M/S TATA SKY LTD.versusSTATE OF M.P. AND OTHERS

                     [2013) 2 S.C.R. 849

                    M/S TATA SKY LTD.                                  A
                               v.
               STATE OF M.P. AND OTHERS
            (Civil Appeal No. 3882 of 2013 etc.)
                       APRIL 16, 2013
                                                                       B
          [AFTAB ALAM AND R.M. LODHA, JJ.]

   MADHYA PRADESH ENTERTAINMENT DUTY AND
ADVERTISEMENTS TAX ACT, 1936:
                                                                       c
     ss.2(a};2(b),2(d)(iv), 3 and 4 - Levy of entertainment duty
on Direct to Home (DTH) entertainment service for the period
5-5-2008 to 1-4-2011 - Held: DTH is not covered by
provisions of s.3 read with ss.2(a),. 2(b) and 2(d) - Further,
neither the provision of s.4(1) nor any of modes provided ul D
s.4(2) can be made applicable for collection of duty on DTH
- Therefore, 1936 Act cannot be extended to cover DTH
operations being carried out by appellants -Indian Telegraph
Act, 1885 - s. 4 - Indian· Telegraphy Act, 1933 - Madhya~
Pradesh Entertainment Duty and Advertisements Tax Rules E
 1942.

     Administrative Law

      Delegated legislation :- Notification - Held: Notification
issued in exercise of powers under the Act cannot amend the            F
Act - In the context of instant case, since no duty could be
levied on DTH operation under 1936 Act prior to issuance of
notification dated 5-5-2008, duty can not be levied under the
said Act after issuance of notification - Madhya Pradesh
Entertainment Duty and Advertisements Tax Act, 1936.                   G
                                                                   I

    On May 5, 2008, the State Government of Madhya
Pradesh, In exercise of powers conferred u/s.3(1) of the
Madhya Pradesh Entertainment Duty and Advertisements
                              849                                      H
    850      SUPREME COURT REPORTS           [2013] 2 S.C.R.

A Tax Act, 1936, issued a gazette notification fixing 20%
  entertainment duty in respect of every payment made for
  admission to an entertainment other than cinemas,
  videos cassette recorders and cable service.
  Consequently, a demand notice dated June 10, 2009 was
B issued by the Excise Commissioner to the appellant
  raising a demand of Entertainment Duty on Direct to
  Home Entertainment Service. Subsequently, a number of
  notices were issued. The appellant filed a writ petition,
  challenging the demand and collection of entertainment
c duty u/ s.3(1) of the 1936 Act. It was the case of the
  appellant that on 24-3-2006, it got a licence .from .the
  Government of India u/s 4 of the Indian Telegraph Act,
  1885 and Indian Telegraphy Act, 1933 to establish,
  maintain and operate DTH platform for a period of 10
  years on the terms and conditions stipulated in the          ,
0
  licence agreement. The writ petition was dismissed by
  the High Court.
      In the instant appeals, the questions for
  consideration before the Court were "whether the
E provisions of the 1936 Act have the necessary expanse
  and flexibility to include DTH as an "entertainment"
  chargeable to tax", and "whether the notification dated
  May 5, 2008 in any manner extended the scope of
  chargeability under the 1936 Act."
F
          Allowing the appeals, the Court
       HELD: 1.1. On a careful examination of the Madhya
  Pradesh Entertainment Duty And Advertisements Tax
  Act, 1936 as a whole, and more particularly, on a conjoint
G reading of clauses (a) ["Admission to an entertainment"],
  (b) ["Entertainment"] and (d) ["Payment of admission"] of
  s.2 along with s.3 creating the charge and s.4 providing
  the collection machinery, it becomes clear that the
  provisions of 1936 Act are applicable only to place-
H
           TATA SKY LTD. v. STATE OF M.P.                  851


