The State Of Kerala vs. Asianet Satellite Communications Ltd.

2025 INSC 757
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE/ORIGINAL JURISDICTION

CIVIL APPEAL NO.9301 OF 2013

STATE OF KERALA & ANOTHER APPELLANTS
VERSUS
ASIANET SATELLITE COMMUNICATIONS
LTD. & OTHERS RESPONDENTS

WITH
CIVIL APPEAL NO.1629 OF 2020
CIVIL APPEAL NOS.1765-1766 OF 2020
CIVIL APPEAL NO.1531 OF 2020
CIVIL APPEAL NO.1533 OF 2020
CIVIL APPEAL NO.1534 OF 2020
CIVIL APPEAL NO.1752 OF 2020
CIVIL APPEAL NO.1753 OF 2020
CIVIL APPEAL NO.1755 OF 2020
WRIT PETITION (C) NO.699 OF 2014
CIVIL APPEAL NO.1532 OF 2020
CIVIL APPEAL NO.1687 OF 2020
CIVIL APPEAL NO.1688 OF 2020
Signature Not Verified
Digitally signed by
NEETU SACHDEVA
Date: 2025.05.22
15:46:37 IST
Reason:
CIVIL APPEAL NO.1689 OF 2020


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CIVIL APPEAL NO.1690 OF 2020
CIVIL APPEAL NOS.1548-1549 OF 2020
CIVIL APPEAL NO. OF 2024
(Arising out of Special Leave Petition (Civil) No.9025 of 2023)
CIVIL APPEAL NO.1630 OF 2020
CIVIL APPEAL NO.1726 OF 2020
CIVIL APPEAL NO.1725 OF 2020
CIVIL APPEAL NO.10114 OF 2011
CIVIL APPEAL NO.2147 OF 2012
CIVIL APPEAL NO.1543 OF 2020
CIVIL APPEAL NO.1547 OF 2020
CIVIL APPEAL NO.1680 OF 2020
CIVIL APPEAL NO.1754 OF 2020
CIVIL APPEAL NO.1756 OF 2020
CIVIL APPEAL NO.1530 OF 2020
WRIT PETITION (C) NO.748 OF 2015
CIVIL APPEAL NO.1628 OF 2020
CIVIL APPEAL NO.5867 OF 2012
CIVIL APPEAL NO.5228 OF 2012
CIVIL APPEAL NO.1535 OF 2020
CIVIL APPEAL NO.1679 OF 2020
CIVIL APPEAL NOS.1681-1682 OF 2020
CIVIL APPEAL NO.1683 OF 2020
CIVIL APPEAL NO.1684 OF 2020


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CIVIL APPEAL NO.1685 OF 2020
CIVIL APPEAL NO.1686 OF 2020
CIVIL APPEAL NO.1580 OF 2020
CIVIL APPEAL NOS.1581-1583 OF 2020
CIVIL APPEAL NO.1536 OF 2020

J U D G M E N T
NAGARATHNA, J.
I N D E X

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


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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:
................................................................................................. 128
ix. Tamil Nadu Entertainments Tax Act, 1939: ......................... 130
x. Uttar Pradesh Entertainment and Betting Tax Act, 1979: ..... 133
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


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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,


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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


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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.


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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:

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3.1 From the above table, it is evident that most of the Civil
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:


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3.3.1 The High Court of Uttarakhand by way of impugned
judgment dated 26.07.2010 passed in Tata Sky Limited vs. State
of Uttarakhand , Writ Petition (M/B) No. 4 of 2010 held that
amendments to Uttar Pradesh Entertainment and Betting Tax,
1979 levying entertainment tax on DTH services was fully within
the legislative competence of the State and did not encroach upon
the field which the Parliament exclusively has authority to legislate.
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


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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.


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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


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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


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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 .


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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.


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Writ Petitions filed before this Court:
W.P. (C) No.699/2014:
3.4 W.P. (C) No.699/2014 has been preferred by the petitioner
Tata Sky Ltd. (now Tata Play Ltd.) challenging the constitutional
validity of Section 65 (105) (zk) read with Section 65(15) of the
Finance Act, 1994, which impose service tax on the provision of
“Direct to Home” (“DTH”) broadcast facility provided by
the petitioner to its subscribers. In short, the petitioner’s case is
that the entire operation carried on by the petitioner is one single
operation and since only service tax is being imposed on this
activity, the petitioner has been paying service tax on this activity
since the year 2006. However, later the Jharkhand Entertainment
Tax Act, 2012 (Act. No.13 of 2012) came into force taxing, inter alia ,
the activity of the petitioners as an entertainment. As a challenge
to the legality of this imposition has been rejected by the High
Court of Jharkhand at Ranchi and several other High Courts,
which is now before this Court, this writ petition has been preferred
contending that once an activity is found to be subject of an
enactment under Entry 62 – List II, the same cannot also be subject
to service tax, which is imposed taking strength from Entry 97 –


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List I. Therefore, it is prayed that this Court may declare
unconstitutional the imposition of service tax on the petitioner’s
activity. In the alternative, it is prayed that this Court may declare
that the activity of broadcasting does not constitute providing
entertainment and is thereby amenable to service tax. The prayers
sought for in this writ petition read as under:

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W.P. (C) No.748/2015:
3.5 The issues raised in W.P.(C) No.748/2015 are similar to
W.P.(C) No.699/2014 inasmuch as the petitioner, M/s Tata Play
Ltd., challenges the constitutional validity of Section 65 (105) (zk)
read with Section 65(15) of the Finance Act, 1994, which imposes
service tax on the provision of DTH broadcast facility provided by
the petitioner to its subscribers. Petitioner also challenges the
constitutional validity of Sections 3(10), 3(11) and Section 15A of
the Andhra Pradesh Entertainment Tax Act, 1939, and the
Assessment Order RC No.A2/424/2014-15 (ET) dated 27.08.2015
issued by the Government of Telangana, Commercial Taxes
Department for FY 2011-22, 2012-13 and 2013-14. After re-
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


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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:

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Submissions:
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:
4.1 Learned senior advocate, Sri Datar, appearing on behalf of
the appellant in C.A. No. 2147/2012, drew our attention to the
conscious use of the word ‘entertainments’ in Entry 62 - List II. It
was contended that the word ‘entertainments’ is not the plural of
‘entertainment’ but is nomen juris. This line of argument was
advanced to contend that the State cannot expand its taxing power
by including DTH services within the meaning of the word
“entertainments”. To buttress his submission, he took us through
the consistent use of the word ‘entertainments’ from the year 1622
onwards in British legislation. It was his argument that this
consistent usage reflects the continuing and underlying intention


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of constitutional makers for ‘entertainments’ to mean only public
entertainment to the exclusion of private entertainment. Reliance
in this regard was also placed on Cantonment Board Poona vs.
Western India Theatres Ltd., AIR 1954 BOM 261, wherein the
Bombay High Court held that ‘entertainments’ is used as a
common noun and is to mean ‘entertainments in public’.
4.2 Sri Datar also argued that Entry 31 – List I refers to
‘communication’ and ‘broadcasting’. Therefore, even in the absence
of an express entry taxing telecommunication or broadcasting, it
was contended that these are “services” and can be taxed only by
the Union, even if used for television channels. As “broadcasting
service” includes DTH service, the States do not have the
competence to tax the same service. He also drew our attention to
the omission of Section 129 of the Government of India Act, 1935
that permitted imposing of fees on construction, use of
transmitters, and use of receiving apparatus. This was contended
in light of the fact that DTH operators use an apparatus to receive
signals and further decode them.


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4.3 It was further contended that vide Circular No.
61/10/2003-ST dated 14.07.2003, the Ministry of Finance
directed Doordarshan and All India Radio to pay service tax as a
provider of broadcasting services. It was therefore contended that,
even if there is any entertainment through Doordarshan and All
India Radio, it has always been treated as part of broadcasting
service. By way of analogy, it was argued that Radio Tax was also
levied by the Post and Telegraph Department even though radio
provided entertainment. It was put forth that while Entry 31 - List
I covers broadcasting and “other like forms of communication”,
Entry 13 - List II applies to communications not specified in List I
(which actually concerns surface transport).
4.4 Our attention was also drawn to Entry 92C – List I of the
Constitution, which was inserted but not notified. Relying on a
judgment of the Constitution Bench of this Court in State of
Kerala vs. Mar Appraem Kuri Company Ltd., (2012) 7 SCC 106,
Sri Datar argued that the subject service tax is within the exclusive
domain of Parliament even though Entry 92C was not notified.
Therefore, it was contended that under Article 246(1) read with


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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


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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


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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


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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.


