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TMI Blog2011 (10) TMI 582X X X X Extracts X X X X X X X X Extracts X X X X ..... cer (Licensing Authority), Distt. Ghazipur directing them to obtain licenses as 'Television Signal Receiver Agency'. 3. We have heard Shri D.K. Singh assisted by Shri R.M. Saggi for the petitioner in Writ Petition No.702 of 2011, and Shri Bharat Ji Agrawal, Sr. Advocate assisted by Shri Ashish Misra in Writ Petition No.755 of 2011 and 676 of 2011. Shri Satish Chaturvedi, Additional Advocate General assisted by Shri A.C. Tripathi, Standing Counsel appears for the State respondents. 4. The Indian Telegraph Act, 1885, is the law relating to telegraph in India. It is an Act of ancient vintage enacted in the end of nineteenth century to regulate telegraph, when the signals were transmitted by mores code (the codes consisting of dots and dashes, or long or short sounds, used for transmitting messages by audible or visual signals on wires. With the rapid advance of science and technology in the field of telecommunications, the Act has been amended from time to time. The word 'telegraph' was amended in the year 1961, by Telegraph Laws (Amendment) Act, 1961, and thereafter in the year 2004 by Indian Telegraph (Amendment) Act, No.8 of 2004, with retrospective effect fro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alled Direct To Home (DTH) broadcasting service) is on the threshold of entry into India. Presently a satellite broadcaster, under the existing technology based on use of a 'C' band transponder and frequencies in bands below 4800 MHz, normally distributes his programme only through a cable operator and through such cable operators, regulations of any undesirable and objectionable programme is feasible but under the new technology a satellite broadcaster can beam his programme directly from the satellite into Indian homes which can be received with the help of a very small sized dish antenna, which even defies detection if and when required and without the involvement of any intermediary like cable operator, thus establishing a direct link with households without any possibility of regulation by an intermediary or any Regulatory Authority. In a nutshell, the new technology would enable any broadcaster within or outside India to telecast or beam any programme of his choice directly to the houses and bedrooms of general public. It is apprehended that any broadcaster who decides to start the DTH service for reception in India could include a foreign entity unlinking his signals ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment System for an efficient, responsive and accurate billing and collection systems. 7.4 The licensee shall not use any equipment which is identified as unlawful. 7.5 All content provided by the DTH platform to the subscribes, irrespective of its source, shall pass through the encryption and conditional access system, located within the Earth Station, situated on Indian soil. 7.6. The Licensee shall provide access to various content providers channels on a non discriminatory basis. 7.7 The Licensee shall adhere to any guidance/ regulations which may be laid down by the Licensor in the interest of consumer such as pricing of bouquet (s) or tier (s) of channels, etc. 7.8 The Licensee shall carry channels of Prasar Bharti on the most favourable financial terms offered to any other channel. 8. In the State of U.P., entertainment by cinema, video cinema, cable television network, and the levy of entertainment tax is regulated by U.P. Cinemas Regulation Act, 1955; U.P. cinema (Regulation of Exhibition by means of Video) Rules, 1988; U.P. Entertainment and Betting Tax Act, 1979 and the U.P. Entertainment and Betting Tax Rules. 9. The U.P. Cinemas (Regulation) Act, 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ii) of Section 2 (1) defines payment for admission as any payment made for the loan or use of any instrument or contrivance which enables a person to get normal or better view or hearing or enjoyment of the entertainment which without aid of such instrument of contrivance, such person would not get. Therefore, if any person charges any money for enabling any person to use any instrument or mechanical device which enables such person to get a normal view of the entertainment which without aid of such device, he would not get, it will come fully within the clutches of Section 3 of the Act. The programmes being broadcast by foreign media like B.B.C. Star T.V. and M.T.V. or by D.D. Metro cannot be received directly on television sets. The Cable T.V. operators receive the wireless signals on their dish-antennas and after processing them through electronic equipments, they are transmitted to television sets of the subscribers through the conducting metal wires. The role played by them will be clear from paras 2 and 8 of Writ Petition No.1353 of 1993- (Universal Communications System v. State of U.P. which are quoted below: Para 2 That several such satellites are visible in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e cinema halls of the State. (b) defining the words multiplex, television signal receiver, television signal receiver agency and video; (c) covering DTH service by bringing television signal receiver agencies under the purview of license; (d) inspection of television signal receiver agencies; (e) enhancing penalty on copyright offenders in relation to cinematograph or video exhibition and the punishment for the breach of laws and rules made under the said Act. The Uttar Pradesh Cinema (Regulation) (Amendment) Bill, 2009 is introduced accordingly. By order, P.V. Kushwaha, Sachiv. 