Holding

Both entertainment tax and service tax can be levied on the activity of broadcasting for entertainment, as they are different aspects of the same activity, and the State Legislatures and Parliament have legislative competence under respective entries.

Summary

The Supreme Court considered whether assessees engaged in broadcasting television signals to subscribers are liable to pay both entertainment tax under State enactments (Entry 62, List II of the Constitution) and service tax under the Finance Act, 1994 (Entry 97, List I). The Court held that the activity of broadcasting has two distinct aspects: the service of transmission (taxable as service tax) and the provision of entertainment (taxable as entertainment tax). Applying the aspect theory, the Court found no legal overlapping as the taxes are imposed under different legislative entries. The Court upheld the constitutional validity of various State entertainment tax laws on DTH and cable operators, and affirmed that the decision in Purvi Communication is not per incuriam. The appeals by assessees from most High Courts were dismissed, while the appeal by the State of Kerala was allowed, and appeals from the Allahabad High Court were partly allowed. The Court also clarified that the expression 'entertainments' in Entry 62 must be given a broad, liberal meaning to include modern forms of entertainment like DTH services.

Issues considered

Whether assessees engaged in broadcasting signals through television channels are liable to pay entertainment tax under State enactments relatable to Entry 62 of List II and also service tax under the Finance Act, 1994 relatable to Entry 97 of List I.
Whether the decision in Purvi Communication failed to consider the tests laid down in Geeta Enterprises and is per incuriam.

Legislation cited

Constitution of Indias. 246, s. 248, s. 265, s. Seventh Schedule List I Entry 31, s. Seventh Schedule List I Entry 92C, s. Seventh Schedule List I Entry 97, s. Seventh Schedule List II Entry 33, s. Seventh Schedule List II Entry 62
Finance Act, 1994s. 65(105)(zk), s. 65(13), s. 65(14), s. 65(15), s. 65(16), s. 65(63), s. 65(72)(zk), s. 65(80), s. 65(90)(zk), s. 65(95), s. 66, s. 66(5), s. 66D
Finance Act, 2002s. 65(90)(zk), s. 66(5)
Finance Act, 2003s. 65(105)(zk), s. 65(15), s. 65(16), s. 65(95), s. 66(1)
Finance Act, 2004
Finance Act, 2005s. 65(105)(zk), s. 65(16)
Gujarat Entertainment Tax (Amendment) Act, 2009
Gujarat Entertainment Tax (Exhibition by means of Direct-to Home (DTH) Broadcasting Services) Rules, 2010s. 11, s. 12, s. 13, s. 14, s. 16, s. 3, s. 4, s. 5, s. 6, s. 7
Jharkhand Entertainment Tax Act, 2012s. 2, s. 3, s. 4, s. 5
Prasar Bharti (Broadcasting Corporation of India) Act, 1990s. 2(c)
Punjab Entertainment Duty Act, 1955s. 2, s. 3, s. 3A, s. 3B, s. 3C
Rajasthan Entertainments & Advertisements Tax Act, 1957s. 3, s. 4AAA, s. 5, s. 6
The Assam Amusement and Betting Tax Act, 1939s. 2, s. 3C
The Delhi Entertainments and Betting Tax Act, 1996s. 2, s. 7, s. 8
The Kerala Tax on Luxuries Act, 1976s. 2, s. 4, s. 4D, s. 5
The Orissa Entertainment Tax Act, 2006s. 2, s. 7, s. 9
The Tamil Nadu Entertainments Tax Act, 1939s. 3, s. 4, s. 4E, s. 4I
Uttarakhand (Uttar Pradesh Entertainment and Betting Tax Act, 1979) (Amendment) Act, 2009
Uttar Pradesh Entertainments and Betting Tax Act, 1979s. 2, s. 3, s. 4C

Headnote

Issue for Consideration The questions for consideration were: 1) Whether appellants- assessees, engaged in broadcasting of signals etc. through television channels to subscribers of those channels, were liable to pay entertainment tax under provisions of respective to Entry 62 – List II of the Seventh Schedule of the Constitution and also liable to pay service tax under provisions of the Finance Act, 1994 as amended from time to time as a provider of a taxable service namely broadcasting service within the scope and ambit of Entry 97–List I;

Subjects

Entertainment TaxService TaxBroadcasting ServicesDTH OperatorsAspect TheoryPith and SubstanceEntry 62 List IIEntry 97 List IEntry 31 List ILegislative CompetenceTaxing PowerConstitutional LawCentre State RelationsDouble TaxationResiduary PowersFederalismOverlapping JurisdictionCable TelevisionPrivate EntertainmentPublic EntertainmentJudicial ReviewTax on LuxuriesInterpretation of ConstitutionHarmonious ConstructionDoctrine of AspectDoctrine of Pith and SubstanceEntry 92C List ITaxability of ServicesState Tax Vs Central TaxCommunication ServicesMinistry of Information and BroadcastingSet Top BoxDirect to Home BroadcastingFinance Act 1994Negative List RegimeBroadcasting and CommunicationPurvi Communication CaseGeeta Enterprises CaseBharat Sanchar Nigam CaseGodfrey Phillips CaseEntry-Based InterpretationConcurrent ListTaxable EventUnion ListState ListDiscriminatory TaxationTax on AdmissionConstitutional Entry InterpretationSubstantial NexusDoctrine of Colorable Legislation

Judgment

[2025] 5 S.C.R. 2215 : 2025 INSC 757

State of Kerala & Another
v.
Asianet Satellite Communications Ltd. & Others
(Civil Appeal No. 9301 of 2013)
22 May 2025
[B.V. Nagarathna* and Nongmeikapam Kotiswar Singh, JJ.]

Issue for Consideration
The questions for consideration were: 1) Whether appellants-
assessees, engaged in broadcasting of signals etc. through
television channels to subscribers of those channels, were liable
to pay entertainment tax under provisions of respective State
enactments relatable to Entry 62 – List II of the Seventh Schedule of
the Constitution and also liable to pay service tax under provisions of
the Finance Act, 1994 as amended from time to time as a provider
of a taxable service namely broadcasting service within the scope
and ambit of Entry 97–List I; and 2) Whether decision of Supreme
Court in Purvi Communication had failed to consider the tests laid
down in Geeta Enterprises and to that extent was per incuriam.

Headnotes†
Constitution of India – Seventh Schedule – List I, Entry 97 and
List II, Entry 62 – Different aspects of same activity – Taxation
under two different legislations by two different legislatures –
Assessees, engaged in broadcasting of signals etc. through
television channels to subscribers of those channels – If liable
to pay entertainment tax under provisions of respective State
enactments relatable to Entry 62 of List II and also liable to
pay service tax as a provider of a taxable service namely
broadcasting service within the scope and ambit of Entry 97
of List I:
Held: There are two aspects in the activity undertaken by the
assessees – The first is the act of transmission of signals of the
content to the subscribers – The second aspect here concerns
not only the content of the signals, but the effect of the decryption
of the signals by the Set-Top Boxes and the viewing cards inside
these boxes provided by the assessees to the subscribers, which

* Author
2216 [2025] 5 S.C.R.

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is providing and receiving of entertainment through the television –
Without the apparatus provided for by the assessees to decrypt the
signals, the subscriber would not be able to watch the content that
is transmitted, the content being for the purpose of entertainment –
The television entertainment provided by them through their modus
operandi i.e., by broadcasting, is a luxury within the meaning
of Entry 62 of List II – The assessees who are engaged in the
activity of providing entertainment are liable to pay service tax on
the activity of broadcasting under the provisions of the Finance
Act, 1994 read with relevant amendments and are also liable to
pay entertainment tax in terms of Entry 62 of List II as being a
specie of luxuries – Therefore, both the taxes, one by the State
Legislature and the other, by the Parliament are leviable on the
activity of the assessees – This is because by rendering the service
of broadcasting, the assessees are entertaining the subscribers
within the meaning of Entry 62 of List II –There is no overlapping
in fact or in law, inasmuch as different aspects of the same activity
are being taxed under two different legislations by two different
legislatures – This is because the activity of broadcasting is a service
and liable to service tax imposed by the Parliament (Entry 97 of
List I) and the activity of entertainment is a subject falling under
Entry 62 of List II and therefore, the assessees herein are liable
to pay entertainment tax as well – Hence, the State Legislatures
as well as the Parliament, both have the legislative competence
to levy entertainment tax as well as service tax respectively on the
activity carried out by the assessees herein. [Para 17.37]

Doctrines – Aspect theory – Double aspect doctrine – A tool of
constitutional interpretation used in Canada to resolve issues
which arise when both the federal and provincial government
have the right to legislate on a subject – Usage of aspect
theory in the Indian context – Discussed:
Held: In India, there appears to be no clarity on the application of
the aspect theory in the Canadian sense – One of the reasons being
that in India, both the Parliament as well as the State Legislature
do not have powers to levy tax on the same subject – The aspect
theory has been applied in India essentially to ascertain whether an
activity would fall within the scope and ambit of an enactment and
whether the said enactment in pith and substance would fall within
an Entry of a particular List of the Seventh Schedule so as to confer
legislative competence to tax that aspect of the activity – Aspect
[2025] 5 S.C.R. 2217

State of Kerala & Another v.
Asianet Satellite Communications Ltd. & Others

theory has no relevance, as such, in determining the constitutionality
of any provision on the ground of legislative competence in India –
Aspect theory is however relevant to determine the applicability of
a taxing statute on the activity or transaction sought to be taxed i.e.,
whether the statute covers an activity which falls within a specific
taxation entry, either in List I or in List II – Thus, an activity could be
taxed by two different legislatures on the basis of the entries in the
respective Lists without there being a clash and within their legislative
competence – However, the aspect of the activity which is being
taxed must be relatable to the legislation under a specific entry of
a particular List so as to be within the legislative competence of a
particular legislature – Thus, the aspect theory is used to determine
if, in fact, there are different aspects within the activity sought to be
taxed and whether the taxable event which forms the basis of the
levy in a legislative enactment corresponds to any aspect in the
activity sought to be taxed – This is in contrast to the applicability of
this theory in Canada, where this theory is used therein to determine
legislative competence of a federal or provincial legislature to enact
a particular law. [Paras 17.27, 17.33-17.36]

Taxation – Activity of Broadcasting service – Application of
Aspect theory – Both entertainment tax as well as service
tax can be imposed on the activity of broadcasting through
television for the purpose of entertainment of the subscriber
or the receiver thereof – The two taxes are different aspects
of the same activity which enable two different legislatures to
impose tax under distinct taxation entries in two different Lists:
Held: One aspect of an activity, say broadcasting service, can
be amenable to service tax, while the other aspect of the same
activity, namely, providing (of) entertainment to television viewers
(as that is the object of broadcasting) can be amenable to “luxury
tax” under Entry 62 List II of the Constitution which could be levied
on the recipients of such entertainment or on the service providers
who are essentially broadcasters – Broadcasting service being a
taxable service under the provisions of the Finance Act, 1994, read
along with the amendments made from time to time would enable
both the Parliament to impose service tax on broadcasting service
and the State Legislatures having the legislative competence to
levy entertainment tax on those who provide entertainment to the
recipients (television viewers) to impose a luxury tax – Entry 62
of List II contemplates a tax on entertainments or amusements
2218 [2025] 5 S.C.R.

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as objects on which a tax can be imposed and therefore it is not
possible to differentiate between an entertainment provider and
an entertainment receiver – The principle is well settled that two
taxes which are separate and distinct imposed on two aspects of
an activity are permissible, as in law, there is no overlapping –
This is because the taxes are relatable to distinct taxation entries
in separate legislative Lists – In the instant case, the Parliament
under the Finance Act, 1994 and its amendments is not imposing
a tax on entertainment – Such a tax is being imposed by the State
Legislatures as entertainment is a luxury within the meaning of
Entry 62 of List II – In the same way, the Finance Act along with
its amendments seeks to impose a tax on the service rendered
by the broadcasting agency which is imposed under Entry 97
of List I – In the same vein, under Entry 62 of List II, the State
Governments are not imposing any service tax on the assessees.
[Paras 17.27, 17.28, 17.30, 17.31]

Constitution of India – Articles 246, 248 and Seventh Schedule,
List I, II & III – Constitutional Scheme regarding distribution
of Legislative Powers – Legislative competence to levy a
tax – Expression “subject to” and “with respect to” in Article
246 – Applicability of doctrine of pith and substance:
Held: Taxation entries under List I and List II (there being no
taxation entry in the Concurrent List) are clearly demarcated within
the scope of the entries in the aforesaid respective Lists – Subject
of taxation is considered to be a distinct matter for the purposes of
legislative competence and the power to tax cannot be deduced
from the general legislative entry as an ancillary power – Also, a
power to legislate as to the principal matters specifically mentioned
in the entries shall also include within its expanse, a legislation
touching upon incidental and ancillary matters – This principle is
derived from the use of the expression “with respect to” in Article
246 of the Constitution – Entry 97 of List I which is a residuary
entry relatable to Article 248 of the Constitution cannot be invoked
or pressed into service when a particular entry empowering the
Parliament or the Legislature of a State to pass laws regarding the
taxation on any subject is specifically enumerated either in List I
or List II – Consequently, as there is no taxation entry in List III,
both the Parliament as well as the Legislature of the State cannot
have competence to levy tax on any one subject of a List – While
interpreting taxation entries in List I or List II, i.e., while determining
[2025] 5 S.C.R. 2219

State of Kerala & Another v.
Asianet Satellite Communications Ltd. & Others

the legislative competence to levy a tax, all efforts must be made
to interpret them in such a way as to give expansive content and
meaning to the same having regard to the constitutional scheme
under which the distribution of legislative powers has been
envisaged in the Seventh Schedule and bearing in mind the object
and intent behind them and also the advances made in human
thought and technology – The expression “subject to” and “with
respect to” in Article 246 of the Constitution aids the applicability
of the doctrine of pith and substance to find out the true character
of the enactment and the entry within which it would fall – The
said doctrine is applied to resolve an issue regarding legislative
competence of a legislature to enact a particular law in relation to a
subject relatable to an Entry in a List under the Seventh Schedule
of the Constitution – Any apparent conflict with respect to an entry
in another List is resolved on the basis of the pith and substance
doctrine. [Paras 17.7-17.10, 17.12, 17.13]

Doctrines – Doctrine of pith and substance – If a law is in its
pith and substance within the competence of the Legislature
which has made it, it will not be invalid because it incidentally
touches upon the subject lying within the competence of
another Legislature:
Held: Where there is an apparent overlapping between two
legislative entries in the Lists of Seventh Schedule of the
Constitution, the doctrine of pith and substance is applied to find
out the true character of the enactment concerned and the entry
within which it would fall – The doctrine of pith and substance, in
short, means, if an enactment substantially falls within the powers
expressly conferred by the Constitution upon the legislature
which enacted it, the same cannot be held to be invalid merely
because it incidentally encroaches on matters assigned to another
legislature – Also, in a situation where there is overlapping, the
said doctrine has to be applied to determine to which entry, a piece
of legislation could be related to by examining the true character
of the enactment or a provision thereof – Due regard must be
had to the enactment as a whole and to its scope and objects –
Question of invasion into another legislative territory has to be
determined by substance and not by degree – The doctrine of
pith and substance is applied to consider the vires of a legislation
impugned on the basis of the principle of legislative competence in
the context of legislative relationship between the Centre and the
2220 [2025] 5 S.C.R.

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State – Constitutional validity of a taxing statute on the ground of
legislative competence has to be examined in the context of the
doctrine of pith and substance as envisaged under Article 246 of
the Constitution of India read with the respective entries in the
List –Once the contours of an entry under which a legislation is
sought to be made is ascertained, the next step is to study the
legislation in question in order to ascertain whether it falls within
the contours of that Entry – If it does fall within the contours of a
particular entry in a particular List, then that particular legislature
which has enacted it would have the legislative competence to
enact such a legislation – But a legislation incidentally touching
upon an entry in another List does not render it invalid, it means
that so long as a piece of legislation is in pith and substance
falling within an entry in a particular List, it would be valid as the
legislature which has enacted it, has the legislative competence
to do so. [Paras 8.2.2, 17.33]

Taxation – Parameters of Taxation, as enumerated by Supreme
Court in Govind Saran Ganga Saran, discussed:
Held: A legislative enactment which provides for the imposition
of a tax must specify the following parameters of taxation: (i) The
taxable event which forms the basis of levy, also referred to as
“subject” of a tax; (ii) The measure of the tax; (iii) The rate(s) of
taxation; and (iv) The incidence of the tax – The said parameters
are each distinct and must not be conflated with the others – The
components of tax, as stated above have been characterised in
Govind Saran Ganga Saran case– In the said case, it was also
laid down that a legislative scheme which seeks to impose a tax,
ought to define each of the aforestated components with certainty
and precision. [Paras 8.26, 17.23]
Taxation – Taxation on Luxuries: Entertainments &
Amusements – Words and Expressions – “Luxuries” –
Meaning of – Bearing in mind the meaning of “entertainments” and
“amusements” and since they come within the scope of “luxuries”,
therefore, the State legislature has legislative competence to impose
entertainment tax under Entry 62 of List II as a tax on luxuries –
Constitution of India – Seventh Schedule, List II, Entry 33 & 62.
[Paras 8.6-8.12, 17.20]

Words and Phrases – “Entertainments” and “Amusements” –
Meaning of – Expressions “entertainments and amusements”
[2025] 5 S.C.R. 2221

State of Kerala & Another v.
Asianet Satellite Communications Ltd. & Others

have to be read ejusdem generis – Constitution of India –
Seventh Schedule, List II, Entry 62:
Held: The expression “entertainments” is a word of general import
and in common parlance, it includes cinema shows, dramatic
performances, etc. – The expression ‘entertainments’ used in Entry
62 of List II does not draw a distinction between one who derives
amusement and one who caters to it – It covers both categories –
Expression “entertainments” cannot be interpreted in a narrow,
pedantic or in a myopic way – With the advancement in technology,
there can be several modes in which the activity of entertainment
can be provided or received – However, what is essential is
the object of providing or receiving signals etc. which must be
for the purpose of entertainment – Expression “entertainments/
entertainment” includes within its scope and ambit not only the
provider of entertainment but also the receiver, inter alia, through
the medium of television – Thus, entertainment through television
network either through cable television or DTH through set-top box
with the object of providing entertainment to the viewer can be
taxed in terms of Entry 62 of List II – The expression “amusement”
in Entry 62 of List II would mean diversion, pass time or enjoyment
or a pleasurable occupation of the senses or that which furnished
it – The expressions “entertainments and amusements” would have
to be read ejusdem generis. [Paras 8.20-8.23, 17.22]

Words and Phrases – “Entertainment” – Interpretation of –
Geeta Enterprises case versus Purvi Communication case –
Discussed:
Held: There is no contradiction in the judgments of Supreme Court
in Geeta Enterprises and Purvi Communications – Judgment in
Geeta Enterprises can never be a binding precedent for the question
raised before this Court in Purvi Communication – Discussion
on the content and meaning, scope and ambit of the expression
‘entertainments’ in Geeta Enterprises is not comprehensive – This
is because, having regard to the advances in technology resulting
in varied forms of entertainments through various media and in a
variety of ways, not only in a public place but also in the confines
of private space such as a home, through mobile or a cell phone
or smart watch and other personal devices etc., the expression
‘entertainments’ must be given a broad, liberal and expansive
meaning than what has been discussed in Geeta Enterprises by
2222 [2025] 5 S.C.R.

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this Court – Purvi Communication is not per incuriam and need not
be referred to a larger Bench. [Paras 10.6, 10.14, 17.24, 17.25]
Words and Phrases – “Broadcasting” and “Broadcasting
agency or organization” – Prasar Bharti (Broadcasting
Corporation of India) Act, 1990 – Section 2(c) – Finance Act,
1994 as amended by the Finance Act, 2001 – Section 65(13).
[Para 17.14-17.18]
Constitution of India – Seventh Schedule, Lists I, II & III – Fee
in respect of any of the matters in the three Lists – Does not
include the power to levy tax – Distinction between levy of
fee and levy of tax. [Para 17.11]

Service Tax – Service tax on broadcasting agency – Finance
Act, 1994 as amended by the Finance Act, 2001 – Sections
65(72)(zk) and 66.
Held: Broadcasting service is a taxable service and the broadcasting
service provider is required to pay service tax under the provisions
of the Finance Act, 1994 as amended from time to time. [Para 17.19]

Case Law Cited
State of West Bengal v. Purvi Communication Pvt. Ltd. [2005] 2
SCR 954 : (2005) 3 SCC 711 – held not per incuriam.
Western India Theatres v. Cantonment Board, Poona [1959]
Supp. 2 SCR 63 – followed.
Union of India v. H.S. Dhillon [1972] 2 SCR 33 : (1971) 2 SCC 779;
MPV Sundararamier & Co. v. State of Andhra Pradesh [1958] SCR
1422 : AIR 1958 SC 468; M/s Hoechst Pharmaceuticals Ltd. v.
State of Bihar [1983] 3 SCR 130 : AIR 1983 SC 1019 – relied on.
Anjum Kadari v. Union of India, 2024 INSC 831 : [2024] 11 SCR
365; P.M. Ashwathanarayana Setty v. State of Karnataka [1988]
Supp. 3 SCR 155 : (1989) Supp. 1 SCC 696; R.K. Garg v. Union
of India [1982] 1 SCR 947 : (1981) 4 SCC 675; Kodar v. State
of Kerala [1975] 1 SCR 121 : (1974) 4 SCC 422; Kerala Hotel
and Restaurant Association v. State of Kerala [1990] 1 SCR
516 : (1990) 2 SCC 502; Ganga Sugar Corporation Ltd. v. State
of Uttar Pradesh [1980] 1 SCR 769 : (1980) 1 SCC 223; Income
Tax Officer, Shillong v. R. Takin Roy Rymbai [1976] 3 SCR 413:
(1976) SC 670; State of Kerala v. Mar Appraem Kuri Company Ltd.
[2025] 5 S.C.R. 2223

State of Kerala & Another v.
Asianet Satellite Communications Ltd. & Others

[2012] 4 SCR 448 : (2012) 7 SCC 106; Bharat Sanchar Nigam
Limited v. Union of India [2006] 2 SCR 823 : (2006) 3 SCC 1;
K. Damodarasamy Naidu & Bros. v. State of Tamil Nadu [1999]
Supp. 3 SCR 597 : (2000) 1 SCC 521; Association of Leasing
& Financial Service Companies v. Union of India [2010] 13 SCR
381 : (2011) 2 SCC 352; Special Reference No.1 of 2001, In Re:
Association of Natural Gas v. Union of India [2004] 3 SCR 534 :
(2004) 4 SCC 489; Federation of Hotel & Restaurant Association
of India v. Union of India [1989] 2 SCR 918 : (1989) 3 SCC 634;
All India Federation of Tax Practitioners v. Union of India [2007] 9
SCR 527; Godfrey Phillips Ltd. v. State of U.P. [2005] 1 SCR 732 :
(2005) 2 SCC 515; Geeta Enterprises v. State of Uttar Pradesh
[1983] 3 SCR 812 : (1983) 4 SCC 202; Commissioner of Central
Excise and Customs, Kerala v. Larsen and Toubro Ltd. [2015] 8
SCR 1046 : (2016) 1 SCC 170; Hoechst Pharmaceuticals Ltd. v.
State of Bihar [1983] 3 SCR 130 : (1983) 4 SCC 45; Bharat Sanchar
Nigam Limited, Imagic Creative (P) Ltd. v. CCT [2008] 1 SCR
457 : (2008) 2 SCC 614; Larsen and Toubro Limited v. State of
Karnataka [2013] 17 SCR 678 : (2014) 1 SCC 708; Commissioner
of Income Tax, Bangalore v. B.C. Srinivasa Setty [1981] 2 SCR
938 : (1981) 2 SCC 460; Govind Saran Ganga Saran v. CST [1985]
3 SCR 985 : 1985 Supp. SCC 205; Express Hotels (P) Ltd. v.
The State of Gujarat [1989] 2 SCR 893 : 1989 3 SCC 677; State
of Karnataka v. State of Meghalaya [2022] 18 SCR 516 : (2023)
4 SCC 416; Suresh v. State of T.N. [1996] Supp. 8 SCR 947 :
(1997) 1 SCC 319; CCE v. Grasim Industries Ltd. [2018] 6 SCR
1099 : (2018) 7 SCC 233; Mineral Area Development Authority v.
Steel Authority of India [2024] 7 SCR 1549 : 2024 SCC OnLine
SC 1796; Navinchandra Mafatlal v. Commissioner of Income-Tax,
Bombay City [1955] 1 SCR 829 : AIR 1955 SC 58; Chhotabhai
Jethabhai Patel and Co. v. Union of India [1962] Supp. 2 SCR
1 : AIR 1962 SC 1006; Calcutta Gas Company Ltd. v. State of
West Bengal [1962] Supp. 3 SCR 1: AIR 1962 SC 1044; RMD
Chamarbaugwalla v. Union of India [1957] SCR 930 : AIR 1957
SC 628; Builders’ Association of India v. Union of India [1989] 2
SCR 320 : (1989) 2 SCC 645; A.B. Abdul Kadir v. State of Kerala
[1976] 2 SCR 690 : (1976) 3 SCC 219; Bangalore Turf Club Ltd. v.
Regional Director, ESI Corporation [2014] 8 SCR 1021 : (2014) 9
SCC 657; State of Karnataka v. Drive-in Enterprises [2001] 2 SCR
378 : (2001) 4 SCC 60; M.J. Sivani v. State of Karnataka [1995] 3
SCR 329 : AIR 1995 SC 1770; State of M.P. v. Abha Sethi [1999]
2224 [2025] 5 S.C.R.

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2 SCR 930 : (1999) 4 SCC 32; Goodyear India Ltd. v. State of
Haryana [1989] Supp. 1 SCR 510 : (1990) 2 SCC 71; International
Tourist Corporation v. State of Haryana [1981] 2 SCR 364; Elel
Hotels & Investments Ltd. v. Union of India [1989] 2 SCR 880 :
(1989) 3 SCC 698; State of West Bengal v. Kesoram Industries Ltd.
[2004] 1 SCR 564 : (2004) 10 SCC 201; Union of India v. Mohit
Minerals Pvt. Ltd. [2018] 13 SCR 139; State of Andhra Pradesh v.
Mc Dowell & Co. [1996] 3 SCR 721; Gujarat Ambuja Cements
Ltd. v. Union of India [2005] 2 SCR 1038 : (2005) 4 SCC 214;
Laghu Udhyog Bharti v. Union of India [1999] 3 SCR 1199 : (1999)
6 SCC 418; Rai Ramakrishna v. State of Bihar [1964] 1 SCR 897:
AIR 1963 SC 1667; Tata Sky Ltd. v. State of M.P. [2013] 2 SCR
849 : (2013) 4 SCC 656; East India Tobacco Company v. State
of Andhra Pradesh [1963] 1 SCR 404; TwyFord Tea Co. v. State
of Kerala [1970] 3 SCR 383 : (1970) 1 SCC 189 – referred to.
Prafulla Kumar Mukherjee v. Bank of Commerce, Khulna, AIR
1947 P.C. 60; A.L.S.P.P.L. Subrahmanyan Chettiar v. Muttuswami
Goundan, AIR 1941 FC 47; United Provinces v. Atiqa Begum,
AIR 1941 FC 16; Re: The Central Provinces and Berar Sales of
Motor Spirit and Lubricants Taxation Act, 1938, AIR 1939 FC 1;
Governor General in Council v. Province of Madras (1945) FCR
179: AIR 1945 PC 98 – referred to.
Tata Sky Limited v State of Uttarakhand, Writ Petition (M/B) No.
4 of 2010; Bharti Telemedia Ltd. v. Government of NCT of Delhi,
W.P.(C) No. 4935 of 2011; M/s. Tata Sky Ltd. v. State of Orissa,
Writ Petition (C) No. 8966 of 2011; Cantonment Board Poona v.
Western India Theatres Ltd., AIR 1954 BOM 261; Tamil Nadu Cable
TV Organisers v. Government of Tamil Nadu, W.P. No. 16237/1994;
Tamil Nadu Cable TV Organisers Association v. Government of
Tamil Nadu, W.P. No.10013 of 1994 dt. 30.11.1994; Vasant Madhav
Patwardhan v. State of Maharashtra, 2000 SCC OnLine Bom
244; Gopal Krishna Agarwal v. State of Uttar Pradesh (1982) All.
L.J. 607; Sky Vision T.V v. State of Bihar, 1995 (2) BJLR 845;
Dish TV India Ltd. v. State of Uttarakhand, W.P. (M/S) No. 2562
of 2007; Tata Sky Ltd. v. State of M.P., W.P. No.10148 of 2009;
A. Thangal Kunju Musaliar v. M. Venkatachalam Potti (1956) 29
ITR 349 – referred to.
Lyle Francis Smith v. Her Majesty the Queen [1960] SCR 776;
Union Colliery Co. of British Columbia v. Bryden, 1899 AC 580 –
referred to.
[2025] 5 S.C.R. 2225

State of Kerala & Another v.
Asianet Satellite Communications Ltd. & Others

Books and Periodicals Cited
Oxford English Dictionary, Second Edition, Volume IX; P. Ramanatha
Aiyar’s Advanced Law Lexicon, 6th Edition, Volume II; Reader’s
Digest Family Word Finder; Webster’s Third New International
Dictionary; Concise Oxford English Dictionary, 11th Edition;
Canada’s Federal System by A.H.F. Lefroy; Tax, Constitution and
the Supreme Court by Sri Karthik Sundaram (OakBridge, 2024);
Chapter by Sri V. Niranjan, K.C. in Oxford Handbook of the Indian
Constitution; Cooley on Taxation – referred to.