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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


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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


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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


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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.


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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:
(i) entire activity of appellants is in relation to transmission of
DTH signals; and
(ii) neither do appellants exercise any control over the content
received from the broadcaster nor do they control exhibition of
the content.
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


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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:
i. Levy of tax is on admission to entertainment by way of a DTH
connection;
ii. Levy is on entertainment through DTH service, and
iii. No taxable event is specified in the charging provision.
4.21 It was contented that herein there is only one activity of
providing DTH signal and that itself is a service. Reliance was
placed on All India Federation of Tax Practitioners vs. Union
of India, (2007) 9 SCR 527 (“All India Federation of Tax
Practitioners”) to submit that a service is also an activity. Thus,
it was contended that the only taxable event here being providing
the service of broadcasting, there are no two aspects to the service


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provided by the Appellants and only one taxable event i.e. provision
of DTH service does not enable the States under the guise of Entry
62 - List II to levy entertainment tax on the same aspect.
4.22 It was stressed on behalf of the appellants that though
entertainment may, inter alia, be a consequence of DTH service,
but entertainment tax cannot be levied on the activity of provision
of DTH service, vide Godfrey Phillips Ltd. vs. State of U.P.,
(2005) 2 SCC 515 (“Godfrey Phillips”). It was contended that
there being only one taxable event, there can be no confounding of
the service provided herein as both: a service and an
entertainment.
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.


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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


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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”).


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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


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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, Bharat Sanchar Nigam Limited; Imagic Creative (P)
vide
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


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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


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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


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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


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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


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(“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


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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:
State of West Bengal:
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


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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 :
“As pointed out by this Court in Navinchandra Mafatlal v.
The Commissioner of Income Tax, Bombay City (1),
following certain earlier decisions referred to therein, the
entries in the legislative list should not 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. It has been accepted as well settled that in construing
such an entry conferring legislative powers the widest
possible construction according to their ordinary meaning
must be put upon the words used therein. In view of this
well established rule of interpretation, there can be no
reason to construe the words " taxes on luxuries or
entertainments or amusements " in entry 50 as having a
restricted meaning so -as to confine the operation of the
law to be made thereunder only to taxes on persons
receiving the luxuries, entertainments, or amusements.
The entry contemplates luxuries, entertainments, and
amusements as objects on which the tax is to be imposed.
If the words are to be so regard- ed, as we think they must,
there can be no reason to differentiate between the giver
and the receiver of the luxuries, entertainments, or
amusements and both may, with equal propriety, be made
amenable to the tax. It is true that economists regard an
entertainment tax as a tax on expenditure and, indeed,
when the tax is imposed on the receiver of the
entertainment, it does become a tax on expenditure, but
there is no warrant for holding that entry 50 contemplates
only a tax on moneys spent on luxuries, entertainments or
amusements. The entry, as we have said, contemplates
a law with respect to these matters regarded as objects
and a law which imposes tax on the act of entertaining


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is within the entry whether it falls on the giver or the
receiver of that entertainment. . ..”
(emphasis supplied)

Applying the aforesaid to the facts of the instant cases, it was
argued that irrespective of the nomenclature of broadcasting or
entertainment, the activity of the petitioner ends with the TV set
and is therefore carried out for the purpose of entertainment.
5.2 Sri Gupta further argued that where taxing entries are not in
conflict, then there is no need to go the doctrine of pith and
substance. Furthermore, examining the application of aspect
theory in Federation of Hotel & Restaurant Association of
India , he argued that the same has been followed in All India
Federation of Tax Practitioners . It was also argued that Purvi
Communication is not per incuriam and was rightly decided it
being distinguished from Geeta Enterprises for multiple reasons.
State of Uttar Pradesh:
5.3 Learned senior counsel Sri Raizada appearing for the State
of Uttar Pradesh, contended that the judgment in Geeta
Enterprises was adjudicated on the anvil of interpretation of
‘ places of entertainment ’ as it appeared in the 1937 Act whereas the


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present impugned levy is imposed under the revised 1979 Act. It
was highlighted that the period of the controversy herein is from
2005–2009 and any dictum under the 1937 Act would have no
bearing on the present case. Furthermore, it was argued that if for
a single transaction two levies are made out or use a measure of
another tax then such an imposition would not be ultra vires the
Constitution. Therefore, it was contended that ‘ entertainments ’ as
it appears in Entry 62 – List II must be given a widest possible
interpretation and it would be erroneous to define entertainment
in a myopic, rigid or straightjacket formula.
State of Odisha:
5.4 Sri Preetesh Kapur, learned senior advocate, appearing for
the State of Odisha in C.A. No.1536/2020 contended that Entry 62
– List II must be read in the widest amplitude possible and a correct
reading of the same allows imposition of tax on the act of
entertaining whether it falls on the provider or receiver of
entertainment, vide Western India Theatres . Furthermore, in
Express Hotels (P) Ltd. vs. The State of Gujarat, 1989 3 SCC
677 (“Express Hotels”) , this Court, while interpreting Entry 62 –
List II on the context of luxuries, observed that a legislative entry


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takes within it everything that can fairly and reasonably be said to
be comprehended in it while the actual measure of the levy is a
matter of legislative policy and will be held to be good in law as long
as it has a reasonable nexus with the concept of luxuries. It was
also canvassed that the actual utilization or derivation of
entertainment was irrelevant for the imposition of tax and could be
of any kind including one which may be purely educative vide
Express Hotels or Geeta Enterprises.
5.5 It was further argued that the Orissa Entertainment Tax Act,
2005 as well as the Amendment Act of 2010 are, in pith and
substance, relatable to Entry 62 - List II. Applying the test
expounded by a three-Judge Bench of this Court in Purvi
Communication to ascertain whether a tax falls within the ambit
of Entry 62 - List II, learned senior counsel contended that the
amendment in question, whereby entertainment tax was imposed
on DTH operators, is a tax on entertainment.
5.6 Sri Kapur argued that this Court in para 46 of Purvi
Communication has held that the appropriate test is whether the
activity being taxed has a direct and proximate nexus with the


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provision (or enjoyment) of entertainment. It was also argued that
once the law is found to be in pith and substance relatable to Entry
62 - List II, the mere imposition of service tax cannot by itself
denude the State legislatures of their legislative competence.
5.7 Sri Kapur sought to contend that when neither entry is
subject to the other, then both entries are required to be
constructed so harmoniously that they are given full effect in their
respective fields. Therefore, both entries herein, though they may
seem overlapping, can indeed be given full effect as they deal with
distinct aspects. States have also placed significant reliance on
‘aspect theory’ or the ‘double aspect doctrine’ to establish that both
Central and State Acts are valid as they seek to levy tax on entirely
different aspects even though they may form part of the same
activity.
5.8 According to Sri Kapur, had the liability been imposed
directly upon the subscriber, the distinction between service tax on
the services rendered by the DTH operator and entertainment tax
upon the subscribers would have been self-evident. It is settled law
that entertainment tax, for administrative convenience, can either


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be on the receiver or equally be upon the provider of the content
without causing any alteration to its nature. – Federation of Hotel
& Restaurant Association of India. The same case was also
relied upon to contend that a measure of tax is not determinative
of the nature of the levy.
5.9 Furthermore, it was contended that the argument advanced
by the appellants herein would render Entry 62 – List II redundant
as almost every provision of entertainment would necessarily be
borne out of rendition of some service. According to Sri Kapur, this
is precisely why the distinction between the two aspects must
always be kept in mind.
5.10 On the application of aspects theory, it was contented that
the same is neither contrary to the pith and substance doctrine nor
is it an exception, but only compliments the latter. The
operationalization of aspect theory is explained by suggesting that
two competing enactments, if they deal with distinct aspects of a
transaction, will not restrict each other and will continue to apply
in their respective fields without inviting any question of overlap or
repugnancy. It was submitted that the aspect theory is helpful at


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the stage of a “seeming” conflict to determine whether the aspects
legislated upon are distinct and whether there is an overlap or not
at all.
5.11 In response to the arguments of the appellants that Entry
31 read with Entry 97 – List I must be seen as taking out from
Entry 62 – List II a tax on entertainment provided by means of
broadcasting, the State of Orissa contended that such an argument
overlooks the distinct aspects involved in rendition of services and
entertainment. Neither could Entry 31 – List I being a regulatory
entry whittle down the scope of Entry 62 – List II nor could Entry
97 – List I being a residuary entry cull out any aspect from a
specific taxing entry in the State List.
5.12 Pertinently it was also highlighted that this Court in State
of Karnataka vs. State of Meghalaya, (2023) 4 SCC 416
(“State of Karnataka”) , specifically rejected the contention that a
regulatory entry in the Union List must be construed as also
covering all facets of taxation along with and through the residuary
entry, even if that tax may squarely fall within the State List.