14. The amendments carried out by the UP Act No.27 of 2009, in the U.P. Cinemas Regulation Act, 1955 relevant for the purposes of deciding these writ petitions, are quoted as below:- 2(aa) Cinematograph includes any apparatus or electronic digital projection system or any other emerging analogeus technology other than video for the representation of moving pictures or series of pictures; Explanation-Digital projection system is a set of electronic apparatus used for digital cinema exhibition receiving digital print delivery through hard disc or through satellite or other ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eo or keeps a video library or television signal receiver agency, in contravention of the provisions of this Act or of the rules made thereunder, and of the conditions and restrictions upon or subject to which licence has been granted under this Act, he shall be punishable [with simple imprisonment for a term which may extend to six months or with fine which may extend to ten thousand rupees, or with both] and in the case of continuing offence with a further fine which may extend to two thousand rupees for each day during which be offence continues. (2) If any person prevents the entry of any officer duly authorised in this behalf, or otherwise obstructs such officer in the discharge of his duties imposed by or under this Act or the rules made thereunder, he shall be punishable with a fine which may extend to five thousand rupees. (3) If any person commits or attempts to commit or abets the commission of offence of infringement of copyright in relation to a cinematograph or video film or a record embodying in part of sound track associated with the film, punishable under the Copyright Act, 1957 or exhibit or permits to be exhibited or sale, store, let on hire, distribute, exc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f distribution of multichannel television programmes in Ku band by using a satellite system, by providing television signals direct to the subscriber's premises without passing through an intermediary such as cable operator; (g) 'entertainment' includes any exhibition, performance, amusement, game, sport or race (including horse race) to which persons are admitted for payment and in the case of cinematography exhibitions, includes exhibition of news-reels, documentaries, cartoons, advertisement shorts or slides, whether before or during the exhibition of a feature film or separately. [It also includes any activity notified as entertainment by the State Government from time to time; (i-1) 'Ku Band' ordinarily means the 11.7 to 12.7 Gigahertz frequency band which splits into two segments namely Fix satellite Service having the frequency of the 11.7 to 12.2 Gigahertz and Broadcasting Satellite service having the frequency of 12.2 to 12.7 Gigahertz, or any other band of width as may be approved by the Government of India from time to time;] (k-1) 'Multi System Operator' means a cable operator who receives a programming service from a broadcaster or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ccount, ticket books or any other relevant records pertaining to the entertainment or pertaining to the management of providing cable service or Direct-to-Home service or Broadband service or any emerging transmission services, by whatever name called, are kept or purported to have been kept; (m) 'proprietor' in relation to any entertainment includes any person- (i) connected with the organisation of the entertainment, or (ii) charged with the work of admission to the entertainment, or (iii) responsible for, or for the time being in-charge of the management thereof; or (iv) any cable operator registered under Section 4 of the Cable Television Network (Regulation) Act, 1995 (Act No.7 of 1995) or any person responsible for or for time being in charge of management of providing cable connection through cable television network or any other emerging technology; or (p-1) 'television signal receiver' means any device, by whatever name called, used to receive and/ or decode the transmission programme of particular channel and without which no person is able to see a particular channel programme; (p-2) 'television signal receiver agency' means a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pplication