TMI Blog2014 (9) TMI 109X X X X Extracts X X X X X X X X Extracts X X X X ..... r 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rvices. The petitioners have also prayed for declaring that Section 2 (l) (iii) of the U.P. Entertainment and Betting Tax Act, 1979 as ultra vires and unconstitutional, and from making any assessment orders; creating any demand or coercive step in pursuance to the order dated 11.6.2004. 2. Writ Petition No.1229 of 2007 has been filed by M/s Tata Sky Ltd. against the notices issued by the District Magistrate, Lucknow, dated 17.8.2007, to show cause as to why entertainment tax be not levied and realized on the sale and establishment of set top boxes, and the sale of recharge coupons for various channels including bouque of channels as well as the directions issued by the District Magistrate, Ghaziabad on 17.8.2007, directing the petitioner in pursuance to the interim orders passed by the High Court in Writ Petition No.5309 (MB) of 2007 dated 2.8.2007, for depositing the entertainment tax, directing the petitioner to provide for the entire list of the subscribers in District Ghaziabad and the sale of recharge coupons. The District Magistrate has directed the petitioner to provide for the names of the authorised agency, who will be depositing the entertainment tax and will be provid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itioners to the subscribers. 7. In Writ Petition No.1977 of 2009, Reliance Big T.V. Ltd. v. State of U.P. Ors., the petitioner has challenged the provisions of the U.P. Entertainment and Betting Taxes (Amendment) Ordinance, 2009 (4 of 2009) promulgated on 16.6.2009 including DTH services within the ambit of the Act as unconstitutional and ultra vires of the Constitution and not to levy any duty under the Act on DTH services. 8. In Writ Petition No.833 of 2010, M/s Tata Sky Ltd. has prayed for declaring the U.P. Entertainment and Betting (Amendment) Act, 2009 levying entertainment tax on DTH broadcasting services as ultra vires to the Constitution of India. They have also prayed for directions to declare that the respondents have no right to claim entertainment tax on any amount of installation charges, and set top boxes and issue appropriate writ commanding the respondents not to levy tax, fees or duty under the amended Act, 2009. They have also sought for quashing the notices dated 27.1.2010; 16.2.2010; 8.3.2010 and 26.3.2010 to deposit entertainment tax on DTH subscriptions. The Amendments to the Act 9. The U.P. Entertainment and Betting Tax Act, 1979 was amended by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Entertainments Rates of Entertainment Tax 5. All other classes of entertainments not covered by items 1 to 4 (including mimicry, carnival, puppet show, magic show, giant wheel, cabaret or floor show, games of skill and video games). Thirty per cent of each payment for admission. 12. The U.P. Entertainment and Betting Tax (Amendment) Ordinance, 2009 (U.P. Ordinance No.4 of 2009) exhaustively amended U.P. Act No.28 of 1979 providing for imposition of entertainment tax on DTH services. The extract of amendments in Sections 2 and 3 relevant for the purposes of this case are quoted as below:- THE UTTAR PRADESH ENTERTAINMENT AND BETTING TAX (AMENDMENT) ORDINANCE 2009 U.P. ORDINANCE NO.4 OF 2009 Promulgated by the Governed in the Sixtith Year of the Republic of India An ORDINANCE Further to amend the Uttar Pradesh Entertainments and Betting Tax Act, 1979. WHEREAS the State Legislature is not in session and the Governor is satisfied that circumstances exist which render it necessary for him to take immediate action. NOW, THEREFORE, in exercise of the powers conferred by clause (1) of Article 213 of the Constitution, the Governor is pleased to promu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or non-residential place of a connection holder; or (vii) any payment made by person to the proprietor of a Direct-to-Home services 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 clause (vi) and (vii) any expenditure incurred by any co-operative society including a cooperative housing society or by the management of any factory, hotel, lodge bar, permit room, pub or by 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 the member or for worker or customers or for himself or themselv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. (h) after clause (t) the following clause shall be inserted namely:- (u) words and expression used in this Act no 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. Amendment of Section 3 3. In Section of the principal Act:- (a) In the marginal hearing for the words tax on the payment for admission to entertainment the words tax on entertainment shall be substituted. (b) in sub-section (1) (i) for the words all payment for admission the words all aggregate payments required for admission to any entertainment shall be substituted. (ii) after the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the existing explanation shall be renumbered as Explanation (1) and after Explanation (1) as so renumbered, the following explanation shall be inserted, namely:- Explanation (2) for the purpose 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 any other amount required to be paid under the Act but does not include any fee or other charges which is not a part of entertainment tax under this Act . 13. The State Legislature passed the bill on which the Ordinance amending the Act of 1979 was promulgated into the U.P. Entertainment and Betting Tax (Amendment) Act, 2009 (U.P. Act No.25 of 2009), which was notified on August 27 of 2009 and came into force on June 16th, 2009 with effect from the date, when the Ordinance was promulgated. 14. On September 4th, 2009 a Notification No.1672/XI-Ka.Ni.-6-2009-M. (92)-2009 was issued under sub-section (1) of Section 3, sub-section (1) of Section 4, sub-section (1) of Section 4A and sub-section (1) of Section 4B and in supersession of the Notifications dated 13.4.1989, 27.4.1989, 15.10.1994, 12.12.2000, 15.12.2002, 26.3.2003 and 14 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t is held. In the absence of admission to any place in which the entertainment is held, no tax can be levied. The cable TV operator neither provides any place nor charges any money for granting admission to any place. The subscribers neither come nor seek admission or insures to any place provided by the operator. He views the programmes on his own TV and in his own residence and thus Section 3 of the Act has no application to such activity. 