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5.13 Furthermore, in response to the contentions on Geeta
Enterprises and Purvi Communication , it was contended that
the judgment in Geeta Enterprises categorically notes that this
Court was concerned with the definition of entertainment under a
particular statute and not under Entry 62 – List II. That it would
be wholly erroneous to transplant the limitations and
interpretations made in the context of a statute to be taken to
govern the interpretation of an entry in the Seventh Schedule of
the Constitution, which must be given an interpretation of the
widest possible amplitude.
5.14 It was also highlighted that this Court in Suresh vs. State
of T.N., (1997) 1 SCC 319 (“Suresh”) had already considered the
argument and expressed agreement with the view of the States
herein.
5.15 Summarily, it was also argued that the imposition of tax on
goods or an activity that a person may ultimately enjoy or consume
at home cannot be construed as an invasion of the right to privacy.
5.16 To the argument of the appellants that they are merely
conduits in the chain between broadcasters and subscribers, it was


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responded that it is settled law that a tax under Entry 62 – List II
can be on the provider of entertainment as well as or on the
receiver. It was also contended that the DTH operator evidently has
a direct and proximate nexus with the subscriber inasmuch as it
is the DTH operator who enrolls and provides the setup box along
with dish antenna to the subscriber. Finally, it was contended that
the argument of merely being a conduit overlooks the well settled
position that tax can be collected at any convenient stage as long
as a rational connection is maintained. – vide CCE vs. Grasim
Industries Ltd., (2018) 7 SCC 233.
5.17 It was also argued that the appellants have erred in relying
on Bharat Sanchar Nigam Limited to contend that the dominant
intention of the activity must be seen and that there must be
splitting of charges between services and entertainment. Learned
senior counsel submitted that this argument ought to be rejected
as it would be totally erroneous to draw an analogy between
entertainment tax on the one hand and tax on sale of goods on the
other, as in the case of entertainment the entire service rendered
by the provider is for the purpose of entertainment. Even though it
might be one activity, it is on one aspect, the price for services


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rendered and, from the point of view of the subscribers, the price
for entertainment. – Federation of Hotel & Restaurant
Association of India.
5.18 According to learned senior counsel, the Court in Bharat
Sanchar Nigam Limited held that tax on sale of goods cannot be
levied on a separate and severable component i.e. services as goods
are only a component of the deemed severable transaction by way
of a fiction. In other words, in Bharat Sanchar Nigam Limited,
it was held that the States lacked jurisdiction to tax the services
component and consequently, lacked the competency to include
the price of services as a measure of tax for sale of goods and vice-
It was for this reason that the judgment in Bharat Sanchar
versa.
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.


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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:
5.20 Sri Radhakrishnan, learned senior counsel appearing on
behalf of Respondent-State of Tamil Nadu in C.A. No.1580/2020
and C.A. No.1581/2020, invited this Court’s attention to the
history of the legislation on the subject in the 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


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st
Province of Madras .” Vide Act No.XVII of 1949 w.e.f. 1 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


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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


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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.


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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 ,


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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


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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


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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.


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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:
5.34 Dr. Manish Singhvi, learned senior counsel appearing on
behalf of the State of Rajasthan, submitted that if the activity of
the petitioners is within Entry 62 – List II then nothing more is to
be seen and the imposition of service tax is wholly irrelevant. After
taking us through the provisions of the relevant Act promulgated
by the State of Rajasthan Act, it was argued that imposition of
service tax is not a tax on entertainment, validity of which needs to


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be determined only by testing if in pith and substance it is
traceable to Entry 62 – List II.
State of Punjab:
5.35 Learned senior counsel Sri Farasat appearing for the State
of Punjab, argued that broadcasting is merely a means to the
entertainment derived, by the content being delivered and that the
imposition of service tax would not detract from the competence of
the State Legislature to levy entertainment tax under Entry 62 –
List II. In the absence of any conclusive intent apparent from the
Constituent Assembly Debates, he argued against drawing any
myopic inference on the scope of Entry 62 – List II.
State of Nagaland:
5.36 Ms. K. Enatoli Sema, learned counsel appearing for the State
of Nagaland in W.P.(C) No.699/2014, brought to our attention that
the relevant state Act was amended in the year 2011 and that the
definition of entertainment includes DTH operators. That the
enactment promulgated by the State of Nagaland has not been
challenged and that in fact even after filing of the writ petition,


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entertainment tax has in fact been paid by the writ petitioner
without any protest.
State of Andhra Pradesh:
5.37 Sri Sahel, learned counsel appearing for the State of Andhra
Pradesh in W.P.(C) No.748/2015, similarly highlighted that there
is no challenge to the State Act in the writ petition.
Union of India:
5.38 Learned senior counsel Ms. Nisha Bagchi appearing for the
Union of India in W.P.(C) No.699/2014, submitted that the issue
of service tax has been conceded in almost all High Courts and has
not been disputed as such. She submitted that in view of the
dismissal of the C.A. No. 261/2013 and C.A. Nos. 1582-1583/2020
the prayers (a) and (b) in W.P. Nos. 699/2014 and 748/2015 do
not survive for consideration. She particularly highlighted that the
Delhi High Court dismissed the challenge to the constitutional
validity of service tax, as did Madras High Court, on the basis of
categorical concessions made by the assessees. Learned senior
counsel also submitted that no controversy with regard to payment


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of service tax arises in the Civil Appeal arising from the decision of
the Kerala High Court.
Reply Arguments:
5.39 We have heard the arguments made by way of reply by the
respective senior counsel and counsel appearing for the parties .
5.40 We have perused the voluminous material on record as well
as the judicial dicta cited before us.
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


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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


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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:
“245. Extent of laws made by Parliament and by the
Legislatures of States .—(1) Subject to the provisions of
this Constitution, Parliament may make laws for the whole
or any part of the territory of India, and the Legislature of


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a State may make laws for the whole or any part of the
State.
(2) No law made by Parliament shall be deemed to be
invalid on the ground that it would have extra-territorial
operation.
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.
xxx
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


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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:

7.2 In order to understand the foundation of the controversy in
these cases, it is necessary to consider Article 246 of the
Constitution and the relevant entries of the two Lists which can be
usefully extracted as under:
“List I – Union List
xxx
31 . Posts and telegraphs; telephones, wireless,
broadcasting and other like forms of communication.
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


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62. Taxes on luxuries, including taxes on entertainments,
amusements, betting and gambling.”

Finance Act, 1994 with Relevant Amendments:
7.3 Chapter V of the Finance Act, 1994 (2001 amended) which
deals with various types of service tax, perhaps under the said Act
has defined “broadcasting” as under-
"65. Definitions .- In this Chapter unless the context
otherwise requires,-
(13) "broadcasting" has the meaning assigned to it
in clause (c) of Section 2 of the Prasar Bharti
(Broadcasting Corporation of India) Act, 1990
(25 of 1990);"

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:-
“2. Definitions - In this Act, unless the context otherwise
requires,-
(c) broadcasting' means the dissemination of any
form of communication like signs, signals,
writing, pictures, images and sounds of all
kinds by transmission of electro-magnetic
waves through space or through cables
intended to be received by the general public
either directly or indirectly through the


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medium of relay stations and all its
grammatical variations and cognate
expressions shall be construed accordingly."

7.3.2 Section 65(63) of the Finance Act, 1994 (amended in 2001)
defines "service tax" as under:
"65. Definitions. - In this Chapter unless the context
otherwise requires,-
(63) "service tax" means tax leviable under the
provisions of this Chapter;"

7.3.3 Section 65 (72) (zk) defines “taxable service” with regard to
“broadcasting agency” as a “service provider” as under:
"65. Definitions. - In this Chapter unless the context
otherwise requires,-
(72) "taxable service" means any service provided,-
xxx
(zk) to a client, by a broadcasting agency or
organization in relation to broadcasting, in any
manner;
And the term "service provider" shall be construed
accordingly;"

7.3.4 Section 66(5) specifics the quantum of tax liability on a
'service provider" providing broadcasting services which is
extracted as :


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"66. Charge of service tax.-(5) With effect from the date
notified under Section 137 of the Finance Act, 2001, there
shall be levied a service tax at the rate of five per Cent of
the value of the taxable services referred to in sub-clauses
(za), (zb), (zc), (zd), (ze), (zf), (zg), (zh), (zi), (zj), (zk), (zl), (zm),
(zn) and (zo) of clause (72) of Section 65 and collected in
such manner as may be prescribed."

