SC says broadcasters liable to pay both service, entertainment tax
This story was originally published at 18:14 IST on 22 May 2025
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NEW DELHI – The Supreme Court on Thursday held that broadcasters are liable to pay both service tax and entertainment tax on the activity of broadcasting and luxuries, respectively. State legislatures as well as the Parliament have the legislative competence to levy entertainment tax as well as service tax respectively on the activity carried out by broadcasters, the court said.
A bench of Justices B.V. Nagarathna and N.K. Singh said that no entertainment could be presented to viewers unless the broadcaster transmits the signals for instantaneous presentation of any performance, film or any programme on television. Thus, there were two aspects in this activity -- first the act of transmission of signals of the content to subscribers, the court said. The second aspect concerns not only the content of the signals, but the effect of the decryption of the signals by set-top boxes and the viewing cards inside these boxes provided by the assessees to subscribers, which is providing and receiving of entertainment through television, the court added.
Without the apparatus provided by broadcasters to decrypt signals, a subscriber would not be able to watch the content transmitted, the content being for the purpose of entertainment, the apex court said. The television entertainment provided by broadcasters through their modus operandi, which was by broadcasting, was a luxury within the meaning of Entry 62 of List II of the Seventh Schedule to the Constitution, the court said.
It said that the judgment passed by the Kerala High Court in 2012, which declared the levy and collection of luxury tax on cable television operators with connections of 7,500 or more as unconstitutional for being discriminatory was "incorrect". The Kerala High Court could have struck down the exemption granted and directed all cable TV operators to pay the tax instead of holding that there was discrimination and violation of Article 14 of the Constitution against the broadcasters, the apex court said.
The apex court was hearing a batch of cases in which entertainment tax was charged on broadcasters by various states. The broadcasters said that they were not liable to pay entertainment tax (or luxury tax) under the respective provisions of the state enactments. The broadcasters said they were engaged in broadcasting of signals through television channels to subscribers of those channels and, hence, were possibly liable to pay service tax to the central government under Entry 97 – List I of the Seventh Schedule of the Constitution. End
Reported by Surya Tripathi
Edited by Avishek Dutta
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