List of Acts
Constitution of India; Finance Act, 1994; Finance Act, 2002;
Finance Act, 2003; Finance Act, 2004; The Kerala Tax on Luxuries
Act,1976; Uttarakhand (Uttar Pradesh Entertainment and Betting
Tax Act, 1979; Rajasthan Entertainments & Advertisements Tax
Act, 1957; Rajasthan Entertainments & Advertisements Tax Rules,
1957; Gujarat Entertainment Tax (Amendment) Act, 2009; Gujarat
Entertainment Tax (Exhibition by means of Direct-to Home (DTH)
Broadcasting Services) Rules, 2010; Jharkhand Entertainment
Tax Act, 2012; Uttar Pradesh Entertainments and Betting Tax
(Amendment) Ordinance, 2009; Uttarakhand (Uttar Pradesh
Entertainment and Betting Tax Act, 1979) (Amendment) Act, 2009;
Punjab Entertainment Duty Act, 1955; The Delhi Entertainments
and Betting Tax Act, 1996; Delhi Entertainments and Betting Tax
(Amendment) Rules, 2010; The Assam Amusement and Betting
Tax Act, 1939; The Orissa Entertainment Tax Act, 2006; Orissa
Entertainment Tax (Amendment) Act, 2010; The Tamil Nadu
Entertainments Tax Act, 1939.

List of Keywords
Entertainment Tax; Service Tax; Broadcasting Services; DTH
Operators; Aspect Theory; Pith and Substance; Entry 62 List II;
Entry 97 List I; Entry 31 List I; Legislative Competence; Taxing
Power; Constitutional Law; Centre State Relations; Double Taxation;
Residuary Powers; Federalism; Overlapping Jurisdiction; Cable
Television; Private Entertainment; Public Entertainment; Judicial
Review; Tax on Luxuries; Interpretation of Constitution; Harmonious
Construction; Doctrine of Aspect; Doctrine of Pith and Substance;
Entry 92C List I; Taxability of Services; State Tax Vs Central Tax;
Communication Services; Ministry of Information and Broadcasting;
2226 [2025] 5 S.C.R.

Supreme Court Reports

Set Top Box; Direct to Home Broadcasting; Finance Act 1994;
Negative List Regime; Broadcasting and Communication; Purvi
Communication Case; Geeta Enterprises Case; Bharat Sanchar
Nigam Case; Godfrey Phillips Case; Entry-Based Interpretation;
Concurrent List; Taxable Event; Union List; State List; Discriminatory
Taxation; Tax on Admission; Constitutional Entry Interpretation;
Substantial Nexus; Doctrine of Colorable Legislation.

Case Arising From
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 9301 of 2013
From the Judgment and Order dated 28.06.2012 of the High Court
of Kerala at Ernakulam in WPC No. 33966 of 2006
With
Civil Appeal Nos. 1629, 1765-1766, 1531, 1533, 1534, 1752, 1753,
1755, 1532, 1687, 1688, 1689, 1690, 1548-1549, 1630, 1726,
1725, 1543, 1547, 1680, 1754, 1756, 1530, 1628, 1535, 1679,
1681-1682, 1683, 1684, 1685, 1686, 1580, 1581-1583 and 1536
of 2020, Civil Appeal No. 10114 of 2011, Civil Appeal Nos. 2147,
5867 and 5228 of 2012, Writ Petition (C) No. 699 of 2014, Writ
Petition (C) No. 748 of 2015, SLP (C) No. 9025 of 2023.

Appearances for Parties
Advs. for the Appellants:
Pallav Shisodiya, K.K. Venugopal, S.K.Bagaria, Tarun Gulati,
Arvind P. Datar, Pallav Shisodiya, Sr. Advs., Nishe Rajen Shonker,
Mrs. Anu K Joy, Alim Anvar, Ajith Anto Perumbully, Riddhi Bose,
Ms. Racheeta Chawla, Ms. Rishi Agarwal, Sampriti Baksi, Mahesh
Agarwal, Rishi Agrawala, Manu Krishnan, Kamaldeep Dayal,
Victor Das, Ms. Madhavi Agrawal, Ms. Madhvi Agarwal, Vipul
Singh, Ashwini Kumar, Ms. Chitra Agarwal, Ms. Anwesha Padhi,
Ms. Manavi Agarwal, Chinmayee Chandra, Ankur Talwar, Yash Jain,
Ajit Kr. Singh, E. C. Agrawala, Vivek Sarin, Aakarshan Aditya, Dibya
Prashant Singh, Satish C. Kaushik, Dhruv Dev Gupta, Sahil Bhalaik,
Tushar Giri, Siddharth Anil Khanna, Ritik Arora, Shivam Mishra,
Gowtham Polanki, Ms. Gulshan Jahan, Md. Rashid Saeed, Harish
Pandey, Gopal Singh, Akhilesh Kumar Pandey, M/S. Acm Legal,
Dr. Shashwat Bajpai, Rohit Amit Sthalekar, Purnendu Bapai,
Shashank Singh, Mahir Khanna, Sahil Tagotra, Ms. Shankari
Mishra, Sujay Jain, Rakesh Talukdar, Ms. Abhivyakti Banerjee,
[2025] 5 S.C.R. 2227

State of Kerala & Another v.
Asianet Satellite Communications Ltd. & Others

Ashwani Kumar Dubey, Praveen Kumar, C. K. Sasi, Ms. Nayantara,
Dinesh Dahiya, Ms. Meena K Poulose, Kumar Visalaksh, Udit
Jain, Ajitesh Dayal Singh, Devansh Garg, Harish Pandey, Praveen
Kumar, Abhishek Vikas, Nishe Rajen Shonker, Mrs. Anu K Joy,
Alim Anvar, Ajith Anto Perumbully, Riddhi Bose, Ms. Racheeta
Chawla, Ms. Rishi Agarwal, Ms. Sampriti Baksi.
Advs. for the Respondents:
K M Nataraj, N.Venkatraman, A.S.Gs., Shadan Farasat, Sr. A.A.G.,
Gurminder Singh A.G. Punjab, K N Balgopal Advocate General
of State of Nagaland, S. K. Bagaria, Tarun Gulati, Mrs. Shirin
Khajuria, Dr. Manish Singhvi, Arunabh Chowdhury, Preetesh
Kapur, K Radhakrishnan, Nalin Kohli, Ms. Nisha Bagchi, V. K.
Khanna, Sanjay Kharde, Saurabh Mishra, Jaideep Gupta, Sr.
Advs., M/s. Corporate Law Group, Ms. Bhavana Duhoon, Kumar
Ajit Sinha, Ms. Swati Tiwari, Devansh Garg, Anshul Syal, Kumar
Sambhav, Shantanu Sagar, Anil Kumar, Gunjesh Ranjan, Manoneet
Dwivedi, Ms. Pallavi Langar, Manoj Kumar, Sujeet Kumar C.,
Ankit Khatri, Bhakti Vardhan Singh, Milind Kumar, Apurv Singhvi,
Ms. Shalini Haldar, Ms. Yasha Goyal, Rajiv Shanker Dvivedi,
Ms. Tulika Mukherjee, Shwetank Singh, V. Aravind, Ms. Rooh-e-
hina Dua, Harshit Khanduja Khanduja, Harshit Khanduja, Ankit
Khera, Abhishek Babbar, Mrs. Kirti Renu Mishra, Sanjay Dutt,
Ms. Deepanwita Priyanka, Mukesh Kumar Maroria, Sabarish
Subramanian, C Kranthi Kumar, Vishnu Unnikrishnan, Danish
Saifi, Shuvodeep Roy, Anshul Malik, Shruti Agrawal, Anando
Mukherjee, Abhay Pratap Singh, M. P. Vinod, Krishnanand Pandeya,
Ms. Swati Ghildiyal, Ms. Devyani Bhatt, Ms. Srujana Suman
Mund, Abhishek Atrey, Rajat Mittal, K. V. Vijayakumar, Samir
Ali Khan, Sanjay Kapur, Ms. Isha Virmani, Ms. Mahima Kapur,
Mrs. Shubhra Kapur, Gurmeet Singh Makker, V C Bharathi, Rajat
Nair, Adit Khorana, Udai Khanna, Shivank Pratap Singh, Sarthak
Karol, Chandan Kumar, Manish Kumar, Dharmendra Kumar Sinha,
Raj Bahadur Yadav, Surjendu Sankar Das, Anand Murthi Rao,
B. Krishna Prasad, Hitesh Kumar Sharma, Amit Kumar Chawla,
Varun Varma, Ms. Tanishka Grover, Akhileshwar Jha, Ms. Sandhya
G., Kamal Mohan Gupta, Siddharth Dharmadhikari, Aaditya
Aniruddha Pande, Bharat Bagla, Sourav Singh, Aditya Krishna,
Ms. Preet S. Phanse, Adarsh Dubey, Sachin Patil, Sarad Kumar
Singhania, Sunny Choudhary, Sarad Kumar Singhania, Ms. Rashmi
Singhania, Avijit Mani Tripathi, P. V. Yogeswaran, Ms. K. Enatoli
Sema, Ms. Limayinla Jamir, Amit Kumar Singh, Ms. Chubalemla
2228 [2025] 5 S.C.R.

Supreme Court Reports

Chang, Prang Newmai, Ms. Nitya Nambiar, Sameer Abhyankar,
Rahul Kumar, Ms. Ayushi Bansal, Aryan Srivastava, Sarthak Dora,
Ms. Astha Sharma, Srisatya Mohanty, Himanshu Chakravarty,
Ms. Riddhi Bose, Ms. Racheeta Chawla, Simranjeet Singh Rekhi,
Ms. Sampriti Bakshi, Rishi Agarwal, Siddharth Banerjee, M/s. Plr
Chambers And Co., M/s. Venkat Palwai Law Associates, Ms. Devina
Sehgal, Mahfooz Ahsan Nazki, Gopal Singh, Akshat Kumar, Ms. G.
Indira, Vatsal Joshi, Krishna Kant Dubey, Ms. Indira Bhakar, Harish
Pandey, Shashwat Parihar, Ms. Priyadarshini Priya, Rajesh Singh
Chauhan, Ms. Priyanka, Shreekant Neelappa Terdal, Ms. Shashi
Kiran, D. S. Mahra, Rajiv Kumar Choudhry, V. N. Raghupathy,
Vishwanath P. Allannavar, Divyanshu Kumar Srivastava.

Judgment / Order of the Supreme Court

Judgment

Nagarathna, J.

I N D E X*

1. Bird’s Eye View of the Controversy: ........................................ 6
2. Facts in brief: .............................................................................. 8
3. Writ Petitions filed before this Court: ...................................... 24
a. W.P. (C) No. 699/2014: ....................................................... 24
b. W.P. (C) No.748/2015: ........................................................ 26
4. Submissions: .............................................................................. 28
a. Submissions on behalf of Appellants: ............................ 28
b. Submissions of Respondent-States: .............................. 51
i. State of West Bengal: .............................................. 51
ii. State of Uttar Pradesh: ............................................ 53
iii. State of Odisha: ........................................................ 54
iv. State of Tamil Nadu: ................................................. 62
v. State of Rajasthan: .................................................. 70
vi. State of Punjab: ........................................................ 71
vii. State of Nagaland: .................................................... 71
viii. State of Andhra Pradesh: ........................................ 72
ix. Union of India: .......................................................... 72
* Ed. Note: Pagination as per the original Judgment.
[2025] 5 S.C.R. 2229

State of Kerala & Another v.
Asianet Satellite Communications Ltd. & Others

c. Reply Arguments: ............................................................. 73
5. Points for Consideration: .......................................................... 73
6. Legal Framework: ....................................................................... 75
a. Relevant Entries of the Seventh Schedule of the
Constitution: ...................................................................... 77
b. Finance Act, 1994 with Relevant Amendments: ............ 78
c. Relevant Provisions of the State Enactments: .............. 91
i. Assam Amusements and Betting Tax Act, 1939: ... 91
ii. Delhi Entertainments and Betting Tax Act, 1996: .. 94
iii. Gujarat Entertainments Tax Act, 1977: .................. 96
iv. Jharkhand Entertainment Tax Act, 2012: .............. 104
v. Kerala Tax on Luxuries Act, 1976: ......................... 108
vi. Orissa Entertainment Tax Act, 2006: ..................... 117
vii. Punjab Entertainment Duty Act, 1955: ................... 120
viii. Rajasthan Entertainments and Advertisements
Tax Act, 1957: ........................................................... 128
ix. Tamil Nadu Entertainments Tax Act, 1939: ........... 130
x. Uttar Pradesh Entertainment and Betting Tax Act,
1979: .......................................................................... 133
7. Interpretation of Entries of the Lists of the Seventh Schedule
of the Constitution: .................................................................... 142
8. State of Karnataka vs. State of Meghalaya: ............................ 157
9. Meaning and Scope of the expression “Luxuries, Entertainments
and Amusements” and Legislative Competence of State
Legislatures to impose Entertainment Tax: ............................ 162
a. Luxuries: ............................................................................ 162
b. Entertainments and Amusements: .................................. 168
c. Amusement: ....................................................................... 171
10. Parameters of Taxation: ............................................................. 180
11. Relevant case law: .................................................................... 184
a. Suresh: .............................................................................. 184
b. Vasant Madhav Patwardhan: ........................................... 194
12. Geeta Enterprises vs. Purvi Communication: ........................ 195
13. “Aspect Theory” or Aspect Doctrine: A Discussion .............. 217
14. Criticism of its Use in Indian Context: .................................... 219
2230 [2025] 5 S.C.R.

Supreme Court Reports

15. Usage of Aspect Theory in the Indian Context: ..................... 222
16. Aspect Theory: Its Extent and Scope in India: ....................... 246
17. Application of Aspect Theory to the Case at hand: ............... 256
18. Modus Operandi of the Assessees and their aspects: .......... 260
19. Allahabad High Court’s Ruling on retrospective operation
of the Amendment: ..................................................................... 265
20. State of Kerala vs. Asianet: ....................................................... 277
a. Submissions: ..................................................................... 282
b. Judgments relied upon by State of Kerala: .................... 283
21. Jharkhand High Court’s Ruling: ............................................... 293
22. Summary of Discussion and Conclusions: ............................. 296
a. Constitutional Scheme regarding distribution of
Legislative Powers: ........................................................... 298
b. Service Tax: ....................................................................... 303
c. Tax on Luxuries: Entertainments & Amusements .......... 305
d. Parameters of Taxation under State Enactments: ........ 307
e. Geeta Enterprises and Purvi Communications: ............ 308
f. Aspect Theory: ................................................................... 310

Leave granted in Special Leave Petition (Civil) No.9025 of 2023.
1.1 Since common questions of law and facts arise in these civil
appeals and writ petitions, they have been heard together and
are being disposed of by this common judgment.
1.2 The Civil Appeals arise from the judgments of the High Courts
of Allahabad, Delhi, Gauhati, Gujarat, Jharkhand, Kerala,
Madras, Orissa, Punjab & Haryana, Rajasthan and Uttarakhand
while two writ petitions have been filed before this Court under
Article 32 of the Constitution by M/s Tata Play & Another and
M/s Tata Play Ltd.

Bird’s Eye View of the Controversy:
2. The assessees have filed these appeals assailing the provisions
of the respective State Acts under which tax on entertainment has
charged on them on the premise that their activity is relatable to
[2025] 5 S.C.R. 2231

State of Kerala & Another v.
Asianet Satellite Communications Ltd. & Others

the field of entertainment as envisaged under Entry 62 – List II of
the Seventh Schedule to the Constitution. It is their contention that
they are not liable to pay entertainment tax (or luxury tax) under the
respective provisions of the State enactments. It is further case of
the assessee that they are engaged in broadcasting of signals etc.
through television channels to the subscribers of those channels
hence, possibly they are liable to pay service tax to the Central
Government under Entry 97 – List I of the Seventh Schedule of the
Constitution. There are however two writ petitions filed by certain
assessees who have also ventilated their grievance that they are
not liable to pay service tax as well. The question whether the
appellants-assessees are liable to pay entertainment tax under the
provisions of the respective State enactments which are relatable
to Entry 62 – List II of the Seventh Schedule of the Constitution and
are also liable to pay service tax under the provisions of the Finance
Act, 1994 as amended from time to time as a provider of a taxable
service namely broadcasting service within the scope and ambit of
Entry 97 – List I which is a residuary entry for the relevant purpose
of assessment is the moot question which arises in these appeals.
2.1. The State of Kerala being aggrieved by the striking down of the
sub-section (iv) of proviso to Section 4 under which the cable
operators who have less than 7,500 connections are being
exempt from payment of entertainment tax and whereas those
who have over and above 7,500 connections are liable to pay
the same tax being discriminatory in nature and being strike
down by the Kerala High Court is questioned by the State of
Kerala in its appeal. While considering the controversy between
the parties, the doctrine of pith and substance in interpreting the
entries of the Seventh Schedule of the Constitution as well as
the aspect theory as referred to by the learned senior counsel
and learned counsel who have appeared for the respective
parties shall be dealt with.
2.2. Since the fields of legislation are in the Seventh Schedule to
the Constitution of India and would be referred to during the
course of discussion primarily in List I and List II (Union List and
State List respectively) in these cases, it shall be understood
that any reference to these Lists is only with reference to the
Seventh Schedule to the Constitution of India.
2232 [2025] 5 S.C.R.

Supreme Court Reports

Facts in brief:
3. For the sake of convenience, some of the relevant facts are delineated
in the form of a table which is as under:

Impugned
S.No. Case No. Cause Title Name of enactment
order dated
1. C.A. No. State of Kerala The Kerala Tax on
9301/2013 Versus Asianet Luxuries Act,1976
Arising out of Satellite 28.06.2012
SLP(C) No. Communications
17573/2013 Ltd.

2. C.A. No. Tata Sky Limited Uttarakhand
1629/2020 Versus State of (Uttar Pradesh
Arising out of Uttarakhand Entertainment and
26.07.2010
SLP(C) No. Betting Tax Act, 1979)
1173/2011 (Amendment) Act,
2009

3. C.A. Nos. M/s. Tata Sky Rajasthan
1765- Ltd. Versus State Entertainments &
1766/2020 of Rajasthan Advertisements
Arising out Tax Act, 1957
19.08.2014
of SLP(C) and Rajasthan
Nos. 34237 - Entertainments &
34238/2014 Advertisements Tax
Rules, 1957

4. C.A. No. Sun Direct TV Gujarat Entertainment
1531/2020 Pvt. Ltd. Versus Tax (Amendment)
Arising out of State of Gujarat Act, 2009 and Gujarat
SLP(C) No. Entertainment Tax
12.03.2015
17300/2015 (Exhibition by means
of Direct-to-Home
(DTH) Broadcasting
Services) Rules, 2010

5. C.A. No. Dish TV India Gujarat Entertainment
1533/2020 Ltd. Versus State Tax (Amendment)
Arising out of of Gujarat Act, 2009 and Gujarat
SLP(C) No. Entertainment Tax
12.03.2015
22171/2015 (Exhibition by means
of Direct-to-Home
(DTH) Broadcasting
Services) Rules, 2010
[2025] 5 S.C.R. 2233

State of Kerala & Another v.
Asianet Satellite Communications Ltd. & Others

Impugned
S.No. Case No. Cause Title Name of enactment
order dated
6. C.A. No. Bharat Business Gujarat Entertainment
1534/2020 Channel Ltd. Tax (Amendment)
Arising out of (Now Known as Act, 2009 and Gujarat
SLP(C) No. Videocon D2H Entertainment Tax
12.03.2015
20511/2015 Ltd.) Versus (Exhibition by means of
State of Gujarat Direct-to-Home (DTH)
Broadcasting Services)
Rules, 2010
7. C.A. No. Bharti Telemedia Jharkhand
1752/2020 Ltd. Versus State Entertainment Tax Act,
Arising out of of Jharkhand 30.01.2014 2012
SLP(C) No.
4855/2014
8. C.A. No. Tata Play Limited Jharkhand
1753/2020 Versus State of Entertainment Tax Act,
Arising out of Jharkhand 30.01.2014 2012
SLP(C) No.
6690/2014
9. C.A. No. Reliance Big TV Jharkhand
1755/2020 Ltd. Versus State Entertainment Tax Act,
Arising out of of Jharkhand 30.01.2014 2012
SLP(C) No.
8421/2014
10. W.P.(C) No. Tata Play Ltd. Section 65(105) (zk)
699/2014 Versus Union of and Section 65(15) of
India Finance Act, 1994
11. C.A. No. Bharati Gujarat Entertainment
1532/2020 Telemedia Ltd. Tax (Amendment)
Arising out of Versus State of Act, 2009 and Gujarat
SLP(C) No. Gujarat Entertainment Tax
12.03.2015
18164/2015 (Exhibition by means of
Direct-to-Home (DTH)
Broadcasting Services)
Rules, 2010
12. C.A. No. IndusInd Uttar Pradesh
1687/2020 Media and Entertainments and
Arising out of Communications Betting Tax Act, 1979
SLP(C) No. Ltd. Versus State and Uttar Pradesh
19.04.2018
11304/2018 of Uttar Pradesh Entertainments
and Betting Tax
(Amendment)
Ordinance, 2009
2234 [2025] 5 S.C.R.

Supreme Court Reports

Impugned
S.No. Case No. Cause Title Name of enactment
order dated
13. C.A. No. MultiTech Digital Uttar Pradesh
1688/2020 Services Pvt. Entertainments and
Arising out of Ltd. Versus State Betting Tax Act, 1979
SLP(C) No. of Uttar Pradesh and Uttar Pradesh
09.04.2018
13949/2018 Entertainments
and Betting Tax
(Amendment)
Ordinance, 2009
14. C.A. No. Siti Networks Uttar Pradesh
1689/2020 Limited Versus Entertainments and
Arising out of State of Uttar Betting Tax Act, 1979
SLP(C) No. Pradesh and Uttar Pradesh
09.04.2018
14077/2018 Entertainments
and Betting Tax
(Amendment)
Ordinance, 2009
15. C.A. No. Bling Ice Uttar Pradesh
1690/2020 Network Pvt. Ltd. Entertainments and
Arising out of Versus State of Betting Tax Act, 1979
SLP(C) No. Uttar Pradesh and Uttar Pradesh
09.04.2018
22181/2018 Entertainments
and Betting Tax
(Amendment)
Ordinance, 2009
16. C.A. Nos. Mansion Cable Uttar Pradesh
1548- Networks Private Entertainments and
1549/2020 Limited Versus Betting Tax Act, 1979
Arising out State of Uttar and Uttar Pradesh
09.04.2018
of SLP(C) Pradesh Entertainments
No. 4233 - and Betting Tax
4234/2020 (Amendment)
Ordinance, 2009
17. C.A. No. of Subhash Chand Uttar Pradesh
2025 Versus State of Entertainments and
Arising out of U.P. Betting Tax Act, 1979
SLP(C) No. and Uttar Pradesh
11.04.2018
9025/2023 Entertainments
and Betting Tax
(Amendment)
Ordinance, 2009
[2025] 5 S.C.R. 2235

State of Kerala & Another v.
Asianet Satellite Communications Ltd. & Others

Impugned
S.No. Case No. Cause Title Name of enactment
order dated
18. C.A. No. Dish TV India Uttarakhand (Uttar
1630/2020 Ltd. Versus State Pradesh Entertainment
Arising out of of Uttarakhand 26.07.2010 and Betting Tax Act,
SLP(C) No. 1979) (Amendment)
1185/2011 Act, 2009
19. C.A. No. Bharti Telemedia Punjab Entertainment
1726/2020 Ltd. Versus State Duty Act 1955 (as
Arising out of of Punjab 25.10.2010 amended in 2010)
SLP(C) No.
4755/2011
20. C.A. No. M/s Tata Sky Ltd Punjab Entertainment
1725/2020 Versus State of Duty Act 1955 (as
Arising out of Punjab 25.10.2010 amended in 2010)
SLP(C) No.
13448/2011
21. C.A. No. Tata Play Ltd. The Delhi
10114/2011 Versus Govt. of Entertainments and
Arising out of NCT of Delhi Betting Tax Act,
SLP(C) No. 1996 and the Delhi
05.09.2011
28836/2011 Entertainments
and Betting Tax
(Amendment) Rules,
2010
22. C.A. No. Bharti Telemedia The Delhi
2147/2012 Ltd. Versus Entertainments and
Arising out of Government of Betting Tax Act,
SLP(C) No. NCT of Delhi 1996 and the Delhi
05.09.2011
265/2012 Entertainments
and Betting Tax
(Amendment) Rules,
2010
23. C.A. No. Tata Sky Ltd. The Assam
1543/2020 Versus State of Amusement and
Arising out of Assam Betting Tax Act, 1939
22.02.2012
SLP(C) No. and Rules 9 and 9A
18256/2012 of the Rules framed
thereunder
24. C.A. No. Bharati The Assam
1547/2020 Telemedia Ltd. Amusement and
Arising out of Versus State of Betting Tax Act, 1939
22.02.2012
SLP(C) No. Assam and Rules 9 and 9A
18766/2012 of the Rules framed
thereunder
2236 [2025] 5 S.C.R.

Supreme Court Reports

Impugned
S.No. Case No. Cause Title Name of enactment
order dated
25. C.A. No. Tata Sky Ltd. Uttar Pradesh
1680/2020 Versus State of Entertainments and
Arising out of Uttar Pradesh Betting Tax Act, 1979
SLP(C) No. and Uttar Pradesh
20.07.2012
28058/2012 Entertainments
and Betting Tax
(Amendment)
Ordinance, 2009
26. C.A. No. Dish T.V India Jharkhand
1754/2020 Ltd. Versus State Entertainment Tax Act,
Arising out of of Jharkhand 30.01.2014 2012
SLP(C) No.
7100/2014
27. C.A. No. Dish TV India Jharkhand
1756/2020 Ltd. Versus State Entertainment Tax Act,
Arising out of of Jharkhand 30.01.2014 2012
SLP(C) No.
10192/2014
28. C.A. No. Tata Play Limited Gujarat Entertainment
1530/2020 Versus State of Tax (Amendment)
Arising out of Gujarat Act, 2009 and Gujarat
SLP(C) No. Entertainment Tax
12.03.2015
17005/2015 (Exhibition by means of
Direct-to-Home (DTH)
Broadcasting Services)
Rules, 2010
29. W.P.(C) No. Tata Play Limited
748/2015 Versus Union of
India
30. C.A. No. Bharati Uttarakhand (Uttar
1628/2020 Telemedia Ltd. Pradesh Entertainment
Arising out of Versus State of 26.07.2010 and Betting Tax Act,
SLP(C) No. Uttarakhand 1979) (Amendment)
1182/2011 Act, 2009
31. C.A. No. Dish TV India The Delhi
5867/2012 Limited Versus Entertainments and
Arising out of Government of Betting Tax Act,
SLP(C) No. NCT of Delhi 1996 and the Delhi
05.09.2011
16255/2012 Entertainments
and Betting Tax
(Amendment) Rules,
2010
[2025] 5 S.C.R. 2237

State of Kerala & Another v.
Asianet Satellite Communications Ltd. & Others

Impugned
S.No. Case No. Cause Title Name of enactment
order dated
32. C.A. No. Dish TV India The Delhi
5228/2012 Ltd. Versus Entertainments and
Arising out of Government of Betting Tax Act,
SLP(C) No. NCT of Delhi 1996 and the Delhi
05.09.2011
20902/2012 Entertainments
and Betting Tax
(Amendment) Rules,
2010
33. C.A. No. Tata Play Ltd. The Orissa
1535/2020 Versus State of Entertainment Tax
Arising out of Orissa Act, 2006 and Orissa
SLP(C) No. Entertainment Tax
23533/2012 24.04.2012 (Amendment) Act,
2010 along with the
Orissa Entertainment
Tax (Amendment)
Rules, 2010
34. C.A. No. Tata Sky Limited. Uttar Pradesh
1679/2020 Versus State of Entertainments and
Arising out of Uttar Pradesh Betting Tax Act, 1979
SLP(C) No. and Uttar Pradesh
20.07.2012
31532/2012 Entertainments
and Betting Tax
(Amendment)
Ordinance, 2009
35. C.A. Nos. New Era Uttar Pradesh
1681- Entertainment Entertainments and
1682/2020 Network Ltd. Betting Tax Act, 1979
Arising out of Versus State of and Uttar Pradesh
20.07.2012
SLP(C) Nos. Uttar Pradesh Entertainments
29366 – and Betting Tax
29367 /2012 (Amendment)
Ordinance, 2009
36. C.A. No. Independent T.V. Uttar Pradesh
1683/2020 Ltd. Versus State Entertainments and
Arising out of of Uttar Pradesh Betting Tax Act, 1979
SLP(C) No. and Uttar Pradesh
20.07.2012
31096/2012 Entertainments
and Betting Tax
(Amendment)
Ordinance, 2009
2238 [2025] 5 S.C.R.