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:-
"65. Definitions.- In this Chapter, unless the context
otherwise requires,-
(14). "broadcasting" has the meaning assigned to it
in clause(c) of Section 2 of the Prasar Bharti
(Broadcasting Corporation of India) Act, 1990 (25 of
1990) and also includes 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;
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


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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;"
7.3.6 The term "broadcasting agency or organization" was also re-
defined under Section 65(15) by way of an amendment in the year
2002 to the Finance Act, 1994, which is extracted as under:-
"65. .- In this Chapter, unless the context
Definitions
otherwise requires,-
(15) "broadcasting agency or organization" means
any agency or organisation engaged in providing
service in relation to broadcasting in any manner
and, in the case of a broadcasting agency or
organization, having its head office situated in any
place outside India, includes its branch office or
subsidiary or representative in India or any agent
appointed in India or any person who acts on its
behalf in any manner, engaged in the activity of
selling of time slots for broadcasting of any
programme or obtaining sponsorships for
programme or collecting broadcasting charges on
behalf of the said agency or organization;"

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:-
"65. Definitions. - In this Chapter, unless the context
otherwise requires,-
(80) "service tax" means tax leviable under the
provisions of this Chapter;"


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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:-
"65. Definitions. - In this Chapter, unless the context
otherwise requires,-
xxx
(90). ''taxable service" means any service provided,-
(zk) to a client, by a broadcasting agency or
organization in relation to broadcasting in any
manner and, in the case of a broadcasting agency or
organization, having its head office situated in any
place outside India, includes service provided 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, engaged in the
activity of selling of time slots for broadcasting of any
programme or obtaining sponsorships for
programme or collecting broadcasting charges on
behalf of the said agency or organization.
- For the removal of doubts, it is hereby
Explanation.
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;"


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7.3.9 Section 66 (5) of the Finance Act, 2002 specified the
quantum of tax liability on a service provider, providing
broadcasting service to the following effect. Section 66(5) aforesaid
is reproduced hereunder:-
"66. Charge of service tax.-(5) With effect from the date
notified under Section 137 of the Finance Act, 2001 (14 of
2001), there shall be levied a service tax at the rate of five
per cent of the value of the taxable services referred to in
sub-clauses (za), (zb), (zc), (zd), (ze), (zf), (zg), (zh), (zi), (zj),
(zk), (zl), (zm), (zn) and (zo) of clause (90) of Section 65 and
collected in such manner as may be prescribed."

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:-


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"65. Definitions.- In this Chapter, unless the context
otherwise requires.-
xxx
(15) '(broadcasting" has the meaning assigned to it
in clause (c) of Section 2 of the Prasar Bharti
(Broadcasting Corporation of India) Act, 1990 ( 25
of 1990) and also includes 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;
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;"

7.3.12 The Finance Act, 2003 also defined the term
''broadcasting agency or organization" in Section 65(16). Section
65(16) of the Finance Act, 2003 is also being reproduced
hereunder:-
"65. Definitions. - In this Chapter, unless the context
otherwise requires.-
(16) "broadcasting agency or organization" means
any agency or organization engaged in providing
service in relation to broadcasting in any manner
and, in the case of a broadcasting agency or


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organization, having its head office situated in any
place outside India, includes its branch office or
subsidiary or representative in India or any agent
appointed in India or any person who acts on its
behalf in any manner, 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 orgnisation;”

7.3.13 Section 65 (95) of the Finance Act, 2003, defines the
term "service tax".
Section 65 (95) aforesaid is being reproduced hereunder:-
"65. Definitions .- In this Chapter, unless the context
otherwise requires.-
xxx
(95) “service tax” mean tax leviable under the provisions
of this chapter;"

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:
"65. Definitions. - In this Chapter, unless the context
otherwise requires.-
xxx


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(105) “taxable service" means any service provided,-
(zk) to a client, by a broadcasting agency or
organization in relation to broadcasting in any
manner and, in the case of a broadcasting agency or
organization, having its head office situated in any
place outside India, includes service provided 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, 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 organization.
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;"
and the term "service provider" shall be construed
accordingly;”

7.3.15 Section 66(1) of the Finance Act, 2003 specified, that
quantum of tax liability on a service provider providing
broadcasting services as under:-
"66. Charge of service tax. -(l) There shall be levied a tax
(hereinafter referred to as the service tax) at the rate of
eight per cent of the value of the taxable services referred
to in sub-clauses (a), (b), (c), (d), (e), (f), (g), (h), (i), (j), (k),


Page 86 of 321





(l), (m), (n), (o), (p), (q), (r), (s), (t) (u), (v), (w), (x), (y), (z), (za),
(zb), (zc), (zd), (ze), (zf), (zg), (zh), (zi), (zj), (zk), (zl), (zm), (zn),
(zo), (zp), (zq), (zr), (zs), (zt) (zu), (zv), (zw), (zx), (zy), (zz) and
(zza) of clause (105) of Section 65 and collected in such
manner as may be prescribed.”

7.3.16 A perusal of the aforesaid provisions reveals, that
under the Finance Act, 2001, service tax levied on service providers
rendering broadcasting services were enhanced from five per cent
to six per cent of the value of taxable service (i.e. eight per cent of
the gross amount charged by the service provider) under the
Finance Act, 2003.
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






"65. Definitions .- In this Chapter, unless the context
otherwise requires.-
xxx
(15) “broadcasting” has the meaning assigned to it
in clause (c) of Section 2 of the Prasar Bharti
(Broadcasting Corporation of India) Act, 1990 ( 25 of
1990) and also includes 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;
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;"

7.3.19 Likewise, the term "broadcasting agency or
organization" was again re-defined under Section 65(16) of the
Finance Act, 2005, which is being reproduced hereunder:-




Page 88 of 321






"65. Definitions .- In this Chapter, unless the context
otherwise requires.-
xxx
(16) "broadcasting agency or organization" means
any agency or organization engaged in providing
service in relation to broadcasting in any manner
and, in the case of a broadcasting agency or
organization, having its head office situated in any
place outside India, includes its branch office or
subsidiary or representative in India or any agent
appointed in India or any person who acts on its
behalf in any manner, engaged in the activity of
selling of time slots for broadcasting of any
programme or obtaining sponsorships for
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 multisystem operator or any
other person on behalf of the said agency or
organization;"

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:-



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"65. Definitions. - In this Chapter, unless the context
otherwise requires,-
xxx
(105) "taxable service" means any service provided,-
(zk) to a client, by a broadcasting agency or
organization in relation to broadcasting in any
manner and, in the case of a broadcasting agency or
organization, having its head office situated in any
place outside India, includes service provided 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, engaged in the
activity of selling of time slots for broadcasting of any
programme or obtaining sponsorships for
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.
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;"



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7.3.21 The quantum of service tax under the Finance Act
2005, on service providers, rendering broadcasting services was
sustained at the same rate as in the preceding Finance Act, 2004.
7.3.22 A perusal of the provisions of the various Finance Acts
reproduced hereinabove, according to the learned counsel for the
petitioners, reveals, that "service tax" was levied on "Direct-to-
Home" (DTH) broadcasting services thereunder. The aforesaid
'legislation, according' to the learned counsel for the petitioners
had obviously been enacted by the Parliament under Entry 92C of
the Union List, contained in the Seventh Schedule of the
Constitution of India.
Relevant Provisions of the State Enactments:
Assam Amusements and Betting Tax Act, 1939 :
7.4 The relevant State Acts can be adverted to as under:
(a) The relevant provisions of Assam Amusements and Betting
Tax Act, 1939 are as under:
“2. Definitions. – In this Chapter, unless there is anything
repugnant in the subject or context –
xxx


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(3B) "Cable service" means the transmission by cables of
programme including transmission by cables of any
broadcast television signal;
Explanation-- For the purpose of this clause--
(a) "cable operator" means any person who provides cable
service directly to customer or transmits signal to a sub-
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


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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"
xxx
Section 3C : Tax on cable service and direct to home
service. - (1) The proprietor of a cable television network
providing cable service [and the service provider of the
direct to home service]1 shall be liable to pay
entertainment tax at such rates not exceeding rupees one
thousand and two hundred for every subscriber for every
year, as the Government may from time to time, notify in
this behalf.
(2) Nothing in sub-section (1) shall preclude the
Government from notifying different rates of entertainment
tax for household or for different categories of hotels.
(3) Where the subscriber is a proprietor of a hotel, he shall
pay the entertainment tax to the Government on such
condition, and in such manner as may be prescribed and
at such rate as the Government may from time to time
notify and different rates of tax may be notified for different
categories of such subscribers.


