9911796707
TMI Blog2000 (4) TMI 834X X X X Extracts X X X X X X X X Extracts X X X X ..... eceived and distributed by the petitioners through the means of cables. THE PROVISIONS OF THE BOMBAY ENTERTAINMENT DUTY ACT, 1923 AS AMENDED. 3. The Bombay Entertainments Duty Act 1923 ("the Act") imposes a duty on entertainment and the charging provision of the Act is section 3. Subsection (4) of section 3 which came to be introduced by an amendment of 1998, provides that there shall be levied and paid by the proprietor entertainment duty at the specified rate per television set which receives radio frequency signals for exhibition of films or moving pictures or series of pictures with the aid of any type of antenna or apparatus for securing transmission through the cable net work or cable television. Sub-section (4) of section 3 is material for the purpose of the present petition and provides as follows : Notwithstanding anything contained in sub-section (2) or in any other provisions of this Act, there shall be levied, and paid by the proprietor to the State Government, the entertainment duty at the rate specified in the table below per television set which receives radio frequency signals for exhibition of films or moving pictures or series of pictures with the ai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m called the head-end, by using a video cassette or disc or both, recorder or player or similar such apparatus on which prerecorded video cassettes or discs or both are played or replayed and the films or moving pictures or series of pictures which are viewed and heard on the television receiving set at a residential or non-residential place of a connection holder. 6. The expression "payment for admission" is defined in clause (b) of section 2 which reads as follows : Payment for admission in relation to the levy of entertainments duty includes.... (vi) any payment made by a person by way of contribution or subscription or installation and connection charges or any charges collected in any manner whatsoever for Television Exhibition with the aid of any type of antenna with a cable net work attached to it or cable television. 7. As stated earlier, sub-section (4) of section 3 provides that entertainment duty shall be paid by the proprietor to the State Government. The expression ''proprietor" for the present purposes is defined by clause (c) of section 2 to include, "in relation to an entertainment", "any person" responsible for or fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tions are extracted hereinbelow for convenience of reference: Cable Television" means a system organized for television exhibition by using a Video cassette or disc or both, recorder or player or similar such apparatus on which prerecorded video cassettes or discs or both are played or replayed and the films or moving pictures or series of pictures which are viewed and heard on the television receiving set at a residential or non-residential place of a connection holder. Television Exhibition" means an exhibition with the aid of any type of antenna with a cable network attached to it, or cable television, of a film, or moving picture, by means of transmission of television signals by which subscribers' television sets at residential or non residential place are linked by metallic coaxial cable or optic fiber cable to a central system called the head-end. Entertainment" means a horse race or cinematograph exhibition to which persons are admitted on payment or television exhibition for which persons are required to make payment by way of contribution, or subscription, or installation or connection charges or any other charges collected in any manner whatsoeve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he T.V. set holders". According to the petitioners, the imposition and collection of dues is a sovereign function of the State and that function cannot be delegated to any individual by the State. Similarly a delegation of power to collect tax cannot be foisted on the individual by the State. (v) The petitioners also seek to challenge circulars which have been issued by the State Government. THE JUDGMENTS OF THE MADRAS HIGH COURT AND THE SUPREME COURT IN REGARD TO THE TAMIL NADU ENTERTAINMENT TAX ACT, 1939. 10. In dealing with the correctness of the submissions urged before us it must, at the outset, be noticed that the question in issue is no longer res integra but has substantially been covered by a judgment of a Division Bench of the Madras High Court consisting of Mr. Justice M. Srinivasan (as the learned Judge then was) and Mr. Justice S. S. Subramani, in which the validity of the provisions of the Tamil Nadu Entertainment Tax Act 1939 as amended by Act 37 of 1999 was considered. A Division Bench of the Madras High Court in its judgment dated 1st December, 1994 disposed of a batch of writ petitions (W.P. No. 10013 of 1994 and connected petitions) between the Tamil Nad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ertainment in respect of the cable television net work. The Court held that entry 62 of the State list in the Seventh Schedule to the Constitution was the specific entry which dealt with "tax on luxuries including tax on entertainments, amusements, betting and gambling". The expression "entertainment" according to the Court, could not be given a narrow interpretation restricted to the circumstances which prevailed at the time of the framing of the Constitution without reference to later developments. The entries of taxation in the 7th Schedule to the Constitution are separate and distinct from other entries in the Schedule. The enactment in question was a fiscal enactment and since there was a specific entry, entry 62 of the State list which dealt with a tax on entertainments, entry 31 of the Union list dealing with the posts and telegraph was not attracted and would not govern the