17. The Division Bench, after considering the submissions, held that the Preamble of U.P. Act of 1979 shows that the Act was enacted to consolidate and amend the law relating to taxes on entertainments, amusement and on certain forms of betting in the State of UP. In view of the fact that the Legislature itself had given a different preamble of the UP Act of 1979, the element of admission, which was present in the Act of 1937, cannot be imported for interpreting its provisions. This Court then held in paragraphs 12, 14, 15, 16, 17, 18, 19 and 20 as follows:- 12. Sub-clause (iii) of Section 2 (1) defines payment for admission as any payment made for the loan or use of any instrument or contrivance which enables a person to get normal or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... subscriber is thus clearly a payment for admission to an entertainment. The activity carried on by the petitioners is thus fully covered by the provisions of Section 3 of the Act and they are liable to pay entertainment tax. 14.Sri Gaur also submitted that for attracting sub-clause (iii) of Section 2 (1) of the Act, use of the instruments should be in the physical sense of the term namely that the person who goes normal view of the entertainment must himself use the instrument. In our opinion, there is no scope for restricting the meaning of the word use to such an extent. The use of instrument can be direct or indirect. Once the instruments of Cable T.V. Operator are connected to the television set of the subscriber by wire or cable the mere fact that someone else is operating the control room can make no difference as the subscriber gets full benefit of the instruments installed therein and it is through those instruments that the wireless signals be amend by the satellites are converted into such type of signals which can be directly received by an ordinary television set. Thus, it cannot be held that a subscriber does not himself use the instruments or devices which have b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... payment is made by way of a consolidated amount on weekly or monthly basis, the tax has to be paid on such consolidated amount. 17.In Ramesh Sippy v. State, AIR 1989 Bom. 250 levy or tax under Bombay Entertainment Duty Act on machines in video parlour was challenged on the ground that the same was levied on lump sum rate on the basis of ₹ 500/- per machine per month within the limits of Municipal Corporation of Greater Bombay and at the rate of 250/- per machine per month in other areas. It was contended that the tax was payable even in a case where the machine, though could used but in fact was not used and thus depended upon its capacity to provide entertainment. It was also contended that as the tax was levied on the machine it was not on an act of entertainment and consequently the same was illegal. The contention was repelled on the ground that in regulation to taxing statutes the legislature enjoys a large discretion in the matter of classification and it must be given full freedom to determine the manner in which tax should be imposed. The tax levied in lump sum basis on the number of machines was only convenient method to levy the tax in so far as video parlours we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ist II if it decides that consolidation levy on the basis of gross collection capacity per show shall be the only mode for levy of tax on entertainment. For taking the above view, the Court relied upon a series of decisions rendered in East India Tobacco Company v. Union of India, AIR 1962 SC 1733, Federation of Hotel Restaurant Association v. Union of India, AIR 1990 SC 1637, Ganon Dankarley v. State of Rajasthan, 1993 (1) SCC 364 and also a decision of U.S. Supreme Court in Son Antonto Independent School Rodriquez, (1972) 411 US (1) page 41, wherein, it has been held in the field of taxation the Legislature is permitted to exercise an extremely wide discretion in classifying items for tax purposes so long as it retains from clear and hostile discrimination against particular person or association. 18.Shri Khare has next submitted that in the notification issued by the State Government on April 13, 1989, there is no specific entry regarding rate of tax which is leviable on a Cable T.V. Operator and the respondents are taking recourse to Entry No. 5 which is residuary clause for levying tax. The submission is that a taxing statute cannot be vague and in absence of some def ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... strained in order to tax a transaction which, had the legislature thought of it, would have been covered by appropriate words. In a taxing Act , said Rowlatt J., one has to look merely at what is clearly said. There is no room for any intendment. There is no equity about a tax. There is no presumption as to a tax. Nothing is to be read in, nothing is to be implied. One can only look fairly at the language used. Reference has also been made to Baidyanath Ayurved Bhavan v. Excise Commissioner AIR 1971 SC 478 where similar view has been taken by the Apex Court. The submission is that as the activity of a Cable T.V. Operator is not specifically or directly mentioned in the act, the levy of Entertainment Tax is illegal. 20. We have given our careful consideration to the submission made by the learned counsel. We are unable to accept the submission that in absence of a corresponding amendment the activity carried on by Cable T.V. Operator would not come within the purview of the Act. We have to gather the intention of the Legislature from the provisions of the Act and then to examine whether the petitioners are realising any amount for admission to an entertainment. If they are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for which it was made and also take cognizance of the current capabilities of technology and life style of the community. It is well settled that the purpose of law provides a good guide to the interpretation of the meaning of the Act. We agree with the views of Justice Krishna Iyer in Busching Schnitz Pvt Ltd's case (supra) that legislative futility is to be ruled out so long as interpretative possibility permits. Similar view has been taken in Municipal Corporation of Greater Bombay v. Indian Oil Corporation, AIR 1991 SC 686 where steel tanks for storing petroleum products were held to be land or building and exigible to property tax under the Bombay Municipal Corporation Act. In view of the aforesaid authorities the law seems to have been settled that in a fast developing