2000 (4) TMI 834 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Legislative competence of the State Legislature to impose an entertainment duty on cable television.
2. Whether the amendment should have been made through an independent legislation.
3. Definition and scope of "entertainment" under the Act.
4. Whether the duty violates the fundamental right to carry on business under Article 19(1)(g) of the Constitution.
5. Whether the duty imposes an unfair burden on cable operators.
6. Validity of the State Government's circulars.

Detailed Analysis:

1. Legislative Competence of the State Legislature:

The petitioners challenged the legislative competence of the State Legislature to impose an entertainment duty on cable television, arguing that this fell under entry 31 of the Union List, which includes "Posts and Telegraphs, Telephones, Wireless, Broadcasting and other like forms of communications." The petitioners contended that the power to legislate on cable TV is vested in Parliament, as evidenced by the Cable Television Network (Regulation) Act, 1995. However, the court held that the State Legislature was competent to enact laws imposing entertainment duty under entry 62 of the State List, which covers "tax on luxuries including tax on entertainments, amusements, betting and gambling." The court noted that the entries in the Seventh Schedule are distinct and separate for taxation purposes, and the State's power to tax entertainment is not precluded by the Union's power to regulate cable TV.

2. Independent Legislation Requirement:

The petitioners argued that the State Legislature should have enacted an independent legislation rather than amending the existing Bombay Entertainments Duty Act, 1923. The court rejected this argument, stating that the form of legislation, whether through amendment or new enactment, is within the discretion of the legislature. The court found no constitutional requirement mandating a separate legislation for imposing such a duty.

3. Definition and Scope of "Entertainment":

The court examined the definition of "entertainment" under the amended Act, which includes "any exhibition, performance, amusement, game or sport" for which payment is required, including cable television. The court referred to the Supreme Court's judgment in Geeta Enterprises vs. State of U.P., which held that "entertainment" should be understood in a broad sense, encompassing all forms of entertainment, including educative content. The court concluded that cable TV falls within the ambit of "entertainment" as defined in the Act.

4. Violation of Fundamental Right under Article 19(1)(g):

The petitioners contended that the duty violated their fundamental right to carry on business under Article 19(1)(g) of the Constitution. The court found no merit in this argument, noting that the petitioners failed to provide evidence of unreasonable restriction. The court emphasized that taxation is not per se a restriction on the freedom to carry on business, and the duty on cable TV is a legitimate exercise of the State's taxing power.

5. Burden on Cable Operators:

The petitioners argued that the duty unfairly burdened cable operators by compelling them to collect the duty from end users. The court held that the State Legislature has the discretion to determine the point of collection for administrative convenience. The court noted that the duty is imposed on entertainment, and the cable operators, as providers of entertainment, are a suitable point for duty collection. The court rejected the argument that this constituted an abdication of the State's sovereign function.

6. Validity of State Government's Circulars:

The petitioners challenged the circulars issued by the State Government for the implementation of the duty. The court found that the circulars were administrative measures to enforce the provisions of the Act and did not affect the legality or constitutional validity of the duty. The court concluded that the circulars were within the scope of the State's administrative powers.

Conclusion:

The court dismissed the petitions, upholding the constitutional validity of the entertainment duty imposed on cable television under the Bombay Entertainments Duty Act, 1923. The court found that the State Legislature was competent to impose the duty, the definition of "entertainment" was broad enough to include cable TV, and the duty did not violate the fundamental right to carry on business. The court also held that the duty did not unfairly burden cable operators and that the State Government's circulars were valid administrative measures.