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PETITIONER: A. SURESH, ETC.ETC.

       Vs.

RESPONDENT: STATE OF TAMIL NADU & ANOTHER, ETC.ETC.

DATE OF JUDGMENT:       21/11/1996

BENCH: B.P. JEEVAN REDDY, K.S. PARIPOORNAN

ACT:

HEADNOTE:

JUDGMENT:                       J U D G M E N T      B.P. JEEVAN REDDY,J.      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

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    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.

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    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

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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

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    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

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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.