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This decision came in response to a petition by Direct-to-Home (DTH) operator Dish TV India. The order was passed on February 20.
Dish TV filed a revision petition challenging the Karnataka Appellate Tribunal’s (KAT) order dated July 29, 2022, which upheld the inclusion of service tax while levying entertainment tax on the DTH operator—a move it argued was unconstitutional.
The high court set aside the KAT’s ruling and remanded the case for reconsideration, directing the tribunal to issue a fresh decision within three months after hearing all stakeholders.
Dish TV’s counsel, Vivek Sarin, argued that Section 4G, read with Section 3 of the Act, clearly indicates that the term “amounts received or receivable” refers only to the consideration paid by subscribers to the DTH operator for distributing satellite TV signals. He contended that service tax should not be included in this calculation for entertainment tax purposes.
He further pointed out that entertainment tax falls under Entry 78 of the State List in Schedule 7 of the Constitution, while service tax falls under Entry 97 of the Central List.Thus, he argued that levying entertainment tax on the service tax would be constitutionally impermissible, requiring a restrictive interpretation of Section 4G to exclude service tax. The Section 4G levies a 10% tax on the subscription fee collected by DTH operators from consumers.Additionally, Sarin highlighted that the Act does not define “invoice.” Therefore, bills or statements of accounts, which itemise details such as the basic value of DTH broadcasting services, service tax, and licence fees, should have been considered as invoices for assessment.
Since this was not done, the KAT orders suffered from an error, he asserted.
Karnataka Additional Advocate General Aditya Vikram Bhat argued that Section 4G must be interpreted literally. He stated that the distinction between Section 3 and Section 4G justifies the inclusion of service tax in the taxable amount. He also contended that taxing a tax is not unconstitutional, citing examples of cess levied on income tax.
“In the above circumstances, this petition is allowed; the impugned order of the tribunal is set at naught; matter is remitted to the domain of the tribunal for consideration afresh in the light of the observations hereinabove made and in accordance with law. This remand would be decided within an outer limit of three months and after giving an opportunity of hearing to the stakeholders,” ruled the bench comprising Justices Krishna Dixit and G. Basavaraja.