  related entertainment and cover an entertainment which A
  takes place in a specified physical location to which
  persons are admitted on payment of some charge as
  defined under clause (d) of s. 2. The legislative history
  and the amendments introduced in the 1936 Act also
  show that it was how the scheme of the 1936 Act was 8
  viewed by the State itself. The provisions of the 1936 Act
  were inadequate to bring shows by video cassette
  recorder or video cassette and player cable T.V.
  operations within the taxing net and, therefore, ss. 3-A
  and s. 3-B were inserted respectively with effect from May C
  1, 1999 and April 1, 2001. In this regard, it is also very
  important to note that both in the case of shows by video
  cassette recorder or video cassette and player, cable T.V.
  operations, the collection machinery is in-built and
, provided within the respective provisions of s.3-A and s.
  3-B .. and in those two cases the collection of duty does D
  not take place u/s. 4 of the 1936 Act. [para 35] [866-F-H;
  867-A-C]
      1.2. The reliance placed on behalf of the State on
 Sub-clause(iv) of clause (d) of s.2 is untenable for more        E-"
 reasons than one: First, s. 2(d)(iv) is only the measure of
 tax and it does not create the charge which is created by
 s. 3. The question of going to the measure of the tax
 would arise only if it is found that the charge of tax is
 attracted. Under s.3 read with s. 2(d) and s. 2(a), the          F
 charge or levy of tax is attracted only if an entertainment
 takes place in a specified place or locations and persons
 are admitted to the place on payment of a charge to the
 proprietor providing the entertainment. In the instant
 case, as DTH operation is not a place-related                    G
 entertainment, it is not covered by the charging s. 3 read
 with ss. 2(a) and 2(b) of the 1936 Act. Consequently, the
 question of going to s. 2(d)(iv) does not arise. Moreover,
 even ifs. 2(d)(lv) is to be read as an ·extension of s. 3 and,
 thus, as a part .of the charge, it does not make any             H
    --852   SUPREME COURT REPORTS               [2013] 2 S.C.R.


A - difference at all because s. 2(d)(iv) refers to
    "entertainment" which relates back to s. 2(b) and finally
    to s. 2(a). Thus, DTH is not covered by the provisions of
    s. 3 read with ss. 2(a), 2(b) and 2(d) of the 1936 Act. [para
    36-38] [867-C-E-H; 868-A-B]
B       1.3. The issue gets further settled on reference being
   made to the mechanism of collection of the charge as
   provided u/s. 4 of the 1936 Act. Section 4(1) mandates that
   no person shall be admitted to any entertainment other
   than entertainment by V.C.R. except with a ticket stamped
C with an impressed, embossed, engraved or adhesive
  stamp issued by the State Government of nominal value
  equal to the duty payable u/s 3; sub-s. (2) of s. 4 provides
  for different modes specified thereunder for payment of
  the amount of duty due on the entertainment. Neither the
D ,provision of s.4(1) nor any of the modes provided u/s. 4(2)
   can be made applicable for collection of duty on DTH
   operation. Further, a perusal of the Madhya Pradesh
   Entertainment Duty and Advertisements Tax Rules 1942
   makes it absolutely clear that the collection mechanism
E under the 1936 Act is based on revenue stamps stuck to -
   the tickets issued by the proprietor for entry to the
   specified place where entertainment Is held~ The
   machinery for collection of duty provided under the 1936
   Act has no application to DTH. It is well settled that if the
F collection machinery provided under the Act Is such that
   It cannot be applied to an event, It follows that the event
   Is beyond the charge created by the taxing statute. [para
  38-39) [868-B·G]
      Commissioner of Income Tax v. B. C. Srinivasa Setty
G 1981 (2) SCR 938 = (1981) 2 SCC 460, Commissioner of
  Income- Tax Emakulam, Kera/a v. Official Liquidator, Palai
  Central Bank Ltd. 1985 (1) SCR 971 = (1985) 1 SCC 45i
  PNB Finance Limited v. Commissioner of Income Tax I, New
  Delhi 2008 (15) SCR 556    =
                             (2008) 13 SCC 94 - relied on.
H
          TATA SKY LTD. v. STATE OF M.P.                  853

    1.5. Therefore, the 1936 Act cannot be extended to           A
cover DTH operations being carried out by the appellants.
[para 40] [869-A]

     2. As regards, the notification dated 5-5-2008, it is
elementary that a notification issued in exercise of 8
powers under the Act cannot amend the Act. Moreover,
the notification merely prescribes the rate of entertainment
duty at 20% in respect of every payment for admission
to an entertainment other than cinema, video cassette
recorder and cable service. The notification cannot C
enlarge either the charging section or amend the
provision of collection u/s. 4 of the Act read with the 1942
Rules. It is, therefore, clear that the notification in no way
improves the case of the State. If no duty could be levied
on DTH operation under the 1936 Act prior to the
issuance of the notification dated May 5, 2008, duty can D
not be levied under the said Act after the issuance of the
notification. [para 41] [869-B·D]
                      Case Law Reference
                                                                 E
    1981 (2) SCR 938          relied on             para 39
     1985 (1) SCR 971         relied on            para 39
    2008 (15) SCR 556         relied on            para 39
    CIVIL APPELLATE JURISDICTION : Civil Appeal No.              F
3882 of 2013.
     From the Judgment & Order dated 20.08.201 Oof the High
Court of Madhya Pradesh at Jabalpur in Writ Petition No. 10148
of 2009.                                                         G
                             WITH
C.A. Nos. 3888, 3889, 3890, 3891 & 3892 of 2013.
    Vivek Tankha, ASG, S. Ganesh, Gopal Subramanlum,
                                                                 H
    854      SUPREME COURT REPORTS               [2013) 2 S.C.R.