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

Delhi Entertainments and Betting Tax Act, 1996 :
(b) The relevant provisions of Delhi Entertainments and
Betting Tax Act, 1996 are as under:
“ 2. Definitions
In this Act, unless the context otherwise require,-
(a) "addressable system" means an electronic device or
more than one electronic devices put in an integrated
system through which television signals and value
added services can be sent in encrypted or
unencrypted form, which can be decoded by the device
or devices at the premises of the subscriber within
limits of the authorization made, on the choice and
request of such subscriber, by the service provider to
the subscriber;

(aa) "admission to an entertainment" includes admission
to any place in which the entertainment is held and in
case of entertainment through cable service and
direct-to-home (DTH) service with or without cable
connection, each connection to a subscriber shall be
deemed to be an admission for entertainment’

xxx

(ha) "direct-to-home (DTH) service" means distribution of
multi-channel television and radio programmes and
similar content by using a satellite system, by
providing signals directly to subscriber's premises
without passing through an intermediary or otherwise;



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(i) "entertainment" means any exhibition, performance,
amusement, game, sport or race (including horse race)
or in the case of cinematograph exhibitions, cover
exhibition of news-reels, documentaries, cartoons,
advertisement shorts or slides, whether before or
during the exhibition of a feature film or separately,
and also includes entertainment through cable service
and direct-to-home (DTH) service;
xxx
(m) "payment for admission" includes—
xxx
(vi) any payment made by a person by way of
contribution, subscription, installation or
connection charges or any other charges collected
in any manner whatsoever for entertainment
through direct-to-home (DTH) broadcasting
service for distribution of television signals and
value added services with the aid of any type of
addressable system, which connects a television
set, computer system at a residential or non-
residential place of subscriber's premises, directly
to the satellite or otherwise.
xxx
(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


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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.
xxx
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 :
(c) The relevant provisions of Gujarat Entertainments Tax Act,
1977 are as under:
“2. Definitions. – In this Act, unless the context otherwise
requires,
xxx
(dd) Direct-To-Home (DTH) Broadcasting Service means a
system of distribution of multi-channel television
programmes in Ku Band by using Satellite system, by
providing television signals direct to the subscriber’s
premises without passing through an intermediary such
as cable operator.



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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;



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(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


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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.


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(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.


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(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:
“ 3. Application for Certificate of Registration. - A
proprietor providing an entertainment with the aid of
Direct to Home (DTH) Broadcasting Service shall apply for
the Certificate of Registration under Section 6C in
Proforma-I in triplicate I and shall be renewable after every
twelve months.
4. Granting of Certificate of Registration.- (1) The
Commissioner may, on receipt of an application in
Proforma-I under rule 3 and having satisfied that all the
rules have been complied with, grant Certificate of
Registration to the proprietor. The Commissioner shall,
while deciding whether to grant or refuse such a certificate
shall have regard to the following matters namely:
(i) the interest of the public generally;
(ii) status of antecedents and the previous experience, if
any, of the proprietor;


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(iii) the adequate precaution made for safety, convenience
and comfort of the persons covered under Direct-to-Home
(DTH) Broadcasting Service as per the guidelines issued by
the Government of India from time to time.
Explanation. For the purpose of 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.
xxx
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


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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:
Provided that the return relating to the second and third
quarter of the financial year 2009-10 shall be furnished
within fifteen days from the publication of these rules in
the official Gazette.
(3) Every proprietor shall maintain a register in Proforma-6
for each financial year.
xxx



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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 :
(d) The relevant provisions of Jharkhand Entertainment Tax
Act, 2012 are as under:
“2. Definitions. - In this Act, unless there is anything
repugnant in the subject or context,-
xxx
(k) " Direct to Home (DTH) Service " means a system of
distribution of multi-channel television programmes by
using a Satellite system by providing television signals
through Antenna direct or any other similar devices to the
subscriber's premises/hotels/clubs, without passing
through an intermediary such as cable service;
(l)" Direct to Home (DTH) Service provider " means any
person or proprietor or agency, who provide Direct to Home
(DTH) Service, whether by means of "Set top boxes" or any
such antenna or instruments or equipments or any other
similar devices and includes the activation or renewal of
such DTH service.
(m)" Entertainment " includes any exhibition,
performance, amusement, game shows or sports to which
persons are admitted for payment, or in the case of
television exhibition with the aid and any type of antenna
with a cable network attached to it or cable television
network or Direct-to-Home (DTH) Service, for which
persons are required to make payment by way of


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contribution or subscription or installation or rent or
security and connection charges or by any other charges
collected in any manner whatsoever; but does not include
magic show and temporary amusement including games
and rides;
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


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(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.
xxx
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) /


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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;


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(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
th
of the Schedule; by 7 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 :
(e) The relevant provisions of Kerala Tax on Luxuries Act,
1976 are as under:
“2. Definitions. – In this Act, unless the context
otherwise requires.-
xxx
(ca) “cable operator”, means a person engaged in the
business of receiving and distributing satellite television
signals, communication network including production and
transmission of programmes and packages for a monetary
consideration.
xxx
(ee) “luxury” means a commodity or service that
ministers comfort or pleasure;
xxx
(fa) “Luxury provided by a cable operator” means any
service by means of transmission of television signals by
wire, where subscriber’s television set is linked by metallic


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co-axial cable or optic fibre cable to a central system called
the ‘headend’ and by using a video cassette or disc or both,
recorder or player or similar such apparatus on which pre-
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.
xxx
(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.
xxx
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


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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, -
xxx
(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:
Provided that no luxury tax shall be payable in respect of
a connection provided by a cable operator engaged in the
distribution of programmes of Doordarshan channels only:
Provided further that luxury tax, if any, collected shall be
paid over to the Government:
xxx
Provided also that a proprietor of a hotel who had claimed
exemption under sub-clause (1) of clause 4 of the Kerala
Finance Bill, 2006 (Bill No. 355 of the XI Kerala Legislative
Assembly) from the 1st day of April 2006 being the charges
of accommodation below rupees two hundred per room per
day, shall be permitted to avail such exemption till 30th
June, 2006.
xxx
(3) The luxury tax shall be collected by the proprietor and
paid within such period and in such manner as may be
prescribed, into a Government treasury" or a Nationalised
Bank notified by Government in this behalf.
xxx


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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, -
xxx
(c) after clause (f), the following clause shall be inserted,
namely:-
"(fa) "Luxury provided by a cable operator" means any
service by means of transmission of television signals by
wire, where subscriber's television set is linked by metallic
co-axial cable or optic fibre cable to a central system called
the headend and by using a video cassette or disc or both,
recorder or player or similar such apparatus on which pre-
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



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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: -
xxx
(ca) "cable operator" means a person engaged in the
business of receiving and distributing satellite television
signals, communication network including production and
transmission of programmes and packages for a monetary
consideration"
xxx
"(da) "Direct-To-Home (DTH) Broadcasting Service" means
a system of distribution of multi-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.
(db) "Direct-To-Home (DTH) Broadcasting Service Provider"
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


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(ee) "luxury" means a commodity or service that ministers
comfort or Pleasure:
xxx
(fa) "Luxury provided by a cable operator" means any
service by means of transmission of television signals by
wire, where subscriber's television set is linked by metallic
co-axial cable or optic fibre cable to a central system called
the 'headend' and by using a video cassette or disc or both,
recorder or player or similar such apparatus on which pre-
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



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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,-
xxx
(ii) by cable operators; ("and by Direct-to-Home (DTH)
Service Providers")
xxx
Provided that the sub-section shall not apply to,-
xxx
(iv) to cable operators whose total number of connections,
including those given through franchisees, is seven
thousand and five hundred or less:
Provided further that the cable operators with seven
thousand and five hundred or less connections shall not
be liable to tax from 1st July, 2006
(2) Luxury tax shall be levied and collected, -
xxx
(d) in respect of a cable TV operator("and Direct-to-
Home(DTH) Broadcasting Provider") at the rate of rupees
five per connection per month, and shall be collectable
from the person enjoying the luxury :
xxx
Provided that no luxury tax shall be payable in respect of
a connection provided by a cable operator engaged in the
distribution of programmes of Doordarshan channels only:
Provided further that luxury tax, if any, collected shall be
paid over to the Government:



