Tamil Nadu Entertainment Tax Act, 1939 was enacted to impose the tax on entertaninments. By Act 37 of 1994 the Act was amended to bring within its purview what is called ‘cable television’. The expression ‘cable television’ is defined in clause 2-B of Section 3. The definition reads:
"‘Cable Television’ means a system
organised for television exhibition
by using a video cassette of disc
or both, recorder or player of
similar such apparatus on which
pre-recorded video casettes or
discs or both are played or
replayed and the films or moving
pictures or series of pictures
which are viewed and heard on the
television receiving set at a
residential or non-residential
place of a connection holder."
The expression "television exhibition", occurring in the above definition, is defined in clause (11) of Section 3 in the following words:
"‘television exhibition’ means an
exhibition with the aid of any type
of antenna with a cable nit-work
attached to it or cable television,
of film, or moving picture or
series of moving pictures, by means
of transmission of television
signals by wire where ‘subscribers’
television sets at residential or
non-residential place are linked by
metallic coaxial cable or ontic
fiber cable to central system
called the head end."
The expression "entertainment" is defined in Clause (4) of Section 3 thus:
" ‘Entertainment’ means a horse
race or cinematograph exhibition to
which persons are admitted on
payment or television exhibition
for which persons are required to
make payment by way of
contribution, or subscription, or
installation or subscription, or
installation or connection charges
or any other charges collected on
any manner whatsoever.
Explanation - For the purposed of
this clause and other provisions of
this Act, ‘Cinematograph
exhibition’ includes exhibition of
film on Television screen through
Video Cassette Recorder and through
cable television network."
Section 4-E is the charging section so far as cable television is concerned. Sub-section (1) thereof provides:
" (1) Notwithstanding anything
contained in sections 4 and 7,
there shall be levied and paid to
the State Government a tax
hereinafter referred to as the
entertainments tax calculated at
forty percent of the mount
collected by way of contribution or
subscription or installation or
connection charges or any other
charges collected in any manner
whatsoever for television
exhibition."
A number of writ petitions were filled in the Madras High Court challenging the validity of the Amendment Act. The grounds of challenge, which are reiterated before us, are the following: (1) The State Legislature has no legislative competence to
enact Amendment Act inasmuch as the subject matter of
the enactment falls exclusively within the province of
Parliament i.e., list 1 of the Seventh Schedule to the
Constitution. (2) The impugned Act is of no effect since the field is
already occupied by Cable Television Net-work
(Regulation) Ordinance 9 of 1994 issued by President of
India and the subsequent enactment made by Parliament
replacing the ordinance. (3) The Amendment Act is violative of the freedom of speach
and expression guaranteed to the petitioners by Article
19(1)(a) of the Constitution. (4) The Amendment Act is colourable piece of legislation.
The tax in truth and effect is a tax on education
inasmuch as the bulk of the programmes shown on cable
television are educative programmes. The entertainment
constitutes less than 10 per cent of the programmes
shown by them. (5) The Amendment Act is violative of Article 14 of the
Constitution since it does not levy the tax on
Doordarshan and other establishments and associations
(like star-hotels and multi-storey housing complexes)
providing entertainment through dish antennas. (6) The tax is not on public entertainment but on private
enjoyment i.e., on people having entertainment sitting
in their homes. (7) The rate of tax is prohibitive and is designed to kill
the cable television in the interest of cinema
theatres.
The defence of the State, in addition to disputing each of the above contentions, was that since the cable television is akin to cinema entertainment - though provided in a different manner, taking advantage of technological advancements - it is treated on par with cinema entertainment in the matter of levy of entertainment tax. If one is good and unexceptionable, so is the other, they say.
The High Court has dealt with each of these contentions advance by the writ petitioners separately and exhaustively and rejected each of them. Since we agree with the reasoning and conclusions arrived at by the High Court on all the issues, we think it unnecessary to deal with the above submissions except contentions No. 3, 4 and 7. Leave granted in all the special leave petitions.