society, it would not be correct to confine the intention of the Legislature to the meaning attributable to the words used at the time of making of enactment. In a scientific age, the legislature must be presumed to be aware of an enlarged meaning of the word which it may attract with the advance in science and technology. Therefore, the contention of the learned counsel not to see the intention of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment' includes 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, including exhibition of news-reels, documentaries, cartoons, advertisement shorts or slides, whether before or during the exhibition of a feature film or separately The High Court has taken the view and in our opinion rightly held that the Cable TV Network run by the petitioners fall within the said definition which is of an inclusive nature. We agree with it. So far as the petitioners are concerned, it is stated that they are providing the said entertainment only to its employees and that too free of cost. Only a nominal sum of ₹ 5/- from each connection is collected - that too for paying part of the maintenance cost payable to the contractors. It is submitted that this is only a welfare measure conceived in the interest of the workers. The High Court has also taken note of this plea and has made the following observation: The fact that the Hindalco is providing Cable Network facilities to its employees as a welfare measure and not with profit motive, may be a good ground for Hin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d in the Madras High Court challenging the validity of the Amendment Act. The ground of challenge, inter alia, was that the State Legislature has no legislative competence to enact the Amendment Act, inasmuch as the subject matter of the enactment falls exclusively within the province of Parliament, that is List I of the 7th Schedule to the Constitution. Such contention was negatived by the Madras High Court and then a S.L.P was filed and the decision of the Madras High Court was challenged before the Supreme Court, which in its judgment reported as A. Suresh Etc. v. State of Tamil Nadu and another Etc. 1996 (8) SCALE 493, held as under: (para 7 at p. 495) The High Court has dealt with each of these contentions advanced by the writ petitions separately and exhaustively and rejected each of them. Since we agree with the reasoning and conclusions arrived at by the High Court on all the issues, we think it unnecessary to deal with the above submissions except contentions Nos. 3, 4 and 7. 20. The Court did not agree that the notification by Government Order dated 12.4.1989 notifying the rates of entertainment tax is violative of Article 19 (1) (a) of Constitution of India and f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... being a general provision applicable to all kinds of admission to entertainments may have to give way to the newly added provisions specially enacted for the purposes of taxing admission to an entertainment through cable T.V. Network as and when amended provisions are enforced by a notification issued by the State Government under sub-section (2) of Section 1 of Act No. 28 of 1995, but so long such amended provisions including Section 4-C, brought about by virtue of Ordinance No. 21 of 1995 as re-enacted by Act No. 28 of 1995, are not enforced, the entertainment provided by cable T.V. Network would continue to be taxable under Section 3 of Act of 1979. The net result would thus be that for the brief period during which the Ordinance No. 21 of 1995 remained in force, the opposite parties can levy tax only in accordance with the amended text of the Act of 1979, but before and after that period, the petitioners would be liable to pay entertainment tax in accordance with the notification dated 13.4.1989 issued under Sections 3 (1) and 4 (1) of Act of 1979. The contention thus raised on behalf of the petitioners that they are liable to pay tax only in accordance with the amended provis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts levy on the principles of quid pro quo. It is a license fee for taking out license, with an object to regulate entertainment. 23. As noticed above, this Court has consistently taken the view in M/s Universal Communication System (Supra) in the year 1995; Hindalco Industries Ltd. (Supra) in the year 1996; Hukum Singh (Supra) in the year 1997; in Rajesh Jolly (Supra) in the year 1997 and in Sharad Traders v. State of U.P. (Writ Petition No.702 of 2011 decided on 21.10.2011) that in a modern progressive society it would be unreasonable to confine the intention of the legislature, to the meaning attributable to the words used at the time, when the law was made. For a modern legislature, making laws to govern a society, which is fast moving, must be presumed to award an enlarged meaning, the same concept might attract with the march of time, and with the revolutionary changes brought about in social, economic, political and scientific and other fields of human activity. Unless a contrary intention appears an interpretation should be given to the words used, to take in new facts and situation. Even prior to the promulgation of the U.P. Entertainments and Betting Tax (Amendment) Or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. If the argument that they do not provide entertainment, is accepted, then it would mean that the proprietor of cinema hall does not provide entertainment as same is provided by the stars and artists, who have acted in the film. Such a restricted interpretation of the word 'entertainment' was not accepted. The Court relied upon Western India Theater v. Cantonment Board (Supra); Y.V. Shrinivasamurthy v. State of Madras (Supra) and Ramesh Sippy v. State (Supra) in support of its decisions. 