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2023 (5) TMI 889 - HC - VAT and Sales TaxLiability to pay Entertainment Tax - sharing of Revenue - proprietor has the ultimate control in the transmission of programs, which he receives from a satellite and through the Local Cable Operators (LCO), broadcasts to the subscribers - constitutional issue raised by the petitioner with reference to the 101st Amendment of the Constitution of India - power to levy and collect the tax as per the enactment, after the 101st amendment - HELD THAT:- A similar provision defining Proprietor was available in the Delhi enactment. The Division Bench which considered the matter in Siti Cable Networks Limited [2017 (3) TMI 627 - DELHI HIGH COURT] also proceeded on the basis that the definition of the word “Proprietor” covers both the MSO and the LCO. It was held that the expression ‘in the manner prescribed’ in Section 7, the charging section, which requires the tax ‘to be collected by the proprietor and paid to the Government in the manner prescribed’, and the definition of the word ‘prescribed’ in Section 2(n); makes inevitable a reference to Rule 26, which also refers to the proprietor of a cable television network. It was thus held that where an MSO provides cable service directly to the subscribers, it would fall under the definition of the proprietor and if it is given through an LCO; then LCO would fall under such definition. The LCO as per clause 9.6 is interdicted from, (i) transmitting or retransmitting, interpolating any signals, not transmitted by the MSO, (ii) inserting any commercial or advertisement or information on any signal transmitted by the MSO, (iii) interfering in any way with the signals of the MSO or using any equipment for decoding, receiving, recording or using a counterfeit set-top box, (iv) altering or tampering the Hardware and (v) using any Hardware not supplied by the MSO. There shall also be no connection provided by the LCO to any entity for retransmission of the TV signals (Clause 9.7) and the LCO is also prohibited from recording and retransmitting and from blocking, adding or substituting the TV signals transmitted by the MSO - It was on similar provisions that the Hon’ble Supreme Court in paragraph 36 of Purvi Communication (P) Ltd. [2005 (3) TMI 438 - SUPREME COURT] found the respondent therein, an MSO, to have a direct and proximate nexus with the entertainments provided by them through the cable TV network and found them to be liable as the taxable person, liable to pay tax on the gross receipts obtained from the viewers; the subscribers. The Act of 1948 in the State of Bihar, by which the State, through its Commercial Tax Officers collect entertainment tax inter alia from the proprietors of cable television networks cannot survive the 101st Amendment, since the field of taxation available to the State under the amended Entry 62 of List II is confined to those levied and collected by the local self-government institutions. The tax for the period prior to the amendment, though levied on the taxable event occurring, cannot also be collected since there is no transition provision available under the 101st Amendment making such collection of entertainment tax permissible for one year or by way of a repeal; by an enactment, consistent with the amendment, with a saving clause for continuance of the levy and collection under the old Act as it was never repealed. The impugned orders are hence set aside, only on the ground of the authorities under the Act of 1948 having been denuded of the power to levy and collect the tax as per the enactment, after the 101st amendment. The State also is denuded of the power to make an enactment in the nature of the Bihar Entertainment Tax Act, 1948 after the 101st Amendment. The repeal and the saving clause provided under the BGST Act does not inure to the benefit of the State since the enactment and the levy made by it cannot be sustained after the 101st amendment - Petition allowed.
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