2014 (12) TMI 1389 - SC - Indian Laws

Liability for license and deposit license fee and other taxes - Uttar Pradesh Cinemas (Regulation) Act, 1955 - N/N. 145/XXVII (5) Entertainment Tax/2005 dated 17.8.2005 - HELD THAT - In pursuance of Section 21 of the Cable Television Network Act, 1995, the provisions of the Cinematograph Act, including the programme code, are fully applicable to the Cable operator. The Respondent got himself registered Under Section 3 by depositing ₹ 500/- as registration fee. The Respondent wants to run two private channels subscribing to 11,885 TV screens. The respondent is covered Under Section 2(aa) of the U.P. Cinema Rules, 1988 and is liable to pay fee under Rule 17. By conduct the Respondent accepted the Rules, as he submitted an undertaking before the Court to comply with the Rules. He also deposited a license fee of ₹ 2400/- per year as imposed under Rule 17(1). The Respondent cannot choose and be selective as to which Rules will be applicable to him. The Respondent has also given an undertaking to comply with Rules 17(1) and 17(2). This Court in M/S. LAXMI VIDEO THEATERS VERSUS STATE OF HARYANA AND OTHERS 1993 (7) TMI 339 - SUPREME COURT , while considering the expression Cinematograph under the Cinematograph Act, 1952 and its applicability on VCR and VCP which was developed in 1970, held that a definition must be given a meaning which takes into account the subsequent scientific developments in the field. The Notification No. 145/XXVII (5) Entertainment Tax/2005 dated 17.8.2005 doesn't apply to the Respondent as it seeks to tax Exhibition by means of Video . The Respondent's activities are not covered by the aforementioned expression - As long as there is no statutory sanction for imposition of a tax, no liability of paying a fee can be imposed relying on the alleged consent or acquiescence to the same imposition in part. The statutory sanction cannot be found under the Uttar Pradesh Entertainment and Betting Tax Act, 1979 or any rules made thereunder. From a plain reading of the relevant provisions it is clear that the same are not applicable to the Respondent and hence the demand as well as the Recovery Certificate dated 6.8.2011 issued under Rule 17(2) of the Rules are bad in law - appeal dismissed.

Summary

Issues involved:
1. Interpretation of U.P. Cinema (Regulation of Exhibition by means of Video) Rules, 1988.
2. Applicability of license fee under Rule 17(2) to Cable Television Network Operators.
3. Compliance with statutory provisions by Cable Operators.
4. Dispute regarding the liability of fee under Rule 17(2) of U.P. Cinema Rules, 1988.
5. Rejection of license application based on Rules 11(1) and 11(2) of U.P. Rules 1988.

Issue 1: Interpretation of U.P. Cinema (Regulation of Exhibition by means of Video) Rules, 1988.
The case involved a dispute regarding the interpretation of the U.P. Cinema Rules, specifically Rule 17(2), concerning the liability of license fee for Cable Television Network Operators. The Respondent challenged the demand for a license fee of Rs. 11,88,500 under this rule, arguing that the rules did not encompass his specific situation as a Cable Operator transmitting live programmes through private channels.

Issue 2: Applicability of license fee under Rule 17(2) to Cable Television Network Operators.
The Respondent, a Cable Television Network Operator, contested the applicability of the license fee under Rule 17(2) of the U.P. Cinema Rules, 1988. The District Magistrate had demanded a substantial fee from the Respondent based on the interpretation that the operation of private video channels fell within the definition of "Exhibition by means of Video" under Section 2(aa) of the Act, requiring a separate license.

Issue 3: Compliance with statutory provisions by Cable Operators.
The Respondent, a Cable Operator, was required to comply with the statutory provisions of the U.P. Cinema (Regulation of Exhibition by means of Video) Rules, 1988. The Court analyzed the Respondent's conduct, emphasizing that by accepting the Rules and depositing a license fee under Rule 17(1), the Respondent had acknowledged the applicability of the Rules to his operations.

Issue 4: Dispute regarding the liability of fee under Rule 17(2) of U.P. Cinema Rules, 1988.
The core dispute revolved around the liability of the Respondent to pay the license fee under Rule 17(2) of the U.P. Cinema Rules, 1988. The Respondent argued that his business activities did not fall within the purview of Section 2(aa) of the Rules, and thus, the imposition of the fee was unjustified.

Issue 5: Rejection of license application based on Rules 11(1) and 11(2) of U.P. Rules 1988.
The Respondent's application for a license was initially rejected based on Rules 11(1) and 11(2) of the U.P. Cinema Rules, 1988. This rejection led to a legal challenge, highlighting the importance of adherence to the regulatory framework governing cable operations and video exhibitions.

The judgment by the Supreme Court delved into the intricate details of the U.P. Cinema Rules, 1988, and the specific obligations imposed on Cable Television Network Operators. The Court scrutinized the applicability of license fees, the compliance of operators with statutory provisions, and the interpretation of key terms within the regulatory framework. Ultimately, the Court dismissed the appeal, upholding the High Court's decision to quash the demand for a substantial license fee from the Respondent, emphasizing the lack of statutory sanction for such imposition. This comprehensive analysis underscores the importance of legal clarity and adherence to regulatory requirements in the realm of cable television operations.