nos. 25986 and 25987 of 2011 and W.P. Nos. 28978 and 28979 of 2011, filed a petition seeking permission to raise additional grounds, contending that as Section 4-I of the Act fails to specify the chargeable event, the Section fails. These writ petitions and W.P. Nos. 25721 and 27070 to 27072 of 2011, attack Section 4-I of the Act as an imperfect charging provision in not providing the chargeable event and hence, the Section fails to achieve the object.
12. The writ petitioner in W.P.Nos.25928 and 25929 of 2011 – M/s. Bharati Tele Media Limited, challenges the levy of service tax on the service provided through DTH. The contention before this Court is diametrically opposite to what was raised before the other High Courts, wherein, conceding the levy of service tax on DTH service, it contended that DTH could not be assessed under the Tamil Nadu Entertainments Tax Act made under Entry 62 List II of VII Schedule to the Constitution of India. Before this Court, the petitioner contends that the essence of providing DTH service is nothing but providing entertainment; hence, the activity of the petitioner would not attract service tax. The petitioner contends that the transaction does not contain any characteristics of a service, which make the activities of the petitioner amenable to service tax. The petitioner points out that DTH is the provider of entertainment; under the DTH, service itself being an entertainment, there could be no levy of service tax; hence, providing DTH connection cannot be brought under the service tax provisions.
13. Thus, we have before us one set of writ petitions in W.P.Nos.25721 and 27070 to 27072 of 2011, primarily contending that DTH services is not entertainment; hence, being service, there could only be a levy under the Service Tax provisions of the Finance Act and to that extent, the provisions of Section 4-I of the Act are unconstitutional. The second set of writ petitions – Bharati Telemedia W.P. Nos. 25928 and 25929 of 2011 and Bharath Business Channel Limited W.P. No. 25872 of 2011 challenge the levy of service tax on DTH by contending that the substance of providing of DTH service is essentially one of entertainment in character; therefore, there can be no demand for payment of service tax. The third set of writ petitions in W.P.No. 25987 of 2011 and W.P. Nos. 28978 and 28979 of 2011 take a middle course, in the sense that given the legislative competence, Section 4-I of the Act, levying tax on entertainment in DTH, is a discriminatory legislation, apart from the rate as an arbitrary one and hence violative of Articles 14 and 19(1)(a) of the Constitution of India and in the event of this Court upholding the provision, the same would not attract service tax.
14. The State has filed its counter affidavit in each one of these writ petitions.
15. It is contended that entertainment tax, levied under Section 4-I of the Act, is on the aspect of entertainment content in DTH service. Referring to the provisions of Articles 245 and 246, it is contended that irrespective of the service tax levy under the Central Law, what is taxed under Tamil Nadu Entertainments Tax Act is the entertainment provided therein through DTH. Entry 62 List II of VII Schedule to the Constitution of India is not obliterated by the introduction of service tax levy under Entry 92 C List I of VII Schedule to the Constitution of India. Defending the provision introduced under Section 4-I of the Act under Act 25 of 2011 with effect from 27.09.2011 that the State has the legislative competence to levy entertainment tax by virtue of Entry 62 List II of VII Schedule to the Constitution of India, the State contends that in charging the entertainment content in the DTH service, there is no colourable legislation.
16. Referring the decisions reported in All India Federation of Tax Practitioners v. Union of India [2007] 10 STT 166 (SC). Purvi Communication (P.) Ltd. (supra), it is contended that when in pith and substance, the tax is on entertainment and when the charge is on the entertainment offered through the medium of DTH, the question of applying the aspect theory or for applying the apportionment of the charges collected towards the levy of service tax and entertainment tax does not arise.
17. Countering the submissions made by the writ petitioner in W.P. Nos. 25721 and 27070 to 27072 of 2011 that DTH service being already a subject matter of taxation under Entry 92C List I of VII Schedule to the Constitution of India, the same could not be subjected to levy under the Tamil Nadu Entertainments Tax Act, it is stated that the levy of service tax is essentially a subject matter falling under Entry 92C List I of the VII Schedule to the Constitution of India, but the mere availability of Entry 92C List I of the VII Schedule to the Constitution of India to tax the service provided through DTH, however, cannot obliterate or wipe out the levy of tax on the entertainment provided. Being two different fields, there could be no overlapping of this levy. Hence, a harmonious construction consistent with the aspect theory must be adopted. The pith and substance of the levy, which is to be the focal point of consideration, that is, Entry 62 List II of the VII Schedule to the Constitution of India, fails.