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Impugned
S.No. Case No. Cause Title Name of enactment
order dated
37. C.A. No. Bharti Telemedia Uttar Pradesh
1684/2020 Ltd. Versus State Entertainments and
Arising out of of Uttar Pradesh Betting Tax Act, 1979
SLP(C) No. and Uttar Pradesh
20.07.2012
31416/2012 Entertainments
and Betting Tax
(Amendment)
Ordinance, 2009
38. C.A. No. Bharati Uttar Pradesh
1685/2020 Telemedia Ltd. Entertainments and
Arising out of Versus State of Betting Tax Act, 1979
SLP(C) No. Uttar Pradesh and Uttar Pradesh
20.07.2012
31342/2012 Entertainments
and Betting Tax
(Amendment)
Ordinance, 2009
39. C.A. No. Sun Direct TV Uttar Pradesh
1686/2020 Pvt. Ltd. Versus Entertainments and
Arising out of State of Uttar Betting Tax Act, 1979
SLP(C) No. Pradesh and Uttar Pradesh
20.07.2012
32123/2012 Entertainments
and Betting Tax
(Amendment)
Ordinance, 2009
40. C.A. No. Tata Sky Limited The Tamil Nadu
1580/2020 Versus The State Entertainments
Arising out of of Tamil Nadu Tax Act, 1939 as
SLP(C) No. amended by Tamil
19.10.2012
10555/2013 Nadu Entertainments
Tax (Second
Amendment) Act,
2011
41. C.A. Nos. Bharati The Tamil Nadu
1581- Telemedia Ltd. Entertainments
1583/2020 Versus Union of Tax Act, 1939 as
Arising out India amended by Tamil
19.10.2012
of SLP(C) Nadu Entertainments
Nos. 10658 - Tax (Second
10660 /2013 Amendment) Act,
2011
[2025] 5 S.C.R. 2239

State of Kerala & Another v.
Asianet Satellite Communications Ltd. & Others

Impugned
S.No. Case No. Cause Title Name of enactment
order dated
42. C.A. No. Bharti Telemedia The Orissa
1536/2020 Ltd. Versus State Entertainment Tax
Arising out of of Orissa Act, 2006 and Orissa
SLP(C) No. Entertainment Tax
12692/2013 14.11.2012 (Amendment) Act,
2010 along with the
Orissa Entertainment
Tax (Amendment)
Rules, 2010

3.1 From the above table, it is evident that most of the Civil Appeals
have been filed by the assessees while Civil Appeal No. 9301
of 2013 has been filed by the State of Kerala assailing the
judgment of the said High Court dated 28.06.2012.

3.2 The Civil Appeals have been filed by the assessees assailing the
orders passed by the High Courts referred to above dismissing
the writ petitions while the State of Kerala has filed its appeal
being aggrieved by some of the findings arrived at by the Kerala
High Court in the context of Article 14 of the Constitution vis-à-
vis the plea regarding discrimination raised by the respondents
in the said Appeal.

3.3 The bird’s eye view of the orders and judgements passed by the
Eleven High Courts referred to above can be gleaned as under:
3.3.1 The High Court of Uttarakhand by way of impugned
judgment dated 26.07.2010 passed in Tata Sky
Limited vs. State of Uttarakhand, Writ Petition (M/B)
No. 4 of 2010 held that amendments to Uttar Pradesh
Entertainment and Betting Tax, 1979 levying entertainment
tax on DTH services was fully within the legislative
competence of the State and did not encroach upon the
field which the Parliament exclusively has authority to
legislate. Relying on the judgment of this Court in State of
West Bengal vs. Purvi Communication Pvt. Ltd., (2005)
3 SCC 711 (“Purvi Communication”), it was observed
that the activity carried on by petitioners therein was not
different from that carried out by cable operators in Purvi
2240 [2025] 5 S.C.R.

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Communication. To explain the distinctions between
the imposition of service tax and entertainments tax the
High Court noted that the ‘incidence’ of service tax is
on the license agreement obtained from the Ministry of
Information and Broadcasting whereas the ‘incidence’ for
the levy of entertainment tax is based on the individual
contracts executed by the petitioner with its customers.
3.3.2 Similarly, the High Court of Punjab and Haryana High
Court in the impugned judgment dated 25.10.2010 held
that the levy of entertainment duty falls under Entry 62 -
List II which operates in a completely different field from
Entry 92C - List I. Affirming the application of aspect
theory to the present facts, it was observed that levies
of service tax and entertainment tax can co-exist and
can be harmonized as they concern different aspects.
Therefore, the High Court upheld the vires of the Punjab
Entertainment Duty Act, 1955, as amended in 2010,
which levied entertainment duty on DTH services and
dismissed the petition.
3.3.3 The impugned judgment dated 05.09.2011 of the
Delhi High Court passed in Bharti Telemedia Ltd. vs.
Government of NCT of Delhi, W.P.(C) No. 4935/2011
applied aspects theory to the facts in hand and held that
the State legislature is competent to levy an entertainment
tax on all payments for admission through DTH. It was
observed that the transaction in question has an aspect
of service which is amenable to service tax and an aspect
of entertainment which is amenable to entertainment
tax. The writ petitions were dismissed and challenge to
Section 7 of the Delhi Entertainments and Betting Tax
Act, 1996 was rejected.
3.3.4 Subsequently, Gauhati High Court at Guwahati vide
impugned judgment dated 22.02.2012 dismissed the
petitions challenging the relevant provisions of Assam
Amusement and Betting Tax Act, 1939 in terms of
the judgments of the Uttarakhand High Court dated
26.07.2010 and Punjab and Haryana High Court dated
25.10.2010. The Gauhati High Court was of the view that
[2025] 5 S.C.R. 2241

State of Kerala & Another v.
Asianet Satellite Communications Ltd. & Others

the issues raised were already covered by the aforesaid
judgments.
3.3.5 By way of impugned order dated 24.04.2012, the High
Court of Orissa at Cuttack dismissed the writ petition being
M/s. Tata Sky Ltd. vs. State of Orissa, Writ Petition (C)
No. 8966 of 2011, and held that the aforesaid decision
of the Punjab and Haryana High Court dated 25.10.2010
was squarely applicable to the facts before it.
3.3.6 The High Court of Judicature at Allahabad also dismissed
the writ petition preferred before it vide impugned
judgment dated 20.07.2012. The High Court thought it fit
to respect the broad latitude given to legislature in fiscal
legislation and thereby rejected the argument that the
rate of entertainment was discriminatory in comparison
with cable operators. It also agreed with the findings of
the Delhi High Court on the application of aspect theory.
In the present batch of petitions, subsequent orders of
the Allahabad High Court dated 09.04.2018, 11.04.2019
and 19.04.2018 are also challenged. These orders which
were passed in terms of the impugned judgment dated
20.07.2012 are also challenged.
3.3.7 On 19.10.2012, the High Court of Judicature at Madras
vide its order and judgment impugned herein held, in
principle, that there could be a levy of entertainment tax
on entertainment received through DTH services and the
pith and substance of the levy contemplated under Entry
62 - List II is a levy on ‘entertainment’ in contradistinction
to service tax levy on providing of service. The High
Court also rejected the argument that Entry 62 - List II
only refers to public entertainment and not entertainment
through DTH vis-à-vis public entertainment. However, in
the specific facts and circumstances, the High Court also
held that the impugned charging provision i.e. Section
4-I of the Tamil Nadu Entertainments Tax Act, 1939 is
inadequate due to no explicitly mention of the chargeable
event and incidence of tax. Therefore, the writ petitions
challenging the levy of entertainment tax were allowed.
In so far as the matters arising from Madras High Court
2242 [2025] 5 S.C.R.

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are concerned, the questions with regard to legislative
competence under Entry 62 – List I and whether DTH
services were exclusively within Entry 92C/97 – List I are
considered in these appeals. Further, the correctness of
the findings of the High Court with regard to the charging
section being defective is assailed by the State of Tamil
Nadu in separate appeals which are not part of this
batch of appeals.
3.3.8 The High Court of Jharkhand at Ranchi vide impugned
judgment dated 30.01.2014 held that the Jharkhand
Entertainment Tax Act, 2012 levying tax on “entertainment”
through DTH, in pith and substance, is on entertainment
which falls under Entry 62 - List II. According to the
High Court, the aforesaid levy is distinguished from
tax on “broadcasting service” under Entry 62 - List II.
Having found the State Legislature competent to levy
such “entertainment tax” the High Court dismissed all
the writ petitions.
3.3.9 Impugned order dated 19.08.2014 passed by Rajasthan
High Court conducted a survey of the extant judgments
of different High Courts on the issues raised and of Purvi
Communication. Finally, the High Court dismissed all
three writ petitions by way of the impugned order.
3.3.10 Soon thereafter, the High Court of Gujarat at Ahmedabad
by way of impugned judgment dismissed the challenge
to the Gujarat Entertainment Tax (Exhibition by means
of DTH Broadcasting) Rules, 2010 for similar reasons
as other High Courts. The Gujarat High Court relied
on Aspect Theory to dissect the two taxable events
herein, firstly, the service of enabling flow of content
and secondly, entertainment from content.
3.3.11 Finally, vide Impugned judgment dated 28.06.2012, the
Kerala High Court allowed WP(C) No.33966 of 2006
(R) on the ground that the provisions of the impugned
Act were discriminatory inasmuch as they authorized
levy and collection of luxury tax on cable TV operators
including petitioners only with connections of 7500 or
above as discriminatory. According to the High Court,
[2025] 5 S.C.R. 2243

State of Kerala & Another v.
Asianet Satellite Communications Ltd. & Others

there could be no reasonable classification between
cable TV operators with connections below 7500 and
cable TV operators with connections above 7500 with
reference to object of legislation.

Writ Petitions filed before this Court:

W.P. (C) No.699/2014:

3.4 W.P. (C) No.699/2014 has been preferred by the petitioner Tata
Sky Ltd. (now Tata Play Ltd.) challenging the constitutional
validity of Section 65 (105) (zk) read with Section 65(15) of the
Finance Act, 1994, which impose service tax on the provision
of “Direct to Home” (“DTH”) broadcast facility provided by the
petitioner to its subscribers. In short, the petitioner’s case is that
the entire operation carried on by the petitioner is one single
operation and since only service tax is being imposed on this
activity, the petitioner has been paying service tax on this activity
since the year 2006. However, later the Jharkhand Entertainment
Tax Act, 2012 (Act. No.13 of 2012) came into force taxing, inter
alia, the activity of the petitioners as an entertainment. As a
challenge to the legality of this imposition has been rejected
by the High Court of Jharkhand at Ranchi and several other
High Courts, which is now before this Court, this writ petition
has been preferred contending that once an activity is found to
be subject of an enactment under Entry 62 – List II, the same
cannot also be subject to service tax, which is imposed taking
strength from Entry 97 – List I. Therefore, it is prayed that this
Court may declare unconstitutional the imposition of service tax
on the petitioner’s activity. In the alternative, it is prayed that
this Court may declare that the activity of broadcasting does
not constitute providing entertainment and is thereby amenable
to service tax. The prayers sought for in this writ petition read
as under:
“a) Declare that Section 65 (105) (zk) and Section
65(15) of the Finance Act, 1994, insofar as they
purport to impose a tax on the “Direct to Home” activity
provided by the Petitioner, are lacking in legislative
competence and are thereby unconstitutional;
2244 [2025] 5 S.C.R.

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b) Issue a writ of mandamus and/or such other
appropriate writ, order or directing Respondent No.1,
the Union of India, to pay to the various States,
which seek to collect tax by way of entertainment
tax, the amount collected by them towards service
tax in discharge of the Petitioner’s liability towards
entertainment tax;
c) In the alternative, declare that the activity
of broadcasting does not constitute providing
entertainment and is thereby amenable to service
tax, and a tax by the States on such activity under
Entry 62, List II, Sch. 7 of the Constitution of India
is lacking in legislative competence;
d) If prayer (c) above is allowed, then issue a writ of
mandamus and/or such other appropriate writ, order
or directing the Respondent States which collect
tax by way of entertainment tax, to pay over the tax
collected by them towards entertainment tax on the
service provided by the Petitioner to the Union of
India in discharge of the Petitioner’s liability towards
service tax.
e) Pass such other orders as this Hon’ble Court may
deem fit and proper in the interest of justice.”

W.P. (C) No.748/2015:

3.5 The issues raised in W.P.(C) No.748/2015 are similar to W.P.(C)
No.699/2014 inasmuch as the petitioner, M/s Tata Play Ltd.,
challenges the constitutional validity of Section 65 (105) (zk)
read with Section 65(15) of the Finance Act, 1994, which
imposes service tax on the provision of DTH broadcast facility
provided by the petitioner to its subscribers. Petitioner also
challenges the constitutional validity of Sections 3(10), 3(11)
and Section 15A of the Andhra Pradesh Entertainment Tax Act,
1939, and the Assessment Order RC No.A2/424/2014-15 (ET)
dated 27.08.2015 issued by the Government of Telangana,
Commercial Taxes Department for FY 2011-22, 2012-13 and
2013-14. After re-organization, the State of Telangana adopted
[2025] 5 S.C.R. 2245

State of Kerala & Another v.
Asianet Satellite Communications Ltd. & Others

the aforementioned Act. The petitioner’s principal contention is
that the petitioner cannot be burdened with imposition of ‘service
tax’ and ‘entertainment tax’ on the same taxable event i.e.
‘transmission of signals’. It is also contended that the petitioner
as a DTH operator does not fall within the ambit of a ‘Master
Cable Operator’ within the meaning of the state enactment and
therefore no entertainment tax can be levied on the petitioner’s
activity. Furthermore, it is argued that the State of Telangana
cannot seek to levy Entertainment Tax for the period prior to
the existence of the State of Telangana especially for the areas
which now form part of the Andhra Pradesh. The prayers sought
for in this writ petition read as under:
“(A) Issue an appropriate writ, order or direction
declaring Section 65 (105) (zk) r/w Section 65(14)
of the Finance Act, 1994 insofar as they purport to
impose a tax on the “Direct to Home” activity provided
by the Petitioner, as lacking legislative competence
and thereby unconstitutional;
(B) In the alternative, declare that the activity
of broadcasting does not constitute providing
entertainment and is thereby amenable to service tax
and a tax by the States on such activity under Entry
62, List II, Schedule 7 of the Constitution of India is.
lacking in legislative competence;
(C) Issue an appropriate Writ, Order or direction,
declaring the Section 3(10), 3(11) and Section 15
A of the Andhra Pradesh Entertainment Tax Act as
adopted by the State of Telangana, in so far as it
purports to impose a tax on the activities carried on
by the Petitioner as lacking legislative competence;
(D) Issue a Writ of certiorari or any other writ, order
or direction setting aside the Assessment Order
(Rc. No. A2/ 424/2014-2015 (ET) dated 27.08.2015
(received by the Petitioner on 07.09.2015) issued by
Respondent No. 3 as illegal, and having been issued
without the authority of law;
(E) Pass such other orders as this Hon’ble Court
may deem fit and proper in the interest of justice.”
2246 [2025] 5 S.C.R.

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Submissions:
4. We have heard learned senior counsel and learned counsel appearing
for the respective assessees/appellants herein and learned senior
counsel and learned counsel for the respective State as well as
learned senior counsel appearing for the Union of India at length
and on several dates.

Submissions on behalf of Appellants:
4.1 Learned senior advocate, Sri Datar, appearing on behalf of
the appellant in C.A. No. 2147/2012, drew our attention to the
conscious use of the word ‘entertainments’ in Entry 62 - List II.
It was contended that the word ‘entertainments’ is not the plural
of ‘entertainment’ but is nomen juris. This line of argument was
advanced to contend that the State cannot expand its taxing
power by including DTH services within the meaning of the
word “entertainments”. To buttress his submission, he took
us through the consistent use of the word ‘entertainments’
from the year 1622 onwards in British legislation. It was his
argument that this consistent usage reflects the continuing and
underlying intention of constitutional makers for ‘entertainments’
to mean only public entertainment to the exclusion of private
entertainment. Reliance in this regard was also placed on
Cantonment Board Poona vs. Western India Theatres Ltd.,
AIR 1954 BOM 261, wherein the Bombay High Court held that
‘entertainments’ is used as a common noun and is to mean
‘entertainments in public’.
4.2 Sri Datar also argued that Entry 31 – List I refers to
‘communication’ and ‘broadcasting’. Therefore, even in the
absence of an express entry taxing telecommunication or
broadcasting, it was contended that these are “services” and
can be taxed only by the Union, even if used for television
channels. As “broadcasting service” includes DTH service, the
States do not have the competence to tax the same service.
He also drew our attention to the omission of Section 129 of
the Government of India Act, 1935 that permitted imposing of
fees on construction, use of transmitters, and use of receiving
apparatus. This was contended in light of the fact that DTH
operators use an apparatus to receive signals and further
decode them.
[2025] 5 S.C.R. 2247

State of Kerala & Another v.
Asianet Satellite Communications Ltd. & Others

4.3 It was further contended that vide Circular No. 61/10/2003-ST
dated 14.07.2003, the Ministry of Finance directed Doordarshan
and All India Radio to pay service tax as a provider of broadcasting
services. It was therefore contended that, even if there is any
entertainment through Doordarshan and All India Radio, it has
always been treated as part of broadcasting service. By way of
analogy, it was argued that Radio Tax was also levied by the
Post and Telegraph Department even though radio provided
entertainment. It was put forth that while Entry 31 - List I covers
broadcasting and “other like forms of communication”, Entry 13
- List II applies to communications not specified in List I (which
actually concerns surface transport).
4.4 Our attention was also drawn to Entry 92C – List I of the
Constitution, which was inserted but not notified. Relying on
a judgment of the Constitution Bench of this Court in State of
Kerala vs. Mar Appraem Kuri Company Ltd., (2012) 7 SCC
106, Sri Datar argued that the subject service tax is within the
exclusive domain of Parliament even though Entry 92C was not
notified. Therefore, it was contended that under Article 246(1)
read with Article 248, only Parliament can levy tax on any kind
of services after the insertion of Entry 92C.
4.5 Furthermore, Sri Datar highlighted that, even the Negative List
under Section 66D of the Finance Act, 1994 in the service tax
regime also specifically excludes tax on entertainments, which,
according to him, means only public entertainments. Therefore,
it was contended that entertainments in public places, theatres,
etc. will be subject to State taxes; whereas the same cinema
shown on a personal device or on DTH/Cable TV can be taxed
only by the Centre as being part of broadcasting service.
4.6 It was also contended by Sri Datar that all the impugned
enactments passed by States have merely included “DTH
Services” or broadcasting service as part of the definition of
entertainment and therefore the tax is levied on the service
itself and not on the entertainment, particularly because the
entire value is taxed.
4.7 On the application of aspect theory, learned senior counsel
Sri Datar’s categorical argument was that “Double Aspect”
theory only comes into play when both the Union and States
2248 [2025] 5 S.C.R.

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have legislative competence. However, as Parliament in 2001
declared its intent to tax DTH services, the aspect theory will
have no application here.
4.8 Furthermore, on the relevancy of Purvi Communication to
the matter at hand, it was pointed out by Sri Datar that while
Parliament levied a tax in the year 2001, the judgment in Purvi
Communication was pronounced in 2005 and has not noted
the legislative history of entertainments and also did not refer
to any entries pertaining to broadcasting or communications.
4.9 As an argument in the alternative, it was contended that even
if the aspect theory was to apply, the impugned enactments
are liable to be struck down as they ignore that in all composite
transaction with different aspects, the legislature provides
for bifurcation; however, herein the State legislatures have
not provided for computation of the value attributable to
entertainment. Only the States of Delhi and Assam have not
levied entertainment tax on the gross consideration. It was
contended that taxation on gross value is prohibited in law
and the value of entertainment cannot be included in the value
of service and vice-a-versa, vide Bharat Sanchar Nigam
Limited vs. Union of India, (2006) 3 SCC 1 (“Bharat Sanchar
Nigam Limited”); K. Damodarasamy Naidu & Bros. vs. State
of Tamil Nadu, (2000) 1 SCC 521.
4.10 In that context, it was also argued that where the services
are availed by the weaker section of the society as well, an
interpretation that avoids double taxation should be preferred.
4.11 Sri S.K. Bagaria, learned senior counsel appearing on behalf
of the appellant in Civil Appeal No.1680 of 2020 and Writ
Petition (Civil) No.699 of 2014, contended that the activity of
the appellants herein is primarily broadcasting and has been
treated and taxed as such under the statutes enacted by the
Parliament. To show that the entire field of DTH services is
occupied by the Central Government, Sri Bagaria drew our
attention to the order dated 15.03.2001 of the Ministry of
Information and Broadcasting, Government of India, by which
DTH broadcasting was permitted in India.
4.12 According to Sri Bagaria, the fact that neither Entry 62 - List II
nor any other entry in the State List explicitly mentions taxes
[2025] 5 S.C.R. 2249

State of Kerala & Another v.
Asianet Satellite Communications Ltd. & Others

on broadcasting shows that any and all taxes on broadcasting
can be imposed exclusively by the Parliament. Reliance in that
regard was placed on Article 248(2) of the Constitution which
provides for the Parliament to make any law imposing a tax
not mentioned either in the Concurrent list or in the State list.
Reliance was placed on the dictum of this Court in Association
of Leasing & Financial Service Companies vs. Union of
India, (2011) 2 SCC 352.
4.13 It was sought to be advanced that the question before
this Court was not merely regarding the scope of taxes on
entertainments but also about the conspicuous absence of
taxes on broadcasting in Entry 62 - List II. In other words, the
question is whether the expression ‘taxes on entertainments’
can be construed so broadly as to include taxes on broadcasting
within it. The argument advanced was that even a reading
of the entries in their widest amplitude would not enable the
respondents to read into the entry a subject not covered
by it. Succinctly stated, the argument of Sri Bagaria is that
giving such a wide interpretation to Entry 62 - List II will nullify
Parliament’s power and legislative competence to levy taxes
on broadcasting service as there can be no overlapping in
the field of taxation.
4.14 While Entry 31 - List I is undisputedly acknowledged as a
regulatory entry, it was also argued that a construction as
argued by the appellants will also be fully in line with the
structure of the constitutional scheme, especially that of the
Seventh Schedule. As broadcasting and other like forms of
communication are covered by Entry 31 - List I and service
tax on broadcasting is imposed under Entry 97 - List I, it
was argued that there is a discernible constitutional scheme
which necessitates the widest possible construction of Entry
31- List I. Additionally, it was advanced that the State List
has no mention of broadcasting and other like forms of
communication or taxes on broadcasting whereas State List
does have regulatory entries in the form of Entry 33 – List II
concerning sports, entertainments and amusements, and in
the form of Entry 34 – List II for betting and gambling. Thus,
Entry 62 – List II relates to taxes on luxuries, including taxes
on entertainments, amusements, betting and gambling.
2250 [2025] 5 S.C.R.

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4.15 Sri Bagaria, learned senior counsel, placed significant reliance
on the scheme of regulation and definition of broadcasting by
Parliamentary statutes and orders. It was argued that the entire
contour of broadcasting is a subject matter of parliamentary
enactments and, therefore, as all forms, types and varieties of
broadcasting are covered by Parliamentary Law, it is evident
that every facet of regulation of broadcasting is subsumed
under Entry 31 – List I and the taxing power for broadcasting
is under Entry 97 – List I. Highlighting the importance of
broadcasting, it was also argued that broadcasting and other
forms of communication are subjects of national importance
which were intended by the constitutional framers to be
regulated and taxed by the Central Government only. It is the
case of the appellants that upholding such an interpretation of
Entry 62 – List II would be to truly and correctly reconcile the
same with other entries in List I. According to the appellants,
the constitutional scheme is with respect to all forms, types
and contents of broadcasting. The consequences and
effects of broadcasting are not the same thing as legislative
subject matter and, consequently, all forms and attributes of
broadcasting also fall within List I. It is Sri Bagaria’s argument
that tax is sought to be levied merely with reference to the
entertainment - causing attribute of broadcasting and is,
therefore, impermissible in law.
4.16 Reliance was placed on the judgment of this Court in Special
Reference No.1 of 2001, In Re: Association of Natural
Gas vs. Union of India, (2004) 4 SCC 489, wherein the
validity of Gujarat Gas (Regulation of Transmission, Supply and
Distribution) Act, 2001 was challenged before the Constitution
Bench. The issue before the Court was whether the State
had legislative competence to make laws on natural gas
and liquefied natural gas under Entry 25 – List II, “Gas and
Gasworks” or whether the Parliament was competent to make
laws under Entry 53 – List I, “Regulation and development of
oilfields and mineral oil resources; petroleum and petroleum
products; other liquids and substances declared by Parliament
by law to be dangerously inflammable”. While the State of
Gujarat argued that Entry 25 – List II must be given the widest
possible interpretation and that it includes all types of gases
[2025] 5 S.C.R. 2251

State of Kerala & Another v.
Asianet Satellite Communications Ltd. & Others

especially when there are no words of limitation in the entry
itself, this Court considered the consistent legislative practice
in various legislations to hold that the term “petroleum” or
“petroleum products” has been given a wide meaning to
include within itself natural gas and other similar products.
Sri Bagaria, learned senior counsel, contended that similarly,
central legislations passed by Parliament over several decades
included within “broadcasting” any form of communication
like signals, images, sounds of all kinds by transmission of
electromagnetic waves irrespective of the contents and their
natures or types. It was further contended that this reading
will not make Entry 62 – List II a “useless lumber” because
any or all forms of broadcasting was never intended to be
covered by the expression “entertainments”.
4.17 It was categorically argued that the aspect theory has no
application to the activity at hand as the activity of broadcasting
is taxed by the Parliament and the state legislatures have no
legislative competence to tax the same under Entry 62 - List
II as tax on ‘entertainments’. Sri Bagaria would argue that
even in Federation of Hotel & Restaurant Association of
India vs. Union of India, (1989) 3 SCC 634 (“Federation
of Hotel & Restaurant Association of India”) this Court
rejected the challenge to the central statute impugned therein
as it found that the subject matter of the impugned statute
was in pith and substance a tax on expenditure and not on
luxuries or sale of goods.
4.18 Sri Gulati, learned senior advocate, argued that at a foundational
level, far from carrying out any activity of entertainment, the
appellant only acts as a conduit in the entire process of
transmission of signals to the subscriber of television channels.
In this context, he outlined that appellants perceive the nature
of their activity as follows:
(i) entire activity of appellants is in relation to transmission
of DTH signals; and
(ii) neither do appellants exercise any control over the
content received from the broadcaster nor do they
control exhibition of the content.
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4.19 It was contended that the said activity is aptly described as only
rendering broadcasting service which was earlier amenable
to service tax under Section 65(105)(zk) of the Finance Act,
1994 and was specifically expanded in 2005 to include DTH
signals. That from the year 2007 onwards, the appellant was
discharging service tax on the entire monthly subscription
charges under ‘broadcasting services’ without charging any
additional consideration for set-top boxes and dish antenna.
It was argued that, in substance, this position continued even
after the Negative List regime was brought about in 2012.
4.20 Sri Gulati highlighted that States have enacted statutes under
Entry 62 – List II intending to tax the very same activity as that
of providing “broadcasting service”, which is already amenable
to service tax imposed by the Parliament. According to Sri
Gulati, the provisions of various State enactments levying
Entertainment tax can be categorized as follows:
i. Levy of tax is on admission to entertainment by way of
a DTH connection;
ii. Levy is on entertainment through DTH service, and
iii. No taxable event is specified in the charging provision.
4.21 It was contented that herein there is only one activity of
providing DTH signal and that itself is a service. Reliance
was placed on All India Federation of Tax Practitioners vs.
Union of India, (2007) 9 SCR 527 (“All India Federation
of Tax Practitioners”) to submit that a service is also an
activity. Thus, it was contended that the only taxable event
here being providing the service of broadcasting, there are
no two aspects to the service provided by the Appellants and
only one taxable event i.e. provision of DTH service does not
enable the States under the guise of Entry 62 - List II to levy
entertainment tax on the same aspect.
4.22 It was stressed on behalf of the appellants that though
entertainment may, inter alia, be a consequence of DTH
service, but entertainment tax cannot be levied on the activity
of provision of DTH service, vide Godfrey Phillips Ltd. vs.
State of U.P., (2005) 2 SCC 515 (“Godfrey Phillips”). It was
contended that there being only one taxable event, there can
[2025] 5 S.C.R. 2253

State of Kerala & Another v.
Asianet Satellite Communications Ltd. & Others

be no confounding of the service provided herein as both: a
service and an entertainment.
4.23 In the same vein, reliance was placed on Godfrey Phillips
to contend that the word ‘entertainments’ contemplates a
tax on ‘activities’ of entertainments and not on any person
being entertained or receiving entertainment per se. As no
entertainment is inherently embedded in the activity conducted
by appellants, namely, broadcasting service, there can be no
levy of entertainment tax on them.
4.24 It was also pressed that the position of law permits tax under
Entry 62 - List II only on the act of entertaining and not on the
consequence of an activity being entertainment vide Western
India Theatres vs. Cantonment Board, Poona, 1959 Supp
(2) SCR 63 (“Western India Theatres”). Highlighting the
multitude of content transmitted by appellants, it was advanced
that the activity of appellants cannot be seen as providing
entertainment insofar as informational and educational shows,
news, etc. as these may not have any element of entertainment
at all.
4.25 Another line of argument of appellants advanced before us
relates to a distinction between public entertainment and
private entertainment. By way of analogy to cinema theaters,
it was contended that mere provision of DTH services does
not constitute a ticket “for admission to an entertainment”/or
provision of “entertainment”. It was also contended that for
an entertainment to be taxed as such, it should be open to
public where members are invited. That is to say, Entry 62 –
List II is restricted to entertainments of a public color. – vide
Geeta Enterprises vs. State of Uttar Pradesh, (1983) 4
SCC 202 (“Geeta Enterprises”). However, as DTH service
is provided to a subscriber in a private place, the appellants
contended that the aspect of providing DTH service levy of
entertainment tax is constitutionally impermissible. According
to Sri Gulati, learned senior counsel, the words appearing
alongside ‘entertainments’ in Entry 62 – List II must also be
taken aid of to interpret the entry as having a public colour. It
was argued that the juxtaposition of amusements, betting and
gambling within one entry indicates that the tax contemplated
2254 [2025] 5 S.C.R.

