2025 (2) TMI 942 - HC - VAT / Sales Tax

Valuation - Invocation of revisional jurisdiction of this court u/s. 8F of the Karnataka Entertainment Tax Act 1958 - inclusion of service tax component in the amount received or receivable while levying entertainment tax in terms of Sec. 4G of the Act Whether the service tax collected by the Petitioner from the subscribers under the provisions of the Finance Act 1994 against the DTH broadcasting services shall from part of consideration for the levy of Entertainment Tax under Section 4G of the 1958 Act? - HELD THAT - The entertainment tax is levied and collected on the amounts received or receivable by a Multi System Operator or Direct To Home service provider DTH . These amounts are nothing but the consideration which the customers would pay towards providing television signals under the DTH scheme. The transaction would obviously include both entertainment and service. Since both are discernible independent of each other they are taxable separately; the entertainment is taxed under the provisions of 1958 Act whereas the service is taxed under the provisions of Finance Act 1994. The text content intent of section 4G leaves no manner of doubt that for the purpose of levy of entertainment tax the amount received or receivable cannot include service tax component. Had the legislature intended inclusion the text of this provision would have been a bit different. Therefore the first question of law is answered in the negative and in favour of the Assessee. The above view gains support from the decision of Apex Court in M/s Anand Swarup Mahesh Kumar vs. Commissioner Of Sales Tax 1980 (9) TMI 238 - SUPREME COURT wherein Assessee therein had argued that the market fee payable under the UP Krishi Utpadan Mandi Adhiniyam 1964 being a sum which could be collected from the purchaser under the provisions of the said statute by the commission agent for being remitted to the market committee could not be considered as forming part of the consideration payable by the purchaser of the goods to the commission agent and therefore it could not be included in the turnover of purchases for the purpose of levy of tax under section 3-D of the UP Sales Tax Act 1948. Whether in the absence of definition of invoice in the 1958 Act the bills/statement of accounts containing the itemized details/segregation of the basic value of DTH broadcasting services service tax license fee etc. will be considered as invoice ? - HELD THAT - Abundant evidentiary material is produced even in the paper book of the petition. The Assessee had placed before the authorities the Statement of Account showing itemized billing and separate collection of service tax amount which aspect has been discussed by a Coordinate Bench of this Court in Assessee s earlier STRP No. 436/2017 disposed off on 10.12.2021 2022 (1) TMI 443 - KARNATAKA HIGH COURT . True it is that the word invoice is not defined in the 1958 Act nor in the Mysore General Clauses Act 1899. However Black s law dictionary 5th edition gives the meaning of this word. A written account or itemized statement of merchandise shipped or sent to a purchaser consignee factor etc. with the quantity value or prices and charges annexed. Document showing details of a sale or purchase transaction The new International Webster s comprehensive dictionary 2004 edition defines invoice to mean a list sent to a purchaser etc. containing the items and charges of merchandise. Both the authorities at their level and the Tribunal in its domain would have treated this aspect of the matter in a satisfactory way. This having not happened it is required to upset the finding in this regard so that even this aspect of the matter would be considered afresh. Conclusion - i) The amount received or receivable for entertainment tax does not include the service tax component. ii) The absence of a statutory provision authorizing the passing on of tax to consumers affects the consideration for tax levy. The impugned order of the Tribunal is set at naught; matter is remitted to the domain of the Tribunal for consideration afresh in the light of the observations hereinabove made and in accordance with law - Petition allowed by way of remand.

Summary

The case involves an appeal invoking the revisional jurisdiction of the Karnataka High Court under section 8F of the Karnataka Entertainment Tax Act, 1958. The petitioner, a Direct to Home (DTH) entertainment service provider, challenges the Karnataka Appellate Tribunal's order that upheld the inclusion of the service tax component in the 'amount received or receivable' for levying entertainment tax under section 4G of the Act.**Issues Presented and Considered:**1. Whether the service tax collected by the petitioner from subscribers against DTH broadcasting services forms part of the consideration for the levy of Entertainment Tax.2. Whether bills/statement of accounts containing itemized details/segregation of DTH broadcasting services, service tax, etc., qualify as 'invoices' in the absence of a definition in the Act.3. Whether the Tribunal erred in holding that the petitioner did not submit invoices to show separate collection of service tax.**Issue-Wise Detailed Analysis:****Relevant Legal Framework and Precedents:**The Karnataka Entertainment Tax Act, 1958 governs the levy of entertainment tax. Section 4G specifically addresses the taxation of Multi System Operators and DTH service providers.**Court's Interpretation and Reasoning:**The court analyzed the legislative intent behind section 4G, emphasizing that the 'amount received or receivable' for entertainment tax cannot include the service tax component. The court referenced a Supreme Court decision to support the interpretation that taxes collected under specific statutes may not form part of consideration for tax levy.**Key Evidence and Findings:**The court considered the arguments presented by both parties, focusing on the text and intent of the relevant provisions. The petitioner provided evidence of itemized billing and separate collection of service tax, which the court found to be relevant for consideration.**Application of Law to Facts:**The court applied the principles of statutory interpretation and tax law to the facts of the case. It concluded that the service tax component should not be included in the 'amount received or receivable' for entertainment tax purposes.**Treatment of Competing Arguments:**The court addressed the arguments raised by both the petitioner and the revenue authorities. It analyzed the textual differences between relevant sections of the Act and the applicability of legal maxims in interpreting tax statutes.**Significant Holdings:**The court held in favor of the petitioner on all three core legal questions. It set aside the Tribunal's order, remitting the matter for reconsideration in light of the court's observations. The court emphasized the need for a fresh examination of the evidence and legal arguments within a specified timeframe.**Core Principles Established:**- The 'amount received or receivable' for entertainment tax does not include the service tax component.- The absence of a statutory provision authorizing the passing on of tax to consumers affects the consideration for tax levy.- The interpretation of tax statutes should adhere to clear and unambiguous language, benefiting the taxpayer in case of ambiguity.**Final Determinations on Each Issue:**The court allowed the petition, overturned the Tribunal's order, and remanded the matter for fresh consideration. The court appreciated the assistance of the advocates and research assistant involved in the case.In conclusion, the Karnataka High Court's judgment clarifies the treatment of service tax in the levy of entertainment tax under the Karnataka Entertainment Tax Act, 1958, emphasizing statutory interpretation principles and the distinction between different components of taxation.