18. Pointing out to the various Entries in the Lists dealing with the general topics and on the field of taxation, the State pointed out to Entries 33 and 62 of List II of VII Schedule to the Constitution of India and contended that while Entry 33 is a legislation dealing with theaters and dramatic performances, cinemas subject to the provisions of Entry 60 of List I; sports, entertainments, and amusements, Entry 62 List II of VII Schedule to the Constitution of India is a legislation on tax on luxury, including tax on entertainment. Thus Entry 62 List II of VII Schedule to the Constitution of India is a specific entry for tax on luxury including entertainment.
19. In the decision reported in Purvi Communication (P) Ltd. (supra), the Apex Court had already confirmed similar contentions taken in the case of Tamil Nadu Cable TV Organizers v. Govt. of Tamil Nadu [W.Ps. Nos. 16237, 16517 and 16272 of 1994 etc. Batch-judgment dated 30.11.1994 and rejected the plea of the writ petitioners on the question of competency of the State to levy tax under Section 4-E of the Act relating to tax on cable television under Entry 62 List II of VII Schedule to the Constitution of India and the question regarding violation of Article 14 as to the arbitrary nature in the rate of tax and also violative of Article 19(1)(a) of the Constitution of India. Placing reliance on paragraphs 36 and 40 of the said judgment, it is submitted that it is not open to the petitioners to agitate the self-same issue once again merely because entertainment is offered through DTH.
20. Entry 62 List II of VII Schedule to the Constitution of India is concerned about levy of entertainment tax and Section 4-I of the Act is on the aspect of entertainment offered through the DTH service. Thus, it is contended that the amending provision, made in exercise of the legislative field under Entry 62 List II of VII Schedule to the Constitution of India, is a valid legislation.
21. As regards the contention that there is arbitrariness in treating entertainment through DTH as a separate class, it is contended that considering the difference in the nature and content of the entertainment between cable TV and DTH, the classification does not violate Article 14 of the Constitution of India and that the State has the wide choice to select and classify persons for differential tax treatment.
22. Countering the submission on the absence of the charging provision in not specifying the charge, the State submitted that the entertainment provided, being the subject matter of charge which is evident from the heading to the Section, it is incorrect to contend that the amended provision has failed to specify the charge and hence, it fails in its intent. It is further stated that the taxable event could be gathered from the wording of the Section namely “gross charges received by the provider of DTH”. Going through the statement of objects and reasons, the definition on “entertainment” under Section 3(4) and “direct to home service” under Section 3(3B), the marginal head note to the provision under Section 4-I and reading the Act as a whole, it is clear that the intention of the legislature is to tax on the entertainment provided through DTH service. Thus Sections 4, 4-D, 4-F, 4-G, 4-H and 4-J of the Act only provide for different modes of entertainment and each one is dealt with under separate charging Section. Referring to the challenge based on Article 14 of the Constitution of India, it is stated that the difference between cable TV and DTH are more than mere mode of delivery of signal and transmission. They have different characteristics and features. The system of transmission, the quality and the quantity of the content are different. The class of consumers is also different. The number of persons employed and the self-employment opportunities created are important social dimensions and that while DTH operators are few and are mainly large corporate entities on All-India basis, cable TV operators are either small firms or individuals operating in local level Expert bodies and the Competition Commission had considered the two services as having wide difference and hence, cannot be treated alike. Even assuming that the technological differences are now sought to be removed pursuant to the digitization, the petitioners cannot claim that there is no difference between the content through cable TV and DTH, as on the date when the provisions were introduced. Cable TV is mostly on analog system and they are different in several features when compared to DTH. The counter narrated the subtle differences as follows:
“DTH is defined as the reception of satellite programmers’ with a personal dish in an individual home. An an individual Set Top Box (STB) empowers to pick & choose bundles of choice and pay for what one watch.
