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TMI Blog2013 (4) TMI 373X X X X Extracts X X X X X X X X Extracts X X X X ..... the appeal arising from SLP (C) No.2752 of 2011) as the lead case. The rest of the writ petitions were dismissed following the judgment dated August 20, 2010. 3. For the sake of convenience, we too have taken the facts from civil appeal arising out of special leave petition (civil) No.27595 of 2010. 4. The appellant operates under a licence from the Government of India under section 4 of the Indian Telegraph Act, 1885 and the Indian Telegraphy Act, 1933. It is, however, the case of the appellant that DTH broadcast is a "service" and it is chargeable to service tax. As a matter of fact, one of the several grounds on which the demand of entertainment tax by the State Government on DTH broadcasting is challenged by the appellant is that DTH broadcasting is one of the notified services under the Finance Act, 1994 and is chargeable to service tax by the Central Government. In that regard, it is stated on behalf of the appellant, that in 1991 the Government of India appointed a Tax Reform Committee under the Chairmanship of Dr. Chelliah. The recommendations made by the Tax Reform Committee were accepted and the service tax was introduced in the budget for the year 1994- 1995 through th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tre at Chhattarpur, Delhi, are in encrypted format and those are decrypted/decoded by the set top boxes and the viewing card inside the set top box supplied by the appellant to its subscribers. The subscribers are required to pay certain charges for viewing DTH broadcasts by the appellant on their TV sets. 10. The appellant does not use any infrastructure from the State for its DTH broadcasts. 11. On May 5, 2008, the State Government in exercise of powers conferred under section 3(1) of the 1936 Act, issued a gazette notification fixing 20 percent entertainment duty in respect of every payment made for admission to an entertainment other than cinemas, videos cassette recorders and cable service. As the aforesaid notification forms the basis of the demand raised by the State Government it is useful to reproduce it here in full:- "No. (63) B-5-9-2006-2-V- In exercise of the powers conferred by sub section (1) of Section 3 of the Madhya Pradesh Entertainment Duty and Advertisements Tax Act 1936 (No 30 of 1936) the State Government hereby prescribed the rate of Entertainment Duty at 20 percent in respect of every payment for admission to an Entertainment other than Cinema, Video Cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uty on DTH broadcasting. 16. On August 18, 2009, the Excise Commissioner Madhya Pradesh wrote to the Deputy Commissioner Excise, Flying Squad, Gwalior Division, Gwalior, telling him that entertainment duty at the rate of 20 percent was payable on subscription amounts received by the DTH entertainment service provider and directing to ensure the realization of entertainment duty from DTH entertainment service providers. The direction of the Excise Commissioner was followed by a number of notices given to the appellant and on October 1, 2009, the Vice President (Operation) and Area Operation (Manager) of the appellant company were arrested and later released on bail for non- compliance with the provisions of section 5(E) of the 1936 Act. 17. On October 3, 2009, the appellant filed a writ petition, being Writ Petition No.10148 of 2009, challenging the demand and collection of entertainment duty at the rate of 20 percent under section 3(1) of the 1936 Act. The writ petition was eventually dismissed by the High Court by its judgment and order dated August 20, 2010 and the matter is now brought to this Court. 18. Before proceeding further, it needs to be stated that the controversy in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ainment is held;" 22. Clause (aaaa) was inserted in the Act with effect from May 1, 1999 to define 'Cable Operator", "Cable Service", "Cable Television Network" and "Subscriber". "2(aaaa) "Cable Operator", "Cable Service", "Cable Television Network" and "Subscriber" shall have the same meaning as assigned to them in the Cable Television Network (Regulation) Act, 1995 (No.7 of 1995)" 23. Clause (b) defines "entertainment": "2(b) "Entertainment" includes any exhibition, performance, amusement, game or sport to which persons are admitted for payment;" 24. Clause (c) defines "entertainment duty": "2(c) "entertainments duty" means a duty levied under section 3;" 25. Clause (d) defines the expression "Payment for admission" as under: "2(d) "Payment for admission" includes - i) any payment for seats or other accommodation in any form in a place of entertainment; ii) any payment for a programme or synopsis of an entertainment; iii) any payment made for the loan or use of any instrument or contrivance which enables a person to get a normal or better view or hearing or enjoyment of the entertainment, which without the aid of such instrument or contrivance such person would not get ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d as a subscription or contribution to any person, or for a season ticket or for the right of admission to a series of entertainments or to any entertainment during a certain period of time, or for any privilege, right, facility or thing combined with the right of admission without further payment or at a reduced charge, the entertainments duty shall be paid on the amount of such lump sum: Provided that where the State Government is of opinion that the payment of a lump sum represents payment for other privileges, rights, or purposes besides the admission to an entertainment, or covers admission to the entertainment during any period for which the duty has not been in operation, the duty shall be charged on such an amount as appears to the State Government to represent the right of admission to entertainment in respect of which the entertainment duty is payable." (4) xxx (i) xxx (ii) xxx" 29. Section 3-A deals with entertainment duty payable by proprietor of V.C.R. or V.C.P. and this provision was inserted in the Act with effect from May 1, 1999. 30. Section 3-B was inserted in the 1936 Act with effect from April 1, 2001. Sub-section (1) of section 3-B deals with entertainmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tertainment other than entertainment by V.C.R. without payment for admission thereto or at concession rates unless the entertainments duty payable in respect thereof or on the full value of the ticket for the class to which such person is admitted has been paid. Provided that nothing in this section shall apply in respect of admission at concessional rates - i) to such class of persons; and ii) to such entertainment or class of entertainments; As the State Government may, by notification, specify." 34. Section 4-C gives the power to impose penalty and section 5 deals with penalties. 5-A deals with composition of offences and section 5-B deals with suspension or revocation of licence for entertainment. Section 8 provides the rule making powers. Section 9 gives the power of entry and inspection and section 9-A makes production and inspection of accounts and documents obligatory. Section 10 deals with recovery of arrears of entertainment duty. Section 10 provides protection to persons acting in good faith and bars any suit or prosecution or other proceedings against officers and servant of the Government. Section 11 deals with delegation of powers and section 12 bars imposition of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 2(d) and section 2(a), the charge or levy of tax is attracted only if an entertainment takes place in a specified place or locations and persons are admitted to the place on payment of a charge to the proprietor providing the entertainment. In the present case, as DTH operation is not a place-related entertainment, it is not covered by the charging section 3 read with section 2(a) and 2(b) of the 1936 Act. Consequently, the question of going to section 2(d)(iv) does not arise. Moreover, even if section 2(d)(iv) is to be read as an extension of section 3 and, thus, as a part of the charge, it does not make any difference at all because section 2(d)(iv) refers to "entertainment" which takes us back to section 2(b) and finally to section 2(a). 38. We have held that DTH is not covered by the provisions of section 3 read with section 2(a), 2(b) and 2(d) of the 1936 Act. The issue gets further settled on reference being made to the mechanism of collection of the charge as provided under section 4 of the 1936 Act. Section 4(1) mandates that no person shall be admitted to any entertainment other than entertainment by V.C.R. except with a ticket stamped with an impressed, embossed, en ..... 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