A Dushyant Dave, D.K. Singh, Pradeep Shukla, Sarvesh Singh
  Baghel, Abhijit Sengupta, Aniruddha P. Mayee, Charudatta
  Mahindrakar, G. Umapathy (for Rakesh K. Sharma), Pankaj
  Bhagat, Dr. Sushil Balwada, Vivek Sarin, Surbhi Mehta, Vibha
  Datta Makhija, Aniruddha Deshmukh, Yashvardhan Roy,
B Rishabh Sancheti, Varun Chopra, Sumeer Sodhi, B.S. Banthia
  for the appearing parties.

          The Judgment of the Court was delivered by

          AFTAB ALAM; J. 1. Leave granted in all the special
C leave petitions.

        2. All these appeals relate to the demand of entertainment
  tax raised by the Government of Madhya Pradesh under the.
  Madhya Pradesh Entertainment Duty and Advertisements Tax
D Act, 1936 {hereinafter referred to as "the 1936 Act") on DTH
  (direct to home) broadcast provided by the appellants to their
  respective customers on payment of subscriptions. The,
  appellants in all the appeals challenged the demand by the
  State Government by filing writ petitions before the Madhya
E Pradesh High Court. The High Court dismissed the writ
  petitions, upholding the demand by the State Government by
  the judgment and order dated August 20, 2010. That judgment
  was rendered in a batch of three writ petitions, taking Writ
  Petition No. 10148 of 2009, filed on behalf of Tata Sky Limited
F (appellant in the appeal arising from SLP (C) No.2752 of 2011)
  as the lead case. The rest of the writ petitions were dismissed
  following the judgment dated August 20, 2010.

      3. For the sake of convenience, we too have taken the facts
  from civil appeal arising out of special leave petition (civil)
G No.27595 of 201 o.

      4. The appellant operates under a licence from the
  Government of India under section 4 of the Indian Telegraph Act,
  1885 and the Indian Telegraphy Act, 1933. It is, however, the
H case of the appellant that DTH broadcast is a "service" and it
 TATA SKY LTD. v. STATE OF M.P. [AFTAB ALAM, J.] 855

 is chargeable to service tax. As a matter of fact, one of the         A
 several grounds on which the demand of entertainment tax by
 the State Government on DTH broadcasting is challenged by
 the appellant is that DTH broadcasting is one of the notified
 services under the Finance Act, 1994 and is chargeable to
 service tax by the Central Government. In that regard, it is stated   B
 on behalf of the appellant. that in 1991 the Government of India
 appointed a Tax Reform Committee under the Chairmanship
 of Dr. Chelliah. The recommendations made by the Tax Reform
 Committee were accepted and the service tax was introduced
 in the budget for the year 1994-1995 through the Finance Act,         c
 1994 under the residuary entry 97 of List 1 of the 7th Schedule
 of the Constitution of India. Under the Act, service tax is levied
 on the notified services provided or to be provided.
           '
       5. For the purpose of levy of service tax on broadcasting,
                                                                           1
  the expression "broadcasting" has been defined specifically          D
  under section 65(15) of the Finance Act. The broadcasting
' services were brought within the purview of the service tax under
  section 65(105)(zk) of the Finance Act, 1994 as amended with
  effect from July 16, 2011. Later on, DTH service was brought
  within the purview of the service tax with effect from June 16,      E
  2006.

      6. Under section 67 of the Finance Act, the value of taxable
 service is the gross amount charged by the service provider
 for provision of service.                                             F

       7. On March 24, 2006, the appellant got a licence from the
  Government of India under section 4 of the Indian Telegraph Act,
  1885 and the Indian Telegraphy Act, 1933 to establish, maintain
 and operate DTH platform for a period of 10 years on the terms
 and conditions stipulated in the licence agreement. The               G
 appellant paid Rs.10 crores as licence fee and furnished a bank
 guarantee for the sum of Rs.40 crores that is to remain valid
 for the entire duration of the licence. In terms of the licence the
 appellant is further required to pay an annual fee equivalent to
 10 percent of its gross revenue as reflected in the audited           H,
    I
    856      SUPREME COURT REPORTS                 [2013] 2 S.C.R.