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is on establishments providing entertainment activities.
Similarly, it was highlighted that the taxable event in various
state legislations is the “admission for an entertainment” and
not the consequence of entertainment.
4.26 The next line of contention taken by the appellants is that there
is no overlap in taxing entries and that it is settled law that
taxing entries must be construed with clarity and precision as
to maintain exclusivity. - Commissioner of Central Excise
and Customs, Kerala vs. Larsen and Toubro Ltd., (2016)
1 SCC 170 and Hoechst Pharmaceuticals Ltd. vs. State
of Bihar, (1983) 4 SCC 45 (“Hoechst Pharmaceuticals”).
4.27 On the question of applicability of aspect theory, which has been
relied on by various High Courts, the appellants contend that
the activity of broadcasting is only one indivisible transaction
which cannot be artificially split into two taxable events and,
therefore, the aspect theory would have no applicability here
as splitting is permitted only when the activity represents
two distinct and separate contracts which are discernible as
such. - Bharat Sanchar Nigam Limited.
4.28 In substance, the contention of the appellants was that
the provision of providing DTH service is only one taxable
event which cannot be split into various aspects to become
amenable to taxation as both a broadcasting service and as
entertainments. Reliance was also placed on the fact that
the appellants are mandated to avail license granted under
Section 4 of the Indian Telegraph Act, 1885 for providing
telecommunication services. It was also highlighted that this
Court in Bharat Sanchar Nigam Limited observed that the
license under Section 4 of the Indian Telegraph Act is for
providing telecommunication service and not for supply of any
goods or transfer of right to use any goods. In furtherance
of the same, it was noted by this Court that the integrity of
the telecommunication service or license would therefore be
mutilated if it were to be broken down into pieces to be taxed
as supply of goods or transfer of right to use goods.
4.29 Sri Gulati, learned senior counsel, furthermore argued that
there being no divisible event, the correct test to ascertain
the true nature of the activity herein is the dominant nature
[2025] 5 S.C.R. 2255

State of Kerala & Another v.
Asianet Satellite Communications Ltd. & Others

test. Having argued vehemently that the dominant intention
of the appellant is to act only as a conduit for receipt and
transmission of broadcasting signals, he highlighted that the
aspect theory will be of no avail to the States to entrench upon
the Union List and tax services by including the cost of such
service in the value of the goods, vide Bharat Sanchar Nigam
Limited; Imagic Creative (P) Ltd. vs. CCT, (2008) 2 SCC
614 (“Imagic Creative”); Larsen and Toubro Limited vs.
State of Karnataka, (2014) 1 SCC 708.
4.30 Sri Gulati took us through the origin of the aspect theory in
the Canadian jurisprudence whilst highlighting at the outset
a significant distinction between the Canadian and Indian
jurisprudence that must be borne in mind. In Lyle Francis
Smith vs. Her Majesty the Queen, (1960) SCR 776, and
in several decisions since then, it has been observed by
the Supreme Court of Canada that within the Canadian
constitutional scheme, an overlap is inevitable between the
subjects outlining the areas of legislations to be legislated on
by the Parliament of Canada and provincial legislatures due to
the general wording of the subjects under Sections 91 and 92
of the British North America Act, 1867 respectively. However,
it is settled law that in India, there is no overlap between the
taxation entries in List I and List II. It was highlighted that the
double aspect doctrine has been developed to resolve these
situations of inevitable overlap and has been applied to allow
both federal and provincial regulation where powers overlap.
It was contended that the doctrine has, however, never been
allowed to enable the dominion and provincial legislatures to
separately tax two aspects of the same transaction. It was
therefore contented that any transplantation of the doctrine to
the Indian Constitution must be tempered and exercised with
caution given that in the Indian constitutional scheme, there
cannot be any overlap in respect to the entries pertaining to
taxation.
4.31 Furthermore, it was contended that the true nature of the
activity of DTH services must be ascertained while keeping
in mind that the DTH operator has no control over the content
that is broadcast or received. It was contended that as the
activity would continue to be a service even if no entertainment
2256 [2025] 5 S.C.R.

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value is transmitted, it must be held that the true nature of the
activity is predominantly that of a broadcasting service. It was
repeatedly and vehemently argued on behalf of appellants
that any element of entertainment is purely incidental to the
provision of service.
4.32 Sri Gulati further argued that the pith and substance of the
state legislations, impugned herein, is in the nature of a
broadcasting service. This argument links to the foundational
argument that the activity of providing broadcasting services
is not in the nature of entertainment, and therefore, the levy
imposed on purported entertainment isn’t different from service
on which service tax is levied by the central government. It
was contended that states cannot simply deem the whole
activity undertaken by appellant as ‘entertainment’ which in
fact is, fundamentally, a broadcasting service.
4.33 The argument further advanced on behalf of the appellants was
that there is no machinery to exclude the value of service from
the value of entertainment. This was argued as the impugned
legislations, except those of the States of Delhi, Gujarat, and
Assam, do not exclude the value of service from the value of
entertainment before levying entertainment tax. According to
the appellants, it is impermissible to levy entertainment tax
on the value of the gross amount received by the appellants
from its subscribers without segregating the value of service
from the value of entertainment. In substance, the contention
of the appellant was that in the absence of any machinery
to compute the measure of tax for the purpose of levy of
entertainment tax, the charge of entertainment tax itself would
fall, vide Commissioner of Income Tax, Bangalore vs. B.C.
Srinivasa Setty, (1981) 2 SCC 460.
4.34 Notably, a three-judge bench of this Court in Purvi
Communication has already found that entertainment tax
was leviable against cable operators. However, learned senior
counsel Sri K.K. Venugopal argued that the decision of this
Court in Purvi Communication failed to consider the tests laid
down in Geeta Enterprises and to that extent is per incuriam
and sub silentio. Appellants also contended that the decision
in Purvi Communication is distinguishable as that case was
[2025] 5 S.C.R. 2257

State of Kerala & Another v.
Asianet Satellite Communications Ltd. & Others

not concerned with attempts of both Central Government and
State Governments to levy a tax on the same activity but
instead dealt with the conflict between Entry 62 – List II and
Entry 31 – List I i.e. between a taxing entry and a regulatory
entry, whereas the conflict herein is between two taxing entries
being Entry 97 – List I and Entry 62 – List II.
4.35 The appellants also contended that if the State legislatures
are held competent to levy entertainment tax under Entry 62 –
List II, then the taxable event would fall within the exclusive
jurisdiction of the State legislature and consequently the
Central Government would lose competence to levy service
tax under Entry 97 – List I.
4.36 Without prejudice to the foregoing arguments, learned
senior counsel appearing for the appellants argued that the
impugned legislations promulgated by the states of Tamil
Nadu, Odisha, Assam and Gujarat fail to provide for a clear
and unambiguous taxable event as they only deem the
operations of DTH operators as entertainment. Therefore, it
was contended that these legislations do not satisfy the test
laid down by this Court in Govind Saran Ganga Saran vs.
CST, 1985 Supp SCC 205 (“Govind Saran Ganga Saran”)
and must be held to be unconstitutional. As only the Madras
High Court accepted this argument, learned counsel for the
appellants contended that the impugned judgments arising
out of the High Courts including Orissa, Gauhati and Gujarat
are bad in law.
4.37 It was further contended that Section 3 of the Jharkhand
Entertainment Tax Act, 2012, which is the charging section,
merely provides a tax on entertainment and lacks any clear
and unambiguous stipulation to tax entertainment through
DTH. Therefore, in the absence of such express words in the
charging section, there cannot be any levy of entertainment tax.
It was also contended that the Notification dated 14.05.2012
issued by the State Government under Section 1(3) of the
Jharkhand Entertainment Tax Act, 2012 appointing 27.04.2012
as the date of implementation of the Act suffers from the vice of
imposing retrospective taxation in the absence of any express
legislative provision providing for it.
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4.38 Ms. Shirin Khajuria, learned senior counsel appearing on
behalf of the subscribers, took us through the scheme of the
impugned Act promulgated by the State of Kerala and brought
to our attention that there was a stay on the levy of luxury tax
for the period 2006 to 2010 and therefore the tax has to be
collected only if leviable and not otherwise.

Submissions of Respondent-States:

State of West Bengal:
5. Sri Jaideep Gupta, learned senior counsel appearing for the State
of West Bengal in W.P.(C) 699/2014, commenced his arguments
by noting that the writ petitioners have not pressed the prayers
challenging the constitutional validity of Section 65 (105)(zk) and
Section 65(15) of the Finance Act, 1994. Further, arguing in support
the constitutional validity of the entertainment tax imposed under
the State enactment, he contended that there is no conflict between
Entry 62 – List II and Entry 97 – List I.
5.1 According to learned senior counsel, this Court’s approach must
be to first interpret Entry 62 – List I, followed by an examination
of the scope of Entry 33 – List I. It was argued that the scope
of Entry 62 – List II can be informed by the judgment of this
Court in Western India Theatres wherein it was held that a
State imposition is on the activity of entertainment. In that case,
it was on the happening of a show in a theater. Reliance was
placed on the following paragraph from Western India Theatres:
“As pointed out by this Court in Navinchandra
Mafatlal v. The Commissioner of Income Tax, Bombay
City (1), following certain earlier decisions referred to
therein, the entries in the legislative list should not be
read in a narrow or restricted sense and that each
general word should be held to extend to all ancillary
or subsidiary matters which can fairly and reasonably
be said to be comprehended in it. It has been
accepted as well settled that in construing such an
entry conferring legislative powers the widest possible
construction according to their ordinary meaning must
be put upon the words used therein. In view of this
[2025] 5 S.C.R. 2259

State of Kerala & Another v.
Asianet Satellite Communications Ltd. & Others

well established rule of interpretation, there can be no
reason to construe the words “ taxes on luxuries or
entertainments or amusements “ in entry 50 as having
a restricted meaning so -as to confine the operation
of the law to be made thereunder only to taxes
on persons receiving the luxuries, entertainments,
or amusements. The entry contemplates luxuries,
entertainments, and amusements as objects on
which the tax is to be imposed. If the words are
to be so regard- ed, as we think they must, there
can be no reason to differentiate between the giver
and the receiver of the luxuries, entertainments, or
amusements and both may, with equal propriety, be
made amenable to the tax. It is true that economists
regard an entertainment tax as a tax on expenditure
and, indeed, when the tax is imposed on the receiver
of the entertainment, it does become a tax on
expenditure, but there is no warrant for holding that
entry 50 contemplates only a tax on moneys spent on
luxuries, entertainments or amusements. The entry,
as we have said, contemplates a law with respect
to these matters regarded as objects and a law
which imposes tax on the act of entertaining is
within the entry whether it falls on the giver or
the receiver of that entertainment. ...”
(emphasis supplied)

Applying the aforesaid to the facts of the instant cases, it was argued
that irrespective of the nomenclature of broadcasting or entertainment,
the activity of the petitioner ends with the TV set and is therefore
carried out for the purpose of entertainment.
5.2 Sri Gupta further argued that where taxing entries are not in
conflict, then there is no need to go the doctrine of pith and
substance. Furthermore, examining the application of aspect
theory in Federation of Hotel & Restaurant Association of
India, he argued that the same has been followed in All India
Federation of Tax Practitioners. It was also argued that Purvi
Communication is not per incuriam and was rightly decided it
being distinguished from Geeta Enterprises for multiple reasons.
2260 [2025] 5 S.C.R.

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State of Uttar Pradesh:
5.3 Learned senior counsel Sri Raizada appearing for the State
of Uttar Pradesh, contended that the judgment in Geeta
Enterprises was adjudicated on the anvil of interpretation of
‘places of entertainment’ as it appeared in the 1937 Act whereas
the present impugned levy is imposed under the revised 1979
Act. It was highlighted that the period of the controversy herein
is from 2005–2009 and any dictum under the 1937 Act would
have no bearing on the present case. Furthermore, it was argued
that if for a single transaction two levies are made out or use a
measure of another tax then such an imposition would not be
ultra vires the Constitution. Therefore, it was contended that
‘entertainments’ as it appears in Entry 62 – List II must be given
a widest possible interpretation and it would be erroneous to
define entertainment in a myopic, rigid or straightjacket formula.

State of Odisha:
5.4 Sri Preetesh Kapur, learned senior advocate, appearing for the
State of Odisha in C.A. No.1536/2020 contended that Entry
62 – List II must be read in the widest amplitude possible and
a correct reading of the same allows imposition of tax on the
act of entertaining whether it falls on the provider or receiver
of entertainment, vide Western India Theatres. Furthermore,
in Express Hotels (P) Ltd. vs. The State of Gujarat, 1989 3
SCC 677 (“Express Hotels”), this Court, while interpreting Entry
62 – List II on the context of luxuries, observed that a legislative
entry takes within it everything that can fairly and reasonably be
said to be comprehended in it while the actual measure of the
levy is a matter of legislative policy and will be held to be good
in law as long as it has a reasonable nexus with the concept
of luxuries. It was also canvassed that the actual utilization or
derivation of entertainment was irrelevant for the imposition of
tax and could be of any kind including one which may be purely
educative vide Express Hotels or Geeta Enterprises.
5.5 It was further argued that the Orissa Entertainment Tax Act, 2005
as well as the Amendment Act of 2010 are, in pith and substance,
relatable to Entry 62 - List II. Applying the test expounded by
a three-Judge Bench of this Court in Purvi Communication
[2025] 5 S.C.R. 2261

State of Kerala & Another v.
Asianet Satellite Communications Ltd. & Others

to ascertain whether a tax falls within the ambit of Entry 62 -
List II, learned senior counsel contended that the amendment
in question, whereby entertainment tax was imposed on DTH
operators, is a tax on entertainment.
5.6 Sri Kapur argued that this Court in para 46 of Purvi
Communication has held that the appropriate test is whether
the activity being taxed has a direct and proximate nexus
with the provision (or enjoyment) of entertainment. It was also
argued that once the law is found to be in pith and substance
relatable to Entry 62 - List II, the mere imposition of service tax
cannot by itself denude the State legislatures of their legislative
competence.
5.7 Sri Kapur sought to contend that when neither entry is subject
to the other, then both entries are required to be constructed so
harmoniously that they are given full effect in their respective
fields. Therefore, both entries herein, though they may seem
overlapping, can indeed be given full effect as they deal with
distinct aspects. States have also placed significant reliance on
‘aspect theory’ or the ‘double aspect doctrine’ to establish that
both Central and State Acts are valid as they seek to levy tax
on entirely different aspects even though they may form part
of the same activity.
5.8 According to Sri Kapur, had the liability been imposed directly
upon the subscriber, the distinction between service tax on the
services rendered by the DTH operator and entertainment tax
upon the subscribers would have been self-evident. It is settled
law that entertainment tax, for administrative convenience, can
either be on the receiver or equally be upon the provider of the
content without causing any alteration to its nature. – Federation
of Hotel & Restaurant Association of India. The same case
was also relied upon to contend that a measure of tax is not
determinative of the nature of the levy.
5.9 Furthermore, it was contended that the argument advanced by
the appellants herein would render Entry 62 – List II redundant
as almost every provision of entertainment would necessarily be
borne out of rendition of some service. According to Sri Kapur,
this is precisely why the distinction between the two aspects
must always be kept in mind.
2262 [2025] 5 S.C.R.

Supreme Court Reports

5.10 On the application of aspects theory, it was contented that the
same is neither contrary to the pith and substance doctrine
nor is it an exception, but only compliments the latter. The
operationalization of aspect theory is explained by suggesting
that two competing enactments, if they deal with distinct
aspects of a transaction, will not restrict each other and will
continue to apply in their respective fields without inviting any
question of overlap or repugnancy. It was submitted that the
aspect theory is helpful at the stage of a “seeming” conflict
to determine whether the aspects legislated upon are distinct
and whether there is an overlap or not at all.
5.11 In response to the arguments of the appellants that Entry
31 read with Entry 97 – List I must be seen as taking out
from Entry 62 – List II a tax on entertainment provided by
means of broadcasting, the State of Orissa contended that
such an argument overlooks the distinct aspects involved
in rendition of services and entertainment. Neither could
Entry 31 – List I being a regulatory entry whittle down the
scope of Entry 62 – List II nor could Entry 97 – List I being
a residuary entry cull out any aspect from a specific taxing
entry in the State List.
5.12 Pertinently it was also highlighted that this Court in State
of Karnataka vs. State of Meghalaya, (2023) 4 SCC 416
(“State of Karnataka”), specifically rejected the contention
that a regulatory entry in the Union List must be construed
as also covering all facets of taxation along with and through
the residuary entry, even if that tax may squarely fall within
the State List.
5.13 Furthermore, in response to the contentions on Geeta
Enterprises and Purvi Communication, it was contended that
the judgment in Geeta Enterprises categorically notes that
this Court was concerned with the definition of entertainment
under a particular statute and not under Entry 62 – List II. That
it would be wholly erroneous to transplant the limitations and
interpretations made in the context of a statute to be taken to
govern the interpretation of an entry in the Seventh Schedule
of the Constitution, which must be given an interpretation of
the widest possible amplitude.
[2025] 5 S.C.R. 2263

State of Kerala & Another v.
Asianet Satellite Communications Ltd. & Others

5.14 It was also highlighted that this Court in Suresh vs. State of
T.N., (1997) 1 SCC 319 (“Suresh”) had already considered
the argument and expressed agreement with the view of the
States herein.
5.15 Summarily, it was also argued that the imposition of tax on
goods or an activity that a person may ultimately enjoy or
consume at home cannot be construed as an invasion of the
right to privacy.
5.16 To the argument of the appellants that they are merely conduits
in the chain between broadcasters and subscribers, it was
responded that it is settled law that a tax under Entry 62 –
List II can be on the provider of entertainment as well as or
on the receiver. It was also contended that the DTH operator
evidently has a direct and proximate nexus with the subscriber
inasmuch as it is the DTH operator who enrolls and provides
the setup box along with dish antenna to the subscriber. Finally,
it was contended that the argument of merely being a conduit
overlooks the well settled position that tax can be collected
at any convenient stage as long as a rational connection is
maintained. – vide CCE vs. Grasim Industries Ltd., (2018)
7 SCC 233.
5.17 It was also argued that the appellants have erred in relying on
Bharat Sanchar Nigam Limited to contend that the dominant
intention of the activity must be seen and that there must
be splitting of charges between services and entertainment.
Learned senior counsel submitted that this argument ought
to be rejected as it would be totally erroneous to draw an
analogy between entertainment tax on the one hand and tax
on sale of goods on the other, as in the case of entertainment
the entire service rendered by the provider is for the purpose
of entertainment. Even though it might be one activity, it is
on one aspect, the price for services rendered and, from the
point of view of the subscribers, the price for entertainment. –
Federation of Hotel & Restaurant Association of India.
5.18 According to learned senior counsel, the Court in Bharat
Sanchar Nigam Limited held that tax on sale of goods
cannot be levied on a separate and severable component
i.e. services as goods are only a component of the deemed
2264 [2025] 5 S.C.R.

Supreme Court Reports

severable transaction by way of a fiction. In other words,
in Bharat Sanchar Nigam Limited, it was held that the
States lacked jurisdiction to tax the services component and
consequently, lacked the competency to include the price
of services as a measure of tax for sale of goods and vice-
versa. It was for this reason that the judgment in Bharat
Sanchar Nigam Limited held that value of services cannot
be included in the value of goods. By way of analogy, it was
contended that had it been the case that electromagnetic
waves had also been deemed to be goods and there was
an overlap of the entire consideration, only then would the
judgment in Bharat Sanchar Nigam Limited be similar to
the facts herein.
5.19 It was also contended that the argument of splitting the
consideration between services and entertainment is an
indirect manner of contending that the entire subscription
amount cannot form the measure of tax. It was argued that in
case of a composite transaction including services and sale of
goods, a measure for one is distinct from the other by virtue
of there being two deemed separate transactions. However
herein, as the employment of aspect theory as laid down in
the Federation is justified, the full subscription amount can
indeed constitute the measure for both taxes as the rational
nexus between the levy and the measure is maintained. – vide
Mineral Area Development Authority vs. Steel Authority
of India, 2024 SCC OnLine SC 1796.

State of Tamil Nadu:
5.20 Sri Radhakrishnan, learned senior counsel appearing on behalf
of Respondent-State of Tamil Nadu in C.A. No.1580/2020
and C.A. No.1581/2020, invited this Court’s attention to the
history of the legislation on the subject in the State of Tamil
Nadu. Promulgated in 1939, the preamble to the Tamil Nadu
Entertainments Tax Act, 1939 reflects that the Act was intended
“to impose a tax on amusement and other entertainments in
the Province of Madras.” Vide Act No.XVII of 1949 w.e.f. 1st
August 1949, the words “a tax” was substituted by “taxes” and
by Madras Act No.V of 1958, the words “amusements and other
entertainments” were substituted by the word “entertainments”.
[2025] 5 S.C.R. 2265

State of Kerala & Another v.
Asianet Satellite Communications Ltd. & Others

5.21 Thus, as it stands today, the Tamil Nadu Entertainments Tax
Act, 1939 is “an Act to impose taxes on entertainments in the
State of Tamil Nadu”. It was shown that Section 3(4) of the
Act, which defines “entertainment” was amended to levy tax
on gross collection per show made by the theatres-touring,
permanent and semi-permanent.
5.22 Of note is the charging section of the Act i.e., Section 4 which
sought to tax entertainment provided through cinematograph
exhibition in the theatres on payment for admission. The system
of levy gradually underwent changes to pay a percentage on
gross collection and based on theatre location. Pertinently, it
was submitted that in the wake of new age medium of recreation
on television screen through a VCR or cable television network,
the legislature in its wisdom inserted Section 4-D to the Act
w.e.f. 17.05.1984. The aforesaid Section was substituted
by Amendment Act 37 of 1994 with effect from 01.09.1994,
which inserted a charging provision under Section 4-E to
levy tax on entertainment through cable television at 40%
of contribution or subscription or installation or connection
charges or charges collected in any manner for television
exhibition. Similarly, appropriate changes were made to the
definition of “entertainment” under Section 3(4) of the Act
to include cable TV and another source of entertainment.
Thereafter, the State of Tamil Nadu, having taken note of
further technological advancement in offering entertainment
through DTH and through IPL matches, inserted section 4-I
in the said Act to levy tax. Therefore, DTH service and cricket
tournaments conducted by the IPL were brought within the
definition of the term ‘entertainment’.
5.23 Aggrieved, several DTH service providers preferred Writ
Petitions before Madras High Court challenging the levy of
entertainment tax. By judgment dated 19.10.2012, the High
Court accepted the contention of DTH service providers that the
charging section was defective and the levy of entertainment
tax is contrary to Article 14; however, the High Court held
that the State Legislature was competent to levy tax on the
entertainment aspect of the DTH services.
5.24 Learned senior counsel submitted that while construing an
entry in a List conferring legislative power, the widest possible
2266 [2025] 5 S.C.R.

Supreme Court Reports

construction according to their ordinary meaning must be
given to the words used therein. – vide Navinchandra
Mafatlal vs. Commissioner of Income-Tax, Bombay City,
AIR 1955 SC 58. It was submitted that the most liberal and
widest construction must be given to accommodate within
an organic Constitution the changing meaning of the text in
tune with an evolving society. In that context, it was submitted
that in today’s society, it is pedantic to contend that the term
‘entertainment’ does not cover within its ambit DTH service
providers. Furthermore, it was argued that merely because
individuals can derive entertainment in their private space
does not denude the public character of entertainment through
DTH services. The facility of choosing the time, place, mode
or content does not convert entertainment through DTH into
private entertainment and therefore, the subject matter of
tax is not a justifiable ground to read any limitation into this
expression.
5.25 Learned senior counsel vehemently argued that the theory of
occupied field advanced by the appellants herein has already
been rejected by this Court. Our attention was drawn to the
judgment of Madras High Court dated 30.11.1994 in Tamil
Nadu Cable TV Organisers vs. Government of Tamil
Nadu, W.P. No. 16237/1994. Therein, Section 4-E of the
State legislation which levied an entertainment tax on the
entertainment aspect of service provided by cable operators
was challenged in the aforementioned petition before the
Madras High Court. Rejecting the challenge, it was held
that there being nothing in Entry 62 – List II to warrant a
restrictive meaning, the definition of entertainment would
not be restricted to cinematographic exhibitions alone and
would include other forms of entertainment as well. It was
submitted that the challenge made therein was most similar
to the challenge made here against Section 4-I of the same
Act. As noted, the Madras High Court rejected the restricted
interpretation of entertainments and rejected the contention
based on the theory of occupied field as it found that in pith
and substance the impugned legislation fell within Entry 62 -
List II. Thereafter, an appeal was preferred before this Court
by cable TV operators which was rejected in Suresh, while
[2025] 5 S.C.R. 2267

State of Kerala & Another v.
Asianet Satellite Communications Ltd. & Others

observing that there was no reason as to why the entertainment
aspect of the transaction could not be taxed.
5.26 It was further argued that in India, the subject of tax can be
the person, thing or activity on which the tax is imposed and
herein the subject of tax is the receiver of entertainment by
subscription to DTH: Godfrey Phillips.
5.27 Sri Radhakrishnan referred to the distinct and different senses
in which the words ‘levied’, ‘paid’ and ‘recoverable’ are used in
Section 4-I of the Act. While the tax is ‘levied’ on entertainment,
it is ‘paid’ on all payments for admission to an entertainment and
it is ‘recovered’ by the proprietor and paid to the government.
Sri Radhakrishnan also agreed that even if the DTH service
provider only acts as a conduit between content providers and
the subscribers, since it is clarified that the subject matter of
the tax is the entertainment derived from the content, there is
no scope for confusing the entertainment with the service of
enabling the flow of content through the DTH system. It was
also argued that there are two aspects of the DTH service;
i.e. the service aspect and the entertainment aspect. The
taxable event for the former being the flow of content through
satellites and for the latter being the entertainment derived
from the subscription of the content.
5.28 It was also canvassed that the specific power of taxation within
the legislative competence of State of Tamil Nadu cannot be
fettered by the general power of regulation or the residuary
power of taxation available to the Union Government under
Entry 31 or even Entry 97 – List I. It was contended that this
Court has already observed that legislative competence of
the State to levy entertainment tax could not be fettered by
the enactment of any regulatory enactment law, vide Purvi
Communication.
5.29 It was therefore contended that the state’s specific power
of taxation cannot be cut down by regulatory power of the
Union. To assail any question of overlapping in the present
case, learned senior counsel submitted that Entry 62 – List II
operates in an entirely different sphere to that of Entry 92C
or Entry 97 – List I.
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5.30 It was further contended that a reading of Entry 33 – List II
makes it evident that entertainment and amusement is a class
by itself not subject to Entry 60 – List I. Although cinemas
mentioned in Entry 33 – List II are made subject to Entry
60 – List I relating to sanctioning of cinematographic films for
exhibition, but other forms of entertainment qua which general
power of regulation is given to the state are not made subject
to any entries in List I.
5.31 It was reiterated that this Court has held that under the Indian
Constitution, the scheme of division of taxing powers is not
based on any criterion depending on the incidence of the
tax. – Chhotabhai Jethabhai Patel and Co. vs. Union of
India, AIR 1962 SC 1006. The importance of the doctrine of
pith and substance in deciding the scope of legislation qua
the entries in the three Lists was also emphasized. - MPV
Sundararamier & Co. vs. State of Andhra Pradesh, AIR
1958 SC 468 (“MPV Sundararamier”). It was also contended
that to decide the true nature and character of a particular levy
with reference to legislative competence, the Court has to look
into the pith and substance of the legislation as a whole. - All
India Federation of Tax Practitioners. On an application of
the aforesaid principles to the facts of these cases, the learned
senior counsel concluded that taxes on DTH service is on a
different subject when compared to taxes on entertainment
as the pith and substance of the relevant state legislation is
to tax the subject of entertainment.
5.32 Sri Radhakrishnan submitted that the question in Geeta
Enterprises was limited to the interpretation of the word
‘entertainment’ as used in Section 2(3) of the United Provinces
Entertainment and Betting Tax Act, 1937 and therefore non-
consideration of the ratio of the said case does not make the
judgment in Purvi Communication bad in law.
5.33 Additionally, it was also argued that DTH operators are not
merely engaged as conduits in the service of broadcasting but
also create their exclusive content and channels available to
their subscribers.
[2025] 5 S.C.R. 2269

State of Kerala & Another v.
Asianet Satellite Communications Ltd. & Others

State of Rajasthan:
5.34 Dr. Manish Singhvi, learned senior counsel appearing on behalf
of the State of Rajasthan, submitted that if the activity of the
petitioners is within Entry 62 – List II then nothing more is to
be seen and the imposition of service tax is wholly irrelevant.
After taking us through the provisions of the relevant Act
promulgated by the State of Rajasthan Act, it was argued that
imposition of service tax is not a tax on entertainment, validity
of which needs to be determined only by testing if in pith and
substance it is traceable to Entry 62 – List II.

State of Punjab:
5.35 Learned senior counsel Sri Farasat appearing for the State
of Punjab, argued that broadcasting is merely a means to the
entertainment derived, by the content being delivered and
that the imposition of service tax would not detract from the
competence of the State Legislature to levy entertainment
tax under Entry 62 – List II. In the absence of any conclusive
intent apparent from the Constituent Assembly Debates, he
argued against drawing any myopic inference on the scope
of Entry 62 – List II.

State of Nagaland:
5.36 Ms. K. Enatoli Sema, learned counsel appearing for the State
of Nagaland in W.P.(C) No.699/2014, brought to our attention
that the relevant state Act was amended in the year 2011 and
that the definition of entertainment includes DTH operators.
That the enactment promulgated by the State of Nagaland
has not been challenged and that in fact even after filing of
the writ petition, entertainment tax has in fact been paid by
the writ petitioner without any protest.