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Provided also that a proprietor of a hotel who had claimed
exemption under sub-clause (1) of clause 4 of the Kerala
Finance Bill, 2006 (Bill No. 355 of the XI Kerala Legislative
Assembly) from the 1st day of April 2006 being the charges
of accommodation below rupees two hundred per room per
day, shall be permitted to avail such exemption till 30th
June, 2006.
(2A) Notwithstanding anything contained in sub-section
(2), there shall be levied a luxury tax at the rate of rupees
one hundred per year per member and the same shall be
collected by the person responsible for the management of
the club, by whatever name called.
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


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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.
xxx
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:-
"(da) "Direct-To-Home (DTH) Broadcasting
Service" means a system of distribution of multi-
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



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(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:
(b) for the existing proviso to sub-section (1), the following
provisos shall be substituted, namely:-

"Provided that the sub-section shall not apply to.-
xxx
(iv) to cable operators whose total number of connections,
including those given through franchisees, is seven
thousand and five hundred or less:
Provided further that the cable operators with seven
thousand and five hundred or less connections shall not
be liable to tax from 1ª July, 2006;
ACT 16 OF 2011
THE KERALA FINANCE ACT, 2011
6. Amendment of Act 32 of 1976.-In the Kerala Tax on
Luxuries Act, 1976 (32 of 1976), 一
(1) in section 2,-
(i) clause (ca) shall be omitted;
(ii) clause (fa) shall be omitted;

Orissa Entertainment Tax Act, 2006:
(f) The relevant provisions of Orissa Entertainment Tax
Act, 2006 are as under:
“2. Definitions. - In this Act, unless there is anything
repugnant in the subject or context,—


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(a) “admission to an entertainment” includes admission to
any place in which the entertainment is held and in case
of entertainment through cable service (or Direct-to-Home
(DTH) Broadcasting Service) each connection to a
subscriber shall be deemed to be an admission for
entertainment;
xxx
(d) “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;
xxx
(e1): Direct-to-Home (DTH) Broadcasting Service” means
system of distribution of multi-channel television
programme in KU Band by using a satellite system, by
providing television signals to a television set with the aid
of set-top box direct to subscribers without passing
through an intermediary such as Cable Operator.
Explanation.- For the purpose of this clause and clause
(k1) “KU Band” ordinarily means the 11.7-12.7 Ghz.
(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


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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.
xxx
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).”







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The relevant provisions of Orissa Entertainment Tax Rules,
2006 are as under:
“12. Permission to operate cable television network or
connection for the Direct-to-Home (DTH) Broadcasting
Service. – (1) The proprietor of a cable television network
or a Direct-to-Home (DTH) Broadcasting Service shall
submit to the Commissioner an application in Form XA
within fifteen days from the date of commencement of
these rules bringing the Direct-to-Home (DTH)
Broadcasting Service under the purview of the Act or at
least fifteen days before the date of such entertainment
and shall furnish any other information which may be so
required by the Commissioner for the purpose.
(2) The Commissioner, after making such enquiry as he
may deem proper and after being satisfied that the
application is in order, shall issue certificate in form XIIIA
permitting the proprietor of a cable television network or a
Direct-to-Home (DTH) Broadcasting Service.”

Punjab Entertainment Duty Act, 1955 :
(g) The relevant provisions of the Punjab Entertainment Duty
Act , 1955 are as under:
“2. Definitions. - In this Act unless the context otherwise
requires -
(a) 'admission to an entertainment’ includes admission
to any place in which the entertainment is being held or is
to be held and where television exhibition is being provided
with the aid of any type of antenna with a cable network
attached to it or cable television or direct-to-home
television in residential or non-residential areas of which
persons are required to make payment by way of
contribution or subscription or installation and connection


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charges or any other charges collected in any manner,
whatsoever.
xxx
(aa) 'antenna' means an apparatus which received
television signals which enable viewers to tune into
transmissions including national or international satellite
transmissions and which is erected or installed for
exhibition of films or moving pictures or series of pictures
by means of transmission of television signals by wire
where subscriber’s television sets at the residential or non-
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;


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(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


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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.
xxx
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,


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specified in the Schedule appended to this Act, per annum
per ride.
SCHEDULE
(See Section 3 (1-B)

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Page 125 of 321

(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.


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(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:
Provided that if the Government consider that such an
order should be brought into force at once, the final
notification may issue without previous publication:
Provided further that Government may impose an
entertainments duty on complimentary tickets at a
different from that imposed on other kinds of payment for
admission subject to the maximum specified in sub-
section (1).

(3) Until such time as the duty referred to in sub-
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.


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(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
th
by the proprietor by the 10 day, commencing from the
close of the concerned calendar month.”


Rajasthan Entertainments and Advertisements Tax Act,
1957 :

(h) The relevant provisions of the Rajasthan Entertainments
and Advertisements Tax Act, 1957 are as under:
“3. Definitions. – In this Act, unless the subject or context
otherwise requires,-
xxx
(4A).- “direct to home broadcasting service” means
distribution of multi channel television programmes by
using satellite system by providing television signals direct
to the premises of subscribers without passing through an
intermediary such as cable services.
(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


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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 18BBBB.- Permission to be obtained to operate
direct to home broadcasting service.


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(1) the proprietor of a direct to home broadcasting
service shall submit to the Commissioner an application
within fifteen days from the date on which these rules
come into force or at least within fifteen days of his
commencing entertainment through direct to home
broadcasting service, whichever is later.
(2) the proprietor shall submit to the Commissioner a
security of an amount fixed by the Commissioner along
with any other information which may be so required by
the Commissioner.

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 :
(i) The relevant provisions of the Tamil Nadu Entertainments
Tax Act, 1939 are as under:
“3. Definitions: In this Act, unless there is anything
repugnant in the subject or context :
xxx


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(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;
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


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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:-

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(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 :
(j) The relevant provisions of Uttar Pradesh Entertainment
and Betting Tax Act, 1979 as amended by Uttar Pradesh
Entertainment and Betting Tax (Amendment) Ordinance,
2009 are as under:


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“ 2. Definitions.- In this Act-
(a) ‘admission to an entertainment’ includes admission
to any place which the entertainment is held or any place
wherefrom entertainment is provided by means of the cable
television network of Direct to Home service or any other
emerging transmission by whatever name called.”
(a-1) ‘amusement park’ mean a place wherein various
type of amusements, which includes games or rides or
water sports, water park, splash pool etc. but does not
include exhibition by means of cinematograph and video,
are provided on payment of admission.”
xxx
(ee) ‘cable operator’ means any person who provides
cable service through a cable television network or
otherwise controls or is responsible for the management
and operation of cable television network and includes the
proprietor of a hotel who provides cable service in the hotel
through his own cable television network”;
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.”


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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,


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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


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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;.
xxx
(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


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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.".
xxx
(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


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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:
Provided also that a proprietor of a cinema, in lieu of
payment under this sub-section, shall make a lump sum
payment to the State Government on such conditions and
restrictions 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 lump sum payments may
be notified for different categories of local areas or cinemas
or for different payment for admission.
(2) Nothing in sub-section (1) shall preclude the State
Government form notifying different rate of entertainment
tax for different areas or for different classes of
entertainment or for different Aggregate payment required
for admission to entertainment.


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(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


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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:
Provided that where the cable operator himself is the
proprietor of the hotel, 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 any other cable operator.
Explanation.- (1) For the purposes of this sub-section and
clause (ee) of Section 2, 'hotel' includes an
accommodational unit wherein rooms are provided to the
customers on rent, but does not include the units
approved under the 'Paying Guest Scheme' of the
Department of Tourism of the State Government.
Explanation - (2) For the purposes of this Act, the
expression aggregate payment shall mean a sum paid by a
person for admission to the entertainment which shall
include entertainment tax and other amount required to
be paid under this Act but does not include any fee or other
charges which is not a part of entertainment tax under this
Act."
The State Legislature of Uttarakhand amended the Uttar
Pradesh Entertainment and Betting Tax Act, 1979 (as applicable to
the State of Uttarakhand) by Act No.4 of 2009 notified on
16.03.2009 which are as under:


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“ Section 2 – Definitions.–
xxx
(ff) “Direct-to-Home (DTH) Broadcasting” a service for
multi-channel distribution programmes direct to
subscriber’s premises without passing through an
intermediary such as cable operator by uplinking to a
satellite system.
Section 2(g) has been amended as under –
(g) “Entertainment” includes Direct-to-Home Broadcasting
service and any and any exhibition, performance,
amusement, game, sport or race (including horse race) to
which persons are admitted for payment and in the case of
cinematograph exhibition, includes exhibition of news-
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:

8. With regard to the distribution of legislative subjects under
the three Lists of the Seventh Schedule of the Constitution, it is
necessary to state that the Devolution Rules drawn under the
Government of India Act, 1919 and thereafter the Government of
India Act, 1935 are the precursors to the distribution of legislative
powers between the Union and the States. Some of the salient
aspects concerning the distribution of legislative powers between
the Parliament and State Legislature as per the three Lists in the
backdrop of constitutional provisions could be alluded to. Article


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246 of the Constitution deals with the distribution of legislative
powers between the Union and the States. The said Article has to
be read along with the three Lists, namely, the Union List, the State
List and the Concurrent List. The taxing powers of the Union as
well as the States are also demarcated as separate entries in the
Union List as well as the State List i.e. List I and List II respectively.
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


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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:
8.2.1 The power to legislate which is dealt with under Article 246
has to be read in conjunction with the entries in the three Lists
discussed above which define the respective areas of legislative
competence of the Union and State Legislatures. While interpreting
these entries, they should not be viewed in a narrow or myopic
manner but by giving the widest scope to their meaning,
particularly, when the vires of a provision of a statue is assailed. In
such circumstances, a liberal construction must be given to the
entry by looking at the substance of the legislation and not its mere
form.
8.2.2 However, while interpreting the entries, in the case of an
apparent conflict between the entries in the Lists, every attempt
must be made by the Court to harmonise or reconcile them. Where


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there is an apparent overlapping between two entries, the doctrine
of pith and substance is applied to find out the true character of
the enactment and the entry within which it would fall. The
doctrine of pith and substance, in short, means, if an enactment
substantially falls within the powers expressly conferred by the
Constitution upon the legislature which enacted it, the same
cannot be held to be invalid merely because it incidentally
encroaches on matters assigned to another legislature. Also, in a
situation where there is overlapping, the said doctrine has to be
applied to determine to which entry, a piece of legislation could be
related to by examining the true character of the enactment or a
provision thereof. Due regard must be had to the enactment as a
whole and to its scope and objects. It is said that the question of
invasion into another legislative territory has to be determined by
substance and not by degree. According to the pith and substance
doctrine, if a law is in its pith and substance within the competence
of the Legislature which has made it, it will not be invalid because
it incidentally touches upon the subject lying within the
competence of another Legislature.


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8.2.3 In case of any conflict between entries in List I and List II,
the power of Parliament to legislate under List I will supersede
when, on an interpretation, the two powers cannot be reconciled.
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


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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:
“It must inevitably happen from time to time that
legislation, though purporting to deal with a subject in one
list, touches also on a subject in another list, and the
different provisions of the enactment may be so closely
intertwined that blind adherence to a strictly verbal
interpretation would result in a large number of statutes
being declared invalid because the Legislature enacting
them may appear to have legislated in a forbidden sphere.
Hence the rule which has been evolved by the Judicial


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Committee whereby the impugned statute is examined to
ascertain its “pith and substance”, or its “true nature and
character,” for the purpose of determining whether it is
legislation with respect to matters in this list or in that.”

8.2.5 Where one entry is made “subject to” another entry, all that
it means is that out of the scope of the former entry, a field of
legislation covered by the latter entry has been reserved to be
specially dealt with by the appropriate legislature. Also, when one
entry is general and another specific, the latter will exclude the
former on a subject of legislation. If, however, they cannot be fairly
reconciled, the power enumerated in List II must give way to List
I.
8.2.6 But once the legislation is found to be ‘with respect to’ the
legislative entry in question, unless there are other constitutional
prohibitions, the power would be unfettered. It would also extend
to all ancillary and subsidiary matters which can fairly and
reasonably be said to be comprehended in that topic or category of
legislation ( United Provinces vs. Atiqa Begum, AIR 1941
vide
FC 16).


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8.2.7 Another important aspect while construing the entries in
the respective Lists is that every attempt should be made by the
Court to harmonise the contents of the entries so that
interpretation of one entry should not render the entire content of
another entry nugatory ( vide Calcutta Gas Company Ltd. vs.
State of West Bengal, AIR 1962 SC 1044). This is especially so
when some of the entries in a different List or in the same List may
overlap or may appear to be in direct conflict with each other. In
such a situation, a duty is cast on the Court to reconcile the entries
and bring about a harmonious construction. Thus, an effort must
be made to give effect to both entries and thereby arrive at a
reconciliation or harmonious construction of the same. It is only
when such attempt to reconcile fails that the non-obstante clause
in Article 246(1) should be applied as a matter of last resort as
observed in Re: The Central Provinces and Berar Sales of Motor
Spirit and Lubricants Taxation Act, 1938, AIR 1939 FC 1 by
Gwyer, C.J. in the following words:
“for the clause ought to be regarded as a last resource, a
witness to the imperfections of human expression and
the fallibility of legal draftsmanship”.



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8.2.8 The sequitur to the aforesaid discussion is that if the
Legislature passes a law which is beyond its legislative competence,
it is a nullity ab-initio . The legislation is rendered null and void for
want of jurisdiction or legislative competence vide RMD
Chamarbaugwalla vs. Union of India, AIR 1957 SC 628.
8.2.9 On a close perusal of the entries in the three Lists, it is
discerned that the Constitution has divided the topics of legislation
into the following three broad categories:
(i) Entries enabling laws to be made;
(ii) Entries enabling taxes to be imposed; and
(iii) Entries enabling fees and stamp duties to be collected.
8.2.10 Lists I and II are divided essentially into two groups :
one, relating to the power to legislate on specified subjects and the
other, relating to the power to tax. Thus, the entries on levy of taxes
are specifically mentioned. Therefore, as such, there cannot be a
conflict of taxation power of the Union and the State. Thus, in
substance the taxing power can be derived only from a specific
taxing entry in an appropriate List. Such a power has to be
determined by the nature of the tax and not the measure or
machinery set up by the statute. In Hoechst Pharmaceuticals, it


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has been categorically held that taxation is considered as a distinct
matter for purposes of legislative competence.
8.2.11 It would be relevant to discuss the following two
judgments of this Court in detail in order to bring out the pertinent
principles of interpretation of taxation entries in List II even when
regulation of an activity is provided under an entry in List I. They
are: (i) MPV Sundararamier and Union of India vs. H.S.
Dhillon, (1971) 2 SCC 779 (“H.S. Dhillon”).
8.2.12 In paragraph 51 of MPV Sundararamier, it was
observed as under:
“51. In List I Entries 1 to 81 mention the several matters
over which Parliament has authority to legislate. Entries
82 to 92 enumerate the taxes which could be imposed by
a law of Parliament. An examination of these two groups of
entries shows that while the main subject of legislation
figures in the first group, a tax in relation thereto is
separately mentioned in the second. Thus, Entry 22 in List
I is “Railways”, and Entry 89 is “Terminal taxes on goods
or passengers, carried by railway, sea or air; taxes on
railway fares and freights”. If Entry 22 is to be construed
as involving taxes to be imposed, then Entry 89 would be
superfluous. Entry 41 mentions “Trade and commerce
with foreign countries; import and export across customs
frontiers”. If these expressions are to be interpreted as
including duties to be levied in respect of that trade and
commerce, then Entry 83 which is “Duties of customs
including export duties” would be wholly redundant.
Entries 43 and 44 relate to incorporation, regulation and


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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


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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:
“There is no such thing as taxation by implication. The
burden is always upon the taxing authority to point to the


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act of assembly which authorises the imposition of the tax
claimed.”

8.2.15 Thus, the power to tax is not an incidental power.
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


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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


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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:
8.3 The controversy in the aforesaid case was regarding the
interpretation to be given to the expression ‘betting and gambling’
in Entries 34 and 62 - List II of the Seventh Schedule to the
Constitution of India. Further, whether “lotteries organised by the
Government of India or the Government of a State”, which is a
subject in Entry 40 - List I also encompasses the power to levy tax
on the said lotteries? Consequently, whether under Entry 62 - List
II the State Legislature is denuded of the power to levy tax on the
said subject? In other words, whether the subject covered in Entry
40 - List I restricts the scope and ambit of Entries 34 and 62 - List
II? If the answer is in the affirmative, whether the State Legislatures


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have no legislative competence to levy tax on lotteries organised by
the Government of India or the Government of a State.
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


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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:
“158.2 The expression “betting and gambling” is also
found in Entry 34 of List II. We have discussed at length
above the content of the said expression and as to what it
encompasses. The activity of “betting and gambling”
includes, inter alia, lotteries. Lotteries can be conducted
by the Government of India or the Government of States or
authorised by a State or be conducted by private entities
in a State. Thus, a lottery conducted by any of the above
entities, Government or private is an activity falling within
the nomenclature of “betting and gambling” which is the
subject in Entry 34 List II. But what has been carved out
of Entry 34 of List II is only lotteries conducted by the
Government of India or the Government of any State.
Therefore, all other types of lotteries continue to remain
within the scope and ambit of “betting and gambling” as
an activity in Entry 34 of List II.”