A   accounts of the company for every financial year within one
    month from the end of the financial year. The appellant is also
    required to pay, in addition to licence fee, royalty for spectrum
    use as prescribed by the Wireless Planning and Coordination
    Authority (WPC) under the Department of Telecommunications.
B
         8. The licence granted by the Central Government is for
    the whole of India and the appellant is not obliged to take any
    permission or any other licence from any other authority for
    making DTH broadcast.

C      9. In August 2006, the appellant launched its operations
  all over India, including the State of Madhya Pradesh. The
  appellant is having a single broadcasting centre at Chhattarpur,
  Delhi. This centre downlinks the signals from satellite and then
  uplinks those signals to the designated transponders for their
D transmission in Ku band. These signals are received by the
  dish antenna installed at the subscribers' premises. The TV
  signals transmitted from the broadcasting centre at Chhattarpur,
  Delhi, are in encrypted format and those are decrypted/
  decoded by the set top boxes and the viewing card inside the
E set top box supplied by the appellant to its subscribers. The
  subscribers are required to pay certain charges for viewing
  DTH broadcasts by the appellant on their TV sets.

         10. The appellant does not use any infrastructure from the
    State for its DTH broadcasts.
F
       11. On May 5, 2008, the State Government in exercise of
  powers conferred under section 3( 1) of the 1936 Act, issued a
  gazette notification fixing 20 percent entertainment duty in
  respect of every payment made for admission to an
G entertainment other than cinemas, videos cassette recorders
  and cable service. As the aforesaid notification forms the basis
  of the demand rai$ed by the State Government it is useful to
  reproduce it here in full:-

          "No. (63) B-5-9-2006-2-V- In exercise of the powers
H
TATA SKY LTD. v. STATE OF M.P. [AFTAB ALAM, J.] 857


    conferred by sub section (1) of Section 3 of the Madhya        A
    Pradesh Entertainment Duty and Advertisements Tax Act
    1936 (No 30 of 1936) the State Government hereby
    prescribed the rate of Entertainment Duty at 20 percent in
    respect of every payment for admission to an
    Entertainment other than Cinema, Video Cassette                B
    Recorder and Cable service.

    This notification shall come into force with effect from the
    date of publication.

    By order and in the name of the Governor of Madhya             .C
    Pradesh."

    12. Following the notification dated May 5, 2008, a
demand notice dated June 10, 2009 was issued by the Excise
Commissioner Madhya Pradesh, Gwalior, to the appellant. The        D
contents of the notice, insofar as relevant for the present, are
as under:

    "S.No. 7-Ent./2009-10/173         Gwalior Date 10.06.2009
    To,                                                            E
    Tata Sky,



                                                                   F
    Sub: Levy of Entertainment Duty on Direct to Home
    Entertainment Service

    You are providing entertainment in the State of Madhya
    Pradesh by Direct to Home (DTH) to registered                  G
    consumers on monthly payment basis. Whereas:

     (1)   Under section 3(1) of the Madhya Pradesh
           Entertainment Duty and advertisements Tax Act,
           1936 except cinema hall, videos and cable in all        H
     858     SUPREME COURT REPORTS                   [2013] 2 S.C.R.


A                entertainments including entertainment provided
                 through registered consumers through DTH on
                 monthly subscription basis is included. In the
                 aforesaid payment by the . consumers,
                 entertainment duty @ 20% is liable to be paid in
 B               advance in the treasury of the Government.

             "

       13. The appellant was directed to provide the information
C as asked for in the notice failing which, the notice declared, an
  ex parte assessment would be made of the entertainment tax
  payable by it.

          14. The appellant replied to the notice by its letter of July
    22, 2009 stating that under the provisions of the 1936 Act, there
· D is no specific entry with respect to DTH broadcasting and in
    absence of such an entry, the provisions of the Act are not
    applicable to DTH broadcasting and, therefore, the notice was
    illegal and without jurisdiction. The appellant also referred to a '
    decision of the Uttarakhand High Court in a case relating to a
  E similar demand raised by the Uttarakhan? Government and the
    order of this Court in the special leave petition filed by the .
    Uttrakhand Government against the judgment of the High Court.

       15. On August 1, 2009, the State of Madhya Pradesh
F passed the Madhya Pradesh Entertainment Duty and
  Advertisements Tax (Amendment) Act, 2009. By the
  Amendment Act, the failure to produce accounts and
  documents as required by the Excise Commissioner or any
  officer authorized by the State Government was made a penal
  offence. The Amendment Act, however, did not introduce any
G provision in the Parent Act with respect to levy of entertainment
  duty on DTH broadcasting.