State of Andhra Pradesh:
5.37 Sri Sahel, learned counsel appearing for the State of Andhra
Pradesh in W.P.(C) No.748/2015, similarly highlighted that
there is no challenge to the State Act in the writ petition.
2270 [2025] 5 S.C.R.

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Union of India:
5.38 Learned senior counsel Ms. Nisha Bagchi appearing for the
Union of India in W.P.(C) No.699/2014, submitted that the issue
of service tax has been conceded in almost all High Courts
and has not been disputed as such. She submitted that in
view of the dismissal of the C.A. No. 261/2013 and C.A. Nos.
1582-1583/2020 the prayers (a) and (b) in W.P. Nos. 699/2014
and 748/2015 do not survive for consideration. She particularly
highlighted that the Delhi High Court dismissed the challenge
to the constitutional validity of service tax, as did Madras High
Court, on the basis of categorical concessions made by the
assessees. Learned senior counsel also submitted that no
controversy with regard to payment of service tax arises in the
Civil Appeal arising from the decision of the Kerala High Court.

Reply Arguments:
5.39 We have heard the arguments made by way of reply by the
respective senior counsel and counsel appearing for the parties.
5.40 We have perused the voluminous material on record as well
as the judicial dicta cited before us.

Points for Consideration:
6. Whether the judgments of the High Courts (Eleven High Courts)
impugned in these cases would call for any interference and if so,
to what extent?
6.1 Whether Purvi Communications has been correctly decided
by this Court?
6.2 Whether the prayers sought for in the writ petitions are to be
granted and if so, to what extent?
6.3 What order?
6.4 On 11.09.2024, learned senior counsel Ms. Nisha Bagchi
submitted that in view of the dismissal of CA No.261/2013
and CA Nos.1582-1583/2020 by this Court, prayers (a) and
(b) in WP Nos.699/2014 and 748/2015 would not survive for
consideration. By way of response, learned senior counsel Sri
Bagaria has also conceded that the controversy in these writ
[2025] 5 S.C.R. 2271

State of Kerala & Another v.
Asianet Satellite Communications Ltd. & Others

petitions is essentially on the imposition of entertainment tax and
therefore, prayer (a) in the writ petitions would not be pressed.
6.5 His submission is placed on record.
6.6 Learned senior counsel Ms. Bagchi also submitted that in the
Civil Appeal which arises from the decision of the Kerala High
Court dealing with luxury tax, there is no controversy with regard
to the payment of service tax by appellants therein.
6.7 The said position is not disputed at the Bar.
6.8 In view of the aforesaid submissions, the issue regarding the
payment of service tax on broadcasting service would be
considered only in light of the issue whether the activity of the
appellants herein is within the scope and ambit of Entry 62 –
List II, namely, providing entertainment to the subscribers or
receivers of entertainment by means of broadcasting through
television channels and the relevant technology applicable for
providing entertainment through television to the subscribers.
6.9 In view of the fact that the correctness of the findings of the
High Court of Madras with regard to the charging section of the
State enactment being defective is assailed by the State of Tamil
Nadu in separate appeals which are not part of this batch of
appeals, the question of correctness or otherwise of the finding
of the High Court does not come up for our consideration here.

Legal Framework:
7. Before proceeding further, it is useful to refer to the relevant provisions
of the Constitution, relevant entries of the Seventh Schedule of
the Constitution and the relevant provisions of the State Act under
considerations. We also would advert to the relevant provisions of the
Finance Act, 1994 as amended from time to time having a bearing
on the controversy in question.
7.1 The following provisions of the Constitution of India are adverted
to as under:
“245. Extent of laws made by Parliament and
by the Legislatures of States.—(1) Subject to the
provisions of this Constitution, Parliament may make
laws for the whole or any part of the territory of India,
2272 [2025] 5 S.C.R.

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and the Legislature of a State may make laws for
the whole or any part of the State.
(2) No law made by Parliament shall be deemed to
be invalid on the ground that it would have extra-
territorial operation.
246. Subject-matter of laws made by Parliament and
by the Legislatures of States.- (1) Notwithstanding
anything in clauses (2) and (3), Parliament has
exclusive power to make laws with respect to any
of the matters enumerated in List I in the Seventh
Schedule (in this Constitution referred to as the
“Union List”).
(2) Notwithstanding anything in clause (3), Parliament,
and, subject to clause (1), the Legislature of any
State also, have power to make laws with respect
to any of the matters enumerated in List III in the
Seventh Schedule (in this Constitution referred to
as the “Concurrent List”).
(3) Subject to clauses (1) and (2), the Legislature of
any State has exclusive power to make laws for such
State or any part thereof with respect to any of the
matters enumerated in List II in the Seventh Schedule
(in this Constitution referred to as the “State List”).
(4) Parliament has power to make laws with respect
to any matter for any part of the territory of India not
included in a State notwithstanding that such matter
is a matter enumerated in the State List.
xxx
248. Residuary powers of legislation.- (1) Subject to
Article 246A, Parliament has exclusive power to make
any law with respect to any matter not enumerated
in the Concurrent List or State List.
(2) Such power shall include the power of making
any law imposing a tax not mentioned in either of
those Lists.
xxx
[2025] 5 S.C.R. 2273

State of Kerala & Another v.
Asianet Satellite Communications Ltd. & Others

265. Taxes not to be imposed save by authority
of law.—No tax shall be levied or collected except
by authority of law.”

Relevant Entries of the Seventh Schedule of the Constitution:
7.2 In order to understand the foundation of the controversy in these
cases, it is necessary to consider Article 246 of the Constitution
and the relevant entries of the two Lists which can be usefully
extracted as under:
“List I – Union List
xxx
31. Posts and telegraphs; telephones, wireless,
broadcasting and other like forms of communication.
xxx
92C. Taxes on Services.
[Omitted by the Constitution (One Hundred and
First Amendment) Act, 2016, Section 17(a)(ii) (with
effect from 16.09.2016). Prior to omission it read as
aforementioned.]
xxx
97. Any other matter not enumerated in List II or
List III including any tax not mentioned in either of
those Lists.
xxx
List II – State List
33. Theatres and dramatic performances; cinemas
subject to the provisions of entry 60 of List I; sports,
entertainments and amusements.
xxx
6 2 . Ta x e s o n l u x u r i e s , inc luding t ax es on
entertainments, amusements, betting and gambling.”
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Finance Act, 1994 with Relevant Amendments:
7.3 Chapter V of the Finance Act, 1994 (2001 amended) which
deals with various types of service tax, perhaps under the said
Act has defined “broadcasting” as under-
“65. Definitions.- In this Chapter unless the context
otherwise requires,-
(13) “broadcasting” has the meaning assigned
to it in clause (c) of Section 2 of the Prasar
Bharti (Broadcasting Corporation of India)
Act, 1990 (25 of 1990);”
7.3.1 In view of the aforesaid definition reference has to be
made to Section 2 (c) of the Prasar Bharti (Broadcasting
Corporation of India) Act, 1990 (“Prasar Bharti Act, 1990”,
for short), which define “broadcasting” as under:-
“2. Definitions- In this Act, unless the context
otherwise requires,-
(c) broadcasting’ means the dissemination
of any form of communication like signs,
signals, writing, pictures, images and
sounds of all kinds by transmission of
electro-magnetic waves through space or
through cables intended to be received
by the general public either directly or
indirectly through the medium of relay
stations and all its grammatical variations
and cognate expressions shall be construed
accordingly.”
7.3.2 Section 65(63) of the Finance Act, 1994 (amended in
2001) defines “service tax” as under:
“65. Definitions.- In this Chapter unless the
context otherwise requires,-
(63) “service tax” means tax leviable under
the provisions of this Chapter;”
7.3.3 Section 65 (72) (zk) defines “taxable service” with regard
to “broadcasting agency” as a “service provider” as under:
[2025] 5 S.C.R. 2275

State of Kerala & Another v.
Asianet Satellite Communications Ltd. & Others

“65. Definitions.- In this Chapter unless the
context otherwise requires,-
(72) “taxable service” means any service
provided,-
xxx
(zk) to a client, by a broadcasting agency
or organization in relation to broadcasting,
in any manner;
And the term “service provider” shall be
construed accordingly;”
7.3.4 Section 66(5) specifics the quantum of tax liability on a
‘service provider” providing broadcasting services which
is extracted as :
“66. Charge of service tax.-(5) With effect from
the date notified under Section 137 of the
Finance Act, 2001, there shall be levied a service
tax at the rate of five per Cent of the value of
the taxable services referred to in sub-clauses
(za), (zb), (zc), (zd), (ze), (zf), (zg), (zh), (zi),
(zj), (zk), (zl), (zm), (zn) and (zo) of clause (72)
of Section 65 and collected in such manner as
may be prescribed.”
Thus, tax at the rate of five per cent of the value of
taxable services was levied on a broadcasting agency
(i.e. five per cent of the gross amount charged by the
service provider).
7.3.5 The term “broadcasting” was re-defined under Section
65(14) of the Finance Act, 1994 by way of 2002
Amendment which reads as under:-
“65. Definitions.- In this Chapter, unless the
context otherwise requires,-
(14). “broadcasting” has the meaning
assigned to it in clause(c) of Section
2 of the Prasar Bharti (Broadcasting
Corporation of India) Act, 1990 (25 of
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1990) and also includes programme
selection, scheduling or presentation of
sound or visual matter on a radio or a
television channel that is intended for
public listening or viewing, as the case
may be; and in the case of a broadcasting
agency or organization, having its head
office situated in any place outside India,
includes the activity of selling of time slots
or obtaining sponsorships for broadcasting
of any programme or collecting the
broadcasting charges on behalf of the
said agency or organization, by its branch
office or subsidiary or representative in
India or any agent appointed in India or
by any person who acts on its behalf in
any manner;”
7.3.6 The term “broadcasting agency or organization” was
also re-defined under Section 65(15) by way of an
amendment in the year 2002 to the Finance Act, 1994,
which is extracted as under:-
“65. Definitions.- In this Chapter, unless the
context otherwise requires,-
(15) “broadcasting agency or organization”
means any agency or organisation
engaged in providing service in relation to
broadcasting in any manner and, in the case
of a broadcasting agency or organization,
having its head office situated in any place
outside India, includes its branch office or
subsidiary or representative in India or any
agent appointed in India or any person
who acts on its behalf in any manner,
engaged in the activity of selling of time
slots for broadcasting of any programme or
obtaining sponsorships for programme or
collecting broadcasting charges on behalf
of the said agency or organization;”
[2025] 5 S.C.R. 2277

State of Kerala & Another v.
Asianet Satellite Communications Ltd. & Others

7.3.7 Section 65 (80) defines the term “service tax” by way
of an amendment to the Finance Act, 1994 in the year
2002, which reads as under:-
“65. Definitions.- In this Chapter, unless the
context otherwise requires,-
(80) “service tax” means tax leviable under
the provisions of this Chapter;”
7.3.8 Section 65 (90) (zk) again while defining “taxable
services”, it included therein a “broadcasting agency” as
a “service provider”. Section 65 (90) (zk) of the Finance
Act, 2002 is reproduced hereunder:-
“65. Definitions.- In this Chapter, unless the
context otherwise requires,-
xxx
(90). ‘’taxable service” means any service
provided,-
(zk) to a client, by a broadcasting agency
or organization in relation to broadcasting
in any manner and, in the case of a
broadcasting agency or organization,
having its head office situated in any
place outside India, includes service
provided by its branch office or subsidiary
or representative in India or any agent
appointed in India or by any person who
acts on its behalf in any manner, engaged
in the activity of selling of time slots
for broadcasting of any programme or
obtaining sponsorships for programme or
collecting broadcasting charges on behalf
of the said agency or organization.
Explanation.- For the removal of doubts,
it is hereby declared that so long as the
radio or television programme broadcast is
received in India and intended for listening
or viewing, as the case may be, by the
2278 [2025] 5 S.C.R.

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public, such service shall be a taxable
service in relation to broadcasting, even if
the encryption of the signals or beaming
thereof through the satellite might have
taken place outside India;
And the term “service provider” shall be
construed accordingly;”
7.3.9 Section 66 (5) of the Finance Act, 2002 specified the
quantum of tax liability on a service provider, providing
broadcasting service to the following effect. Section 66(5)
aforesaid is reproduced hereunder:-
“66. Charge of service tax.-(5) With effect from
the date notified under Section 137 of the
Finance Act, 2001 (14 of 2001), there shall be
levied a service tax at the rate of five per cent
of the value of the taxable services referred to
in sub-clauses (za), (zb), (zc), (zd), (ze), (zf),
(zg), (zh), (zi), (zj), (zk), (zl), (zm), (zn) and (zo)
of clause (90) of Section 65 and collected in
such manner as may be prescribed.”
7.3.10 A perusal of the provisions of the Finance Act, 2002
reveals, that as hitherto before (under the Finance Act
2001) service tax at the rate of five per cent of the value
of taxable service was leviable on a service provider
rendering broadcasting services (i.e. five per cent of the
gross amount charged by the service provider) even
under the Finance Act, 2002.
7.3.11 Under the Finance Act, 2003, the term “broadcasting”
was re-defined through Section 65(15), which is being
extracted hereunder:-
“65. Definitions.- In this Chapter, unless the
context otherwise requires.-
xxx
(15) ‘(broadcasting” has the meaning
assigned to it in clause (c) of Section
2 of the Prasar Bharti (Broadcasting
[2025] 5 S.C.R. 2279

State of Kerala & Another v.
Asianet Satellite Communications Ltd. & Others

Corporation of India) Act, 1990 ( 25 of 1990)
and also includes programme selection,
scheduling or presentation of sound or
visual matter on a radio or a television
channel that is intended for public listening
or viewing, as the case may be; and in
the case of a broadcasting agency or
organization, having its head office situated
in any place outside India, includes the
activity of selling of time slots or obtaining
sponsorships for broadcasting of any
programme or collecting the broadcasting
charges on behalf of the said agency
or organization, by its branch office or
subsidiary or representative in India or any
agent appointed in India or by any person
who acts on its behalf in any manner;”
7.3.12 The Finance Act, 2003 also defined the term
‘’broadcasting agency or organization” in Section 65(16).
Section 65(16) of the Finance Act, 2003 is also being
reproduced hereunder:-
“65. Definitions.- In this Chapter, unless the
context otherwise requires.-
(16) “broadcasting agency or organization”
means any agency or organization
engaged in providing service in relation to
broadcasting in any manner and, in the case
of a broadcasting agency or organization,
having its head office situated in any place
outside India, includes its branch office or
subsidiary or representative in India or any
agent appointed in India or any person
who acts on its behalf in any manner,
engaged in the activity of selling of time
slots for broadcasting of any programme
or obtaining sponsorships for programme
or collecting the broadcasting charges on
behalf of the said agency or orgnisation;”
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7.3.13 Section 65 (95) of the Finance Act, 2003, defines the
term “service tax”.
Section 65 (95) aforesaid is being reproduced
hereunder:-
“65. Definitions.- In this Chapter, unless the
context otherwise requires.-
xxx
(95) “service tax” mean tax leviable under the
provisions of this chapter;”
7.3.14 Section 65 (105) (zk) of the Finance Act, 2003 again
while defining the term ‘taxable service”, it included
therein a “broadcasting agency” as a ‘service provider”.
Section 65(105) (2k) aforesaid is being extracted
hereunder:
“65. Definitions.- In this Chapter, unless the
context otherwise requires.-
xxx
(105) “taxable service” means any service
provided,-
(zk) to a client, by a broadcasting agency
or organization in relation to broadcasting
in any manner and, in the case of a
broadcasting agency or organization,
having its head office situated in any
place outside India, includes service
provided by its branch office or subsidiary
or representative in India or any agent
appointed in India or by any person
who acts on its behalf in any manner,
engaged in the activity of selling of time
slots for broadcasting of any programme
or obtaining sponsorships for programme
or collecting the broadcasting charges on
behalf of the said agency or organization.
[2025] 5 S.C.R. 2281

State of Kerala & Another v.
Asianet Satellite Communications Ltd. & Others

Explanation.- For the removal of doubts,
it is hereby declared that so long as the
radio or television programme broadcast is
received in India and intended for listening
or viewing, as the case may be, by the
public, such service shall be a taxable ser
vice in relation to broadcasting, even if the
encryption of signals or beaming thereof
through the satellite might have taken place
outside India;”
and the term “service provider” shall be
construed accordingly;”
7.3.15 Section 66(1) of the Finance Act, 2003 specified, that
quantum of tax liability on a service provider providing
broadcasting services as under:-
“66. Charge of service tax.-(l) There shall be
levied a tax (hereinafter referred to as the service
tax) at the rate of eight per cent of the value of
the taxable services referred to in sub-clauses
(a), (b), (c), (d), (e), (f), (g), (h), (i), (j), (k), (l),
(m), (n), (o), (p), (q), (r), (s), (t) (u), (v), (w), (x),
(y), (z), (za), (zb), (zc), (zd), (ze), (zf), (zg), (zh),
(zi), (zj), (zk), (zl), (zm), (zn), (zo), (zp), (zq), (zr),
(zs), (zt) (zu), (zv), (zw), (zx), (zy), (zz) and (zza)
of clause (105) of Section 65 and collected in
such manner as may be prescribed.”
7.3.16 A perusal of the aforesaid provisions reveals, that
under the Finance Act, 2001, service tax levied on
service providers rendering broadcasting services
were enhanced from five per cent to six per cent of
the value of taxable service (i.e. eight per cent of the
gross amount charged by the service provider) under
the Finance Act, 2003.
7.3.17 The provisions of the Finance Act, 2004 on the subject
matter of the controversy in hand were identical to the
ones incorporated under the Finance Act, 2002, and as
such, the relevant provisions of the Finance Act, 2004
are not being reproduced here.
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7.3.18 Insofar as the Finance Act, 2005 is concerned, it re-
defined the term “broadcasting” under Section 65(16).
Section 65(16) of the Finance Act, 2005 is being
reproduced hereunder:-
“65. Definitions.- In this Chapter, unless the
context otherwise requires.-
xxx
(15) “broadcasting” has the meaning
assigned to it in clause (c) of Section 2 of the
Prasar Bharti (Broadcasting Corporation of
India) Act, 1990 ( 25 of 1990) and also
includes programme selection, scheduling
or presentation of sound or visual matter
on a radio or a television channel that is
intended for public listening or viewing,
as the case may be; and in the case of
a broadcasting agency or organization,
having its head office situated in any place
outside India, includes the activity of selling
of time slots or obtaining sponsorships
for broadcasting of any programme or
collecting the broadcasting charges or
permitting the rights to receive any form
of communication like sign, signal, writing,
picture, image and sounds of all kinds by
transmission of electro-magnetic waves
through space or through cables, direct
to home signals or by any other means
to cable operator including multisystem
operator or any other person on behalf
of the said agency or organization, by its
branch office or subsidiary or representative
in India or any agent appointed in India or
by any person who acts on its behalf in
any manner;”
7.3.19 Likewise, the term “broadcasting agency or organization”
was again re-defined under Section 65(16) of the Finance
Act, 2005, which is being reproduced hereunder:-
[2025] 5 S.C.R. 2283

State of Kerala & Another v.
Asianet Satellite Communications Ltd. & Others

“65. Definitions.- In this Chapter, unless the
context otherwise requires.-
xxx
(16) “broadcasting agency or organization”
means any agency or organization
engaged in providing service in relation to
broadcasting in any manner and, in the case
of a broadcasting agency or organization,
having its head office situated in any place
outside India, includes its branch office or
subsidiary or representative in India or any
agent appointed in India or any person
who acts on its behalf in any manner,
engaged in the activity of selling of time
slots for broadcasting of any programme
or obtaining sponsorships for programme
or collecting the broadcasting charges or
permitting the rights to receive any form
of communication like sign, signal, writing’
picture, image and sounds of all kinds by
transmission of electro-magnetic waves
through space or through cables, direct to
home multisystem operator or any other
person on behalf of the said agency or
organization;”
7.3.20 The term “service tax” retained the same definition as
was assigned to it by the Finance Act, 2003 even for
the Finance Act, 2005. However, sub-clause (zk) as
defined in the Finance Act, 2005 was given a different
meaning and effect. In this behalf Section 65(105)(zk) of
the Finance Act, 2005 is being reproduced hereunder:-
“65. Definitions.- In this Chapter, unless the
context otherwise requires,-
xxx
(105) “taxable service” means any service
provided,-
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(zk) to a client, by a broadcasting agency
or organization in relation to broadcasting
in any manner and, in the case of a
broadcasting agency or organization,
having its head office situated in any
place outside India, includes service
provided by its branch office or subsidiary
or representative in India or any agent
appointed in India or by any person
who acts on its behalf in any manner,
engaged in the activity of selling of time
slots for broadcasting of any programme
or obtaining sponsorships for programme
or collecting the broadcasting charges or
permitting the rights to receive any form
of communication like sign, signal, writing,
picture, image and sounds of all kinds by
transmission of electro-magnetic waves
through space or through cables, direct
to home signals or by any other means
to cable operator, including multisystem
operator or any other person on behalf of
the said agency or organization.
Explanation.- For the removal of doubts,
it is hereby declared that so long as the
radio or television programme broadcast is
received in India and intended for listening
or viewing, as the case may be, by the
public, such service shall be a taxable
service in relation to broadcasting, even
if the encryption of signals or beaming
thereof through the satellite might have
taken place outside India;
and the term “service provider” shall be
construed accordingly;”
7.3.21 The quantum of service tax under the Finance Act 2005,
on service providers, rendering broadcasting services
[2025] 5 S.C.R. 2285

State of Kerala & Another v.
Asianet Satellite Communications Ltd. & Others

was sustained at the same rate as in the preceding
Finance Act, 2004.
7.3.22 A perusal of the provisions of the various Finance Acts
reproduced hereinabove, according to the learned
counsel for the petitioners, reveals, that “service tax” was
levied on “Direct-to-Home” (DTH) broadcasting services
thereunder. The aforesaid ‘legislation, according’ to the
learned counsel for the petitioners had obviously been
enacted by the Parliament under Entry 92C of the
Union List, contained in the Seventh Schedule of the
Constitution of India.

Relevant Provisions of the State Enactments:

Assam Amusements and Betting Tax Act, 1939:
7.4 The relevant State Acts can be adverted to as under:
(a) The relevant provisions of Assam Amusements and
Betting Tax Act, 1939 are as under:
“2. Definitions. – In this Chapter, unless there
is anything repugnant in the subject or context –
xxx
(3B) “Cable service” means the transmission by
cables of programme including transmission by
cables of any broadcast television signal;
Explanation-- For the purpose of this clause--
(a) “cable operator” means any person who
provides cable service directly to customer or
transmits signal to a sub-cable operator through
a cable television network otherwise controls or
is responsible for the management and operation
of a cable television network;
(b) “sub-cable operator” means a person other
than any owner or person who is a cable
operator referred to in this Explanation who,
on the basis of an agreement, contract or any
other agreement made between him and such
2286 [2025] 5 S.C.R.

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cable operator, receives signal from such cable
operator and provides cable service for exhibition
of performance, film or any programme to the
customers”.
(3C) “cable television network” means any
system consisting of a set of closed transmission
paths and associated signal generation,
control and distribution equipment designed to
provide cable service for reception by multiple
subscribers”.
(3CC) “direct to home service” means a service
for multi channel distribution of programmes
direct to subscribers’ premises by up-linking to
a satellite system”;
(4) “Entertainment” includes any exhibition,
performance, amusement, game, sport,
music, cultural and dramatic performances,
entertainment by electronic devices and
entertainment by direct to home service
and cable television network or a series of
exhibitions, performances, amusements,
games, sports, music, cultural and dramatic
performances, entertainment by electronic
devices and entertainment by direct to home
service and cable television network, to which
persons are admitted for payment, and the
continuity of which is either broken or unbroken
as the case may be, or is only broken by such
intervals as are in the opinion of the State
Government a normal or usual feature thereof.
xxx
(8) ‘Proprietor’ in relation to any entertainment
means the owner and shall also include
manager, organiser and any person responsible
for, or, for the time being, in charge of the
management thereof;
xxx
[2025] 5 S.C.R. 2287

State of Kerala & Another v.
Asianet Satellite Communications Ltd. & Others

(10) “Subscriber” means a person who receives
the signal of cable television network or of direct
to home service at any place indicated by him
without further transmitting to any other person;
Explanation- In case of hotels, each room
or premise where signals of cable television
network or of direct to home service are received
shall be treated as a subscriber”
xxx
Section 3C : Tax on cable service and direct
to home service. - (1) The proprietor of a
cable television network providing cable service
[and the service provider of the direct to home
service]1 shall be liable to pay entertainment
tax at such rates not exceeding rupees one
thousand and two hundred for every subscriber
for every year, as the Government may from
time to time, notify in this behalf.
(2) Nothing in sub-section (1) shall preclude
the Government from notifying different rates of
entertainment tax for household or for different
categories of hotels.
(3) Where the subscriber is a proprietor of a
hotel, he shall pay the entertainment tax to the
Government on such condition, and in such
manner as may be prescribed and at such rate
as the Government may from time to time notify
and different rates of tax may be notified for
different categories of such subscribers.
(4) The tax payable under this section shall be
paid, collected or realised in such manner as
may be prescribed.”

Delhi Entertainments and Betting Tax Act, 1996:
(b) The relevant provisions of Delhi Entertainments and
Betting Tax Act, 1996 are as under:
2288 [2025] 5 S.C.R.

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“2. Definitions
In this Act, unless the context otherwise require,-
(a) “addressable system” means an electronic
device or more than one electronic devices
put in an integrated system through
which television signals and value added
services can be sent in encrypted or
unencrypted form, which can be decoded
by the device or devices at the premises
of the subscriber within limits of the
authorization made, on the choice and
request of such subscriber, by the service
provider to the subscriber;
(aa) “admission to an entertainment” includes
admission to any place in which the
entertainment is held and in case of
entertainment through cable service and
direct-to-home (DTH) service with or
without cable connection, each connection
to a subscriber shall be deemed to be an
admission for entertainment’
xxx
(ha) “direct-to-home (DTH) service” means
distribution of multi-channel television and
radio programmes and similar content
by using a satellite system, by providing
signals directly to subscriber’s premises
without passing through an intermediary
or otherwise;
(i) “entertainment” means any exhibition,
performance, amusement, game, sport
or race (including horse race) or in the
case of cinematograph exhibitions, cover
exhibition of news-reels, documentaries,
cartoons, advertisement shorts or slides,
whether before or during the exhibition of a
feature film or separately, and also includes
[2025] 5 S.C.R. 2289

State of Kerala & Another v.
Asianet Satellite Communications Ltd. & Others

entertainment through cable service and
direct-to-home (DTH) service;
xxx
(m) “payment for admission” includes—
xxx
(vi) any payment made by a person by
way of contribution, subscription,
installation or connection charges or
any other charges collected in any
manner whatsoever for entertainment
through direct-to-home (DTH)
broadcasting service for distribution
of television signals and value added
services with the aid of any type of
addressable system, which connects
a television set, computer system at
a residential or non-residential place
of subscriber’s premises, directly to
the satellite or otherwise.
xxx
(s) “subscriber” means a person who receives
the signals of television network and
value added services from multi-system
operator or from cable operator or from
direct-to-home (DTH) broadcasting service
at a place indicated by him to the service
provider, without further transmitting it to
any other person;
Explanation I: In case of hotels, each
room or premises where signals of cable
television network are received shall be
treated as a subscriber;
Explanation II : In case of direct-to-home
(DTH), every television set or computer
set receiving the signals shall be treated
as a subscriber;
xxx
2290 [2025] 5 S.C.R.

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7. Tax on cable, video service and direct-
to-home (DTH) service.- (1) Subject to the
provisions of this Act, there shall be levied and
paid an entertainment tax on all payments for
admission to an entertainment through a direct-
to-home (DTH) or through a cable television
network with addressable system or otherwise,
other than entertainment to which section 6
applies, at such rates not exceeding rupees six
hundred for every subscriber for every year as
the Government may, from time to time, notified
in this behalf, which shall be collected by the
proprietor and paid to the Government in the
manner prescribed.
xxx
8. Information before holding entertainment.-
xxx
(2) No proprietor of a cable television network
or video cinema or Direct-to-Home (DTH)
shall provide entertainment unless he
obtains permission from the Commissioner
in the manner prescribed.”

Gujarat Entertainments Tax Act, 1977:
(c) The relevant provisions of Gujarat Entertainments Tax
Act, 1977 are as under:
“2. Definitions. – In this Act, unless the context
otherwise requires,
xxx
(dd) Direct-To-Home (DTH) Broadcasting
Service means a system of distribution of multi-
channel television programmes in Ku Band by
using Satellite system, by providing television
signals direct to the subscriber’s premises
without passing through an intermediary such
as cable operator.
[2025] 5 S.C.R. 2291

State of Kerala & Another v.
Asianet Satellite Communications Ltd. & Others

Explanation.- For the purpose of this clause
and clause (g), “Ku Band” ordinarily means
the 11.7 – 12.7 GHz (Giga Hertz) frequency
band which splits into two segments, viz. the
first having the frequency of 11.7 – 12.7 GHz,
known as FSS (Fixed Satellite Service) and the
other having the frequency of 12.2 – 12.7 GHz,
known as BSS (Broadcasting Satellite Service),
or it may have such other band width as may
be approved by the Government of India from
time to time;
2(e) ‘entertainment’ includes any exhibition,
performance, amusement, game or sport to
which persons are admitted for payment or in
the case of television exhibition with the aid
of any type of antenna with a cable network
attached to it or cable television, for which
persons are required to make payment by way
of contribution or subscription or installation
charges of connection charges or any other
charges collected in any manner whatsoever.
Explanation. - For the purpose of this clause, the
expression “exhibition” includes any exhibition
by cinematograph including video exhibition or
television exhibition with the aid of any type
of antenna with a cable network attached to it
or cable television; or Direct-To-Home (DTH)
Broadcasting System;
xxx
2(g) ‘Payment for admission’ includes –
(i) 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;
(ii) any payment for seats or other accommodation
in a place of entertainment;
2292 [2025] 5 S.C.R.

