Dual taxation on broadcasting services permissible in law: Supreme Court judgment

“There is no overlapping in fact or in law, inasmuch as different aspects of the same activity are being taxed under two different legislations by two different legislatures,” Supreme Court Judge Justice B.V. Nagarathna said. File
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The Supreme Court has held in a judgment that broadcasting through television for the purpose of the entertainment of the subscribers can be separately taxed by the Centre and the State concerned

A Bench of Justices B.V. Nagarathna and N. Kotiswar Singh said The Centre can impose service tax on the broadcasting service while the State concerned can, on the other hand, make cable operators and entertainment providers liable to pay entertainment tax.

“Broadcasting service being a taxable service under the provisions of the Finance Act, 1994, read along with the amendments made from time to time would enable both the Parliament to impose service tax on broadcasting service and the State Legislatures having the legislative competence to levy entertainment tax on those who provide entertainment to the recipients [television viewers],” the top court interpreted the law.

Justice Nagarathna, who authored the judgment dated May 22, said imposition of two different taxes on two separate aspects of the same activity – broadcasting service – was permissible in law. There was no danger of overlapping taxation.

“There is no overlapping in fact or in law, inasmuch as different aspects of the same activity are being taxed under two different legislations by two different legislatures. This is because the activity of broadcasting is a service and liable to service tax imposed by the Parliament (Entry 97 – Union List) and the activity of entertainment is a subject falling under (Entry 62 – State List),” Justice Nagarathna held.

The court said the expression ‘entertainment’ came within the ambit of ‘luxury’ defined in Entry 62 of the State List of the Seventh Schedule of the Constitution.

“Advances in technology have resulted in varied forms of entertainment through various media and in a variety of ways, not only in a public place but also in the confines of private space such as a home, through mobile or a cell phone or smartwatch and other personal devices, etc. The expression ‘entertainments’ must be given a broad, liberal and expansive meaning,” the court said.