The taxation of DTH services under the Kerala Tax on Luxuries Act is valid, but excluding cable operators from the tax is discriminatory and violates Article 14.

1. These writ petitions challenge the constitutional validity of the Kerala Tax on Luxuries Act, to the extent it seeks to levy luxury tax on Direct to Home Services (hereinafter referred to as "DTH Services"). The petitioners in these writ petitions are all Companies engaged in providing DTH Services, having been granted licenses, by the Government of India, to provide such services under the Indian Telegraph Act, 1885 and the Indian Wireless Act, 1933 on the terms and conditions specified in the licenses issued to them.

2. In the broadcasting sector, the content of the broadcast reaches the ultimate subscriber through different distribution platforms. For the purposes of the instant cases, the examination is limited to only two of them viz. Cable TV network and DTH services. In the cable TV network, the services value chain comprises of four supply side entities namely (i) the broadcaster, (ii) the aggregator, (iii) The Multi - system operator (MSO) and (iv) The local cable operator (LCO). In the case of the DTH Service provider the services value chain comprises of only three supply side entities namely, (i) the broadcaster, (ii) the aggregator and (iii) the DTH Operator. At the end of the supply chain in both the above cases is the subscriber or end customer, who receives the content of the broadcast on his receiving device such as a Television set or Monitor. The Broadcaster owns the content to be televised and received by the viewer. His role is to transmit or uplink the content signals to the satellite from where they are downlinked by the distributor. An aggregator is a distribution agent who undertakes the distribution of TV channels for one or more broadcasters. The MSO's role is to downlink the broadcasters' signals, decrypt any encrypted channels and to provide a bundled feed consisting of multiple channels to the LCO. The MSO business is dependent on the broadcaster / aggregator for content and on the LCO for last mile connectivity and subscription and revenue collection. The role of the LCO in the supply chain is to receive the bundled signals from the MSO and re - transmit this to subscribers in his area through cables. In the case of DTH services, the DTH service provider replaces the MSO and LCO of the cable network and is responsible for both, negotiating with broadcasters / aggregators and servicing the end consumer. The mode of transmission between the operator and the consumer is via satellite rather than cable. The required customer premises equipment in DTH services includes a satellite dish (to receive signals) and a set top box to decode signals and provide conditional access to paid content. The box is linked to a subscriber management system allowing the consumer to change his product / service offering as required. The stand - alone nature of satellite transmission at the customer's premises allows DTH operators to be present across the country. It can reach out to large geographic regions and to sparsely populated areas.

3. Under the Kerala Tax on Luxuries Act, 1976 , the levy of a tax on "luxury provided by a cable operator" was first introduced with effect from 01/04/2006. The relevant portions of the Act, as it then stood, that governed the levy of tax on the services provided by cable operators, read as follows:
"2. Definition clauses.—
(ca) "cable operator", means a person engaged in the business of receiving and distributing satellite television signals, communication network including production and transmission of programmes and packages f