        16. On August 18, 2009, the Excise Commissioner
     Madhya Pradesh wrote to the Deputy Commissioner Excise,
H
 TATA SKY LTD. v. STATE OF M.P. [AFTAB ALAM, J.] 859


 Flying Squad, Gwalior Division, Gwalior, telling him that            A
 entertainment duty at the rate of 20 percent was payable on
 subscription amounts received by the DTH entertainment
 service provider and directing to ensure the realization of
 entertainment duty from DTH entertainment service providers.
 The direction of the Excise Commissioner was followed by a           B
 number of notices given to the appellant and on October 1,
 2009, the Vice President (Operation) and Area Operation
 (Manager) of the appellant company were arrested and later
 released on bail for non-compliance with the provisions of
 section 5(E) of the 1936 Act.                                        c
       17. On October 3, 2009, the appellant filed a writ petition,
  being Writ Petition No.10148 of 2009, challenging the demand
  and collection of entertainment duty at the rate of 20 percent
  under section 3(1) of the 1936 Act. The writ petition was
  eventually dismissed by the High Court by its judgment and          D
  order dated August 20, 2010 and the matter is now brought to
• this Court.
       18. Before proceeding further, it needs to be stated that
  the controversy in all the appeals relates to the demand and E
, realization of entertainment tax under the 1936 Act, which
  means for the period between the commencement of operation
  by the appellant in the year 2006 and March 31, 2011, i.e., the
  day prior to the coming into force of the new Act, called the
  Madhya Pradesh Vilasita, Manoranjan, Amod Evam · F
  Vigyapan Kar Adiniyam, 2011. Further, in course of hearing
  of the appeals Mr. Dave learned counsel appearing for the
  State of Madhya Pradesh submitted that he proposed to defend
  the demand and realization of the impugned tax only for the
  period between May 5, 2008, the date of the notification issued G
  under section 3(1) of the 1936 Act and the coming into force
 of the new Act on April 1, 2011. It is, therefore, made clear that
 this judgment deals with the question of levy of entertainment
  tax on DTH broadcast under the 1936 Act for the period
  between the issuance of the notification (May 5, 2008) and the H
    860      SUPREME COURT REPORTS                [2013) 2 S.C.R.


A   coming into force of the new Act (April 1, 2011 }. The judgment
    is not concerned with the legal position arising after the new
    Act came into force.

        19. We now propose to examine whether on the basis of
  the provisions of the 1936 Act, it is permissible or possible for
8
  the State of Madhya Pradesh to levy on what in the lexicon of
  broadcasting is called direct-to-home or in short DTH. Here it
  needs to be clearly understood that the issue in this case is
  not whether direct to home broadcast is "entertainment" in the
  broader sense. Entry 62 of List 2 of Schedule 7 to the
C constitution may indeed be wide enough to include DTH as yet .
  another form of entertainment but that is not the issue rising for
  consideration. The issue under consideration is whether the
  provisions of the 1936 Act have the necessary expanse and
  flexibility to include DTH as an "entertainment" chargeable to
D tax and whether the notification dated May 5, 2008 in any
  manner extended the scope of chargeability under the 1936
  Act.

          20. The preamble to the 1936 Act reads as under:-
E
          "An Act to impose a duty in respect of admission to
          entertainments and a tax in respect of certain forms of
          advertisernent exhibited at such entertainments in Madhya
          Pradesh."

F       21. Section 2 of the 1936 Act contains the definition
    clauses and clause (a) defines the expression "admission to
    an entertainment":

          "2(a) "admission to an entertainment" includes admission
          to any place in which the entertainment is held;"
G
        22. Clause (aaaa) was inserted in the Act with effect
    from May 1, 1999 to define 'Cable Operator", "Cable Service",
    "Cable Television Network" and "Subscriber".

H         "2(aaaa} "Cable Operator", "Cable Service", "Cable
TATA SKY LTD. v. STATE OF M.P. [AFTAB ALAM, J.] 861


   Television Network" and "Subscriber'' shall have the same A
   meaning as assigned to them in the Cable Television
   Network (Regulation) Act, 1995 (No.7 of 1995)"

    23. Clause (b) defines "entertainment":

   "2(b) "Entertainment" includes any exhibition, performance,     B
   amusement, game or sport to which persons are admitted
   for payment;"

    24. Clause (c) defines "entertainment duty":

   "2(c) "entertainments duty" means a duty levied under
                                                                   c
   section 3;"

    25. Clause (d) defines the expression "Payment for
admission" as under:
                                                                   D
   "2(d) "Payment for admission" includes -

    (i) any payment for seats or other accommodation in any
    form in a place of entertainment;

    (ii) any payment for a programme or synopsis of an             E
    entertainment;

    (iiij any payment made for the loan or use of any instrument
   or contrivance which enables a person to get a normal or
   better view or hearing or enjoyment of the entertainment,       F
   which without the aid of such instrument or contrivance such
   person would not get;

   (iv) any payment made by a person by way of
   contribution or subscription or installation and
   connection charges or any other charges, by G
   whatever name called, for providing access to any
   entertainment, whether for a specified period or on a
   continuous basis;
   (v) any payment, by whateyer name called for any purpose H
    862       SUPREME COURT REPORTS                  [2013) 2 S.C.R.