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(iii) any payment for a programme or synopsis
of an entertainment;
(iv) 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
of the entertainment which, without the aid of
such instrument or contrivance, such person
would not get;
(v) any payment for any purpose whatsoever
connected with an entertainment which a person
is required to make a condition of attending
or continuing to attend the entertainment in
addition to the payment, if any, for admission
to the entertainment;
(vi) any payment for admission of a motor
vehicle into the auditorium of a cinema known
as Drive-in-Cinema;
(vii) any payment made by a person by way
of contribution or subscription or installation
charges or connection charges or any other
charges collected in any manner whatsoever
for television exhibition with the aid of any type
of antenna with a cable network attached to it
or cable television;
(viii) any payment made by a person to
the proprietor of a Direct-To-Home (DTH)
Broadcasting Service by way of contribution,
subscription, installation charges or connection
charges, or any other charges collected in any
manner whatsoever for Direct-To-Home (DTH)
Broadcasting Service with the aid of any type of
set top box or any other instrument of like nature
which connects television set at a residential or
non-residential or any other place of connection-
holder directly to the Satellite;”
2(gg) ‘place of entertainment’ includes a house,
building, tent or any other place where the books
[2025] 5 S.C.R. 2293

State of Kerala & Another v.
Asianet Satellite Communications Ltd. & Others

of account, ticket books and other relevant
records pertaining to the entertainment or
pertaining to the management of providing cable
connections from any type of antenna or cable
television or pertaining to the management of
providing Direct-To-Home (DTH) Broadcasting
Service are kept or are believed to have been
kept;”
xxx
2(j) ‘proprietor’ in relation to any entertainment,
includes the owner thereof, and any person –
(i) responsible for, or for the time being in charge
of, the management thereof, or
(ii) connected in whatsoever manner with
the organization of the entertainment for any
duration, or
(iii) charged or entrusted or authorized with the
work of admission to the entertainment, or
(iii-a) a company registered under the Companies
Act, 1956, having license to provide Direct-To-
Home (DTH) Broadcasting Service by the
Government of India under section 4 of the
Telegraph Act, 1885 and the Wireless Telegraphy
Act, 1933 or;
(iv) responsible for, or for the time being in charge
of, management of providing of maintaining or
operating cable connection from any type of
antenna or cable television;
Whether or not he has obtained license or
Certificate of Registration, if any, for such
entertainment under any law for the time being
in force;
2(jj) ‘set top box’ means an apparatus connected
to a television set at a residential or non-
residential or any other place which receives
encrypted television signals through dish
2294 [2025] 5 S.C.R.

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antenna from satellite directly and provides
decrypted television signals to the television set,
which enables the viewers to tune into multi-
channel television programmes in Ku Band,
on payment, by the connection-holder, of the
charges collected in any manner whatsoever
by the proprietor;
xxx
6C. Registration.- (1) No proprietor providing an
entertainment with the aid of any type of antenna
or cable television or Direct-To-Home (DTH)
Broadcasting Service shall carry on television
exhibition without obtaining a valid Certificate of
Registration from the prescribed officer.
(2) The provisions of sub-section (1) shall not
be deemed to have been contravened if the
proprietor having applied for such registration
as provided in this section within three months
from the date of the commencement of the
Gujarat Entertainments Tax (Amendment) Act,
1993, carries on television exhibition with the
aid of any type of antenna with a cable network
attached to it or cable television.
(2A) The provisions of sub-section (1) shall not
be deemed to have been contravened if the
proprietor having applied for such registration as
provided in this section within three months from
the date of the commencement of the Gujarat
Entertainments Tax (Amendment) Act, 2009,
carries on television exhibition with the aid of
Direct-To-Home (DTH) Broadcasting Service.
(3) Every proprietor providing an entertainment
with the aid of any type of antenna or cable
television or Direct-To-Home (DTH) Broadcasting
Service shall apply in such form, in such
manner and on payment of such fee as may
be prescribed to the prescribed officer.
[2025] 5 S.C.R. 2295

State of Kerala & Another v.
Asianet Satellite Communications Ltd. & Others

(4) If the prescribed officer is satisfied that the
requirements of provisions of this Act and the
rules made thereunder have been complied
with, he shall issue a Certificate of Registration.
xxx
6E (1) Notwithstanding anything contained in
section 3, 4, 6, 6A or 6B or any other provisions
of this Act, there shall be levied and paid, by
the proprietor of every Direct-To-Home (DTH)
Broadcasting Service, to the State Government,
the entertainments tax, per television set which
receives radio frequency signals for exhibition of
films or moving pictures or series of pictures with
the aid of a set top box or any other apparatus
attached to it for securing transmission through
Direct-To-Home (DTH) Broadcasting Service, a
tax at the annual rate of Rs.200 per television set
for which such proprietor has provided Direct-To-
Home (DTH) Broadcasting Service Connection.
(2) Where the number of Direct-To-Home (DTH)
connection holders increase in any month during
the financial year, the proprietor shall be liable
to pay the tax proportionately in the manner as
may be prescribed.
(3) The tax leviable under this section shall be
paid in advance in quarterly installment of one-
fourth of the annual rate within such period and
in such manner as may be prescribed.
Explanation. - For the purpose of this section,
‘quarter’ means a period of three months
commencing on the 1st day of April, 1st day
of July, 1st day of October or the 1st day of
January of each year, and the term ‘quarterly’
shall be construed accordingly.”

The relevant provision of Gujarat Entertainments Tax
(Exhibitions by means of Direct-To-Home (DTH)
Broadcasting Service) Rules, 2010 are as under:
2296 [2025] 5 S.C.R.

Supreme Court Reports

“3. Application for Certificate of Registration. -
A proprietor providing an entertainment with
the aid of Direct to Home (DTH) Broadcasting
Service shall apply for the Certificate of
Registration under Section 6C in Proforma-I in
triplicate I and shall be renewable after every
twelve months.
4. Granting of Certificate of Registration.-
(1) The Commissioner may, on receipt of an
application in Proforma-I under rule 3 and
having satisfied that all the rules have been
complied with, grant Certificate of Registration
to the proprietor. The Commissioner shall,
while deciding whether to grant or refuse such
a certificate shall have regard to the following
matters namely:
(i) the interest of the public generally;
(ii) status of antecedents and the previous
experience, if any, of the proprietor;
(iii) the adequate precaution made for safety,
convenience and comfort of the persons covered
under Direct-to-Home (DTH) Broadcasting
Service as per the guidelines issued by the
Government of India from time to time.
Explanation. For the purpose of sub-rule (1) the
expression ‘antecedents’ means the conduct of
the applicant in relation to the regular payment
of any tax or other dues payable by him.
(2) The Certificate of Registration under
section 6C shall be issued Proforma-2 and the
Commissioner may prescribe special condition
or conditions to be fulfilled, in the certificate.
5. Refusal to Grant Certificate.- The
Commissioner shall have absolute discretion to
refuse a Certificate of Registration for grounds to
be recorded in writing for refusal of granting the
[2025] 5 S.C.R. 2297

State of Kerala & Another v.
Asianet Satellite Communications Ltd. & Others

Certificate of Registration. The Commissioner
before refusing the Certificate shall afford to the
proprietor an opportunity of being heard.
6. Fees.- The fees for a Certificate of Registration
shall be rupees 10 lacs, the fees for renewal
of Certificate of Registration shall be ten
thousand and the fees for duplicate Certificate
of Registration shall be rupees five thousand.
7. Security Deposits.- Every proprietor shall
furnish as required under section 7, security
amount of rupee ten lacs in form of Demand
Draft to the Commissioner or shall deposit
the National Savings Certificate or furnish
Bank Guarantee of a Nationalized Bank in
favour of Government of Gujarat, Information
and Broadcasting Department on obtaining
Certificate of Registration.
xxx
11. Applicability of other Acts.- The proprietor
shall comply with such of the provisions of the
Electricity Act, 2003 (36 of 2003), the Wireless
Technology Act, 1933 (17 of 1933), the Telegraph
Act, 1885 (13 of 1885), Guidelines, Policies and
Notifications issued by Government of India
from time to time and such other Acts and the
rules made thereunder as are applicable to the
Direct-to-Home (DTH) Broadcasting Services.
12. Free access or public servants on duty.-
Free access to any place in respect of which
a certificate is issued under these rules for
Direct-to-Home (DTH) Broadcasting Service
shall be given at all hours to the Commissioner
or any officer authorized by the Commissioner,
the Collector or any other officer as may be
authorized by the State Government in the
execution of their duties.
2298 [2025] 5 S.C.R.

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13. Receipt for payment.- The proprietor shall
give a receipt to the connection holder for every
payment and shall also furnish the connection
number to such connection holder when he
receives payment for installation charges or any
other charges by whatsoever it may be called.
A copy of the receipt shall be kept in the receipt
book by the proprietor till the assessments is
completed and thereafter for a period of one
year.

14. Return.- (1) The returns under clause (b) of
sub-section (1) of section 8 shall be furnished
to the prescribed officer.

(2) The returns relating to the payment of tax
under section 6E shall be furnished quarterly
in every financial year by the proprietor to the
prescribed officer in Proforma-3, Proforma-4
and Proforma-5 along with challan within fifteen
days of the completion of the respective quarter:

Provided that the return relating to the second
and third quarter of the financial year 2009-10
shall be furnished within fifteen days from the
publication of these rules in the official Gazette.

(3) Every proprietor shall maintain a register in
Proforma-6 for each financial year.

xxx

16. Order of Assessment.- (1) The assessment
of tax in the respect of an entertainment shall
be made within thirty days after the return in
respect of such entertainment is furnished.

(2) After the assessment is made, the prescribed
officer shall serve a notice upon the proprietor
for payment of tax, if any additional amount of
tax is found to be due.”
[2025] 5 S.C.R. 2299

State of Kerala & Another v.
Asianet Satellite Communications Ltd. & Others

Jharkhand Entertainment Tax Act, 2012:
(d) The relevant provisions of Jharkhand Entertainment Tax
Act, 2012 are as under:
“2. Definitions. - In this Act, unless there is
anything repugnant in the subject or context,-
xxx
(k) “Direct to Home (DTH) Service” means
a system of distribution of multi-channel
television programmes by using a Satellite
system by providing television signals through
Antenna direct or any other similar devices to
the subscriber’s premises/hotels/clubs, without
passing through an intermediary such as cable
service;
(l)”Direct to Home (DTH) Service provider”
means any person or proprietor or agency, who
provide Direct to Home (DTH) Service, whether
by means of “Set top boxes” or any such antenna
or instruments or equipments or any other similar
devices and includes the activation or renewal
of such DTH service.
(m)”Entertainment” includes any exhibition,
performance, amusement, game shows or
sports to which persons are admitted for
payment, or in the case of television exhibition
with the aid and any type of antenna with a
cable network attached to it or cable television
network or Direct-to-Home (DTH) Service, for
which persons are required to make payment by
way of contribution or subscription or installation
or rent or security and connection charges or
by any other charges collected in any manner
whatsoever; but does not include magic show
and temporary amusement including games
and rides;
For the purposes of this clause -
2300 [2025] 5 S.C.R.

Supreme Court Reports

The expression “exhibition” includes any
exhibition by cinematograph including video
exhibition or television exhibition with the aid
of any type of antenna with a cable network
attached to it, or cable television network as
provided by the cable operator incidental to
cable service(s);
Explanation. - For the purpose of this provision,
exhibition shall include exhibitions in Multiplex
Cinema Complex(s).
The expression “game” includes video games
which are played with the aid of machine which
is operated electronically or mechanically
or electro-mechanically for the purposes of
entertainment or otherwise and;
The expression “temporary amusement”
means the amusement rides and games which
are not provided on fairly permanent basis like
in amusement park or meals or fair.
(n)”Entertainment Tax” means a tax levied on
“entertainment” under this Act.
xxx
2(s) “Payment for entertainment” includes –
xxx
(iv) any payment made by a person by way of
contribution or subscription or installation or
connection charges or valuable consideration
or any other charge collected in any manner
whatsoever for television exhibition with the
aid of any type of antenna with a cable network
attached to it or cable television network as
provided by the cable operator; or
(v) any payment made by a person to the
proprietor of a Direct to Home (DTH) service
by way of contribution, subscription, installation
[2025] 5 S.C.R. 2301

State of Kerala & Another v.
Asianet Satellite Communications Ltd. & Others

or rent or security or activation charges or
connection charges, or valuable consideration
or any other charges collected in any manner
whatsoever for Direct to Home (DTH) service
with the aid of any type of set-top box(s) or
any other instrument/equipment of like nature,
or any other similar devices, which connects
television set at a residential/hotels/clubs or
non-residential place or a connection holder
directly to the Satellite.
Explanation. - For the purposes or this sub-
clause any expenditure incurred by any co-
operative housing society, residential complexes
as valuable consideration or by the management
of any factory, hotels, lodge, bar, permit room
pub, or by a person or group of persons, for the
purchase of any type of antenna or any other
apparatus equipments for securing transmission
through the cable network of cable television
attached to it, for its members, or for workers or
customers or for himself or themselves, as the
case may be, shall be deemed to be the payment
made under this sub-clause for the television
exhibition with the aid of any type of antenna with
cable network attached to it or cable television
network no DTH service provider.
xxx
3. Incidence of entertainment tax. - (1) Save
as provided in sub- section (2), there shall be
levied and paid to the State Government by
an assessee: a tax on the entertainment at the
rate(s) as specified in the notification issued
under this Act.
Provided that the State Government may
specify different rate or rates of entertainment
tax in respect to different categories of the
entertainments for the different specified periods
and for different specified areas.
2302 [2025] 5 S.C.R.

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Provided further that the rate of entertainment
tax shall not exceed thirty percent of the value
of gross collection / admission charge(s) /
subscription(s) / contribution(s) / rent / security /
sponsorship / activation charges or by any other
valuable consideration(s) received or receivable
for providing entertainment(s).
(2) Notwithstanding anything contained in sub-
section (1), entertainment tax shall be levied
in relation to cinematograph exhibition on the
proprietor of an entertainment at compounded
rate(s) as specified in the schedule.
Provided that the state Government may
specify different rate or rates of tax in respect
to the different specified areas and for different
specified periods.
Provided further the State Government may
specify different rates in relation to the separate
units of Multiplex Cinema Complex, depending
upon their respective sitting capacity.
4. Assesses to collect entertainment tax from
persons admitted to entertainment. - Save as
provided under sub-section (2) of Section 3 of this
Act, every assessee shall be entitled to collect,
from persons admitted to the entertainment(s),
an amount equal to the entertainment tax
payable in respect to the valuable consideration
of tickets or complimentary tickets or the
sponsorship amount.
5. Payment of tax. - Subject to the provisions
of this Act and such rules as may be prescribed,
entertainments tax shall be payable by
every assessee for the following class of
entertainments-
(i) For the cinematograph exhibition falling under
sub-section (2) of Section 3, before commencing
of the week;
[2025] 5 S.C.R. 2303

State of Kerala & Another v.
Asianet Satellite Communications Ltd. & Others

(ii) For the video exhibition falling under sub-
section (2) of Section 3 read with serial number
2 of the schedule, before commencing of the
week;
(iii) for the Multiplex Cinema Complex exhibition
falling under sub-section (2) of Section 3 read
with serial number 3 of the schedule, before
commencing of the week;
(iv) for the sponsored programmes falling
under clause (x) and (ad) of Section 2, before
commencement of such sponsored programmes
(v) for the cable operators, operating cable
television network and Direct-to-Home
Service Provider, and all other descriptions of
entertainment falling under sub-section (2) of
Section 3 read with serial number 4, 5 and 6
of the Schedule; by 7th day of the month after
the expiry of the respective month.
Explanation. - If the specified date happens to
be holiday, the next working day shall be treated
to be the payment day.”

Kerala Tax on Luxuries Act, 1976:
(e) The relevant provisions of Kerala Tax on Luxuries Act,
1976 are as under:
“2. Definitions. – In this Act, unless the context
otherwise requires.-
xxx
(ca) “cable operator”, means a person engaged
in the business of receiving and distributing
satellite television signals, communication
network including production and transmission
of programmes and packages for a monetary
consideration.
xxx
2304 [2025] 5 S.C.R.

Supreme Court Reports

(ee) “luxury” means a commodity or service that
ministers comfort or pleasure;
xxx
(fa) “Luxury provided by a cable operator”
means any service by means of transmission
of television signals by wire, where subscriber’s
television set is linked by metallic co-axial cable
or optic fibre cable to a central system called
the ‘headend’ and by using a video cassette
or disc or both, recorder or player or similar
such apparatus on which pre-recorded video
cassettes or disc or both are played or replayed
and the films or moving pictures or series of
pictures which are viewed and hear on Television
receiving set at a residential or a non residential
place of a connection holder.
xxx
(g) “prescribed” means prescribed by rules made
under this Act;
(h) “Proprietor” in relation to a hotel, house
boat, hall auditorium, home stay, hospital
Kalyanamandapam or place of like nature
includes the person who for the time being is
in charge of the management of such hotel,
house boat, hall, auditorium home stay, hospital
or kalyanamandapam or place of like nature as
the case may be.
xxx
4. Levy and collection of luxury tax. – (1)
Subject to the provisions of this Act, there shall
be levied and collected a tax, hereinafter called
the ‘luxury tax’ in respect of any luxury provided, -
(i) in a hotel, house boat, hall, auditorium
or kalyanamandapam or including
those attached to hotels, clubs,
Kalyanamandapam and places of the like
[2025] 5 S.C.R. 2305

State of Kerala & Another v.
Asianet Satellite Communications Ltd. & Others

nature which are rented for accommodation
for residence or used for conducting
functions, whether public or private,
exhibition;
(ii) by cable operators;
(iii) in a hospital; and
(iv) in a home stay
Provided that the sub-section shall not apply
to halls and auditoriums located within the
premises of ‘places of worship’ owned by such
institutions;
Provided that the sub-section shall not apply
to halls and auditoriums located within the
premises of ‘places of worship’ owned by such
institutions.
(2) Luxury tax shall be levied and collected, -
xxx
(d) in respect of a cable TV operator at the rate
of rupees five per connection per month,
and shall be collectable from the person enjoying
the luxury:
Provided that no luxury tax shall be payable
in respect of a connection provided by a
cable operator engaged in the distribution of
programmes of Doordarshan channels only:
Provided further that luxury tax, if any, collected
shall be paid over to the Government:
xxx
Provided also that a proprietor of a hotel who
had claimed exemption under sub-clause (1) of
clause 4 of the Kerala Finance Bill, 2006 (Bill
No. 355 of the XI Kerala Legislative Assembly)
from the 1st day of April 2006 being the charges
of accommodation below rupees two hundred
2306 [2025] 5 S.C.R.

Supreme Court Reports

per room per day, shall be permitted to avail
such exemption till 30th June, 2006.
xxx
(3) The luxury tax shall be collected by the
proprietor and paid within such period and
in such manner as may be prescribed, into a
Government treasury” or a Nationalised Bank
notified by Government in this behalf.
xxx
5. Returns. – Every proprietor liable to pay
luxury tax under this Act shall submit such return
in such manner and within such period as may
be prescribed.
xxx
The Kerala Finance Act, 2006
3. Amendment of Act 32 of 1976.- In the Kerala
Tax on Luxuries Act, 1976 (32 of 1976), -
(1) in Section 2, -
xxx
(c) after clause (f), the following clause shall be
inserted, namely:-
“(fa) “Luxury provided by a cable operator”
means any service by means of transmission
of television signals by wire, where subscriber’s
television set is linked by metallic co-axial
cable or optic fibre cable to a central system
called the headend and by using a video
cassette or disc or both, recorder or player or
similar such apparatus on which pre-recorded
video cassettes or disc or both are played or
replayed and the films or moving pictures or
series of pictures which are viewed and heard
on Television receiving set at a residential or a
non-residential place of a connection holder;”;
xxx
[2025] 5 S.C.R. 2307

State of Kerala & Another v.
Asianet Satellite Communications Ltd. & Others

The Kerala Tax on Luxuries Rules, 1976
3. Filing of return. – (1) The return referred to
in section 5 shall be
xxx
(b) in Form 1A in the case of cable TV Operator;
xxx

The Kerala Tax on Luxuries Act, 1976
(Act 32 of 1976)
(Incorporating Amendments up to the
Finance Act, 2010)
2. Definitions: - In this Act, unless the context
otherwise requires: -
xxx
(ca) “cable operator” means a person engaged
in the business of receiving and distributing
satellite television signals, communication
network including production and transmission
of programmes and packages for a monetary
consideration”
xxx
“(da) “Direct-To-Home (DTH) Broadcasting
Service” means a system of distribution of
multi-channel television programmes in ku band
using a satellite system of providing television
signals direct to the subscriber’s premises in
an encrypted form which will be received by an
antenna and decrypted by an electronic device,
thus providing television signals to the television
set or other viewing devices of the subscriber,
without passing through an intermediary such
as cable operator.
(db) “Direct-To-Home (DTH) Broadcasting
Service Provider” means, a company registered
2308 [2025] 5 S.C.R.

Supreme Court Reports

under the Companies Act, 1956 (Central Act
1 of 1956) having granted license to provide
Direct-To-Home (DTH) Broadcasting Service by
the Government of India under section 4 of the
Telegraph Act, 1885(Central Act 13 of 1885) and
Indian Wireless Telegraphy Act, 1933 (Central
Act 17 of 1933) and providing such service
within the State.
xxx
(ee) “luxury” means a commodity or service that
ministers comfort or Pleasure:
xxx
(fa) “Luxury provided by a cable operator”
means any service by means of transmission
of television signals by wire, where subscriber’s
television set is linked by metallic co-axial
cable or optic fibre cable to a central system
called the ‘headend’ and by using a video
cassette or disc or both, recorder or player or
similar such apparatus on which pre-recorded
video cassettes or disc or both are played or
replayed and the films or moving pictures or
series of pictures which are viewed and heard
on Television receiving set at a residential or a
non-residential place of a connection holder;
xxx
“(fd) “Luxury provided by Direct-To-Home (DTH)
Broadcasting Service Provider” means any
service by means of transmission of television
signals and the films or moving pictures or
series of pictures which are viewed and heard
on television receiving set or other devices
through a Direct-To-Home (DTH) service at
a residential or a non-residential place of a
subscriber, providing pleasure, comfort and
entertainment to the subscribers and viewers.”;
xxx
[2025] 5 S.C.R. 2309

State of Kerala & Another v.
Asianet Satellite Communications Ltd. & Others

“(l) “subscriber” means a person who enjoys the
luxury by receiving the signal of cable television
network or a direct-to-home service at a place
indicated by him to the cable operator or the
Direct-To-Home (DTH) Service Provider, without
further transmitting it to any other person.”;
xxx
4. Levy and collection of luxury tax: (1)
Subject to the provisions of this Act, there
shall be levied and collected a tax, hereinafter
called the ‘luxury tax’, in respect of any luxury
provided,-
xxx
(ii) by cable operators; (“and by Direct-to-Home
(DTH) Service Providers”)
xxx
Provided that the sub-section shall not apply to,-
xxx
(iv) to cable operators whose total number of
connections, including those given through
franchisees, is seven thousand and five hundred
or less:
Provided further that the cable operators with
seven thousand and five hundred or less
connections shall not be liable to tax from 1st
July, 2006
(2) Luxury tax shall be levied and collected, -
xxx
(d) in respect of a cable TV operator(“and
Direct-to-Home(DTH) Broadcasting Provider”)
at the rate of rupees five per connection per
month, and shall be collectable from the person
enjoying the luxury :
xxx
2310 [2025] 5 S.C.R.

Supreme Court Reports

Provided that no luxury tax shall be payable
in respect of a connection provided by a
cable operator engaged in the distribution of
programmes of Doordarshan channels only:
Provided further that luxury tax, if any, collected
shall be paid over to the Government:
Provided also that a proprietor of a hotel who
had claimed exemption under sub-clause (1) of
clause 4 of the Kerala Finance Bill, 2006 (Bill
No. 355 of the XI Kerala Legislative Assembly)
from the 1st day of April 2006 being the charges
of accommodation below rupees two hundred
per room per day, shall be permitted to avail
such exemption till 30th June, 2006.
(2A) Notwithstanding anything contained in
sub-section (2), there shall be levied a luxury
tax at the rate of rupees one hundred per year
per member and the same shall be collected
by the person responsible for the management
of the club, by whatever name called.
Explanation: For the purpose of this section,
‘club’ means a club which provides more than
two facilities like card room, bar, billiard rooms,
snooker room, tennis court, swimming pool,
Sauna Jacuzzi and the like, gymnasium, golf
course, internet facility, video, video compact
disk, digital video disk and computer games
and having a membership strength of at least
twenty five.
xxx
(4) In computing the luxury tax, a fraction of
a rupee, which is not a multiple of five paise,
shall be rounded of to the next higher multiple
of five paise.
“ ( 5 ) E v e r y D i r e c t - To - H o m e ( D T H )
Broadcasting Service Provider in the
State shall pay luxury tax at the rate of two
[2025] 5 S.C.R. 2311

State of Kerala & Another v.
Asianet Satellite Communications Ltd. & Others

per cent on the gross charges received
or receivable by him every month in any
manner including installation charges,
subscription charges, recharges, or other
charges by whatever name called from the
subscribers in the State in respect of the
luxury provided by him.”;”
xxx
4D. Registration of cable operators and Direct-
to-Home(DTH) Broadcasting Service Provider.-
Every cable operator (“and Direct-to-Home(DTH)
Broadcasting Service Provider”) shall get
himself registered with such authority and in
such manner, as may be prescribed and the
application for registration shall be accompanied
by a registration fee of Rupees one thousand.
The registration shall be for a period of one year
and shall be renewed annually.
xxx
5. Returns: - Every proprietor liable to pay luxury
tax under this Act shall submit such return in
such manner and within such period as may
be prescribed.

ACT 10 of 2010
THE KERALA FINANCE ACT, 2010
6. Amendment of Act 32 of 1976. In the Kerala
Tax on Luxuries Act, 1976 (32 of 1976),-
(1) in section 2,-
(i) after clause (d), the following clauses shall
be inserted, namely:-
“(da) “Direct-To-Home (DTH) Broadcasting
Service” means a system of distribution of
multi-channel television programmes in ku band
using a satellite system of providing television
2312 [2025] 5 S.C.R.

Supreme Court Reports

signals direct to the subscriber’s premises in
an encrypted form which will be received by an
antenna and decrypted by an electronic device,
thus providing television signals to the television
set or other viewing devices of the subscriber,
without passing through an intermediary such
as cable operator.
xxx
(2) in section 4,-
(i) (a) in sub-section (1), in item (ii), the words,
symbols, brackets and letters “and by Direct-
To-Home (DTH) Service Providers” shall be
added at the end:
(b) for the existing proviso to sub-section (1), the
following provisos shall be substituted, namely:-
“Provided that the sub-section shall not apply to.-
xxx
(iv) to cable operators whose total number of
connections, including those given through
franchisees, is seven thousand and five hundred
or less:
Provided further that the cable operators with
seven thousand and five hundred or less
connections shall not be liable to tax from 1ª
July, 2006;

ACT 16 OF 2011
THE KERALA FINANCE ACT, 2011
6. Amendment of Act 32 of 1976.-In the Kerala
Tax on Luxuries Act, 1976 (32 of 1976),—
(1) in section 2,-
(i) clause (ca) shall be omitted;
(ii) clause (fa) shall be omitted;
[2025] 5 S.C.R. 2313

State of Kerala & Another v.
Asianet Satellite Communications Ltd. & Others

Orissa Entertainment Tax Act, 2006:
(f) The relevant provisions of Orissa Entertainment Tax Act,
2006 are as under:
“2. Definitions. - In this Act, unless there is
anything repugnant in the subject or context,—
(a) “admission to an entertainment” includes
admission to any place in which the entertainment
is held and in case of entertainment through
cable service (or Direct-to-Home (DTH)
Broadcasting Service) each connection to a
subscriber shall be deemed to be an admission
for entertainment;
xxx
(d) “cable television network” means any system
consisting of a set of closed transmission paths
and associated signal generation, control and
distribution equipment, designed to provide cable
service for reception by multiple subscribers;
xxx
(e1): Direct-to-Home (DTH) Broadcasting
Service” means system of distribution of multi-
channel television programme in KU Band by
using a satellite system, by providing television
signals to a television set with the aid of set-top
box direct to subscribers without passing through
an intermediary such as Cable Operator.
Explanation.- For the purpose of this clause
and clause (k1) “KU Band” ordinarily means
the 11.7-12.7 Ghz. (Gigahertz) frequency band
which splits into two segments viz. the first
having the frequency of 11.7-12.2 Ghz. Known
as FSS (Fixed Satellite Service) and the other
having the frequency of 12.2-12.7 Ghz. Known
as BSS (Broadcasting Satellite Service), or it
2314 [2025] 5 S.C.R.

Supreme Court Reports

may have such other brand width as may be
approved by the Government of India from
time to time.”