shall be accompanied with the following documents- (i) a site plan in duplicate showing the location of premises in relation to adjacent premises and public thoroughfare on which the premises abuts. (ii) documents showing the ownership or tenancy of the place or building or shop of the said agency. (iii) documents regarding Photo identity and address Proof e.g. Election Photo identity Card, driving licence, Ration Card or any Photo identity card issued by recognised institution. (iv) Documents regarding Bank guarantee of ₹ 25,000.00 (v) the authority letter/ consent from the channel owner or his assignee. (b) in the case of video library the application shall be accompanied with documents referred to in sub clause (i) and (ii) of clauses (a) and proof of residential address e.g. Election Card, Ration Card etc.: Provided that any change in address shall be communicated immediately to Licensing Authority. (2) The Licensing Authority may grant or renew the licence for a period not exceeding three financial years at a time for keeping a video library/ television signal receiver agency in a local area having population mentioned in Column 1 below ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r which the U.P. Entertainment and Betting Tax Act, 1979 was amended by U.P. Act No.25 of 2009 w.e.f. 16.6.2009. 18. The companies under license from Telecom Regulatory Authority of India under the Telegraph Act have filed writ petitions in which interim orders have been obtained not to collect and pay entertainment tax prior to 16.6.2009, when the U.P. Act No.25 of 2009 amending U.P. Entertainment and Betting Tax Act, 1979 came into force. They were, however, asked to pay entertainment tax for the period after 16.6.2009. We are informed that at Lucknow Bench of the Court writ petitions have been filed by the Licensee companies, in which directions have been issued to them holding license under the Indian Telegraph Act, to directly deposit entertainment tax, on the number of subscribers on the amount charged for DTH services. 19. Shri D.K. Singh and Shri Bharat Ji Agrawal, Sr. Advocate submit that the petitioners are distributors of dish antennas, set top boxes and recharge vouchers of DTH services of the licensed companies. These equipments are called consumer premise equipments, and viewing cards, which are solely owned by the company and are part of services provided to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... exclusive privilege for granting or establishing, maintaining etc. of telegraph or granting license for such purpose. 22. It is submitted that under the Indian Wireless Telegraphy Act, 1933, Rule 2 (1) defines 'wireless communication' and Rule 2 sub-rule (2) defines 'wireless telegraphy apparatus'. The license to possess 'wireless telegraphy apparatus' under the Act can be granted by the Central Government. The Act provides for offence and penalties and punishment for violation of the provisions of the Act and the Rules made thereunder. The radio television and video cassette recorder sets are exempt from Licensing Requirement Rules, 1985. The broadcasting satellite services or fixed satellite services shall be deemed to be wireless telegraphy apparatus for the purposes of Indian Wireless Telegraphy Act, 1933 (after its amendment on 25.10.1986). The DTH services were covered by an amendment made to the Rules in the year 1997. On 9.1.2011, the 1997 Rules were amended, whereby Rule 4 was omitted and Rule 3 was amended, whereby DTH services were allowed. The cumulative reading of the Indian Telegraph Act, 1885; Indian Wireless Telegraphy Act, 1933 and var ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ors., (2004) 10 SCC 201; Godfrey Phillips India Ltd. Anr. Vs. State of U.P. Ors., (2005) 2 SCC 515 and Mohan Meakin Ltd. Vs. State of H.P. Ors., (2009) 3 SCC 157 in support of their submissions that the State Government under Item 33 of List II has no power to legislate on the subject of 'telegraph', which is exclusively covered under Entry 31 of List-1 of the Seventh Schedule. Under Art.246 (3) of the Constitution of India; the State Government cannot make laws on the subjects, which are exclusively covered under the Union List. 26. The rates of license fees to be paid by the Television Signal Receiver Agency, under Rule 18 of the 4th Amendment Rules, 2011, and the slabs are provided in Rule 18. These provide license fees for video library in column-2 and for Television Signal Receiver Agency in column-3, at fixed and different rates based on population for local areas such as Municipal Corporation (Noida and Greater Noida); Municipal Board, and Town Area/ other places. For population of less than 2 lacs a fees of ₹ 10,000/- for Municipal Corporation (Noida and Greater Noida); ₹ 6500/- for Municipal Board; and ₹ 3000/- for Town Area and other ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... India Ors., (1989) 3 SCC 488; the Second Gift Tax