A         whatever, connected with an entertainment, which a person
          is, required to make in any form as a condition of
          attending, or continuing to attend the entertainment, either
          in addition to the payment, if any, for admission to the
          entertainment or without any such payment for admission;
B
          (vi) any payment, made by a person, who having been
          admitted to one part of a place of entertainment is
          subsequently admitted to another part thereof, for
          admission to which a payment involving tax or more tax is
          required;
c
          Explanation - I. - Any subscription raised or donation
          collected in connection with an entertainment in any form
          shall be deemed to be payment for admission;

D         [Explanation - II. - Where entertainment is provided as part
          of any service by any person, whether forming an integral
          part of such service or otherwise the charges received by
          such person for providing the service shall be deemed to
          include charges for providing entertainment or access to
          entertainment also];
E
          26. Clause (f) defines "proprietor":

          "2(f) "proprietor" in relation to any entertainment, includes
          any person responsible for or for the time being in-charge
F         of the management thereof;"

        27. "Video Cassette Recorder~ and "Video Cassette
    Player" are defined in clauses (g) and (h) of section 2.
                                      '
      28. The charging provision is contained in Section 3 of the
G 1936 Act which, insofar as relevant for the present, is extracted
  hereunder:

          "Entertainment Duty payable by proprietor of an
          entertainment - (1) Every proprietor of an entertainment
H         other than proprietor of an entertainment by Video
TATA SKY LTD. v. STATE OF M.P. [AFTAB ALAM, J.] 863


   Cassette Recorder (hereinafter referred to as V.C.R.) or         A
   Video Cassette Player (hereinafter referred to as V.C.P.)
   or a Cable Operator, shall in respect of every payment for
   admission to the entertainment pay to the State
   Government a duty at the rate as prescribed by the State
   Government not exceeding seventy five per centum thereof:        B

   Provided ...

   Provided further ...

   Provided also ....                                               c
   Explanation ...

   (2) xxx

   (3) Where the payment for admi~sion to an entertainment          0
   is made by means of a lump sum paid as a subscription
   or contribution to any person, or for a season ticket or for
   the right of admission to a series of entertainments or to
   any entertainment during a certain period of time, or for any
   privilege, right, facility or thing combined with the right of   E
   admission without further payment or at a reduced charge,
   the entertainments duty shall be paid on the amount of such
   lump sum:

   Provided that where the State Government is of opinion
   that the payment of a lump sum represents payment for            F
   other privileges, rights, or purposes besides the admission
   to an entertainment, or covers admission to the
   entertainment during any period for which the duty has not
   been in operation, the duty shall be charged on such an
   amount as appears to the State Government to represent           G
   the right of admission to entertainment in respect of which
   the entertainment duty is payable."

   (4) xxx
                                                                    H
    864       SUPREME COURT REPORTS                 [2013] 2 S.C.R.


A         (i) xxx

          (ii) xxx"

       29. Section 3-A deals with entertainment duty payable by
  proprietor of V.C.R. or V.C.P. and this provision was inserted
B in the Act with effect from May 1, 1999.

       30. Section 3-B was inserted in the 1936 Act with effect
  from April 1, 2001. Sub-section (1) of section 3-8 deals with
  entertainment duty payable by cable operator and it makes a
c cable operator, providing access to entertainments through
  cable service to subscribers of such service, not being owner
  or occupants of rooms of hotel or lodging house, liab1e to pay
  duty at the rate of twenty rupees per month per subscriber in
  urban and cantonment areas. Sub-section (2) of section 3-B
0 makes every proprietor of hotel or lodging house, providing
  access to entertainments in the rooms of a hotel or lodging
  house through the cable service of his own or obtained through
  any cable operator liable to pay a consolidated amount of duty
  per month determined on the basis of number of rooms.

E         31. Section 3-C deals with levy of Advertisement Tax.

         32. The machinery for effectuating the charge created by
    section 3 is provided under section 4 of the 1936 Act which,
    insofar as relevant for the present, is quoted below:
F
          "4. Method of levy- (1) Save as otherwise provided by this
          Act, no person shall be admitted to any entertainment other
          than entertainment by V.C.R., except with a ticket
          stamped with an impressed, embossed, engraved or
          adhesive stamp, (not before used) Issued by the
G         State Government, of nominal value equal to the duty
          payable under section 3.                        ·

          (1A) Omitted.