(f) “entertainment” means any cinematographic
exhibition including exhibition of news reels,
documentaries, cartoons, advertisement shots
or slides, whether before or during exhibition of
a feature film or separately, and includes any
other exhibition, performance, amusement and
entertainment through cable service (or Direct-
to-Home (DTH) Broadcasting Service);

xxx

7. Tax on cable and DTH service. - (1) The
proprietor of a cable television network providing
cable service (and of a Direct-to-Home (DTH)
Broadcasting Service) shall be liable to pay
entertainment tax at such rate as specified in
Part II of the Schedule.

(2) The tax payable under this section shall be
paid, collected or realised in such manner as
may be prescribed.

xxx

9. Intimation before holding entertainment.-
(1) No entertainment on which tax is leviable
shall be held without prior information being
given to the Commissioner in the manner
prescribed.

(2) No proprietor of a cable television network
(or Direct-to-Home (DTH) Broadcasting Service)
shall provide entertainment, unless he obtains
permission from the Commissioner in the
manner prescribed.

xxx
[2025] 5 S.C.R. 2315

State of Kerala & Another v.
Asianet Satellite Communications Ltd. & Others

(3a) Notwithstanding anything contained in sub-
sections (2) and (3) where any proprietor of a
Direct-to-Home (DTH) Broadcasting Service is
providing entertainment immediately before the
commencement of the Orissa Entertainment
Tax (Amendment) Act, 2010 he may continue
to provide entertainment,—
(a) for a period of three months from the date
of commencement of said amendment Act; or
(b) till the permission under sub-section (2) is
granted by the Commissioner, if an application
to that effect is made in the prescribed manner
within the period specified in clause (a).”
The relevant provisions of Orissa Entertainment Tax Rules,
2006 are as under:
“12. Permission to operate cable television
network or connection for the Direct-
to-Home (DTH) Broadcasting Service. –
(1) The proprietor of a cable television network
or a Direct-to-Home (DTH) Broadcasting Service
shall submit to the Commissioner an application
in Form XA within fifteen days from the date
of commencement of these rules bringing the
Direct-to-Home (DTH) Broadcasting Service
under the purview of the Act or at least fifteen
days before the date of such entertainment
and shall furnish any other information which
may be so required by the Commissioner for
the purpose.
(2) The Commissioner, after making such
enquiry as he may deem proper and after
being satisfied that the application is in order,
shall issue certificate in form XIIIA permitting
the proprietor of a cable television network or
a Direct-to-Home (DTH) Broadcasting Service.”
2316 [2025] 5 S.C.R.

Supreme Court Reports

Punjab Entertainment Duty Act, 1955:
(g) The relevant provisions of the Punjab Entertainment
Duty Act, 1955 are as under:
“2. Definitions. - In this Act unless the context
otherwise requires -
(a) ‘admission to an entertainment’ includes
admission to any place in which the entertainment
is being held or is to be held and where television
exhibition is being provided with the aid of any
type of antenna with a cable network attached to
it or cable television or direct-to-home television
in residential or non-residential areas of which
persons are required to make payment by way
of contribution or subscription or installation
and connection charges or any other charges
collected in any manner, whatsoever.
xxx
(aa) ‘antenna’ means an apparatus which
received television signals which enable viewers
to tune into transmissions including national or
international satellite transmissions and which
is erected or installed for exhibition of films
or moving pictures or series of pictures by
means of transmission of television signals by
wire where subscriber’s television sets at the
residential or non-residential place are linked by
metallic coaxial cable or optio-fibre cable to a
central system called the head-end, on payment
by the connection holder of any contribution
or subscription or installation and connection
charges or any other charges collected in any
manner whatsoever.
(aaa) ‘cable television’ means a system
organised on payment by a connection holder
of any contribution or subscription or installation
[2025] 5 S.C.R. 2317

State of Kerala & Another v.
Asianet Satellite Communications Ltd. & Others

and connection charges or any other charges
collected in any manner whatsoever, for
exhibition of films or moving pictures or series of
pictures by means of transmission of television
signals by wire where subscriber’s television set
is linked by metallic coaxial cable or optio-fibre
cable to a central system called the head-end,
by using a video cassette or disc or both,
recorder or player or similar such apparatus
on which prerecorded vide cassettes 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.
(b) ‘Commissioner’ means the Excise and
Taxation Commissioner, Punjab, for the time
being;
(bb) “direct-to-home television” means the
reception of satellite programmes with the aid of
a dish by a subscriber in his home or any other
place for exhibition of films or moving pictures
or series of pictures on payment basis;
(bbb) “dish” means a large circular antenna for
receiving television signals from a satellite;”;
‘Entertainment Tax Officer’ means the officer
appointed as such under this Act;
(d) ‘entertainment’ includes any exhibition,
performance, amusement, game, sport or
race to which persons are ordinarily admitted
on payment for exhibition of films or moving
pictures or series of pictures which are shown
in a cinema house or on the television receiving
set, with the aid of any type of antenna with a
cable net work attached to it or cable television
or dish relating to direct-to-home television
2318 [2025] 5 S.C.R.

Supreme Court Reports

network for which persons are required to make
payment by way of contribution or subscription
or installation and connection charges or
any other charges collected in any manner
whatsoever.
Explanation.- For the purpose of this clause,
the expression “Cinema house” shall have the
same meaning as has been assigned to it in
the Punjab Entertainments Tax (Cinematograph
Shows) Act, 1954 (Punjab Act 8 of 1954).
(e) ‘payment for admission’ includes –
(i) any payment made by a person admitted to
any part of a place of entertainment and in a case
where such person is subsequently admitted to
another part thereof for admission to which an
additional payment is required, such additional
payment, whether actually made or not;
(ii) in cases of free, surreptitious, unauthorised
or concessional entry, whether with or without
the knowledge of the proprietor, the payment
which would have been made if the person
concerned had been admitted on payment of
the full charges ordinarily chargeable for such
admission;
(iii) any payment for any purpose whatsoever
connected with an entertainment which a person
is required to make as a condition of attending
or continuing to attend the entertainment in
addition to the payment, if any, for admission
to the entertainment;
(iv) any payment made by a person by way
of contribution or subscription of installation
and connection charges or any other charges
collected in any manner whatsoever for television
exhibition with the aid of any type of antenna
with a cable network attached to it or cable
[2025] 5 S.C.R. 2319

State of Kerala & Another v.
Asianet Satellite Communications Ltd. & Others

television or a dish relating to direct-to-home
television network.
(f) ‘prescribed’ means prescribed by rules made
under this Act;
(g) ‘proprietor’ in relation to any entertainment
includes the owner, partner or a person
responsible for the management thereof and
any person responsible for or for the time being
incharge of the management for providing
cable connection from any type of antenna or
cable television or for providing direct-to-home
television service.
xxx
3. Duty on payments for admission to
entertainments.
(1) A person admitted to an entertainment shall
be liable to pay an entertainment duty at a
rate of twenty-five per centum, which shall be
collected by the proprietor and rendered to the
Government in the prescribed manner.
(1-A) Notwithstanding anything contained in sub-
section (1), the Government may, by notification,
levy lumpsum entertainment duty at a rate not
exceeding, -
(a) eight thousand rupees per annum in the
local area of a City constituted as such under
the Punjab Municipal Corporation Act, 1976, or
of a Municipality declared as such under the
Punjab Municipal Act, 1911; and
(b) Six thousand rupees per annum in areas
other than the local areas specified in clause (a);
in respect of entertainments arranged by a
proprietor by replay of video cassette player or
2320 [2025] 5 S.C.R.

Supreme Court Reports

video record player and the lumpsum duty so
levied shall be recoverable from the proprietor,
(1-B) Notwithstanding anything contained in sub-
section (1), a proprietor may, at his option, pay in
lump sum entertainment duty on an amusement
park at the rates, specified in the Schedule
appended to this Act, per annum per ride.

SCHEDULE
(See Section 3 (1-B)

Category Description of rides Rate of duty per
of rides ride
(in Rupees)
1 2 3
1. Dragon Roller Sixty thousand
Coaster
2. Big Apple
3.Dragon Coaster
4. Roller Coaster
5. Bumper Car
6. Cyclone
7. Striking Cars

A 8. Go karts
9. Water Chute
10. Octopus
11. Twister
12. Enterprise
13. Kamikaze
14. Rainbow
15. Power Tower
16. Family Swinger
[2025] 5 S.C.R. 2321

State of Kerala & Another v.
Asianet Satellite Communications Ltd. & Others

1. Break Dance Forty thousand
2. Caterpillar
3. Paratrooper
4. Round About
5. Train
6. Dream Boat
7. Formula Cars
8. Family Slide
9. Love Boats
10. My Fair Lady
11. Tea Cup or
Cup and Saucer
B 12. Gandola
13. Jumping Frogs
14. Parachute
Towers
15. Ship or
Pandulum
16. Harakiri
17. Slide
18. Razzle Dazzle
19. Ferris Wheel
20. Rock ‘N’ Roll
21. Telecombat
22. Bumper Boats
1. Baby Train Twenty thousand
2. Toto Train
3. Fun Spin
C
4. Fun Channel
5. Vintage Cat
6. Jingle Ride
2322 [2025] 5 S.C.R.

Supreme Court Reports

7. Scooters
8. Guided Cars
9. Money Tree
10. Snail
11. Kiddie Boats
12. Coin Operated
Rides
13. Children Slide
14. Any other
un-specified Ride
15. Merry Go
Round
16. Carousel
17. Water Merry
18. Go Round
19. Sun and Moon
20. Mini Coaster
21. Water Canal
22. Crazy
Submarine
1. Boating
2. Play Pen
3. Little Kingdo
D 4. Funny Boats
5. Kids Castle
6. Bike Mania
7. Water Slide

(1-B) (a) Notwithstanding anything contained in
sub-section (1) Government may, by notification,
levy lump-sum entertainment duty of amusement
park at a rate not exceeding rupees sixty
thousand per annum.
[2025] 5 S.C.R. 2323

State of Kerala & Another v.
Asianet Satellite Communications Ltd. & Others

(b) A proprietor may, however, opt to pay an
entertainment duty either under sub-section (1)
or he may pay lump-sum entertainment duty
under the proceeding clause (a).
(2) A draft of the proposed order specifying the
rate of entertainments duty referred to in sub-
section (1) shall be notified for the information
of all persons likely to be affected thereby and
it shall take effect only after the Government
has considered all objections received within
a period of thirty days from the date of such
publications, and has notified the same again,
with or without modification:
Provided that if the Government consider that
such an order should be brought into force at
once, the final notification may issue without
previous publication:
Provided further that Government may impose
an entertainments duty on complimentary tickets
at a different from that imposed on other kinds of
payment for admission subject to the maximum
specified in sub-section (1).
(3) Until such time as the duty referred to in
sub-sections (1) and (2) has been finally notified,
the entertainments duty shall be levied at the
rates in force in this behalf immediately before
the commencement of this Act.
(3-A) Notwithstanding anything in this section,
the amount of duty shall be calculated to the
nearest multiple of 5 naye paise by ignoring 2
naye paise or less and counting more than 2
naye paise as 5 naye paise.
(4) The final notification specifying the rates
of entertainment duty shall be laid before the
Legislature at the session immediately following
its publication.
2324 [2025] 5 S.C.R.

Supreme Court Reports

3.A. Entertainment duty is not leviable in
case tax is paid under Punjab Act 8 of 1954.-
Notwithstanding anything contained in this Act,
no entertainment duty shall be leviable on the
proprietor who is able to pay entertainment
tax under the Punjab Entertainment Tax
(Cinematograph Shows) Act, 1954.
(3B) Notwithstanding anything contained in sub-
sections (l), (1-A), (2) and (3), in the case of
entertainment provided with the aid of antenna
or cable television to a connection holder, the
proprietor of such entertainment shall pay
entertainment duty of fifteen thousand rupees
per annum at a time.
(3C) Notwithstanding anything contained in this
section, in the case of entertainment, provided
with the aid of dish, relating to direct-to-home
television, the proprietor of such entertainment
shall pay entertainment duty at the rate of ten per
cent of the charges, received by such proprietor
from the subscriber. The entertainment duty
shall be paid by the proprietor by the 10th day,
commencing from the close of the concerned
calendar month.”

Rajasthan Entertainments and Advertisements Tax Act,
1957:
(h) The relevant provisions of the Rajasthan Entertainments
and Advertisements Tax Act, 1957 are as under:
“3. Definitions. – In this Act, unless the subject
or context otherwise requires,-
xxx
(4A).- “direct to home broadcasting service”
means distribution of multi channel television
programmes by using satellite system by
providing television signals direct to the premises
of subscribers without passing through an
intermediary such as cable services.
[2025] 5 S.C.R. 2325

State of Kerala & Another v.
Asianet Satellite Communications Ltd. & Others

(4AAA.)- “levy of tax on direct to home
broadcasting service”- The proprietor of a
direct to home broadcasting service shall be
liable to pay entertainment tax at such rates,
not exceeding twenty percent of the monthly
subscription charges per subscriber, as the
State Government may from time to time,
notify in the Official Gazette, in this behalf and
different may be notified for different categories
of subscribers
(5) “entertainment” includes –
(i) any exhibition, (show), performance,
amusement, game or sport to which persons
are admitted for payment.
(ii) providing cable service to a subscriber.
(iii) providing direct to home broadcasting
service and,
(6) “entertainment tax” means the tax levied
and charged under section 4, 4AA and 4AAA
and the expression 4AA shall be deemed to
have been inserted with effect from 26.03.1999
and the expression 4AAA shall be deemed to
have been inserted with effect from 25.02.2008
and includes the additional tax payable under
section 6A,
xxx
(8) “proprietor” in relation to an entertainment
includes any person responsible for, or for the
time being in-charge of the management thereof;
xxx
(11A) “subscriber” means a person who
receives the signals of cable television network
at a place indicated by him to the proprietor
of the cable television network without further
transmitting it to any other person;
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Explanation : In case of hotels each room or
premises where facility for receiving signals of
cable television network have been attached
shall be treated as a subscriber.”

The relevant provisions of the Rajasthan Entertainments and
Advertisements Tax Rules, 1957 are as under
“Rules 18BBBB.- Permission to be obtained
to operate direct to home broadcasting
service.
(1) the proprietor of a direct to home broadcasting
service shall submit to the Commissioner an
application within fifteen days from the date on
which these rules come into force or at least within
fifteen days of his commencing entertainment
through direct to home broadcasting service,
whichever is later.
(2) the proprietor shall submit to the Commissioner
a security of an amount fixed by the Commissioner
along with any other information which may be
so required by the Commissioner.
Rules 18BBBBB.- Payment of tax for direct
to home broadcasting service.
(1) The proprietor of a direct to home broadcasting
service liable to pay tax in accordance with
section 4AAA of the Act, shall maintain a true
and correct record of the number of subscribers,
the amount received from each subscriber and
the amount of tax.
(2) The proprietor of a Direct to Home
broadcasting service shall be required to deposit
tax payable within seven days of the close of
each calendar month.
(3) The proprietor of a Direct to Home
broadcasting service shall file quarterly return
in Form S-7 in duplicate, within fifteen days
[2025] 5 S.C.R. 2327

State of Kerala & Another v.
Asianet Satellite Communications Ltd. & Others

of the end of each quarter along with proof of
deposit of tax payable under the Act.”

Tamil Nadu Entertainments Tax Act, 1939:
(i) The relevant provisions of the Tamil Nadu Entertainments
Tax Act, 1939 are as under:
“3. Definitions: In this Act, unless there is
anything repugnant in the subject or context :
xxx
(3B) “direct to home service” means distribution
of multi-channel television programmes by using
a satellite system by providing television signals
direct to subscribers’ premises without passing
through an intermediary such as cable operator;
xxx
3(4) “entertainment” means a horse race or
cinematograph exhibition to 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 connection charges or any other
charges collected in any manner whatsoever
or an amusement or a recreation parlour where
a game such as bowling, billiards, snooker or
the like is provided or direct to home service or
a cricket tournament conducted by the Indian
Premier League.
xxx
3(9) “proprietor” in relation to any entertainment
means a licensee of Cinematograph exhibition
under the Tamil Nadu Cinemas (Regulation)
Act, 1995 (Tamil Nadu Act No.IX of 1955) or the
licensee of an Exhibition of Cinematograph film
on Television Screen through Video Cassette
Recorder or through Cable Television Network
under the Tamil Nadu Exhibition of Films on
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Television Screen through Video Cassette
Recorders and cable Television Network
(Regulation) Act, 1984 (Tamil Nadu Act No.
VII of 1984) or any person providing Television
exhibition or any person providing amusement
or any person providing recreation parlour or any
person providing direct to home service or the
Indian Premier League and includes the State
Government, any local authority or any person
responsible for the management thereof.
xxx
3(11) “Television exhibition” means an exhibition
with the aid of any type of antenna with a cable
network attached to it or a cable television, of
a 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 optic fibre
cable to a central system called the head-end.
xxx
4-I. Tax on direct to home service.—(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 “entertainment tax”) calculated at the rate
of thirty per cent of the gross charges excluding
the service tax, received by the provider of a
direct to home service.
(2) The tax levied under sub-section (1) shall
be recoverable from the proprietor.
(3) The provisions of this Act (other than Sections
4, 7 and 13) and the rules made thereunder
shall, so far as may be, apply in relations to the
tax payable under sub-section (1).
xxx
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State of Kerala & Another v.
Asianet Satellite Communications Ltd. & Others

4-E. Tax on television exhibition.- (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 entertainment tax) on television exhibition
at the following rates namely:-

Within the limits Six thousand
of the Municipal rupees per
Corporation of Chennai, month.
Madurai, Coimbatore,
Tiruchirapalli, Tirunelveli,
(i)
Salem or any other
Corporation that may be
constituted under any
law for the time being in
force;
Within the limits of the Three
Municipalities constituted thousand
under the Tamil Nadu rupees per
(ii)
District Municipalities month
Act, 1920 (Tamil Nadu
Act No. V of 1920)
Within the limits of Town One thousand
Panchayats constituted and five
under the Tamil Nadu hundred
District Municipalities rupees per
(iii) Act, 1920 (Tamil Nadu month
Act No. V of 1920)
or any other area not
specified in items (i), (ii),
or (iv)
Within the limits of One thousand
Village Panchayats rupees per
constituted under the month.
(iv)
Tamil Nadu Panchayats
Act, 1994 (Tamil Nadu
Act No. 21 of 1994).

(2) The tax levied under sub-section (1) shall
be recoverable from the proprietor.
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(3) The provisions of this Act other than Sections
4, 4-B, 4-D, 4-F, 4-G, 5-F, 5-G, 6(1), 7 and 13
and the rules made there under shall, so far
as may be, apply in relation to the tax payable
under sub- section (1).

Uttar Pradesh Entertainment and Betting Tax Act, 1979:
(j) The relevant provisions of Uttar Pradesh Entertainment
and Betting Tax Act, 1979 as amended by Uttar
Pradesh Entertainment and Betting Tax (Amendment)
Ordinance, 2009 are as under:
“2. Definitions.- In this Act-
(a) ‘admission to an entertainment’ includes
admission to any place which the entertainment
is held or any place wherefrom entertainment
is provided by means of the cable television
network of Direct to Home service or any other
emerging transmission by whatever name
called.”
(a-1) ‘amusement park’ mean a place wherein
various type of amusements, which includes
games or rides or water sports, water park,
splash pool etc. but does not include exhibition
by means of cinematograph and video, are
provided on payment of admission.”
xxx
(ee) ‘cable operator’ means any person who
provides cable service through a cable television
network or otherwise controls or is responsible
for the management and operation of cable
television network and includes the proprietor
of a hotel who provides cable service in the
hotel through his own cable television network”;
xxx
(f-1) ‘Direct-to-Home service’ means a system
of distribution of multi-channel television
[2025] 5 S.C.R. 2331

State of Kerala & Another v.
Asianet Satellite Communications Ltd. & Others

programmes in Ku band by using a satellite
system, by providing television signals direct
to the subscriber’s premises without passing
through an intermediary such as cable
operator.”
(g) ‘entertainment’ includes any exhibition,
performance, amusement, game, sport or
race (including horse rase) to which persons
are admitted for payment and in the case of
cinematograph exhibition, includes exhibition
of news-real, documentaries, cartoons,
advertisement shorts or slides, whether before
or during the exhibition of a feature film or
separately,; It also includes any activity notified
as entertainment by the State Government from
time to time.”
xxx
(i-1) ‘Ku Band’ ordinarily means the 11.7 to 12.7
Gigahertz frequency band which splits into two
segments namely Fix Satellite Service having
the frequency of the 11.7 to 12.2 Gigahertz
and Broadcasting Satellite service having the
frequency of 12.2 to 12.7 Gigahertz, or any
other band of width as may be approved by
the Government of India and from time to time.”
xxx
(k.1) “Multi System Operator” means a cable
operator who receives a programming service
from a broadcaster or his authorized agencies
and retransmits the same or transmits his own
programming service for simultaneous reception
either by multiple subscribers directly or through
one or more local cable operators, and includes
his authorized distribution agencies by whatever
name called.
(l) ‘payment for admission’ includes-
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(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 entertainment;
(iii) any payment made for the loan or use
of any instrument or contrivance which
enables a person to get a normal or
better view of hearing or enjoyment of
the entertainment, which without the aid
of such instrument or contrivance such
person would not get;
(iv) any payment, by whatever name called
or any purposes whatsoever, connect
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 payment, if any, entertainment or without
any such payment for admission.
(v) 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.
Explanation.-Any subscription raise or donation
collected in connection with an entertainment
in any form shall be deemed to be payment
for admission;
(vi) Any payment made by a person by
way of contribution or subscription or
installation and connection charges or any
other charges collected in any manner
whatsoever, by whatever name called,
for television exhibition through cable
television network or any other such
[2025] 5 S.C.R. 2333

State of Kerala & Another v.
Asianet Satellite Communications Ltd. & Others

network by whatever name called, attached
to television set or any other device at a
residential or non-residential place of a
connection holder; or
(vii) Any payment made by person to the
proprietor of a Direct-to-Home service or
any other service by whatever name called,
by way of contribution or subscription or
installation and connection charges or
any charges collected in any manner by
whatever name called either directly or
through any agency established for the
purpose for Direct-to-Home service with
the aid of set top box or any other device
of like nature which connects television
set or any other device at a residential
or non-residential place of a connection
holder directly to the satellite without
passing through an intermediary such as
cable operator;
Explanation-For the purposes of sub-clauses
(vi) and (vii) any expenditure incurred by any
co-operative society including a co-operative
housing society or by the management of any
factory, hotel, lodge, bar, permit room, pub
or by a person or group of persons for the
purchase of any type of antenna or any other
apparatus for securing transmission through
cable television network, Direct-to-Home service
or any other service by whatever name called,
for its member or for workers or customers or
for himself or themselves, as the case may be
shall be deemed to be payment made under
the sub-clause;
(viii) Where in any entertainment admission
has been allowed on a gross payment,
such gross payment shall be deemed to
be aggregate payment”.
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(l-l) ‘Place of entertainment includes-
(i) a house, building, tent, site to be used
for purpose of cinema building or other
structure and description of transport
whatsoever;
(ii) any addition to the place of entertainment;
(iii) a house building, tent or any other place
where the books of account, ticket books
or any other relevant records pertaining
to the entertainment or pertaining to the
management of providing cable service
or Direct-to-Home service or Broadband
service or any emerging transmission
services, by whatever name called, are
kept or purported to have been kept;.
xxx
(m) ‘proprietor’ in relation to any entertainment
includes any person-
(i) connected with the organisation of the
entertainment, or
(ii) charged with the work of admission to the
entertainment, or
(iii) responsible for, or for the time being in-
charge of the management thereof, or
(iv) any cable operator registered under
Section 4 of the Cable Television Network
(Regulation) Act, 1995 (Act No. 7 of
1995) or any person responsible for or for
time being in charge of management of
providing cable connection through cable
television network or any other emerging
technology; or
(v) any company registered under the Company
Act, 1956 having license to provide Direct-
to-Home service or any other emerging
[2025] 5 S.C.R. 2335

State of Kerala & Another v.
Asianet Satellite Communications Ltd. & Others

transmission services by whatever name
called by the Government of India under
Section 4 of the Telegraph Act, 1985
and the Indian Wireless Telegraph Act,
1933 or any agent thereof appointed for
the purpose of sale, letting on rent or
distribution of equipment related thereto;”.
xxx
(p-1) television signal receiver’ means any
device, by whatever name called, used to receive
and/or decode the transmission programme of
particular channel and without which no person
is able to see a particular channel programme.”
(p-2) ‘television signal receiver agency’ means a
place of entertainment by whatever name called,
where business of selling or letting on hire or
distribution or exchange or putting into circulation
in any manner whatsoever of television signal
receiver.”.
xxx
(t) Words and expressions used in this Act but
not defined, shall have the meaning respectively
assigned to them in the Cable Television
Networks (Regulation) Act, 1952.
(u) Words and expression used in this Act
not defined, shall have the same meaning
as respectively assigned to them in the Uttar
Pradesh Cinema (Regulation) Act, 1955 or the
rules made thereunder and the Cable Television
Network (Regulation) Act, 1995 and the rules
made thereunder.
3. Tax on entertainment. - (1) Subject to the
provisions of this Act, there shall be levied and
paid on all Aggregate payments required for
admission to any entertainment other than an
entertainment to which Section 4 or Section
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4-A or Section 4-B applies or a compounded
payment is made under the proviso to this
sub-section an entertainment tax at such rate
not exceeding one hundred and fifty per cent of
each such payments as the State Government
may form time to time notify in this behalf, and
the tax shall be collected by the proprietor from
the person making the payment for admission
and paid to the Government in the manner
prescribed.
Provided that a proprietor of a cinema or cable
operator in a local area having a population not
exceeding one lac. may, in lieu of payment under
this sub-section, pay a compounded payment to
the State Government on such conditions and in
such manner as may be prescribed and at such
rate as the State Government may from time to
time notify, and different rates of compounded
payments may be notified for different categories
of local areas.
Provided further that in the case of cable service,
the proprietor of the cable service control room/
multi system operator shall be liable to pay the
tax irrespective of the fact whether he collect it
directly from the person making the payment for
admission or indirectly through an associate or
franchise cable operator or an agent, who in turn
collects it from the person making the payment:
Provided also that a proprietor of a cinema,
in lieu of payment under this sub-section,
shall make a lump sum payment to the State
Government on such conditions and restrictions
and in such manner as may be prescribed and
at such rate as the State Government may from
time to time notify, and different rates of lump
sum payments may be notified for different
categories of local areas or cinemas or for
different payment for admission.
[2025] 5 S.C.R. 2337

State of Kerala & Another v.
Asianet Satellite Communications Ltd. & Others

(2) Nothing in sub-section (1) shall preclude the
State Government form notifying different rate
of entertainment tax for different areas or for
different classes of entertainment or for different
Aggregate payment required for admission to
entertainment.
(2-a) It shall be lawful for the State Government
to notify lump sum rate of entertainment tax for
any entertainment or class of entertainments
or for different payment for admission to
entertainment or for different area;
(3) Where the aggregate payment required for
admission to an entertainment together with
any other charge leviable under this Act, is not
a multiple of one rupee then notwithstanding
anything to the contrary contained in sub-section
(1) or sub-section (2) or any notification issued
thereunder, the tax shall be increase to such
extent and be so computed that the aggregate
of such aggregate payment and other charges
is rounded off to the next higher multiply of
one rupee and such increased tax shall also
be collected by the proprietor and paid to the
State Government in such manner as may be
prescribed,
(4) If in any entertainment, referred to in sub-
section (1), to which admission is generally
on payment, any person is admitted free of
charge or on a concessional rate, the same
amount of tax shall be payable as would have
been payable had such person been admitted
on full payment.
(5) Where the Aggregate payment required for
admission to an entertainment, referred to in
sub-section (1), is made wholly or partly, by
means of a lump sum paid as subscription,
contribution, donation or otherwise, the tax shall
be paid on the amount of such lump sum and
2338 [2025] 5 S.C.R.

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on the amount of Aggregate payment required
for admission if any made otherwise.
(6) Where in hotel or a restaurant, entertainment
by way of cabaret or floor show (by whatever
name called, by excluding a mere band in
attendance or recorded music) is provided
alongwith any meal or refreshment with a
view to attracting customers, whether or not
Aggregate payment required for admission
is charged distinctly for such entertainment,
Thirty per cent of the amount payable by the
customer such meal or refreshment or the
amount charge distinctly for such entertainment,
whichever is higher, shall be deemed to be the
Aggregate payment required for admission to
such entertainment and the tax shall be levied
and pain accordingly.
(7) Where in a hotel, entertainment by way
of cable service is provided in rooms or other
places, the entertainment so provided in each
room or other place shall be deemed to be a
separate entertainment and the subscription
for admission to each such entertainment
shall be deemed to be equal to the amount
of subscription charged from a subscriber in
the vicinity of the hotel by the cable operator
providing cable service in the hotel, and the tax
shall be levied and paid on the basis of such
subscription:
Provided that where the cable operator himself
is the proprietor of the hotel, the subscription
for admission to each such entertainment
shall be deemed to be equal to the amount of
subscription charged from a subscriber in the
vicinity of the hotel by any other cable operator.
Explanation.- (1) For the purposes of this sub-
section and clause (ee) of Section 2, ‘hotel’
includes an accommodational unit wherein
[2025] 5 S.C.R. 2339

State of Kerala & Another v.
Asianet Satellite Communications Ltd. & Others

rooms are provided to the customers on rent,
but does not include the units approved under
the ‘Paying Guest Scheme’ of the Department
of Tourism of the State Government.
Explanation - (2) For the purposes of this Act,
the expression aggregate payment shall mean
a sum paid by a person for admission to the
entertainment which shall include entertainment
tax and other amount required to be paid under
this Act but does not include any fee or other
charges which is not a part of entertainment tax
under this Act.”
The State Legislature of Uttarakhand amended the Uttar Pradesh
Entertainment and Betting Tax Act, 1979 (as applicable to the State
of Uttarakhand) by Act No.4 of 2009 notified on 16.03.2009 which
are as under:
“Section 2 – Definitions.–
xxx
(ff) “Direct-to-Home (DTH) Broadcasting” a service for multi-
channel distribution programmes direct to subscriber’s
premises without passing through an intermediary such
as cable operator by uplinking to a satellite system.
Section 2(g) has been amended as under –
(g) “Entertainment” includes Direct-to-Home Broadcasting
service and any and any exhibition, performance,
amusement, game, sport or race (including horse race) to
which persons are admitted for payment and in the case
of cinematograph exhibition, includes exhibition of news-
reel, documentaries, cartoons, advertisement shorts or
slides, whether before or during the exhibition of a feature
film or separately.”