25. In M/s Universal Communication System (Supra) the Division Bench did not accept the argument that the Act, as it was enacted in 1979 could not have possibly taken into consideration the advent of video cinema and cable TV and with that end in view Section 4A and 4B were added by UP Act No.12 of 1989. The Court did not accept the argument that since there was no corresponding amendment for making a cable TV operator liable to entertainment tax, the tax cannot be imposed unless intendment is provided by the amendment. The same argument has now been raised in respect of DTH services. The Judgments of other High Courts 26. The High Court of Bihar at Patna and the High Court, Utta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r as two entries per se are concerned. Both the High Courts have relied upon the, 'aspects theory' and held that tax on entertainment through DTH service is a tax on entertainment and not that services provided by the DTH service provider. Relying upon State of W.B. v. Purvi Communication Pvt. Ltd. Ors., JT 2005 (3) SC 339, it was held that the television, films and programmes shown to the viewers is entertainment and therefore within the legislative competence of the State Legislature under Entry 62 of List-II of the 7th Schedule to make law for the levy and collection of tax on such entertainment and that the tax is paid on all payments for admission to an entertainment. The tax is levied on entertainment. It is paid on all payments for admission to an entertainment, and is collected by the proprietor and paid to the government in the manner prescribed. The tax is neither on the provider of DTH services nor on the DTH services nor on the person entertained, that the question of tax may fall on the ultimate subscriber and the tax may have to be collected by the DTH service provider and paid to the Government. Those are matters consisting instance and measure of tax, whic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... only a collector of the entertainment tax on behalf of the government. He is not the subject matter of the tax, nor is the service provided by him the subject-matter of the entertainment tax. At the cost of repetition but, for the sake of clarity, we state that the tax in question is neither on a person nor on a thing but on the activity of entertainment. This is the true nature and character of the tax and is, therefore, within the legislative field of Entry 62 of List II of the VIIth Schedule to the Constitution. 33. Let us understand the role played by the petitioners in delivering entertainment directly into the homes of individual subscribers or rooms of hotel guests. The petitioners downlink the signals from various satellites of various TV channels at their hub stations. From there they uplink the signals to their own Ku Band designated transponders which are then transmitted in Ku Band through satellites. Dish antennae installed by the petitioners at their subscribers' premises pick up these Ku Band signals which are then decrypted by the set-top boxes and viewing cards provided by the petitioners. These decrypted signals are then viewed by the subscribers on thei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e aspect, the taxable event is flow of content through the DTH system, whereas, in respect of the entertainment aspect, the taxable event is the entertainment from the content. The Arguments 30. Shri D.K. Singh assisted by Shri R.M. Saggi appearing for Tata Sky Limited in Writ Tax Nos. 1493 of 2007, 5309 of 2007, 1229 of 2007 and 1231 of 2007 has challenged the notices dated 29.6.2007 issued by the District Magistrates in the State of UP demanding entertainment tax from the petitioners on the Direct To Home (DTH) Services; seeking to impose entertainment tax on DTH services @ 30% under the residuary entry in the Schedule setting out the rate of entertainment tax. The District Magistrates have also demanded entertainment tax on the sale proceeds of the set top boxes and installation charges, on which it is alleged that the petitioners have paid Value Added Tax (VAT). 31. It is submitted by Shri D.K. Singh, that the DTH services were not covered under the U.P. Entertainment and Betting Tax Act, 1979 either prior to its amendment by UP Act No. 25 of 2009, or that even after the amendment the entertainment tax cannot be levied on DTH services. The levy and demand of entertain ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... clear indication of the person on whom the tax is imposed and who is obliged to pay the tax; (iii) the rate at which the tax is imposed and (iv) measure or value to which the rate would be applied for computing the tax liability. If these components are not clearly and definitely ascertainable, the levy cannot be a valid levy. Relying upon Kesoram Industries (supra) he submits that in interpreting a taxing statute, equitable considerations are entirely out of place. The taxing statutes cannot be interpreted on any presumption or assumption. A taxing statute has to be interpreted in the light of what is clearly expressed; it cannot imply anything, which is not expressed; it cannot import provisions in the statute to supply the deficiency. Before taxing any person, it must be shown that he falls within the ambit of charging section by clear words used in the section; and if the words are ambiguous and open to two interpretations, the benefit of the interpretation is given to the subject. There is nothing unjust in the tax payer escaping, if the letter of law fails to catch him on account of legislature's failure to express itself clearly. 34. Shri D.K. Singh submits that DTH b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Cable Television Network (Regulation) Act, 1995 as were used for the Act but are not defined therein and (ii) imposition of tax on the proprietor of a hotel, who provides cable service to the hotel through his own cable television network. 36. The Act was again amended in the year 2001 to define 'cable operator' and Section 3 was amended to provide specifically for tax on cable. Since the legislature found that Section 3 read with Section 2 (l) did not cover cable TV operations, the same cannot possibly be considered to cover DTH operations or services. Similarly entertainment provided through video cinema was not covered by the Act and therefore, the Act was amended and specific charging Section 4A and 4B were enacted for levying entertainment tax on video cinema. It is submitted that 'payment for admission' defined in various clauses of Section 2 (l) is only the measure of the tax and is not part of the charge which is imposed by Section 3. The question of going into the measure of the tax arises only, if it is first found that the charge of tax is attracted. Since the charging section with the aid of Section 2 (g) and Section 2 (a) is confined to entertain ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (2) SCC 460, that if the machinery provisions are found to be inapplicable or unworkable, then the charge of tax itself has to fall or construed inapplicable. In case of DTH operations the machinery of tickets with entertainment tax stamped is wholly unworkable. He then submits that the machinery provisions in the Acts and the Rules established the continuous contemporaneous understanding of the concerned authorities. From the very beginning the charge of tax under Section 3 was only on place related entertainment. In Deshbandhu Gupta vs. Delhi Stock Exchange 1974 (4) SCC 565 and K.P. Verghese vs. ITO 1981 (4) SCC 173 the doctrine of contemporaneous exposition was explained and it was laid down that the Courts would not ordinarily depart from the contemporaneous understanding of the provisions and the working of the Act by the authorities. 