Broadcasters liable for both service and luxury tax: SC

In a verdict with far-reaching implications for India’s broadcasting industry, the Supreme Court has upheld the constitutional validity of dual taxation on broadcasters, ruling that both service tax and entertainment (luxury) tax can be levied concurrently. The judgment settles a long-standing legal tussle over whether states could impose an entertainment tax on cable TV operators and digital content providers already covered under central service tax laws, affirming that both taxes apply to distinct aspects of the same activity.

The verdict, delivered by Justices B.V. Nagarathna and N. Kotiswar Singh, came in a batch of appeals and writ petitions, including one by Tata Play. The Court held that service tax and entertainment tax target different aspects of broadcasting, allowing both to be levied without overlap.

While a 321-page verdict was given, the operative portion of the Supreme Court judgment summarised the Court’s final decisions on the various appeals and laws involved.

It said, “The Civil Appeals filed by the appellants/assessees arising from the judgments of the High Courts of Delhi, Gauhati, Gujarat, Jharkhand, Madras, Orissa, Punjab & Haryana, Rajasthan and Uttarakhand are dismissed. The appeal filed by the State of Kerala is allowed. The appeals arising out of the judgments of the Allahabad High Court
are allowed in part.”

The bench observed that the provisions relevant to this case under the Kerala Tax on Luxuries Act, 1976; Uttar Pradesh Entertainment and Betting Tax Act, 1979; Rajasthan Entertainments & Advertisements Tax Act, 1957 and the Rules thereunder; Gujarat Entertainment Tax Act, 1977 and Gujarat Entertainment Tax (Exhibition by means of Direct-to-Home Broadcasting Services) Rules, 2010; Jharkhand Entertainment Tax Act, 2012 and Jharkhand Entertainment Tax Rules, 2013; Punjab Entertainment Duty Act, 1955 (Amendment in 2010); Delhi Entertainment and Betting Tax Rules, 1997; Assam Amusements and Betting Tax Act, 1939; Orissa Entertainment Tax Rules, 2006, along with the Orissa Entertainment Tax (Amendment) Tax Rules, 2010 are
upheld.

“The correctness of the findings of the High Court of Madras with regard to the charging section in the State enactment being defective is assailed by the State of Tamil Nadu in separate appeals which are not part of this batch of appeals, and accordingly have not been taken up for our consideration herein,” the judgement said.

As for the Andhra Pradesh Entertainment Tax Act, 1939 (adopted by Telangana), the Supreme Court did not comment on its validity, since the matter is still pending before the Andhra Pradesh High Court. All related issues have been left open to be argued before the appropriate legal forum. The writ petitions filed under Article 32 have also been disposed of.