1994 (3) TMI 383 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Vires of the Circular issued by the Commissioner of Commercial Tax, Patna.
2. Applicability of the Bihar Entertainment Tax Act, 1948 to Cable T.V. Operators.
3. Requirement of amendment in the Act to levy tax on Cable T.V. Operators.
4. Constitutionality under Article 265 of the Constitution of India.

Detailed Analysis:

1. Vires of the Circular Issued by the Commissioner of Commercial Tax, Patna:
The petitioners challenged the circular issued by the Commissioner of Commercial Tax, Patna, which directed the collection of entertainment tax from cable T.V. operators under the Bihar Entertainment Tax Act, 1948. The circular was based on the opinion of the Advocate General of Bihar. The petitioners argued that the circular was ultra vires as it did not consider whether the Act could be applied to cable operators.

2. Applicability of the Bihar Entertainment Tax Act, 1948 to Cable T.V. Operators:
The core issue was whether the Act contained provisions for imposing tax on the distribution of programs through dish antennas. The Act, which came into force on October 1, 1948, was enacted to impose tax on amusement and other entertainment in Bihar. The relevant definitions under Section 2 of the Act were considered, particularly "entertainment," which included any exhibition, performance, amusement, game, sport, or races to which persons are admitted for payment. The petitioners contended that their operations did not fall under this definition as there was no admission for payment.

3. Requirement of Amendment in the Act to Levy Tax on Cable T.V. Operators:
The petitioners asserted that the Act did not specifically cover cable T.V. operations, and thus, an amendment was necessary to bring cable operators within the Act's purview. The court examined Section 3, which provides for the imposition of entertainment tax, and noted that the definition of "entertainment" required persons to be admitted for payment, which did not apply to cable T.V. operators.

4. Constitutionality under Article 265 of the Constitution of India:
The court highlighted that under Article 265, no tax shall be levied or collected except by authority of law. The Supreme Court in various judgments, including State of Mysore v. Cowasji and Rayalaseema Construction v. Dy. Commercial Tax Officer, emphasized that taxation must be based on an Act of the Legislature and cannot be imposed through an executive order or circular without express statutory authority.

Conclusion:
The court held that the impugned circular was ultra vires the Bihar Entertainment Tax Act and Article 265 of the Constitution of India. The Act, as it stood, did not provide for the imposition of entertainment tax on cable T.V. operators without an amendment. Consequently, the show cause notices issued to the petitioners were quashed. The writ application was allowed, and the circular was declared void. There was no order as to costs.