situation; (ii) The Court rejected the submission that there was any repugnancy between the law enacted by the legislature of the State of Tamil Nadu and the Central Act dealing with the Cable Television Net Work. The Law enacted by Parliament dealing with the Cable Television net w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the legislation was referable to entry 62 of the State list of the 7th Schedule to the Constitution. Since the substance of the statute related to topic which was within the competence of the legislature, the legislation must be held to intra vires even if it may incidentally encroach upon the subjects not within the competence of the legislature. Following the judgment of the Supreme Court in the case of Geeta Enterprises and others vs. State of U.P., AIR 1983 SC 1098, the Madras High Court held that the expression "entertainment" has been used in a wide sense to include within its ambit entertainment of any kind including one which may be purely educative. Consequently, even if a major part of the programming transmitted by the Cable T.V. Operators is educative or informative that will not invalidate the levy of the duty of entertainment as defined by the Act. (vi) The Madras High Court rejected the submission that the true object and purpose of the Act was to indirectly benefit the Cinema Theatres because the flourishing of the cable T.V. business had adversely affected the Motion Picture Industry. The Court held that the motive of the legislature was irrelevant. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd expression (ii) Colorable legislation and (iii) the rate of tax. The Supreme Court noted the submission of the petitioner's that Cable T.V, Operators not only show films on their network but also relay programs broadcast by Doordarshan, B.B.C. C.N.N. and other similar network. The argument was that the entertainment part of programming is barely 10 per cent and by levying tax at the rate of 40 percent on the collections of Cable T.V. Operators the entire burden was being cast upon them. The submission was that it was not possible for the Operators to survive if a rate of tax as high as 40 per cent was maintained. It was urged that the immediate and direct effect of the taxation would be to affect Cable T.V. operators in respect of their fundamental right to the freedom of speech and expression. In dealing with this contention, the Supreme Court held that while providing entertainment was a facet of the exercise of the fundamental right to free speech and expression, Cable T.V. Operators carried on a business, the business of providing entertainment through the media of video Cassettes or Disks with the help of a VCR, Disk player or similar apparatus. The Court held that even ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eedom of speech and expression by Article 19(1 )(a) of the Constitution subject to this rider that where speech and conduct are joined in a single course of action, the free speech values must be balanced against competing societal interests. The argument that the rate of tax was disproportionately high was similarly rejected with the following observations : We are inclined to agree with the submission of the Learned Counsel for the State of Tamil Nadu. The reason given by the State for imposing tax at the rate of 40 per cent is duly explained by the State and we do not see any flaw in it. Since the appellants also carry on business it is their duty to share the burden of the State by paying taxes like any other business. The entertainment tax is an indirect tax. It is meant to be and is passed on to the consumer i.e., subscriber, in the case of indirect taxes, levy at more than 100 per cent of the value of the goods is not unknown e.g., in the case of customs and Central Excise duties. As a matter of fact, even in the case of direct taxes, levy at the rate higher than 50% is a regular feature. of course, these are instances not involving free speech right and stand upon a diff ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 3(4) of the Maharashtra Act while levying a flat rate makes a distinction between the rates impossible in respect of areas falling within (1) Municipal Corporation/Cantonments (2) Municipal Councils and (3) other areas. THE CHALLENGE BEFORE this Court AFTER THE JUDGMENT OF THE SUPREME COURT AND THE MADRAS HIGH COURT. 15. The Learned Counsel appearing for the petitioners conceded that a substantial part of the controversy in dispute in the present case is covered by the judgments of the Madras High Court and the Supreme Court. In the written submissions which have been filed in these proceedings, by Learned Counsel appearing in Writ Petition No. 1467 of 2000, it has been conceded that the State has legislative competence to enact the law in question. Similarly in regard to the argument relating to "repugnancy and occupied field" the written submissions set out that the broad reasoning of the Madras High Court is correct and the Cable T.V. network (Regulation) Act, 1985 enacted by Parliament and the Bombay Entertainments Duty Act, 1923, operate in different fields. The challenge of the petitioners is that (i) the Cable Operators* right to do business by virtue of thei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... als, (iv) The levy of tax and its collection partake the colour of a sovereign function of State. The State may farm out its function of Tax collection but this can be done only through a separate piece of legislation intended for that purpose alone and not within the four corners of a law relating to tax on entertainment, (vi) The incidence of tax must still remain on the viewer of the entertainment, and the impugned amendment seeks to shift the burden on the cable operators making them penalty liable if the viewer does not pay and (vii) There appears to be no basis for the calculation of the amount of tax due and this violates basic ingredients of taxing statutes that the tax must be certain. THE TENABILITY OF THE SUBMISSIONS OF THE PETITIONERS. A. The impact of the Judgment of the Supreme Court. 