Adarsh Kumar Goel :- This order will dispose of C.W.P. Nos. 10992, 11929 and 12240 of 2010 as all the three petitions involve common question as to validity of levy of entertainment duty under section 3(3C) of the Punjab Entertainment Duty Act, 1955 (in short, "the 1955 Act"). According to the petitioners, the said levy was in substance levy of service tax referable to entry 92C of List I of the Seventh Schedule to the Constitution and was, thus, beyond the competence of the State Legislature. The same does not fall in entry 62 of List II providing for levy of entertainment tax. Activity carried on by the petitioner is covered by taxable service under section 65(105)(zk) to the Finance Act, 1994, as amended by the Finance Act, 2001 providing for levy of service tax on service by a broadcasting agency in relation to broadcasting. The expression broadcasting has been defined under section 65(15) of the said Act as having same meaning as under section 2(c) of the Prasar Bharati (Broadcasting Corporation of India) Act, 1990 and includes receiving of signals through space or cables, direct to home (DTH) signals or other means as specified therein.

The petitioner in C.W.P. No. 10992 of 2010 has its broadcasting centre which downlinks signals from broadcaster's satellite and uplinks the same to its own satellite for transmission through dish antennas to the subscribers. The signals broadcasted by the petitioner are in encrypted format and are decrypted/decoded by set top boxes and the viewing cards inside the set top boxes for the customers to receive DTH broadcasting service. The set top boxes are separately sold to the customers. The subscribers are required to pay subscription charges.

The petitioner has licence under the Indian Telegraph Act, 1885 and Indian Wireless Telegraphy Act, 1933 in accordance with the Government of India guidelines dated March 5, 2001 for providing direct to home (DTH) broadcasting service. The petitioner has also obtained permission to establish, maintain and operate uplinking hub as per guidelines notified on December 2, 2005. It has also entered into an agreement with the Government of India dated March 24, 2006 to pay annual fee which is a specified percentage of its gross revenue. As per DTH licence dated March 24, 2006, the petitioner is governed by legislation enacted in connection with broadcasting. It is liable to provide access to various content providers/channels. Under article 268A read with article 270 of the Constitution and recommendations of the 12th Finance Commission, 30.5 per cent of net proceeds of service tax is distributed amongst States. Broadcasting is covered by entry 31 of List I. Predominant aspect of the activity of the petitioner is broadcasting service by carrying signals through electromagnetic waves in Ku Band, content of which is provided by third party and entertainment provided is incidental to the broadcasting. The same is not provided by the petitioner but by the channels whose signals are carried by the petitioner.

In reply filed on behalf of the State, the levy under the 1955 Act as amended by 2010 Act has been defended on the plea that tax on entertainment being expressly covered by entry 62 of List II cannot be held to be covered by entry 92C of List I. The State tax was not on broadcasting service but on entertainment.

Question for consideration :

The question which arises for consideration is whether levy of entertainment tax is covered by entry 62 of List II or is tax on broadcasting service covered by entry 92C of List I.

Statutory provisions

Relevant provisions are as under :

Constitutional entries :

List I

"Entry 31. Posts and telegraphs, telephones, wireless, broadcasting and other like forms of communications."

"Entry 92C. Taxes on services"

List II

"Entry 62. Taxes on luxuries, including taxes on entertainment, amusements, betting and gambling."

Punjab Entertainment Duty Act :

"3. Duty on payment for admission to entertainments. - (1) A person a