40. Shri D.K. Singh further submits that the Amending Act of 2009, which came into force on 16.6.2009 amending the UP Act of 1979 including DTH services, is not clarificatory in nature inasmuch as the Act was substantially implied to include DTH broadcasting services. The substantive amendments are not held to be clarificatory and do not have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to cancellation of licence and invite imposition of heavy penalties. The service providers are merely to re-transmit the contents without any addition, alteration or charges that it has received from the broadcasters. The licence issued to the petitioner is to only provide services of re-transmitting the signals received from the broadcasters. These services cannot by any stretch of imagination be called entertainment. Under the Up-linking and Down Linking Guidelines issued by the Union of India applications have to be made for entertainment channels and sports channels. For each type of channels a broadcaster is proposed to show the terms and conditions for grant of licence, including the restrictions by the Government on foreign investments in each of these types of channels. As a service provider the petitioner carries all the types of channels licenced as non-entertainment and sports channels. The petitioners as such as licencees are not providing entertainment and thus are not liable to pay entertainment tax on the non-entertainment channels, which are mandatory, the State cannot levy or collect tax by which its very own enactment cannot impose the tax. 44. It is submitted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ive in its operation. The Amendment Act specifically states that it shall deem to have come into force on June 16, 2009. The DTH services are not taxable services under the definition of entertainment in Section 2 (g) of the UP Act of 1979. 46. Shri Bharat Ji Agrawal submits that Section 2 (a) specifically provides for a place where entertainment is held. In Section 2 (g) several examples have been given which clearly show that they relate to a place/situs of entertainment for the entertainment. Section 2 (l) provides for the definition of payment for admission. It is to be read with the other provisions including Section 2 (a), Section 2 (g) and Section 3 of the Act. The phrase 'admission to an entertainment' and 'payment for admission' clearly denote entry into physical premises. The entertainment, which does not contemplate admission or entry into a physical premises, where such entertainment is provided, is not covered by the Act. 47. It is submitted that the petitioner is only providing services and providing of such services by no stretch of imagination comes within the ambit of entertainment. It is against the spirit of physical statutes that all servic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by charging Section 3 read with Section 2 (a), 2 (g) and 2 (l). He relies upon Geeta Enterprises 1989 (4) SCC 204 which also deals with a place related entertainment namely the video game machines in a game parlour. In paragraph-12 the Supreme Court clearly held that the principle, that the entertainment tax under the Act is one, which takes place in a particular physical location to which a person is admitted. The Supreme Court clearly held that the activity to fall under the definition of entertainment must contain a public colour and the show should be open to public in a hall, theatre or any other place where members of the public are invited or attended the show. In paragraph-13 the Supreme Court held:- 13. Thus, on a consideration of the legal connotation of the word 'entertainment' as defined in various books, and other circumstances of the case as also on a true interpretation of the word as defined in Section 2 (3) of the Act, it follows that the show must pass the following tests to fall within the ambit of the aforesaid Section: 1.That the show, performance, game or sport, etc. must contain a public colour in that the show should be open to public in a ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or declaratory or not would indisputably depend upon the nature thereof as also the object it seeks to achieve. What we intend to say is that if two views are not possible, resort to clarification and/or declaration may not be permissible. 52. Shri Bharat Ji Agrawal submits that in the various notices sent to the petitioners stating that the same contents/TV channels are being delivered by the DTH operators to subscribers as these are delivered by the cable operators, the entertainment as contemplated by the Act is being provided. The respondents have equated the DTH services to cable services in which the delivery is made through cable. The respondents, however, seek to levy tax at the rate of 30% on DTH services as against 10% to 15% levied on cable services. The inequality in the matter of imposing differential rates/quantum of tax is violative of Articles 14 and 19 (1) (g) of Constitution of India and amounts to hostile discrimination. He relies upon Aashirwad Films vs. Union of India 2007 (6) SCC 624 in submitting that the taxation laws must pass test of Article 14 of Constitution of India and that there should be reasonable classification, which should bear a nexus with ob ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt under Entry 62 of List-II of the 7th Schedule does not include the power to tax everything, which is connected with entertainment. The expression admission to an entertainment is a place specific definition under Section 2 (a). The definition of the word 'entertainment' under Section 2 (g) and 'payment for admission' under Section 2 (l) will not include entertainment on whom by any means. He submits that if a person cannot be entertained without a television set, would not mean that even the price of television set be included under Section 2 (l) (iii), which includes 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 enjoyment of the entertainment, which without the aid of such instrument or contrivance such person would not get. Shri Tripathi submits that on the same logic even spectacles or hearing aid without which a person may not get normal or better view or hearing or enjoyment of the entertainment would be taxable. He submits that any payment would not include the price of dinner, if the entertainment is held in hotel. Any charge, which is not connected with admission should not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reement became taxable as capital receipt and not a revenue receipt by specific legislation and thus the liability could not be created retrospectively. 