DTH offer digital superior quality picture against cable TV of today which is mostly analog.
DTH also offers digital quality signals which do not degrade the picture or sound quality. It also offers interactive channels and program guides with customers having the choice to block out programming which they consider undesirable.
Programs offered by cable vary from area to area whereas satellite gives you programs that are same everywhere. There are a lot more programs that one can watch on DTH which can never be accessible through cable.
DTH enables one to watch one program and record another which may be on at the same time. Such interactive services are not generally available through cable. Under DTH, Direct Video Recording lets pause, rewind and record any program one likes giving immediate control over live TV. However, in Cable, Video on Demand limits one to what the cable company eventually puts in its VOD library.”
23. Pointing out to the availability of entertainment in several channels upto 150 under the DTH service, the State contends that cable TV offers 50 to 90 channels alone, but the DTH offers digital pictures which ensures clarity, which is not possible in analog system. The programmes are available on demand. Referring to the technological superiority to justify the classification of DTH as a class by itself, the State places reliance on the decisions reported in:
(i) Tube Investments of India Ltd. v. Asst. CIT [2010] 325 ITR 610;
(ii) Sony India Ltd. v. CTO [2008] 18 VST 49 (Mad.)
(iii) Twyford Tea Co. Ltd. v. State of Kerala AIR 1970 SC 1133
(iv) State of UP v. Kamla Palace [2000] 1 SCC 557
(v) Malwa Bus Service (P.) Ltd. v. State of Punjab [1983] 3 SCC 237
(vi) Kerala Hotel & Restaurant Association v. State of Kerala AIR 1990 SC 913
(vii) State of Madhya Pradesh v. Gwalior Sugar Co. Ltd. [1962] 2 SCR 619
(viii) Tamil Nadu Cable TV Organizers (supra) by this Court; and
(ix) East India Tobacco Co. v. State of Andhra Pradesh AIR 1962 SC 1733
Thus, the State justifies the classification and submits that in the light of the decisions of the Apex court, the challenge to the Amending Act has to fail.
24. Heard learned senior counsel appearing for the petitioners in the respective writ petitions, learned Advocate General appearing for the State, Mr. C.S. Vaidyanathan, learned senior counsel appearing for the State, Mr. N. Senthil Kumar, learned Senior Central Government Standing Counsel and perused the materials placed before this Court.
25. The Tamil Nadu Entertainments Tax Act, 1939, passed originally in the year 1939, was an Act “to impose a tax on amusement and other entertainments in the Province of Madras.” By Madras Act No. XVII of 1949 with effect from 1.8.1949, the word “taxes” was substituted for the word “a tax” as appearing in the preamble to the Act. Again, by Madras Act No. V of 1958, the word “entertainments” was substituted for “amusements and other entertainments”. Thus the Tamil Nadu Entertainments Tax Act, 1939 is “an Act to impose taxes on entertainments in the State of Tamil Nadu”. The simple enactment of taxing “entertainment”, defined, under Section 3(4) of the Act, as horse race or cinematograph, was amended to levy tax on gross collection per show made by the theaters- touring, permanent and semi-permanent. The rate of tax levied varied according to the geographical location of the theaters. Thus, to start with, there was one charging Section under Section 4 of the Act, to tax entertainment provided through cinematograph exhibition in the theaters on payment for admission. The system of levy gradually underwent changes to pay a percentage on gross collection and based on theater location.