          (2) The State Government may, on' the application of a
H
TATA SKY LTD. v. STATE OF M.P. [AFTAB ALAM, J.] 865


    proprietor of any entertainment other than entertainment by   A
    V.C.R. in respect of which entertainments duty is payable
    under section 3, allow such proprietor to pay by one of the
    modes specified hereunder as it may think fit, in such
    manner and subject to such conditions as may be
    prescribed, the amount of the duty due, namely:-              B

     (a)   by a consolidated payment of such percentage as
           determined by the State Government of the gross
           sum received by the proprietor on account of
           payments for admission to the entertainment and
           on account of the duty to be fixed by the State
                                                                  c
           Government;

     (b)   in accordance with returns of the payments for
           admission to the entertainment and on account of
           the duty;                                        D
     (c) . in accordance with the results recorded by any
           mechanical contrivance which automatically
           registers the number of persons admitted;

     (d)   xxx                                                    E

     (e)   xxx
     (f)   xxx
     (3)   xxx                                                    F

     (4)   xxX.'
    33. Section 4-B imposes restriction on admission without
payment or at concession rates and provides as under:
                                                                  G
          "4-B Restriction on admission without payment or at
    concession rates. - No proprietor shall admit any person
    to an entertainment other than entertainment by V.C.R.
    without payment for admission thereto or at concession
                                                                  H
    866           SUPREME COURT REPORTS                 [2013] 2 S.C.R.


A         rates unless the entertainments duty payable in respect
          thereof or on the full value of the ticket for the class to which
          such person is admitted has been paid.
                                                           .   .
               Provided that nothing in this section shall apply in
          respect of admission at concessional rates -
B
           (i)     to such class of persons; and

           (ii)     to-such entertainment or class of entertainments;

          As the State Government may, by notification, specify."
c
        34. Section 4-C gives the power to impose penalty and
  section 5 deals with penalties. 5-A deals with composition of
  offences and section 5-8 deals with suspension or revocation
  of licence for entertainment. Section 8 provides the rule making
D powers. Section 9 gives the power of entry and inspection and
  section 9-A makes production and inspection of accounts and
  documents obligatory. Section 10 deals with recovery of arrears
  of entertainment duty. Section 10 provides protection to
  persons acting in good faith and bars any suit or prosecution
E or other proceedings against officers and servant of the
  Government. Section 11 deals with delegation of powers and
  section 12 bars imposition of entertainment duty by any local
  authority.
       35. On a careful examination of the 1936 Act as a whole,
F and more particularly on a conjoint reading of clauses (a)
  ["Admission to an entertainment"], (b) ["Entertainment"] and (d)
  ["Payment of admission"] along with section 3 creating the
  charge and section 4 providing the collection machinery, we find
  ourselves in agreement with the submission made on behalf
G of the appellants that the provisions of 1936 Act are applicable
  only to place-related entertainment. In other words, the
  provisions of the 1936 Act cover an entertainment which takes
  place in a specified physical location to which persons are
  admitted on payment of some charge as defined under clause
H (d) of section 2 of the 1936 Act. The legislative history and the
TATA SKY LTD. v. STATE OF M.P. [AFTA8 ALAM, J.] 867


amendments introduced in the 1936 Act also show that it was            A
how the scheme of the 1936 Act was viewed by the State itself.
It was earlier found that the provisions of the 1936 Act were
inadequate to bring shows by video cassette recorder or video
cassette and player cable T.V. operations within the taxing net
and hence, the legislature considered it necessary to amend            8
the 1936 Act and to insert section 3-A and section 3-8
respectively with effect from May 1, 1999 and April 1, 2001. In
this regard, it is also very important to note that both in the case
of shows by video cassette recorder or video cassette and
player, cable T.V. operations, the collection machinery is in-built    c
and provided within the respective provisions of section 3-A
and section 3-8. and in those two cases the collection of duty
does not take place under section 4 of the 1936 Act.
     36. On behalf of the State the imposition of levy on DTH
was sought to be justified on the basis of sub-clause(4) of            D
clause (d) of section 2 which reads as under:
     "(iv) any payment made by a person by way of contribution
     or subscription or installation and connection charges or
     any other charges, by whatever name called, for providing
     access to any entertainment, whether for a specified              E
     period or on a continuous basis;"
     37. In our view, the submission is untenable for more
reasons than one. First, section 2(d)(iv) is only the measure of
tax and it does not create the charge which is created by
                                                                       F
section 3. The question of going to the measure of the tax would
arise only if it is found that the charge of tax is attracted. Under
section 3 read with section 2(d) and section 2(a), the charge
or levy of tax is attracted only if an entertainment takes place
in a specified place or locations and persons are admitted to          l..:i
the place on payment of a charge to the proprietor providing
the entertainment. In the present case, as DTH operation is not
a place-related entertainment, it is not covered by the charging
section 3 read with section 2(a) and 2(b) of the 1936 Act.
Consequently, the question of going to section 2(d)(iv) does not
                                                                       H
      868     SUPREME· COURT REPORTS                  [2013] 2 S.C.R.