58. Shri K.N. Tripathi submits relying upon Union of India Ors. v. Ind-Swift Laboratories Ltd., (2011) 4 SCC 635 (para 20) that a taxing statute must be interpreted in the light of what is clearly expressed. It is not permissible to import provisions in a taxing statute so as to supply any assumed deficiency. In CST v. Modi Sugar Mills Ltd., AIR 1961 SC 1047 the Supreme Court held that the Court must look squarely at the words of the statute and interpret them. It must interpret a taxing statute in the light of what is clearly expressed, it cannot imply anything, which is not expressed, it cannot import provisions in the statute so as to supply any assumed deficiency. In Bansal Wire Industries Ltd. Anr. v. State of Uttar Pradesh Ors., (2011) 6 SCC 545 (para 30), a cardinal principle of construction of a statute was reiterated namely that when the language of the statute is plain and unambiguous, the Court must give effect to the words used int he statute. Besides, in a taxing Act one has to look merely at what is clearly s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ring at the inception of clause (ix) controls the meaning of the aforesaid words it does not follow that merely because winnings from gambling/betting activities are included within the ambit of income, the monies received from non-gambling and non-betting activities are not so included. If moneys which are not earned in the true sense of the word constitute income, moneys earned by skill and toil would also constitute income. The rally in question was a contest, if not a race. The assessee entered the contest to win it and to win the first prize. What he got was a 'return' for his skill and endurance. As such it is income. Word 'income' must be construed in its widest sense. In Lucknow Development Authority vs. M.K. Gupta (supra) the Supreme Court explained the reasons as to why certain words are added by way of abundant caution and held in paragraph-7 that a perusal of the definition of 'service' as it stood in the Consumer Protection Act prior to 1993 would indicate that the word 'facility' was already there. The legislature while amending the law in 1993 added the word in clause (d) to dispel any doubt that consumer in the Act would mean a person ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ision network come within the meaning of entertainments and therefore within the legislative competence of the State Legislature under Entry 62 of List II of Seventh Schedule to the Constitution of India to make law for the levy and collection of tax on such entertainments. 37. A tax under Entry 62 of List II of Seventh Schedule to the Constitution of India may be imposed not only on the person spending on entertainment but also on the act of a person entertaining, or the subject of entertainment. It is well settled by this Court that such tax may be levied on the person offering or providing entertainment or the person enjoying it. The respondents admittedly engaged in the business of receiving broadcast signals and the instantaneously sending or transmitting such visual or audio visual signals by coaxial cable, to subscribers homes through their various franchise. It has been made possible for the individual subscribers to choose the desired channels on their individual T.V. sets because of cable television technology of the respondents and of sending the visual or audio visual signals to sub-cable operators, and instantly re-transmitting such signals to individual subscribers ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rimination amongst persons. There is no scope of any discrimination in as much as either an owner, or person who having in possession of electrical, electronic or mechanical device receive signals and instantly transmits such signals of visual image and audio to a sub-cable operator for presentation of any performance, film or any other programme to the subscriber and/or viewers against payment, and as such owner or person exhibits such performance, film or any other programme through his cable television network directly to customers he is liable to pay tax. Except that owner or person of the class referred to in sub-section (4a) of Section 4A of the said 1982 Act, no other person can be held liable to pay such tax. There is clear indication of the character of tax from the incidence of such tax or taxable event which takes place on the happening of the event of offering entertainments to the subscribers. The person on whom the legal liability to pay tax falls he has also been clearly and unambiguously mentioned in the charging section. The rates of tax has been sought to be specified by the notification. The measure of tax is the gross receipt on the basis of which the person i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of Communication network given in the agreement between the cable operator and sub-cable operator (termed as Franchise in the agreement), will be clear that the service rendered by respondent No.1 is not restricted only to receiving signals but also extends to sending visual images and audio and other information by means of telecommunication network for presentation to members of public. In the present case, respondent No.1 sends visual images and audio signals for presentation to the individual subscribers at various homes through their Feeder Line i.e. coaxial cable or any other device used for transmitting audio and visual signals in terms of clause 2 of the said agreement. The franchisee has access to the signals provided by respondent No.1. Therefore, it cannot be disputed that the price or prices received or receivable by the respondent No. 1 is the amount received or receivable by him for transmitting the signal for exhibition of any performance, film or any other programme telecast and the aggregate of such prices or amounts is the gross receipt of the respondent No.1 in relation to any month or part thereof. 