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8.3.2 In the above backdrop, Entry 40 – List I and Entries 34
and 62 - List II were considered to assess whether there is any
apparent conflict or overlapping between the same. It was observed
that with regard to lotteries organized by the Government of India
or Government of a State are concerned, they continue to remain
within the scope and ambit of Entry 62 - List II dealing with, inter
alia , betting and gambling in so far levy of tax is concerned. But in
order to have uniformity of laws throughout the country governing
such lotteries, the framers of the Constitution had intentionally
included the said activity referred to above in Entry 40 – List I.
Consequently, Parliament has legislative competence to pass laws
on lotteries organized by the Government of India or the
Government of any State, uniformly throughout the country, as the
conduct of such lotteries by the sovereign State is a source of
revenue. Therefore, in order to enhance the faith of the people in
the organization and conduct of such lotteries throughout the
territories of India by the Government of India or the Government
of any State, the said regulation by Parliament is enabled by
placing the subject in Entry 40 – List I. Consequently, the Lotteries
(Regulation) Act, 1998 had been passed by Parliament which is


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regulatory in nature. But the question, whether, while interpreting
Entry 40 - List I alongside Entries 34 and 62 - List II, the power to
tax lotteries organized by Government of India or the Government
of a State was also taken away from Entry 62 - List II and was to
be read within the ambit of Entry 40 - List I was considered. It was
held that the power to tax remains in Entry 62 – List II with the
State Legislature for which in paragraph 158 of the said judgment,
twelve reasons were assigned. It was ultimately held that Entry 62
- List II is a specific taxation entry on luxuries, including taxes on
entertainments, amusements, betting and gambling. Since
lotteries conducted by any entity or organization was nothing but
betting and gambling, the State Legislatures would have the power
to tax lotteries under Entry 62 - List II as lotteries would come
within the nomenclature of betting and gambling irrespective of
who conducts them.
8.4 Therefore, before approaching Entry 97 - List I which is a
residuary entry in the Union List (List I), it would be necessary to
first interpret the relevant taxation entry in the State List and it is
only in the absence of there being legislative competence in the
relevant taxation entry in the State List could such a power be


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traced to Entry 97 - List I in the residuary list provided such a
power is not also traceable to any entry in the Union List. This is
because in List I itself the entries concerning taxation are separate
and distinct. Such entries are from Entries 82 to 92-B and Entry
96 - List I deals with fees in respect of any of the matters in the List
but not including fees taken in any court. Therefore, the power to
tax can be read under Entry 97- List I which is only a residuary
entry, if the same is not enumerated separately in List I or in List
II in which latter case it would come within the legislative
competence of the State Legislature.
8.5 From the aforesaid discussion, we would have to deduce and
give a finding whether the activity conducted by the assessees
herein falls within the nomenclature of entertainments under
Entry 62 – List II thereby recognizing legislative competence with
the State legislature to impose a tax on the assessees herein.
Meaning and Scope of the expression “Luxuries,
Entertainments and Amusements” and Legislative
Competence of State Legislatures to impose Entertainment
Tax:

Luxuries:
8.6 The expression “entertainments and amusements” finds a
place both in Entries 33 as well as 62 – List II. The former is a


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regulatory entry while the latter is a taxation entry. Entry 33 – List
II, on the one hand, speaks of theatres and dramatic performances,
while on the other hand, it deals with sports, entertainments and
amusements. Cinemas are also covered within Entry 33 – List II
subject to Entry 60 – List I which deals with sanctioning of
cinematograph films for exhibition. The taxation entry (Entry 62 –
List II) essentially grants or reserves legislative competence to the
State Legislature to impose taxes on “luxuries” which expression
includes entertainments, amusements, betting and gambling.
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


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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;


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(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


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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


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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


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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:
8.14 According to P. Ramanatha Aiyar’s Advanced Law Lexicon,
th
6 Edition, Volume II, the word ‘entertainment’ includes any
exhibition, performance, game, sport and any other form of
amusement to which persons are ordinarily admitted on payment.
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.


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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.
th
8.17 According to Concise Oxford English Dictionary, 11 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


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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


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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:
8.22 The expression “amusement” in Entry 62 – List II would
mean diversion, pass time or enjoyment or a pleasurable
occupation of the senses or that which furnished it vide M.J.
Sivani vs. State of Karnataka, AIR 1995 SC 1770.
8.23 Entry 62 - List II is a specific taxation entry on luxuries,
including taxes on entertainments, amusements, betting and
gambling. The expression “entertainments and amusements”
would have to be read ejusdem generis . The tax is thus on the
activity of “entertainments and amusements” as it is on the activity
of betting and gambling. Hence under Entry 62 - List II, the specific
power to tax an activity which is “entertainments and
amusements” is reserved with the State Legislature and cannot be


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read within the scope and ambit of Entry 31 - List I which is
inherently restricted in its scope to include “broadcasting and other
like forms of communication” (Entry 31 – List I). We say so for the
following reasons:
8.23.1 First, when a specific entry regarding taxation is
provided in List II empowering the State Legislature to levy tax on
a subject, namely, “entertainments and amusements” amongst
other similar activities, the same cannot be read by implication in
an entry of List I, namely, Entry 31 - List I which is a regulatory
entry. This is because a taxation entry is separate and distinct from
an entry dealing on a particular subject. This principle has been
adequately explained by this Court in several judgments such
as MPV Sundararamier and was followed in Hoechst
Pharmaceuticals as discussed above.
8.23.2 Second, a taxation entry or legislative power to levy a tax
on “entertainments and amusements” in the instant case, cannot
be split between Parliament and the State Legislature when the
said power is expressly enumerated in Entry 62 - List II. This is the
constitutional scheme under the three Lists. This is also evident on


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a perusal of the entries of List III (Concurrent List) which empowers
both the Union as well as State Legislature to enact laws on
subjects mentioned therein and the power to levy a tax is
conspicuous by its absence.
8.23.3 Third, the object and purpose of Entry 62 - List II is to
tax the activity of “entertainments and amusements”.
8.23.4 Fourth, theatres and dramatic performances, cinemas,
sports, entertainments and amusements are subjects enumerated
in Entry 33 - List II and are State subjects, therefore, regulation of
such activities within a State is complemented by the power of the
State legislature to also tax the said activity under Entry 62 – List
II. This is because what is being taxed is an entertainment and
amusement activity which is squarely covered under Entry 62 -
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


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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


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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,


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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


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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


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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


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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


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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:
8.26 A legislative enactment which provides for the imposition of
a tax must specify the following parameters of taxation:
(i) The taxable event which forms the basis of levy, also referred
to as “subject” of a tax;
(ii) The measure of the tax;
(iii) The rate(s) of taxation; and

(iv) The incidence of the tax.
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)



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“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:
“111.1. In the context of the tax sought to be imposed by
the impugned Acts, the basis of levy is the conduct of
lotteries within the State of Karnataka or Kerala. In other
words, the subject of taxation is the conduct of lottery
schemes , by the Government of India or the Government
of other States, within the State of Kerala or Karnataka.
While it has rightly been stated by the learned counsel
appearing on behalf of the respondents that the conduct
of lotteries involves a host of events such as formulation
and notification of scheme of lotteries, printing,
transportation and sale of lottery tickets, etc. all these
events constituting the conduct of the lotteries are
ultimately for the participation of persons, within the State
of Karnataka or Kerala. Therefore, the subject of tax is the
conduct of lottery schemes, within the State of Karnataka


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or Kerala, which is enabled by the propensity of persons to
participate in the lottery schemes.
111.2. The measure of taxation in the instant case is the
“ draw ”. The impugned legislations contemplate two kinds
of draws, namely, bumper draw and draw other than a
bumper draw.
111.3. The rate of tax , is a dependent variable and is to
be determined based on the measure. In the instant case,
the rate of tax under the Karnataka Act, 2005 is Rupees
one lakh and fifty thousand in respect of a bumper draw
and Rupees one lakh in respect of any other draw.
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:


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