Dual Taxation Upheld; Supreme Court Greenlights States Can Levy On DTH & Cable Services
Dual Taxation Upheld; Supreme Court Greenlights States Can Levy On DTH & Cable Services
The Supreme Court has ruled that State governments can levy entertainment tax on cable and Direct-to-Home (DTH) television services, upholding the constitutional validity of such taxes.
The Supreme Court, presided over by Justices BV Nagarathna and N Kotiswar Singh held that States are competent to tax the "entertainment" aspect of DTH services, even if the broadcasting function is already subject to service tax by the Union. The Court applied the "aspect theory," which allows different levels of government to tax different aspects of the same commercial activity. This theoretical framework resolves the apparent conflict between Central and State taxation powers by recognizing that the same transaction can have multiple taxable aspects without creating legal overlapping.
The judgment validated entertainment tax laws across multiple States, including Kerala, Uttar Pradesh, Rajasthan, Gujarat, Jharkhand, Punjab, Delhi, Assam, and Odisha. The Court rejected arguments by DTH service providers, including Tata Sky (now Tata Play), Dish TV, and Sun Direct, that they were merely conduits in the broadcasting chain and should not be liable for entertainment tax. Instead, the Court emphasized that DTH operators have a "direct and proximate nexus" with entertainment provision.
The Court stated that, "Under the Constitution of India, the power to tax is not an incidental or ancillary power. The power to tax cannot be implied within a regulatory entry under our Constitution."
In this case the petitioners were represented by Mr. KK Venugopal, Mr. Arvind P Datar, Mr. Tarun Gulati, Mr. SK Bagaria, Mr. Jaideep Gupta and Ms. Pallav Shisodia, Senior Advocates. The respondents were represented by Mr. Manish Singhvi, Mr. RK Raizada, Mr. Arunabh Chowdhury (AAG), Mr. Preetesh Kapur, Mr. K Radhakrishnan, Mr. Shirin Khajuria, Ms. Nisha Bagchi, Mr. V K Khanna, Mr. Sanjay Kharde, Mr. Saurabh Mishra, Advocates along with Mr. KN Balgopal (Advocate General, Nagaland). Meanwhile the Union of India was represented by Mr. KM Nataraj, Additional Solicitor General.