The submissions of the learned counsel for the appellants (with respect to contentions 3, 4 and 7 referred to above) are to the following effect:- The appellants not only show films on their net-work using video-cassette/disc and recorder but also relay the programmes broadcast by Doordarshan, B.B.C, C.N.N.,Star T.V. and other similar T.V. net-works. Most of the programmes shown by them ar educative in nature. The entertainment part is hardly 10 per cent. In any event providing entertainment is also part of freedom of speech and expression. By levying tax at the rate of 40 per cent of the appellants‘ collections, the State is casting an unbearable burden upon the appellants. It is not possible for the appellants to survive in business of providing entertainment if they are made to pay tax at the said rate. The immediate and direct effect of taxation at the said rate is to deprive the appellants of their fundamental right of freedom of speech and expression. It is really being done to help the cinema operators whose business is said to have been adversely affected by the entry of cable television. Even if some films are shown by the appellants, that does not detract from the fact that to substantial degree, the programmes relayed by them are educative and informative in nature. Exhibition of films is providing entertainment. Providing entertainment is also a mode of exercise of their freedom of speech and expression - and that connot be taxed. As a matter of fact, they perform the same function as that of Doordarshan and yet they are being subjected to prohibitive rate of taxation while Doordarshan goes sest free, say the counsel.
For a proper appreciation of the appellants contentions, it is necessary to examine the nature of the activity carried on by the appellants. The appellants are carrying on the business of providing entertainment. Their main activity is to show films and other material using the video-cassetts or disc with the help of a V.C.R., disc player or a similiar apparatus. By means of cables, the T.V. sets in the homes of the subscribers are linked to their apparatus with a view to enable the subscribers to receive the programmes relayed by the appellants. For this service, each subscriber is charged a particular amount every month. This is their business. It may be true that providing entertainment is a form of exercise of freedom of speech and expression. It is quite likely that they also relay the programmes broadcast by Doordarshan and other T.V. net-works and some of them may be informative in nature or educational in character but the fact remains that their activity is a combination of two rights i.e., business and speech - sib-clauses (g) and (a) of clause (1) of Article 19. There is no reason why the business part of it cannot be taxed. If tax can be levied upon entertainment provided by cinemas, if taxes can be levied upon the Press, it is ununderstandable why the appellants‘ activity connot be taxed. Certainly, the appellants cannot claim that their activity is of more significance to society than that of the Press. Where the freedom of speech gets intertwined with business it undergoes a fundamental change and it‘s exercise has to be balanced against societal interests. In Secretary, Ministry of Information and Broadcasting, Government of India & Others v. Cricket Association of Bengal & Others [1995 (2) S.C.C. 161] one of us ( B.P. Jeevan Reddy, J.) stated the proposition, flowing from the decided cases, in the following words: "Providing entertainment is implied in freedom of speech and expression guaranteed by Article 19 (1)(a) of the Constitution subject to this rider that where speech and conduct are joined in a single course of action, the free speech values must be balanced against competing societal interests." (at page 297).
Even with respect to the freedom of Press, this Court said in Express Newspapers v. Union of India [1985 ( S.C.C 641]:
"Newspaper industry enjoys two of
the fundamental rights, namely the
freedom of speech and expression
guaranteed under Article 19(1)(a)
and the freedom to engage in any
profession, occupation, trade,
industry or business guaranteed
under Article 19(1)(g) of the
Constitution, the first because it
is concerned with the field of
expression and communication and
the second because communication
has become an occupation or
profession and because there is an
invasion of trade, business and
industry into that field where
freedom of expression is being
exercised. While there can be no
tax on the right to exercise
freedom of expression, tax is
leviable on newspaper industry. But
when such tax transgresses into the
field of freedom of expression and
stifles that freedom, it becomes
unconstitutional. As long as it is
within reasonable limits and does
not impede freedom of expression it
will not be contravening the
limitation of Article 19(2). The
delicate task of determining when
it crosses from the area of
profession, occupation, trade,
business of industry into the area
of freedom of expression and
interferes with that freedom is
entrusted to the courts."
