A Bench comprising Justice S N Variava, Justice AR Lakshmanan and Justice S H Kapadia gave this ruling while upholding the validity of a provision of West Bengal Entertainment-cum-Amusement Tax Act providing for such levy on MSOs and not the cable operators.
Justice Lakshmanan, said the centrally enacted Cable TV Network (Regulation) Act, 1995 "does not fetter the legislative power or competence of the state to levy tax on luxuries including taxes on entertainments, amusements, betting and gambling....".
The MSOs had challenged the levy of entertainment tax on them before the High Calcutta Court, which had held that the levy should be on the cable operators who give the link to households for viewing of different TV programmes.
Setting aside the High Court order, the Bench said it was the MSO, engaged in the business of providing entertainment, including showing films, serials, cricket matches and dramatic performances, to the subscribers and the tax was imposed for providing such entertainment to viewers.
Justifying the exclusion of the operators providing the link-up to households, Justice Lakshmanan said "it is true that the wire to get in touch with the TV set of the consumer has been provided by the sub-cable operator, but that fact alone, by itself, cannot make the sub-cable operator, the only exhibitor or the giver of the entertainment."