Officer, Mangalore Vs. D.H. Nazareth, (1970) 1 SCC 749; Bharat Sanchar Nigam Ltd. Anr. Vs. Union of India Ors., (2006) 3 SCC 1; Association of Leasing and Financial Service Companies Vs. Union of India Ors., (2011) 2 SCC 352 and Bharat Sanchar Nigam Ltd. Anr. Vs. Union of India, (2006) 3 SCC 1 in submitting that the State Government does not have competence to legislate on the subject of telegraph under Entry 31 of the Union List. He submits that the State Government has clearly transgressed its legislative powers. In M/s Ujagar Prints Ors. (II) Vs. Union of India Ors. (Supra) it was held that the entries to the legislative lists are not source of the legislative power but are merely topics or fields of legislation and must receive a liberal construction inspired by a broad and generous spirit and not in a narrow pedantic sense. The expression 'with respect to' in Art.246 brings in the doctrine of 'pith and substance' in the understanding of the exertion of the legislative power and wherever the question of legislative competence is raised, the test is whether the legislation, looked at as a whole is s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... action of service and sale. There may be transfer of a right to use the goods in providing of a telephone connection, it is possible for States to tax the sale element providing there is a discernible sale and 'dominant intention' test is satisfied, but only to the extent relatable to such sale. There may not be any transfer of user of any goods in electromagnetic waves or radio frequencies as these are not deliverable goods. The goods in such a transaction are limited only to handsets or other works provided by service provider, which can be taxed under the sales tax laws. The Supreme Court further held that the integrity of the license to provide telephone services cannot be broken into pieces nor can telecom service rendered by service providers be so mutilated. The question whether SIM cards are goods was left open. 31. Shri Satish Chaturvedi, AAG appearing for the State of U.P. has relied upon the object and reasons for amending U.P. Cinemas Regulation Act, 1955, given in the extraordinary gazette of the State of U.P. dated 9th September, 2009. He submits that with rapid advancement of science and technology of communication, modern means have been achieved for ente ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bition of Film on Television Screen through Video Cassette Recorder (Regulation) Act, 1984, the license given to a person to keep a video cassette library and to keep letter of consent from the first owner of the copyright in any of such film or assignee thereof, so that he may not infringe the copyrights, and for which he can be punished under the Act, is no ground to held that the State legislature losses the legislative competence, which it has on the subject of cinema in List-II of the Seventh Schedule. Setting aside the judgment of the Madras High Court the Supreme Court held that when a regulatory legislative measure is enacted by a legislature on a subject within its competence, requires a person to obtain a license for doing certain business concerned with the subject and impose certain restrictions upon such person to make him conduct the business, lawfully, it could be regarded as legislative provision, which is ancillary to the main subject of the regulation. Once the subject of regulation is found within the pith and substance of the covered legislative competence namely cinema, ancillary provisions, by which the business is required to be run lawfully, and not to viola ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rafting the entries must be given the widest possible interpretation. This is because the application of the subjects to the lists is not by way of scientific or logical definition but by way of mere simplex enumeratio of broad categories. A power to legislate as to the principal matter specifically mentioned in the entry shall also include within its expanse the legislation touching incidental and ancillary matters. In para 138 of the majority opinion the Supreme Court held:- It is well settled that it is for the legislature to draft a piece of legislation by making the choicest selection of words so as to give expression to its intention. The ordinary rule of interpretation is that the words used by the legislature shall be given such meaning as legislature has chosen to assign them by coining definitions contained in the interpretation clause and in absence thereof the words would be given such meaning as they are susceptible of in the ordinary parlance, may be by having recourse to dictionaries. However still, the interpretation is the exclusive privilege of the Constitutional Courts and the Court embarking upon the task of interpretation would place such meaning on the wor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nema a wholesome entertainment. The development in technology