 A    arise. Moreover, even if section 2(d)(iv) is to be read as an
'.~
      extension of section 3 and, thus, as a part of the charge, it does
      not make any difference at all because section 2(d)(iv) refers
      to "entertainmenr which takes us back to section 2(b) and finally
      to section 2(a).
 B       38. We have held that DTH is not covered by the provisions
   of section 3 read with section 2(a), 2(b) and 2(d) of the 1936
   Act. The issue gets further settled on reference being made to
   the mechanism of collection of the charge as provided under
   section 4 of the 1936 Act. Section 4(1) mandates that no
'C person shall be admitted to any entertainment other than
   entertainment by V.C.R. except with a ticket stamped with an
   impressed, embossed, engraved or adhesive stamp issued by
   the State Government of nominal value equal to the duty payable
   under section 3; sub-section (2) of section 4 provides for
 D different modes specified thereunder for payment of the amount
   of duty due on the entertainment. Neither the provision of section
   4(1) nor any of the modes provided under section 4(2) can be
   made applicable for collection of duty on DTH operation.
   Further, it is noted above that section 8 provides rule making
 E powers. In exercise of the powers under that provision the
   Madhya Pradesh Entertainment Duty and Advertisement Tax
   Rules 1942 were framed. A perusal of the Rules makes it
   absolutely clear that the collection mechanism under the 1936
   Act is based on revenue stamps stuck to the tickets issued by
 F the proprietor for entry to the specified place where
   entertainment is held.
       39. The machinery for collection of duty provided under the
  1936 Act has no application to DTH. It is well settled that if the
  collection machinery provided under the Act is such that it
G cannot be applied to an event, it follows that the event is beyond
  the charge created by the taxing statute. See: Commissioner
  of Income Tax v. B.C. Srinivasa Setty, (1981) 2 SCC 460,
  Commissioner of Income- Tax Ernakulam, Kera/a v, Official
  Liquidator, Pa/ai Central Bank Ltd.. (1985) 1 SCC 45 (pages
H 50-51 ), PNB Finance Limited v. Commissioner of Income Tax
TATA SKY LTD. v. STATE OF M.P. [AFTAB ALAM, J.] 869


/, New Delhi (2008) 13 SCC 94 (paragraphs 21 and 24 pages           A
100 to 101).
     40. In light of the discussions made above, we are clearly
of the view that the 1936 Act cannot be extended to cover DTH
operations being carried out by the appellants.
                                                                    B
     41. Coming now to the notification dated May 5, 2008, it
is elementary that a notification issued in exercise of powers
under the Act cannot amend the Act. Moreover, the notification
merely prescribes the rate of entertainment duty at 20 percent
in respect of every payment for admission to an entertainment       C
other than cinema, video cassette recorder and cable service.
The notification cannot enlarge either the charging sectioli or
amend the provision of collection under section 4 of the Act
read with the 1942 Rules. It is, therefore, clear that the
I
notification in no way improves the case of the State. If no duty
could be levied on DTH operation under the 1936 Act prior to        D
the issuance of the notification dated May 5, 2008 as fairly
stated by Mr. Dave, we fail to see how duty can be levied under
the 1936 Act after the issuance of the notification.
      42. We have held that the 1936 Act does not cover DTH         E
operations on an interpretation of the provisions of 1936 Act
itself. We, therefore, see no need to refer to the cases relied
upon by the appellants relating to demand of duty on DTH
operations under the Uttar Pradesh Entertainments and Betting
Tax Act, 1979 and under the Bihar Entertainment Tax Act.
                                                                    F
     43. Further, as we have held that the 1936 Act does not
cover the DTH operations we need not go to the other
submissions made on behalf of the appellants inter alia
regarding the legislative competence of the statute legislature
to impose tax on DTH operation as it was a notified service         G
chargeable to service tax under the Finance Act, 1994.
     44. In the result, the appeals are allowed but with no order
as to costs.

R.P.                                         Appeals allowed.       H