In other words, only when taxes are levied not for raising revenues but for killing the appellants‘ business, can they legitimately complain.
The Court also quoted with approval, in the said decision, the following statement of law in Corpus Juris Secundum (Vol.16) says at page 1132:
"213(13) Taxing and Licensing. -
The constitutional guaranties of
freedom of speech and of the press
are subject to the proper exercise
of the government’s‘s power of
taxation, and reasonable license
fees may be imposed on trades or
occupation concerned with the
dissemination of literature or
ideas.
As a general rule, the
constitutional guaranties of
freedom of speech and of the press
are subject to the proper exercise
of the government‘s power of
taxation, so that the imposition of
uniform and non-discriminatory
taxes is not invalid as applied to
persons or organisations engaged in
the dissemination of ideas through
the publication or distribution of
writing. The guarantee of freedom
of the press does not forbid the
taxation of money or property
employed in the publishing
business, or the imposition of
reasonable occupations concerned
with the dissemination of
literature or ideas."
Dealing with the power of the State to levy taxes, the Court observed: "Taxation is the legal capacity of sovereignty or one of its governmental agents to exact or impose a charge upon person or their property for the support of the government and for the payment for any other public purposes which it may constitutionally carry out."
In this view of the matter, the only question is whether the level of taxation is not within reasonable limits and whether it‘s incidence is such as to disable the appellants from exercising their free speech right. Though the appellants have alleged that the tax imposed is too heavy and is intended to drive them out of their business with a view to help the cinema theatres, no material has been placed before us to substantiate the said averment. The respondent‘s case is that the cable television has taken the place of cinema. It has replaced the cinema to certain degree. The cable television is performing the very same function as is performed by the cinema. Cinema also provides entertainment. It also provides educational programmes. Indeed according to the learned counsel for the State, major chunk of the programmes shown on cable television are pure and simple entertainment and that they are mainly engaged in showing films which are broadcast either by T.V. net-works or relayed by the appellants with the help of a V.V.R. Counsel complained that some of the programmes shown by the appellants are having a deleterious effect upon the young and impressionable. With a view to promote their business counsel submitted, the appellants are showing programmes designed to cater to base instincts and vulgar tastes. It is accordingly submitted that the rate of entertainment tax levied upon cable television at the same level and on the same par as the entertainment tax levied upon cinema theatres is neither unreasonable nor excessive. It is submitted that the levy of entertainment tax at 40 per cent of the collections is no higher than the rate of tax levied upon the cinema. It is also brought to our notice that the rate of taxation has since been down 20 per cent. If the levy of entertainment tax at the rate of 40 per cent or thereabouts on the cinema theatres is not impermissible, it is submitted, the levy of entertainment tax at the same or lesser rate on cable television cannot also be held to ba bad.
We are inclined to agree with the submission of the learned counsel fro the State of Tamil Nadu. The reason given by the State for imposing tax at the rate of 40 per cent is duly explained by the State and we do not see any flaw in it. Since the appellants also carry on business it is their duty to share the burden of the State by paying taxes like any other business. The entertainment tax is an indirect tax. It is meant to be and is passed on to the consumer i.e., subscriber. In the case of indirect taxes, levy at more than 100 per cent of the value of the goods is not unknown e.g., in the case of customs and central excise duties. As a matter of fact, even in the case of direct taxes, levy at a rate higher than 50% is regular feature. Of course, these are instances not involving free speech right and stand upon a different plane.
We are also unable to see any substance in the grievance that taxes are only levied upon them and not upon the Doordarshan. We do not think that there can be any comparison between Doordarshan and the appellants. Doordarshan is a government organisation which is supposed to act in furtherance of public interest. It is not a business carried on by the Government. The revenues collected by it by permitting advertisements are only intended to defray part of the huge expenditure the Government incurs on establishing and maintaining the broadcasting system throughout the country. By no stretch of imagination can the appellants claim any similarity with the Doordarshan.
For the above reasons the appeals and writ petitions fail and are dismissed. There shall be no order to costs.