42. We do not find any reason to consider the sub-cable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act mainly to provide for defining the words Amusement park , direct to home service , Ku Band , Muh System Operator , Place of Entertainment , Television Signal Receiver and Television Signal Receiver Agency and enlarging the definitions of Admission to Entertainment , Payment for Admission and Proprietor and clarifying the payment of tax thereon, simplifying the payment of entertainment tax, making binding of proprietor to utilize appropriate amount of ticket value on the maintenance of cinema premises, abolishing the maximum limit of tax on interior cinemas, making the permission of the District Magistrate necessary for holding entertainment, making the Multi System Operator/ Proprietors of cable control room responsible for the payment of tax due on the cable connection issued by their defaulter franchise cable operators and entertainment of appeal by the State Government only after payment of undisputed amount of tax and one-third of the disputed amount of tax. Since the State Legislature was not in session and immediate legislative action was necessary to implement the aforesaid decision, the Uttar Pradesh Entertainment and Betting Tax (Amendment) Ordinance, 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y Phillips (Supra) the Supreme Court reiterated that classically a tax is similarly composed of two elements namely the thing or activity on which the tax is imposed and the instance of tax. The instance of tax would be relevant in construing whether a tax is direct or indirect. But it would be irrelevant in determining the subject matter of the tax. 67. In Federation of Hotels (Supra) the Supreme Court reiterated the principles that the true nature and character of legislation and not its ultimate economic result matters. The subject of tax is different from the measure of the levy. Further the measure of the tax is not determinative of its essential character or the competence of the legislature. The same transaction may involve two or more taxable events in its different aspects. The fact that there is an overlapping does not detract from the distinctiveness of the aspects. For deciding the true character and nature of a particular levy, with reference to the legislative competence, it was held in All India Federation of Tax Practitioners (Supra) that the Court has to look into the pith and substance of the legislation. The Court must bear in mind that, where the application ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... royalty of spectrum used as prescribed by the Department of Telecommunication. The petitioners have Signal Broadcasting Centres, which downlinks the signals from satellite and then uplinks to the designated transponders for transmission of signals in Ku band. These signals are received by the dish antennas installed at the subscribers' premises for which the petitioners claim that they had not used any infrastructure of the State in providing such services. 71. The TV signals transmitted from the Broadcasting Centres are in encrypted format. They are decrypted/ decoded by the set top box, with the help of the viewing card inside the set top box for the customers to be able to view the service. The subscribers have to obtain a connection for which they pay monthly charges. The set top boxes are provided to the customers free of cost without any consideration, for facilitating effective receipt and entertainment of DTH service. The set top boxes were earlier sold but that thereafter under the new schemes they continue to be the property of the petitioners' broadcasting DTH services. When a new connection is given, the subscriber gets the applicable charges for occupation a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essions shall be constitute accordingly. 74. The competence to legislate flows from Art.245, 246 and other Articles in Part XI. A legislation like the Finance Act can be supported on the basis of a number of entries. In All India Federation of Tax Practitioners (Supra) the Supreme Court held in para 44 that the nomenclature of levy is not conclusive for deciding its true character and nature. For deciding the true character and nature of a particular levy, with reference to the legislative competence, the Court has to look into the pith and substance of the legislation. The powers of the Parliament and the State Legislatures are subject to constitutional limitations. The tax laws are governed by Part- XII and Part-XIII. Art.265 takes in Art.245, when it says that the tax shall be levied by the authority of law. Various entries of the 7th Schedule shows that the powers to tax is treated as a distinct matter for the purpose of legislative competence. The underlying principle is to differentiate between the two groups of entries namely general entry and taxing entry. The tax on services is a different subject as compared to tax on profession, trust and calling etc. The Supreme Cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er Entry 97 List-I (now Entry 92C of List-I after 2003). If the nature of the transaction had elements of both sale and service, the question, which arose was whether both the State Legislature and Parliament could levy their separate tax together or only one of them. The Court held that the nature of the transaction involved in providing the telephone connection may be a composite contract of service and sale. It is possible for the State to tax sale element provided there is a discernible sale and only to the extent relatable to such sale. This, however, does not allow the State to entrench upon the Union List and to tax service by including the cost of such service in the value of the goods. Even in those composite contracts, which are by legal fiction deemed to be visible under Art.366 (29-A) the value of the goods involved in the execution of the sale transaction cannot be assessed to sales tax. By way of clarification it was added that the 'aspect theory' would not apply to enable the value of the services to be included in the sale of goods or the price of goods in the value of the service. 76. In Purvi Communication (Supra) the Supreme Court considered the questi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... network. The performance, film or programmes shown to the viewers through the cable television network come within the meaning of entertainments and therefore within the legislative competence of the State Legislature under Entry 62 of List II of the Seventh Schedule to the Constitution to make law for the levy and collection of tax on such entertainments. 