16. In considering the correctness of the submissions urged at the Bar on behalf of the Cable T.V. Operators, it would be worthwhile to notice at the outset that the petitioners concede in certain areas such as legislative to urge in certain areas such legislature competence and the freedom of speech and expression, that the view adopted by the Madras High Court is correct. However, a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cision of the High Court in that case is erroneous or that what is urged by the petitioners before us was not considered either by the Madras High Court or the Supreme Court. This course of action is clearly not open to the petitioners. In fact and in substance the attempt of the petitioners before us is to reagitate issues which came to be settled by the Madras High Court which decision was confirmed in Appeal by the Supreme Court. This exercise is impermissible and is not open to the petitioners. 18. Having said this, we will briefly deal with the submissions urged on behalf of the petitioners. Having given our anxious considerations to them we find that there is no substance in the challenge. B. The Nature of the Levy in the present case : a duty on entertainment. 19. Entry 33 of the State List to the 7th Schedule inter alia deals with 'Theatres, Dramatic Performances, Entertainments and Amusements.' Entry 62 of the State list is entitled "Tax on Luxuries including tax on entertainments, amusement, betting and gambling". Interpreting Entry 62 of the State List. 20. The entries in the 7th Schedule to the Constitution, it is well settled, have to be given an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... other charges collected in any manner whatsoever. The expression "exhibition" is defined for the purpose of section 2(a) to include exhibition through the television with the aid of antenna and with cable net work attached to it or cable television. Section 2(b) similarly defines payments for admission to include contribution, subscription, installation and connection charges and all other charges collected for television exhibition with the aid of Antenna with a cable network attached to it or cable television. Section 2(g) defines "place of entertainment" to include a house, building, tent or any other place where relevant records pertaining to the management of providing cable connections from any type of Antenna or cable television are kept. Section 2(c) defines "proprietor" to include a person responsible for or for the time being in charge of management of providing cable connections from any type of Antenna or cable television. These provisions clearly amplify the nature of the duty sought to be imposed in relation to the entertainment provided by the Cable T.V. network. C. The meaning of the expression "entertainment" 25. The Cable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vides entertainment. Those who received entertainment are exigible to tax. Those who provide it are similarly, not immune to the taxing net. 28. This was decided by the Supreme Court in the Western India Theatres Ltd. vs. The Cantonment Board, Pune Cantonment, AIR 1959 SC 582. In that judgment the Supreme Court while interpreting a similar entry. Entry 50 of the 7th Schedule of the Government of India Act, 1935 held as follows :- ...In view of this well established rule of interpretation there can be no reason to construe the words 'taxes on luxuries or entertainments or amusements' in entry 50 as having a restricted meaning so as to confine the operation of the law to be made thereunder only to taxes on persons receiving the luxuries, entertainments, or amusements. The entry contemplates luxuries, entertainments, and amusements as objects on which the tax is to be imposed. If the words are to be so regarded, as we think they must there can be no reason to differentiate between the giver and the receiver of the luxuries, entertainments, or amusements and both may, with equal propriety, be made amenable to the tax. (emphasis supplied). 29. Learned Counsel for the petit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Act purports to levy tax on notional entertainment then the exercise of that taxing power must be held to be ultra vires the Constitution. This is exactly what has happened in the instant case. 31. The view of the law which was taken by this Court in AIR 1984 Bom 345, was held to be erroneous by the Supreme Court in the Express Hotels case. In paragraph 8 of the judgment in the Express Hotels case. Mr. Justice Venkatachaliah (as the learned Chief Justice then was) disapproved the observations of this Court in the following words : With due respect to the High Court, the interpretation that commended itself to the High Court would unduly restrict the scope of the Legislative entry. On such an interpretation, it might be possible for a person to go further and contend that no entertainment was actually derived. The concept of 'luxuries' in the Legislative Entry takes within it everything that can fairly and reasonably be said to be comprehended in it. The actual measure of the levy is a matter of legislative policy and convenience. So long as the legislation has reasonable nexus with the concept of 'luxuries' in the broad and general sense in which the expression ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt of the Supreme Court provides a complete answer to the submissions urged on behalf of the petitioners with reference to the judgment of this Court in AIR 1984 Bom. 345. The judgment of this Court referred to above no longer holds the field. Following the judgment of the Supreme Court in Express Hotels we hold that the expression "entertainment" for the purpose of the Constitution as well as the Bombay Entertainments Duty Act, 1923 is wide enough to comprehend within it all aspects of the concept which can be reasonably and fairly regarded as comprehended by it. E. The element of nexus - the taxing event and the measure of tax. 34. State Legislature clearly has the legislative competence to enact the legislation in question. The taxing power is with regard to entertainments. The taxing power is not conditioned by the actual providing of entertainment. The subject matter of the Bombay Entertainments Duty Act 1923, particularly section 3(4) which is under consideration, is entertainment provided through the cable T.V. net work. There is a clear nexus between the taxing power and the subject of taxation. Once that nexus is established, the other incidents of section 3(4) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ows :- The standard adopted as the measure of assessment may throw light on the nature of the levy but is not determinative of it. When a statutory measure for assessment of the tax is contemplated, it "need not contour along the lines which spell out the levy itself and "a broader based standard of reference may be adopted for the purposes of determining the measure of the levy." Any statutory standard which maintains a nexus with the essential character of the levy can be regarded as a valid basis for assessing the measure of the tax. 36. There is indeed a long line of precedent on the subject in which the same view has been taken. This includes the judgment of a Constitution Bench of the Supreme Court in R. R. Engineering vs. Zilla Parishad, Bareilly AIR 1980 SC 1088. In that case, the learned Chief Justice speaking for the Court held thus:- It may be, and is often so, that the tax on circumstances and property is levied on the basis of income which the assessee receives from his profession trade, calling or property. That is, however, not conclusive on the nature of the tax. It is only as a matter of convenience that income is adopted as a yardstick or measu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... supra) where the Constitution Bench held thus:- It is now well settled that though taxing laws are not outside Art. 14, however, having regard to the wide variety of diverse economic criteria that go into the formulation of a fiscal policy, legislature enjoys a wide latitude in the matter of selection of persons, subject-matter, events, etc. for taxation. The tests of the vice of discrimination in a taxing law are, accordingly, less rigorous. In examining the allegations of a hostile, discriminatory treatment what is looked into is not its phraseology, but the real effect of its provisions. A legislature does not as an old saying goes, have to tax everything in order to be able to tax something. If there is equality and uniformity within each group, the law would not be discriminatory. Decisions of this Court on the matter have permitted the legislatures to exercise an extremely wide discretion in classifying items for tax purposes, so long as it refrains from clear and hostile discrimination against particular persons or classes. 38. Finally, reference may be made to the judgment of the Supreme Court in Venkateshwara Theatre vs. State of Andhra Pradesh, (1993) 3 SCC 677 where t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red to enact separate legislation and not an Amending Act as was done in the present case. Topics of legislation covering a group of fiscal matters are often grouped or enacted together. The shape in which the law will be enacted, whether by way of fresh legislation or an amendment to existing law, is a matter of form. The submission of the petitioners is thus liable to be rejected. H. The sovereign function argument. 40. We also do not find any substance in the submission that by the legislation in question the State Legislature has delegated its sovereign function in relation to the tax on entertainment as defined by the Act on the Cable T.V. Operators. The tax has been imposed by legislation enacted by the competent legislature. The charge of tax, the measure of tax and the method of assessment and collection are all prescribed by the Act. The legislature when it imposes tax can provide a convenient point of collection for the tax. The Legislature could legitimately have taken the view while enacting the law, that the point at which the tax should be collected should be the proprietor or the Cable T.V. Operator. This is a matter of administrative convenience since, the collect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sition of the levy and its assessment for collection are provided for by the Act itself. The circulars have to be so construed and need not detain us any further. 43. In the circumstances, we do not find any substance in the challenge to the imposition of entertainment duty under the Bombay Entertainments Duty Act, 1923 in respect of entertainment provided through the medium of Cable T.V. The State legislature has brought within the net of taxation an activity which clearly involves the provision of entertainment. The State Legislature is competent to levy a tax on entertainment, which is what the entertainment duty in the present case is. The State enactment does not encroach upon the Parliamentary enactment namely, the Cable T.V. Network Regulation Act, 1995. The Legislature in structuring the levy has maintained the element of nexus required to ensure that the tax does not encroach upon a prohibited area. The measure of the tax does not disturb the element of nexus in the present case. Like other forms of business, Cable T.V. is exigible to taxation. The State Legislature has been cognizant of new forms of technology which provide fresh avenues of entertainment. The Court in th ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
