2014 (9) TMI 109 - ALLAHABAD HIGH COURT

Levy of entertainment tax on entertainment content in DTH services – Constitutional validity of Section 2 (l) (iii) of the U.P. Entertainment and Betting Tax Act, 1979 – Held that:- The entertainment tax is to be paid on payments for admission to an entertainment, which includes contribution, subscription, installation or connection charges or any other charges collected in any manner whatsoever. Clauses (i) to (v) with their Explanation under section 2(l) defining ”payment for admission” have not undergone any change after amendment. A new sub-clause (vi) has been added, which includes the subscription or installation or charges or any other charges collected in any manner whatsoever by whatever name called for television, through cable television network or any such network of whatever name called, attached to television set or any other device at a residential or non-residential place.

A further sub-clause (vii) has been added to make a clarification for any payment made by person to the proprietor of a direct-to-home service, by way of contribution or subscription or installation and connection charges, or any charges collected in any manner of whatever name called with aid of set top box or any other device at a residential or non-residential place of connection holder directly to the satellite without passing through an intermediary such as cable operator. For viewing channels through DTH connection by either prepaid or post-paid payments made through cash or credit cards, or by any other method, are all payments for admission to entertainment. The entertainment tax is to be collected by the proprietor and paid to the State Government in the manner prescribed. The proprietor includes in relation to the entertainment any person connected with the organisation of the entertainment, or charges with the work of admission to the entertainment or responsible for, or for the time being in charge of, the management thereof under section 2(m).

In dealing with the challenge to the constitutional validity of the provisions of taxing statutes that it violates article 14 of the Constitution, the court, which exercises the power of judicial review should be conscious of the limitation of judicial intervention, particularly in matters relating to the legitimacy of economic or fiscal legislation. The Legislature is entitled to a great deal of latitude in fiscal legislation. The court would interfere only where a clear infraction of constitutional provision is established. The burden is all the heavier when the legislation under attack is a taxing statute, since the powers of the Legislature in classifying objects for the purposes of taxation are wide. The Legislatures possess the greatest freedom in classification and the burden is on the one attacking the legislative arrangement to negative every conceivable basis which might support it. The court must make every effort to uphold the constitutional validity of a statute, even if that requires giving the statutory provision a strained meaning, or narrower or wider meaning, than what appears on the face of it. It is only when all efforts to do so fail should the court declare a statute to be unconstitutional.

Following decisions in Baldeo Singh v. Commissioner of Income-tax [1960 (8) TMI 6 - SUPREME Court], East India Tobacco Co. v. State of Andhra Pradesh [1962 (4) TMI 57 - SUPREME COURT OF INDIA], R. K. Garg v. Union of India [1981 (11) TMI 57 - SUPREME Court], State of Madhya Pradesh v. Indore Iron and Steel Mills Pvt. Ltd. [1998 (8) TMI 505 - SUPREME COURT OF INDIA] and Government of Andhra Pradesh v. P. Laxmi Devi [2008 (2) TMI 850 - SUPREME COURT] - Decided against assessee.