38. A tax under Entry 62 of List II of the Seventh Schedule to the Constitution may be imposed not only on the person spending on entertainment but also on the act of a person entertaining, or the subject of entertainment. It is well settled by this Court that such tax may be levied on the person offering or providing entertainment or the person enjoying it. The respondents are admittedly engaged in the business of receiving broadcast signals and then instantaneously sending or transmitting such visual or audio-visual signals by coaxial cable, to subscribers' homes through their various franchisees. It has been made possible for the individual subscribers to choose the desired channels on their individual TV sets because of cable television technology of the respondents and of sending the visual or audio-visual signals to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... verlapping in so far as the two entries per-se are concerned. The tax on cable and DTH service contemplated under the U.P. Act of 1979 is tax on entertainment, and not a tax on services. The measure of a tax or the instance of tax or the economic effect of the tax is not material in determining its true nature and character. The tax in the present case under the unamended Act in Section 3, which is the charging section is entertainment tax to be levied and paid on all payments for admission to any entertainment, other than entertainment to which Section 4 or Section 4A or Section 4B applies or a contended payment is made under the provisions of the Act. Section 4A levies entertainment tax on video cinema and Section 4B on video show in public service vehicle or hotels. Under Section 4C the entertainment tax is on cable service, after the amendment w.e.f. June 16th, 2009, the words 'tax on payment for admission to entertainment' have been substituted with the words 'tax on entertainment' and for the words 'all payment for admission' the words 'aggregate payments required for admission to any entertainment' have been substituted. The inclusion of the w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... measure of the tax is based on the amount paid by the subscriber as subscription money, but the instance of a tax or measure of the tax is not the same and cannot be treated as subject matter of the tax. 80. 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. Clause (i) to (v) with its explanation under Section 2 (l) defining 'payment for admission' has 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 or any other service by whatever name called, by way of contribution or subscription or installation and connection char ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct of entertainment remains the same. 83. The day is not far, when the technology will make it possible for viewing all the channels on the hand held sets, which may be sold together with smart phones, i-pads or tablets and on which the programmes may be viewed with the help of modem and for which the signals may be provided through data cards by internet. It will not be necessary for the Act to be amended again to impose entertainment tax on such entertainments as the principal activity will continue to remain the entertainment and not the method by which such entertainment is provided. 84. The method by which the flow and content may be provided by the infrastructural set up, and for which the petitioner may be subjected to service tax under the service tax regime put in place by Parliament in exercise of its legislative powers under Art.246 of the Constitution read with Entry 92C of List-1. The service provider will in that sense only act as a link between the content provider and the content viewers. It is ultimately the entertainment, which cannot be treated as a good, but a feeling, which may be subject matter of tax under the Act. In such case it would not be the servi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in and intend is to be implied. One can only look fairly at the language used. Gathering the intention of legislature in para 20 of the opinion of the learned Judge (as he then was) it was said that if the petitioners are realising any amount for admission to entertainment, they are liable to pay entertainment tax. The progress made by the society and development in science and technology, which could not be visualised at the time, when the laws are enacted cannot be ignored by the Court. In a modern progressive society the intention of legislature to the meaning attributed to the word must be presumed to have a larger meaning while preserving the same concept and such interpretation, unless a contrary intention appears, should be given to the words used to take in new facts and situation. If the words are capable of comprehension, there is no reason to have an restrictive interpretation. The changing concepts and values, without doing any violence to the object and reasons, and where language permits and rather does not prohibit after adjustment through general interpretation must be adopted. The Court followed the opinions expressed in S.P. Gupta v. Union of India (Supra) and S.P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 09, was enforced and prior to that the legal position as obtained in M/s Universal Communication was operative. The petitioners were thus liable to collect the tax and to deposit it in accordance with the procedure prescribed under the Act. 91. The challenge to the notices on the ground that information collected by the District Magistrates regarding the number of subscribers and the amount charged is not reliable, would require consideration of facts in each case. The argument that the petitioners did not sell the set top boxes and that some other agency had sold the set top boxes and further that number of subscribers in the State of U.P. is much less than the numbers, which has been found by the District Magistrate or assessment of Entertainment Tax Commissioner is a question of fact, subject to right of appeal provided under the Act. 92. A feeble argument was raised that the rate of entertainment tax on DTH services prescribed by the notification is discriminatory, in comparison to the cable services. In this regard we may observe that in dealing with the challenge to the constitutional validity of the provisions of taxing statutes that it violates Art.14 of the Constitut ..... X X X X Extracts X X X X X X X X Extracts X X X X
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