26. Development of technology made its entry in the field of providing entertainment in the early 1990s, that apart from the traditional medium of getting entertainment through exhibition of films, entertainment through exhibition of films and other forms of information and recreation on the television screen through VCR or cable television network, started gaining momentum. This form of entertainment was sought to be taxed as a class by itself with effect from 17.5.1984, by insertion of Section 4-D under Tamil Nadu Act 25 of 1984. The Section was subsequently substituted under Amendment Act 37 of 1994 with effect from 01.09.1994. This was followed by insertion of yet another charging provision under Section 4-E of the Act from 01.09.1994 under Amendment Act 37 of 1994, to levy tax on entertainment through cable television, fixing the rate of tax at 40% of the amount collected by way of contribution or subscription or installation or connection charges or other charges collected in any manner whatsoever for television exhibition. Corresponding changes were made to the definition of “entertainment” under Section 3(4) of the Act, to include cable TV as another source of entertainment. Section 4-E of the Act was substituted by Section 2(1) of the Amendment Act 18 of 2000 with effect from 12.06.2000 and again under Amendment Act 23 of 2003, with effect from 01.06.2003. As in the nature of regulatory measures in the field of cable television network, the Parliament enacted the Cable TV Networks (Regulation) Act, 1995, introduced with effect from 29.09.1994. Entertainment through DTH services began from 2004 on wards.
27. Thus, taking note of the further technological advancement in the system offering entertainment through DTH and the entertainment provided through I.P.L. matches, the State of Tamil Nadu, by Amendment Act 25 of 2011 with effect from 27.09.2011, inserted Section 4-I in the Act to levy tax on Direct to Home Services and tax on cricket tournament conducted by I.P.L. The statement of objects and reasons for inserting the charging Section reads as under:
“The Tamil Nadu Entertainments Tax Act, 1939 (Tamil Nadu Act X of 1939) does not contain any provision to levy tax in respect of entertainment provided by DTH (Direct To Home service) and the cricket tournaments organized by the Indian Premier League (IPL). In certain States, entertainment tax has been levied on DTH service and on cricket tournaments conducted by the IPL. The Government have, therefore decided to include the DTH service and the cricket tournaments conducted by the IPL within the definition of the term “entertainment” and to levy entertainment tax under the said Act.
2. In order to mobilize additional revenue resources, the Government have also decided to increase the rate of tax for admission to any cinematography exhibition in a theatre under the said Act. “
28. Thus, while providing for taxing DTH under Section 4-I of the Act, the definition of “Entertainment” under Section 3(4) of the Act to include DTH, was also amended. The definition of “Proprietor” under Section 3(9) was also amended to include any person providing DTH service.
Entry 62 List II of Seventh Schedule to the Constitution of India:
29. Before we consider the contentions raised in the respective writ petitions, the relevant provisions in Entry 92C List I and Entries 33 and 62 List II of the Seventh Schedule to the Constitution of India, the definition Section, inserting Section 3(3B) of the Act defining “direct to home service”, the amendment to “entertainment” under Section 3(4) of the Act to include DTH, and Section 3(9) of the Act defining “proprietor”, the insertion of the charging provision under Section 4-I of the Act to levy tax on direct to home service under Amendment Act No. 25 of 2011, with effect from 27.9.2011, which is under challenge now before this Court and Section 4-E of the Act “Tax on Cable Television” with the relevant amended definitions, need to be seen. The above provisions relevant for the consideration herein are as under:
“Entry 92 C List I of the VII Schedule to the Constitution of India Taxes on services.
Entry 33 of List II of Seventh Schedule to the Constitution of India –
Theaters and dramatic performances, cinemas subject to the provisions of entry 60 of List I; sports, entertainments and amusements.
Entry 62 of List II of Seventh Schedule to the Constitution of India –
Taxes on luxuries, including taxes on entertainments, amusements, betting and gambling.
The Tamil Nadu Entertainments Tax Act, 1939:
“3. Definitions:-
(3B) “direct to home service” means distribution of multi-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;
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; “
3(9) “proprietor” in relation to any entertainment means a licensee of cinematograph exhibition under the Tamil Nadu Cinemas (Regulation) Act, 1955 (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. “
“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 130 and the rules made there under shall, so far as may be, apply in relation to the tax payable under sub-section (1).”
30. “Television exhibition” is defined in Section 3(11) of the Tamil Nadu Entertainments Tax Act as follows:
“3(11) “television exhibition” means an exhibition with the aid of any type of antenna with a cable network attached 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 fiber cable to a central system called the head-end. “
31. Section 4-E of the Tamil Nadu Entertainments Tax Act reads as under:
“Section 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 entertainments tax) on television exhibition at the following rates, namely:–
