2013 (6) TMI 586 - MADRAS HIGH COURT

Constitutional validity of Levy of entertainment tax and service tax on DTH Service - simultaneous levy - whether DTH services is not entertainment - Held that:- even though we have held that by reason of the imperfections pointed out as to the absence of chargeable event not being specified in explicit, unambiguous and clear terms in Section 4-I, the charge cannot be effectuated, yet, on the grounds of violation of Article 14 and the imperfection in the Section creating the impression as though the charge is in the nature of service tax and hence, colourable in character, we have no hesitation in declaring the provision as unconstitutional.

As far as the contentions on Article 19(1)(a) and 19(1)(g) are concerned, we do not find any good ground to accept the plea of the petitioners that levying tax on entertainment is a tax on the premium of expression.

On the question of the chargeable event not specified in Section 4-I of the Act, as to the colourable character of Section 4-I, and on the violation of Article 14, we allow the writ petitions holding Section 4-I of the Tamil Nadu Entertainments Tax Act as unconstitutional.

Regarding levy of Service Tax - Held that:- the petitioners have also challenged Section 4-I, stated in the affidavit in paragraph No.4, that the questions raised as to whether the activity of the petitioner would attract service tax liability and whether the levy by the State under the Tamil Nadu Entertainments Tax Act would amount to transgression of powers under Entry 62 List II of Seventh Schedule to the Constitution of India. When the contrary stand taken as regards the challenge on service tax was pointed out to the attention of the learned senior counsel, initially, we were informed that the petitioner had filed a Writ Petition before the Delhi High Court in July, 2012 questioning the levy of service tax. When the petitioner was asked to file an affidavit explaining their conduct in not disclosing the above-said facts of taking diametrically opposite stand from the one conceded before the Delhi High Court, the petitioner had filed an affidavit stating that realising that 88th Constitution Amendment introducing Entry 92C of List I of VII Schedule to the Constitution of India was not notified, the imposition of service tax thus not valid, after obtaining advice from the senior counsels in Delhi, the petitioner has filed the Writ Petition in W.P.No.4302 of 2012 before the Delhi High Court also. Thus the petitioners made the plea that in the absence of Entry 92C List I of VII Schedule to the Constitution of India notified, the Union cannot impose service tax. Before this Court, the petitioner conceded that being a subject falling under Entry 62 List II of VII Schedule to the Constitution of India to tax entertainment, the exclusive power to tax entertainment rested with the State, and the Centre cannot levy service tax. As already seen from the extract from the judgment of the Delhi High Court, the petitioner conceded about its liability to service tax and all that it challenged was the levy of entertainment tax under the Delhi Entertainments and Betting Tax Act.

Regarding non information of case in Delhi High Court - The affidavit states that the lapse in not specifically referring to the stand taken before the Delhi High Court was unintentional and bona fide. The petitioner further states that during the course of the arguments, earnest attempts were made by the petitioner to demonstrate the error in the judgments of the High Court and lapse was there in the affidavit in not specifically referring to the inconsistent stand and there was no intention to suppress the material.

We do not appreciate the attitude shown by the petitioner in suppressing the material fact about its conceding a particular state of affairs on its liability under the Service tax levy. Even though learned counsel appearing for the petitioner submitted that there was no intention, the question is not one of intention, but a question of fairness to the Court in the matter of placing statement of facts truthfully, which, we think, is the basis of the justice delivery system. We may once again point out that but for the State's argument pointing out to the different stand taken, the case would have gone for further argument from the petitioners' side. We wish that the petitioners do not repeat the same tactics before other High Courts. In the light of the material suppression made, we do not find that the petitioners would be justified in advancing its argument further on its challenge on the levy of service tax.

We may also point out that when this Court pointed out to the appeal filed before the Supreme Court challenging the levy of entertainment tax, there is no direct answer explaining the conduct of the petitioners. The petitioners cannot speak in two tongues.

Writ petitions challenging levy of service tax dismissed for suppression of facts from the High Court. - Decided against the assessee.