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2005 (3) TMI 438 - SC - Indian LawsWhether clause (ii) of sub-section (4a) of section 4A of the West Bengal Entertainment-cum-Amusement Tax Act, 1982 (as amended by the West Bengal Finance Act, 1998) is beyond the legislative competence of the State Legislature? Whether respondent Nos. 1 and 2 would come within the purview of clause (ii) of sub-section (4a) of section 4A of the West Bengal Entertainment-cum-Amusement Tax Act, 1982 (as amended by the West Bengal Finance Act, 1998) as they are the persons who exhibit such performance through cable Television Network through the sub-cable operator? Held that - Appeal allowed. The arguments advanced by learned Senior Counsel for the respondents with reference to entry 31 of List I is misplaced since the impugned legislation cannot by any stretch of imagination be said to be one in pith and substance relating to broadcasting. If, levy of tax upon the sub-cable operator treating him as provider of entertainment admittedly falls under entry 62 making cable operator liable can by no means take it out of the purview of entry 62.
Issues Involved
1. Legislative competence of the State Legislature to enact clause (ii) of sub-section (4a) of section 4A of the West Bengal Entertainment-cum-Amusement Tax Act, 1982. 2. Whether the respondents fall within the purview of clause (ii) of sub-section (4a) of section 4A of the West Bengal Entertainment-cum-Amusement Tax Act, 1982. Detailed Analysis Legislative Competence of the State Legislature The primary issue was whether clause (ii) of sub-section (4a) of section 4A of the West Bengal Entertainment-cum-Amusement Tax Act, 1982, as amended by the West Bengal Finance Act, 1998, was beyond the legislative competence of the State Legislature. The respondents argued that the State Legislature was not competent to levy the tax on the "entertainer" or the "entertainee" under entry 62 of List II of the Seventh Schedule to the Constitution. They contended that the tax was imposed on Multi-System Operators (MSOs) who only transmitted signals and did not directly provide entertainment. The High Court had declared the provision ultra vires the Constitution, but the Supreme Court disagreed, holding that the respondents, as cable operators, had a direct and proximate nexus with the entertainment provided through their cable television network. The Court emphasized that the State Legislature was competent to levy the tax on entertainments, and the provision did not cross the bounds of entry 62 of List II. Applicability to Respondents The second issue was whether the respondents, engaged in receiving and providing TV signals to individual sub-cable operators, fell within the purview of clause (ii) of sub-section (4a) of section 4A. The respondents argued that they were not "cable operators" as per the Cable Television Networks (Regulation) Act, 1995, and were merely intermediaries. However, the Supreme Court found that the respondents, as MSOs, were indeed cable operators within the meaning assigned by the Explanation to sub-section (4a) of section 4A. The Court noted that the respondents received TV signals and transmitted them to sub-cable operators, who then provided cable service to individual customers. The respondents' role in receiving and transmitting signals constituted providing entertainment, making them liable to pay the tax. The Court held that the legislative provision was clear, unambiguous, and did not suffer from vagueness or unreasonable classification. Conclusion The Supreme Court concluded that the State Legislature was competent to levy the tax under entry 62 of List II of the Seventh Schedule to the Constitution. The respondents, as cable operators, had a direct and proximate nexus with the entertainment provided through their cable television network, making them liable to pay the tax. The judgment of the High Court was set aside, and the civil appeal was allowed. The Court found no substance in the respondents' contention that the provision was ultra vires the Constitution or that it impinged on the field occupied by the Central legislation. The provision was held to be intra vires and within the legislative competence of the State Legislature.
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