News: The Supreme Court has held in a judgment that broadcasting through television for the purpose of entertainment of subscribers can be separately taxed by the Centre and the State concerned. Dual Taxation on Broadcasting Services
About Dual Taxation on Broadcasting Services
- In a recent Judgment, the Supreme Court of India has clarified that 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.
- As broadcasting service being a taxable service under the provisions of the Finance Act, 1994.
- The State Legislatures having the legislative competence to levy entertainment tax on those who provide entertainment to the recipients [television viewers].
- No overlapping taxation
- Seventh Schedule: 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).
- ‘Aspect Theory’ in place
- Central to the Court’s decision was the “aspect theory”, which permits different levels of government to tax separate components of the same transaction.
- Background
- Kerala Vs Asianet Satellite Communications Case: The top court dismissed appeals filed by major DTH providers, including Tata Sky (now Tata Play), Dish TV, and Sun Direct.
- These companies had challenged various state entertainment tax laws, arguing that the tax was unconstitutional since the Centre already levied a service tax on broadcasting.