in wireless telegraphy, and the transmissions of digital signals through satellites has facilitated entertainment while sitting at home. 40. The technology of satellite broadcasting based on the use of C- Band Transponder and frequencies in bands below 4800 MHz distributing programmes through a cable operator to the television sets in the homes, underwent a radical change after the advent of technology in satellite broadcasting using digital compression and Ku band transponder transmitting signals in frequency band above 4800 MHz commonly called DTH service, made its entry. Under the new technology a satellite broadcaster can beam his programme directly through the satellite, into homes, which can be received with the help of very small sized dish antenna, with or without involvement of any intermediary like a cable operator. A direct link can now be maintained with the television sets in homes without any possibility of regulation by intermediary. 41. The new technology enables any broadcaster within or outside India to beam any programme directly to the homes without linking his signals from inside the Indian soi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Central Government under Entry 31 of List-I in the Seventh Schedule, including post and telegraph, telephones, wireless, broadcasting and other like forms of communication. 42. The telegraphy with its technological advances, giving it an increased capacity to reach home directly, has enormous potential of entertainment, on which the exclusive power of regulation has been given to the State Government under Entry 33 in the State list, including theaters and dramatic performances, cinemas, subject to the provisions of Entry 60 of List 1 (providing for sanctioning of cinematograph films for exhibition namely censure), sports entertainment and amusements. The State Government has the legislative power in such case to regulate entertainment by advanced telegraphy and also to levy tax on it under Entry 62, which provides for tax on luxuries, including tax on entertainments, amusements, betting and commercial. 43. The State legislation in order to keep pace with advanced technology amended the U.P. Act, 1955, to include DTH services in the year 2009. The U.P. Entertainment and Betting Tax Act, 1979 was correspondingly amended in the same year. The licensing, however, did not cove ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 58 the Corporation of Calcutta by resolution changed the basis of assessment of fees. Under the new method the fee was to be assessed at rates prescribed per show, according to the sanctioned seating capacity of the cinema house and the respondents had to pay fee of ₹ 600/- per year. It was argued that levy was tax, and not fee in return of service, and was not commensurate with the cost incurred by the Corporation in providing the services; the levy was thus invalid and was also violative of Art.19 (1) (f) and (g) of the Constitution of India. The Supreme Court held that the Calcutta Municipal Corporation Act does not intend to use the word 'fee' as referring only to a levy in return for services. The words used are fees for the license and these words do not necessarily mean a fee in return for services. The Act does not provide for any service of a special kind being rendered resulting the benefits of the person to whom it may be imposed. The Act permits bye-laws to be framed for regulating the inspection, supervision and control amongst others of cinema houses, but it is not obligatory to make such bye-laws. The inspection to be carried out is to see, that the ter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce. The State Government has legislative competence to regulate the entertainment. The DTH services, as the latest technological advance, in the field of telegraphy, can be, and is used for entertainment, which is subject to regulation under Entry 33 of the State list. The amendments clearly fall within the legislative competence of the State Government. There is no repugnancy between the two laws. A repugnancy arises as it was held in M/s Hoechst Pharmaceuticals Ltd. Ors. (Supra), when the law made by Parliament and a law made by the State Legislature, occupy the same field with respect to anyone of the matters enumerated in the concurrent list, and there is direct conflict between the two laws. We further hold that the license fees, for taking out a license by the Television Signal Receiver Agency under the U.P. Cinema Regulation Act, 1955 as amended by UP Act No.27 of 2009, from the place from where he is running the business, and where he keeps his books of accounts, apparatus and equipments, under Rule 18 of the U.P. Cinemas (Regulation of Exhibition by Means of Video) (4th Amendment) Rules, 2011 on Form IV, is not a compensatory fees, which may require the State Government ..... X X X X Extracts X X X X X X X X Extracts X X X X
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