2013 (3) TMI 110 - SC - Indian Laws

Constitutional validity of Entertainment Tax - Multi System Operators (MSO) - The contentions raised on behalf of the appellants before this Court were to the effect that the appellants were not Proprietors and they were not providing entertainment and, therefore, no tax was to be paid by them. - held that - The first issue is no longer res integra as this Court, in the case of STATE OF WEST BENGAL v. PURVI COMMUNICATIONS (P) LTD., (2005 (3) TMI 438 - SUPREME COURT OF INDIA) has held that even Multi-System Operators (MSO) would be liable to pay Entertainment Tax. It is not in dispute that the appellants are Multi-System Operators, who transmit the signals to the cable operators and in turn, the cable operators transmit signals to the subscribers. In such a way, as the appellants are connected to an organisation of the entertainment, they would be Proprietors as per the provisions of the Act. - Decided against the assessee.

Summary

Issues:
1. Liability of Multi System Operators to pay Entertainment Tax
2. Imposition of penalty on the appellants

Analysis:
1. Liability of Multi System Operators to pay Entertainment Tax:
The appellants, who are Multi System Operators (MSO), argued that they are not liable to pay Entertainment Tax under the Gujarat Entertainment Tax Act, 1977, as they are not providing entertainment directly to subscribers. However, the Supreme Court referred to a previous judgment in the case of STATE OF WEST BENGAL v. PURVI COMMUNICATIONS (P) LTD., 2005, where it was established that even MSOs are liable to pay Entertainment Tax. As the appellants transmit signals to cable operators who, in turn, provide entertainment to subscribers, the court concluded that the appellants are considered 'Proprietors' under the Act. Therefore, the liability of the appellants to pay Entertainment Tax was upheld without further consideration.

2. Imposition of penalty on the appellants:
The appellants contested the imposition of penalty under Section 9(3) of the Act, claiming that they were under a genuine belief that they did not fall under the definition of 'Proprietor' and, therefore, penalty imposition was unjust. They also argued that the penalty order violated the principles of natural justice as they were not given proper notice or opportunity to be heard. However, the court found no merit in these arguments. It was revealed that the appellants provided incorrect information regarding the total number of connections, despite repeated notices and requests. The authorities had issued notices before imposing the penalty, and the appellants failed to provide accurate information, attempting to evade payment of Entertainment Tax through willful misstatements and suppression of facts. Consequently, the court held that the penalty imposition was not a violation of natural justice principles.

In conclusion, the Supreme Court upheld the decision of the High Court, confirming the order passed by the Mamlatdar, and dismissed the appeals filed by the appellants. No costs were awarded in the case.