Interpretation of Entries of the Lists of the Seventh Schedule
of the Constitution:
8. With regard to the distribution of legislative subjects under the three
Lists of the Seventh Schedule of the Constitution, it is necessary
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to state that the Devolution Rules drawn under the Government of
India Act, 1919 and thereafter the Government of India Act, 1935 are
the precursors to the distribution of legislative powers between the
Union and the States. Some of the salient aspects concerning the
distribution of legislative powers between the Parliament and State
Legislature as per the three Lists in the backdrop of constitutional
provisions could be alluded to. Article 246 of the Constitution deals
with the distribution of legislative powers between the Union and the
States. The said Article has to be read along with the three Lists,
namely, the Union List, the State List and the Concurrent List. The
taxing powers of the Union as well as the States are also demarcated
as separate entries in the Union List as well as the State List i.e.
List I and List II respectively. The entries in the Lists are fields of
legislative powers conferred under Article 246 of the Constitution. In
other words, the entries define the areas of legislative competence
of the Union and the State Legislature. (vide: State of Karnataka).
8.1 The legislative power to impose a tax or impost can be traced to
either List I - Union List or List II - State List. List III - Concurrent
List which gives powers to both Union as well as the States to
legislate on a subject does not contain any taxation entry. Entry
47 - List III states that fees in respect of any of the matters in
that List but not including fees taken in any Court could be levied
and collected by an authority of law either by the Union or the
State Legislature. Similarly, Entry 66 - List II states that fees
in respect of any of the matters in List II but not including fees
taken in any Court could be collected by the State Legislature.
In a similar vein, Entry 96 - List I gives power to levy fee in
respect of subjects enumerated in List I but not including fees
taken in any Court.
8.2 On the aspect of interpretation of legislative entries in the
three Lists, the principles are apposite as discussed in State
of Karnataka:
8.2.1 The power to legislate which is dealt with under Article
246 has to be read in conjunction with the entries in the
three Lists discussed above which define the respective
areas of legislative competence of the Union and State
Legislatures. While interpreting these entries, they should
not be viewed in a narrow or myopic manner but by giving
[2025] 5 S.C.R. 2341

State of Kerala & Another v.
Asianet Satellite Communications Ltd. & Others

the widest scope to their meaning, particularly, when
the vires of a provision of a statue is assailed. In such
circumstances, a liberal construction must be given to
the entry by looking at the substance of the legislation
and not its mere form.
8.2.2 However, while interpreting the entries, in the case of an
apparent conflict between the entries in the Lists, every
attempt must be made by the Court to harmonise or
reconcile them. Where there is an apparent overlapping
between two entries, the doctrine of pith and substance
is applied to find out the true character of the enactment
and the entry within which it would fall. The doctrine of
pith and substance, in short, means, if an enactment
substantially falls within the powers expressly conferred
by the Constitution upon the legislature which enacted it,
the same cannot be held to be invalid merely because it
incidentally encroaches on matters assigned to another
legislature. Also, in a situation where there is overlapping,
the said doctrine has to be applied to determine to
which entry, a piece of legislation could be related to
by examining the true character of the enactment or
a provision thereof. Due regard must be had to the
enactment as a whole and to its scope and objects. It is
said that the question of invasion into another legislative
territory has to be determined by substance and not by
degree. According to the pith and substance doctrine, if
a law is in its pith and substance within the competence
of the Legislature which has made it, it will not be invalid
because it incidentally touches upon the subject lying
within the competence of another Legislature.
8.2.3 In case of any conflict between entries in List I and List
II, the power of Parliament to legislate under List I will
supersede when, on an interpretation, the two powers
cannot be reconciled. But if a legislation in pith and
substance falls within any of the entries of List II, the
State Legislature’s competence cannot be questioned
on the ground that the field is covered by Union list or
the Concurrent list (vide Prafulla Kumar Mukherjee vs.
Bank of Commerce, Khulna, AIR 1947 P.C. 60). It
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was further observed that in distinguishing between the
powers of the divided jurisdictions under Lists I, II and
III of the Seventh Schedule to the Government of India
Act, 1935, it is not possible to make a clean cut between
the powers of the various legislatures. They are bound to
overlap from time to time, and the rule which has been
evolved by the Judicial Committee whereby an impugned
statute is examined to ascertain its pith and substance
or its true character for the purpose of determining in
which particular list the legislation falls, applies to Indian
as well as to Dominion legislation.
8.2.4 The Privy Council quoted with approval, the observations
of Gwyer, CJ in A.L.S.P.P.L. Subrahmanyan Chettiar vs.
Muttuswami Goundan, AIR 1941 FC 47 wherein it
was observed that overlapping of subject-matter is not
avoided by substituting three lists for two, or even by
arranging for a hierarchy of jurisdictions. It was observed
that “Subjects must still overlap, and where they do the
question must be asked what in pith and substance is
the effect of the enactment of which complaint is made,
and in what list is its true nature and character to be
found. If these questions could not be asked, much
beneficent legislation would be stifled at birth, and many
of the subjects entrusted to provincial legislation could
never effectively be dealt with”. In the said case, it was
further observed that the dominant position of the Central
Legislature (Parliament) with regard to matters in List
I and List III is established. But the rigour of the literal
interpretation is relaxed by the use of the words “with
respect to” which signify “pith and substance”, and do
not forbid a mere incidental encroachment. The learned
Chief Justice Gwyer further added as under:
“It must inevitably happen from time to time
that legislation, though purporting to deal with a
subject in one list, touches also on a subject in
another list, and the different provisions of the
enactment may be so closely intertwined that
blind adherence to a strictly verbal interpretation
would result in a large number of statutes
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State of Kerala & Another v.
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being declared invalid because the Legislature
enacting them may appear to have legislated in
a forbidden sphere. Hence the rule which has
been evolved by the Judicial Committee whereby
the impugned statute is examined to ascertain
its “pith and substance”, or its “true nature
and character,” for the purpose of determining
whether it is legislation with respect to matters
in this list or in that.”
8.2.5 Where one entry is made “subject to” another entry, all
that it means is that out of the scope of the former entry,
a field of legislation covered by the latter entry has been
reserved to be specially dealt with by the appropriate
legislature. Also, when one entry is general and another
specific, the latter will exclude the former on a subject of
legislation. If, however, they cannot be fairly reconciled,
the power enumerated in List II must give way to List I.
8.2.6 But once the legislation is found to be ‘with respect to’
the legislative entry in question, unless there are other
constitutional prohibitions, the power would be unfettered.
It would also extend to all ancillary and subsidiary
matters which can fairly and reasonably be said to be
comprehended in that topic or category of legislation (vide
United Provinces vs. Atiqa Begum, AIR 1941 FC 16).
8.2.7 Another important aspect while construing the entries
in the respective Lists is that every attempt should be
made by the Court to harmonise the contents of the
entries so that interpretation of one entry should not
render the entire content of another entry nugatory
(vide Calcutta Gas Company Ltd. vs. State of West
Bengal, AIR 1962 SC 1044). This is especially so when
some of the entries in a different List or in the same
List may overlap or may appear to be in direct conflict
with each other. In such a situation, a duty is cast
on the Court to reconcile the entries and bring about
a harmonious construction. Thus, an effort must be
made to give effect to both entries and thereby arrive
at a reconciliation or harmonious construction of the
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same. It is only when such attempt to reconcile fails
that the non-obstante clause in Article 246(1) should
be applied as a matter of last resort as observed in
Re: The Central Provinces and Berar Sales of Motor
Spirit and Lubricants Taxation Act, 1938, AIR 1939
FC 1 by Gwyer, C.J. in the following words:
“for the clause ought to be regarded as a last
resource, a witness to the imperfections of
human expression and the fallibility of legal
draftsmanship”.
8.2.8 The sequitur to the aforesaid discussion is that if the
Legislature passes a law which is beyond its legislative
competence, it is a nullity ab-initio. The legislation is
rendered null and void for want of jurisdiction or legislative
competence vide RMD Chamarbaugwalla vs. Union of
India, AIR 1957 SC 628.
8.2.9 On a close perusal of the entries in the three Lists, it is
discerned that the Constitution has divided the topics
of legislation into the following three broad categories:
(i) Entries enabling laws to be made;
(ii) Entries enabling taxes to be imposed; and
(iii) Entries enabling fees and stamp duties to be
collected.
8.2.10 Lists I and II are divided essentially into two groups : one,
relating to the power to legislate on specified subjects
and the other, relating to the power to tax. Thus, the
entries on levy of taxes are specifically mentioned.
Therefore, as such, there cannot be a conflict of taxation
power of the Union and the State. Thus, in substance
the taxing power can be derived only from a specific
taxing entry in an appropriate List. Such a power has
to be determined by the nature of the tax and not the
measure or machinery set up by the statute. In Hoechst
Pharmaceuticals, it has been categorically held that
taxation is considered as a distinct matter for purposes
of legislative competence.
[2025] 5 S.C.R. 2345

State of Kerala & Another v.
Asianet Satellite Communications Ltd. & Others

8.2.11 It would be relevant to discuss the following two
judgments of this Court in detail in order to bring out
the pertinent principles of interpretation of taxation
entries in List II even when regulation of an activity is
provided under an entry in List I. They are: (i) MPV
Sundararamier and Union of India vs. H.S. Dhillon,
(1971) 2 SCC 779 (“H.S. Dhillon”).
8.2.12 In paragraph 51 of MPV Sundararamier, it was observed
as under:
“51. In List I Entries 1 to 81 mention the several
matters over which Parliament has authority to
legislate. Entries 82 to 92 enumerate the taxes
which could be imposed by a law of Parliament.
An examination of these two groups of entries
shows that while the main subject of legislation
figures in the first group, a tax in relation thereto
is separately mentioned in the second. Thus,
Entry 22 in List I is “Railways”, and Entry 89
is “Terminal taxes on goods or passengers,
carried by railway, sea or air; taxes on railway
fares and freights”. If Entry 22 is to be construed
as involving taxes to be imposed, then Entry
89 would be superfluous. Entry 41 mentions
“Trade and commerce with foreign countries;
import and export across customs frontiers”.
If these expressions are to be interpreted as
including duties to be levied in respect of that
trade and commerce, then Entry 83 which is
“Duties of customs including export duties”
would be wholly redundant. Entries 43 and
44 relate to incorporation, regulation and
winding up of corporations. Entry 85 provides
separately for corporation tax. Turning to List II,
Entries 1 to 44 form one group mentioning the
subjects on which the States could legislate.
Entries 45 to 63 in that List form another
group, and they deal with taxes. Entry 18,
for example, is “Land” and Entry 45 is “Land
revenue”. Entry 23 is “Regulation of mines”
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and Entry 50 is “Taxes on mineral rights”. The
above analysis—and it is not exhaustive of the
entries in the Lists—leads to the inference that
taxation is not intended to be comprised in the
main subject in which it might on an extended
construction be regarded as included, but is
treated as a distinct matter for purposes of
legislative competence. And this distinction is
also manifest in the language of Article 248
clauses (1) and (2) and of Entry 97 in List I of
the Constitution. Construing Entry 42 in the
light of the above scheme, it is difficult to resist
the conclusion that the power of Parliament to
legislate on inter-State trade and commerce
under Entry 42 does not include a power to
impose a tax on sales in the course of such
trade and commerce.”
On the above analysis, it was categorically inferred in
MPV Sundararamier that taxation was not intended
to be comprised in the main subject in which it might,
on extended construction, be regarded as included
but is to be treated as a distinct matter for the purpose
of legislative competence. But while saying so, in the
said case, reliance was also placed on Article 286 of
the Constitution.
8.2.13 It was observed in H.S. Dhillon that Entry 97 - List I
conferred the residuary powers on Parliament. Article
248 of the Constitution which speaks of residuary powers
of legislation confers exclusive power on Parliament
to make any law with reference to any matter not
enumerated in the Concurrent List or the State
List. But at the same time, it provides that such a
residuary power shall include a power of making any
law imposing a tax not mentioned in either of those
Lists. It is thus clear that if any power to tax is clearly
mentioned in List II, the same would not be available to
be exercised by Parliament based on the assumption
of a residuary power.
[2025] 5 S.C.R. 2347

State of Kerala & Another v.
Asianet Satellite Communications Ltd. & Others

8.2.14 In fact, the judgment in H.S. Dhillon was by a majority of
4 : 3 to the effect that the power to legislate in respect of
a matter does not carry with it a power to impose a tax
under our constitutional scheme. Thus, there is nothing
like an implied power to tax. The source of power to
legislate on a subject which does not specifically speak
of taxation cannot be so interpretated by expanding its
width as to include therein the power to tax, by implication
or by necessary inference. Reliance was also placed
on Cooley on Taxation to the following effect:
“There is no such thing as taxation by
implication. The burden is always upon the
taxing authority to point to the act of assembly
which authorises the imposition of the tax
claimed.”
8.2.15 Thus, the power to tax is not an incidental power.
Although legislative power includes incidental and
subsidiary power under a particular entry dealing
with a particular subject, the power to impose a tax
is not such a power which could be implied under our
Constitution. Therefore, it was held that the power to
legislate in respect of inter-State trade and commerce
(Entry 42 -List I) did not carry with it the power to tax
the sale of goods which are subject of inter-State trade
and commerce, before the insertion of Entry 92-A - List
I and such power belonged to the States under Entry
54 - List II subject to Article 286 of the Constitution.
(See: Builders’ Association of India vs. Union of
India, (1989) 2 SCC 645)
8.2.16 Delving further on the distinction between the power
to regulate and control and the power to tax, it has
been observed by this Court that there is a significant
distinction between the two primary purposes of
legislation. The primary purpose of taxation is to collect
revenue. Power to tax may be exercised for regulating
an industry, commerce or any other activity. The purpose
of levying such tax is the exercise of sovereign power
for effectuating regulation although incidentally, the
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levy may contribute to the revenue. Taking a leaf from
Cooley on his work on taxation, it was observed that
the distinction between a demand of money under the
police power and one made under the power to tax, is
not so much one of form as of substance.
8.2.17 In view of the detailed discussion made above, we find
that the dictum of this Court in MPV Sundararamier
analysing the entries in Lists I and II dealing with
various subjects of legislation and entries concerning
taxation being separate and distinct must be borne
in mind while interpreting the impugned provisions of
the State Acts. That is the constitutional scheme. In
this regard, we reiterate what has been observed in
Hoechst Pharmaceuticals, to the effect that taxation
is considered to be a distinct matter for purposes of
legislative competence and the power to tax cannot
be deduced from the general legislative entry as an
ancillary power. Also, a power to legislate as to the
principal matter specifically mentioned in the entry shall
also include within its expanse legislation touching only
upon incidental and ancillary matters. But the power to
levy tax cannot be considered to be an incidental and
ancillary matter while interpreting an entry in the Lists
concerning legislative competence of Parliament or
legislature of any State to enact laws on the subjects
mentioned in the entry.
8.2.18 As a sequitur, it is observed that Entry 97 - List I which
is the residuary entry relatable to Article 248 of the
Constitution cannot be invoked or pressed into service
when a specific entry empowering Parliament or the
Legislature of a State to pass laws regarding the taxation
on any subject is specifically enumerated either in List
I or List II.
8.2.19 It would also be useful to mention that since the
legislative competence to pass a law relating to taxation
being specific and distinct in List I or List II, such an entry
is not found in List III. In other words, both Parliament
as well as the Legislature of a State cannot have the
[2025] 5 S.C.R. 2349

State of Kerala & Another v.
Asianet Satellite Communications Ltd. & Others

competence to levy tax on a particular subject and
hence, there is no specific entry regarding taxation in
List III or the Concurrent List. In fact, Entry 47 - List III
refers only to power to impose “fees in respect of any
of the matters in the List but not including fees taken in
any court”. The distinction between the power to levy
fees and the power to levy a tax is well known and it
would not be necessary to go into that aspect of the
matter in the present cases except to highlight that there
is no entry for taxation in the Concurrent List. Therefore,
while interpreting a taxation entry in List I or List II, all
efforts must be made to interpret them in such a way
as to give content and meaning to the same having
regard to the constitutional scheme under which the
distribution of legislative powers have been envisaged
in the Seventh Schedule and bearing in mind and the
object and intent behind them.

State of Karnataka vs. State of Meghalaya:
8.3 The controversy in the aforesaid case was regarding the
interpretation to be given to the expression ‘betting and gambling’
in Entries 34 and 62 - List II of the Seventh Schedule to the
Constitution of India. Further, whether “lotteries organised by
the Government of India or the Government of a State”, which
is a subject in Entry 40 - List I also encompasses the power
to levy tax on the said lotteries? Consequently, whether under
Entry 62 - List II the State Legislature is denuded of the power
to levy tax on the said subject? In other words, whether the
subject covered in Entry 40 - List I restricts the scope and ambit
of Entries 34 and 62 - List II? If the answer is in the affirmative,
whether the State Legislatures have no legislative competence
to levy tax on lotteries organised by the Government of India
or the Government of a State. Consequently, the question in
these cases was, whether, the Legislatures of the States of
Karnataka and Kerala had the legislative competence to enact
the Karnataka Act, 2004 and the Kerala Act, 2005 respectively.
8.3.1 After examining the entries in List I and List II, it was
observed that the expression “betting and gambling” finds
a mention in Entry 34 – List II and taxes on, inter alia,
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betting and gambling are leviable having regard to Entry
62 – List II. Thus, the activity of betting and gambling and
taxes on betting and gambling are subjects falling within
List II i.e. they are State subjects. If conduct of lotteries is
held to come within the scope of the expression ‘betting
and gambling’ then the regulation and control of the said
activity as well as the taxation on lotteries are squarely
within the contours of the legislative powers of the State.
However, only lotteries organised by the Government
of India or the Government of a State, even though,
they come within the scope of the expression ‘betting
and gambling’ have been carved out of Entry 34 - List
II dealing with betting and gambling inasmuch as Entry
40 - List I (Union List) deals with lotteries organised by
the Government of India or the Government of a State.
This implies that conduct of lotteries by the Government
of India or the Government of a State, even though, is
betting and gambling within the meaning of Entry 34
and Entry 62 - List II, nevertheless, those entries are
denuded inasmuch as the State Legislature has no
legislative powers to pass any law on the subject lotteries
organised by the Government of India or the Government
of a State. If such is the simplistic interpretation to be
given, the matter would rest. However, that is not so.
This Court observed that:
“158.2 The expression “betting and gambling”
is also found in Entry 34 of List II. We have
discussed at length above the content of the
said expression and as to what it encompasses.
The activity of “betting and gambling” includes,
inter alia, lotteries. Lotteries can be conducted
by the Government of India or the Government
of States or authorised by a State or be
conducted by private entities in a State. Thus,
a lottery conducted by any of the above
entities, Government or private is an activity
falling within the nomenclature of “betting and
gambling” which is the subject in Entry 34
List II. But what has been carved out of Entry
[2025] 5 S.C.R. 2351

State of Kerala & Another v.
Asianet Satellite Communications Ltd. & Others

34 of List II is only lotteries conducted by the
Government of India or the Government of any
State. Therefore, all other types of lotteries
continue to remain within the scope and ambit
of “betting and gambling” as an activity in Entry
34 of List II.”
8.3.2 In the above backdrop, Entry 40 – List I and Entries 34
and 62 - List II were considered to assess whether there
is any apparent conflict or overlapping between the same.
It was observed that with regard to lotteries organized by
the Government of India or Government of a State are
concerned, they continue to remain within the scope and
ambit of Entry 62 - List II dealing with, inter alia, betting
and gambling in so far levy of tax is concerned. But in
order to have uniformity of laws throughout the country
governing such lotteries, the framers of the Constitution
had intentionally included the said activity referred to
above in Entry 40 – List I. Consequently, Parliament has
legislative competence to pass laws on lotteries organized
by the Government of India or the Government of any
State, uniformly throughout the country, as the conduct
of such lotteries by the sovereign State is a source of
revenue. Therefore, in order to enhance the faith of the
people in the organization and conduct of such lotteries
throughout the territories of India by the Government of
India or the Government of any State, the said regulation
by Parliament is enabled by placing the subject in Entry
40 – List I. Consequently, the Lotteries (Regulation) Act,
1998 had been passed by Parliament which is regulatory
in nature. But the question, whether, while interpreting
Entry 40 - List I alongside Entries 34 and 62 - List II, the
power to tax lotteries organized by Government of India
or the Government of a State was also taken away from
Entry 62 - List II and was to be read within the ambit
of Entry 40 - List I was considered. It was held that
the power to tax remains in Entry 62 – List II with the
State Legislature for which in paragraph 158 of the said
judgment, twelve reasons were assigned. It was ultimately
held that Entry 62 - List II is a specific taxation entry on
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luxuries, including taxes on entertainments, amusements,
betting and gambling. Since lotteries conducted by
any entity or organization was nothing but betting and
gambling, the State Legislatures would have the power
to tax lotteries under Entry 62 - List II as lotteries would
come within the nomenclature of betting and gambling
irrespective of who conducts them.
8.4 Therefore, before approaching Entry 97 - List I which is a
residuary entry in the Union List (List I), it would be necessary
to first interpret the relevant taxation entry in the State List and
it is only in the absence of there being legislative competence in
the relevant taxation entry in the State List could such a power
be traced to Entry 97 - List I in the residuary list provided such
a power is not also traceable to any entry in the Union List.
This is because in List I itself the entries concerning taxation
are separate and distinct. Such entries are from Entries 82 to
92-B and Entry 96 - List I deals with fees in respect of any of
the matters in the List but not including fees taken in any court.
Therefore, the power to tax can be read under Entry 97- List I
which is only a residuary entry, if the same is not enumerated
separately in List I or in List II in which latter case it would
come within the legislative competence of the State Legislature.
8.5 From the aforesaid discussion, we would have to deduce and
give a finding whether the activity conducted by the assessees
herein falls within the nomenclature of entertainments under
Entry 62 – List II thereby recognizing legislative competence with
the State legislature to impose a tax on the assessees herein.

Meaning and Scope of the expression “Luxuries, Entertainments
and Amusements” and Legislative Competence of State
Legislatures to impose Entertainment Tax:

Luxuries:
8.6 The expression “entertainments and amusements” finds a place
both in Entries 33 as well as 62 – List II. The former is a regulatory
entry while the latter is a taxation entry. Entry 33 – List II, on
the one hand, speaks of theatres and dramatic performances,
while on the other hand, it deals with sports, entertainments
[2025] 5 S.C.R. 2353

State of Kerala & Another v.
Asianet Satellite Communications Ltd. & Others

and amusements. Cinemas are also covered within Entry 33 –
List II subject to Entry 60 – List I which deals with sanctioning
of cinematograph films for exhibition. The taxation entry (Entry
62 – List II) essentially grants or reserves legislative competence
to the State Legislature to impose taxes on “luxuries” which
expression includes entertainments, amusements, betting and
gambling. Thus, the aforesaid four expressions have been
brought under the umbrella of the word “luxuries” so as to
enable a State Legislature to tax these activities. Therefore,
it is necessary to understand the meaning and content of the
expression “luxuries, entertainments and amusements”.
8.7 In Express Hotels, this Court observed that luxury connotes
extravagance or indulgence as distinguished from the needs
and necessities of life. Taxes on luxuries is not limited to things
tangible and corporeal but the entry encompasses all the
manifestations and emanations which comprehend the elements
of extravagance and indulgence that differentiates luxury from
necessity. There can be elements of extravagance or indulgence
in the quality of service as well as activities.
8.8 It was observed that luxuries covered both corporeal and
incorporeal services and thus refers to goods and services as
noted above. Further, there are two aspects of luxury, the first
being objects and services which are intrinsically capable of
fostering a sense of luxury and second, the recipient of such
articles or services who consumes them experiences such
gratification. Since “luxuries” can be both goods and services,
what is relevant is the common denominator of the luxury
element/potential of goods and services.
Reference could be made to Oxford English Dictionary, (Second
Edition, Volume IX), wherein it is stated that luxury could among
other things be defined as –
(i) abundance, sumptuous enjoyment;
(ii) the habitual use of, or indulgence in, what is choice or
costly;
(iii) refined and intense enjoyment; means of luxurious
enjoyment;
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(iv) in a particularised sense: something which conduces to
enjoyment or comfort in addition to what are accounted as
the necessaries. Hence, in recent use, something which
is desirable but not indispensable; and
(v) as an attribute such as luxury coach, cruise duty, edition,
flat, liner, shop, tax, trade.
8.9 In short, the connotation of the word luxury is something which
conduces enjoyment over and above the necessities of life to
which one takes with a view to enjoy, amuse or entertain oneself.
8.10 In the same vein, in A.B. Abdul Kadir vs. State of Kerala,
(1976) 3 SCC 219 (“A.B. Abdul Kadir”), it was observed
that the connotation of the word “luxury” is something which
conduces enjoyment over and above the necessities of life. It
denotes something which is superfluous and not indispensable
and to which one takes with a view to enjoy, amuse or entertain
oneself. An expenditure on something which is in excess of
what is required for economic and personal well-being would be
expenditure on luxury although the expenditure is of a nature
which is incurred by a large number of people, including those
not economically well off.
8.11 Further, in Godfrey Phillips, it was observed that the expression
“luxury” must be understood in a sense analogous to that of
the less general words such as entertainments, amusements,
gambling and betting which are clubbed with it. This is by way
of the application of the principle of interpretation known as
noscitur a sociis. Thus, luxuries is also capable of meaning
an activity and has primarily and traditionally been defined as
such. It is only derivatively and recently used to connote an
article of luxury. If luxuries is understood as meaning something
which is purely for enjoyment and beyond the necessities of
life, then, entertainments, amusements, betting and gambling
would come within its scope and ambit. Further, these are all
activities.
8.12 In Western India Theatres, this Court observed that the
ordinary meaning has to be given to the word “luxury”. This
means that it would refer to goods and services which foster
“luxury”, a sense of abundance, enjoyment and gratification.
[2025] 5 S.C.R. 2355

State of Kerala & Another v.
Asianet Satellite Communications Ltd. & Others

Further taxes on luxuries, entertainments or amusements
cannot have a restricted meaning so as to confine the operation
of the law only to taxes on persons receiving the luxuries,
entertainments or amusements. The entry contemplates
luxury, entertainments and amusements as objects on which
the tax is to be imposed, if so there can be no reason to
differentiate between the giver and the receiver of the luxuries,
entertainments and amusements and both may, with equal
propriety be made amenable to the tax. Thus luxury tax can
be imposed on those who provided it also. It was further
observed that the concept of luxuries in the legislative entry
takes within it everything that can fairly and reasonably be
said to comprehended in it. The actual measure of the levy is
a matter of legislative policy and convenience so long as the
legislation has a reasonable nexus with the concept of luxuries
in the broad and general sense in which the expressions in
legislative list are comprehended, the legislative competent
extends to all matters “with respect to” that field of topic of
legislation.
It was further observed that the taxable event need not
necessarily be the actual utilization or the actual consumption,
as the case may be, of the luxury. Once the legislative
competence and the nexus between the taxing power and
the subject of taxation is established, the other incidence are
matter of fiscal policy behind the taxing law. The measure of
the tax is not the same thing as and must be kept distinguished
from the subject of the tax.
8.13 In Federation of Hotel & Restaurant Association of India,
the concept of luxuries in Entry 62 – List II was also considered
and in the said case, the aspect theory was also applied.

Entertainments and Amusements:
8.14 According to P. Ramanatha Aiyar’s Advanced Law Lexicon,
6th Edition, Volume II, the word ‘entertainment’ includes any
exhibition, performance, game, sport and any other form
of amusement to which persons are ordinarily admitted on
payment. It also means “work in connection with, or for the
purposes of, any cinema, exhibition or entertainment”. The
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expression ‘entertainment’ includes hospitality of any kind and
also expenditure on business gift with the aim of advertising
to the general public. It is an activity that provides amusement
and would include public performances including games and
sports, exhibition, amusement to which persons are admitted
for payments.
8.15 Readers Digest’s Family Word Finder defines the word
“entertainment” to mean amusement, diversion, distraction,
recreation, fun, play, good time, pass time, novelty, pleasure,
enjoyment and satisfaction. Entertainment denotes that which
serves for amusement and ‘amusement’ is defined as a
pleasurable occupation of the sense or that which furnishes
it as sports or music.
8.16 Webster’s Third New International Dictionary has defined
‘entertainment’ as an act of diverting, amusing or causing
someone’s time to pass agreeably.
8.17 According to Concise Oxford English Dictionary, 11th Edition
(Revised) as cited in Bangalore Turf Club Ltd. vs. Regional
Director, ESI Corporation, (2014) 9 SCC 657 (paragraph
43.1), “entertainment” means ‘the action of providing or
being provided with amusement or enjoyment. An event or
performance designed to entertain’.
8.18 In State of Karnataka vs. Drive-in Enterprises, (2001) 4
SCC 60, it was observed that the word “entertainment” is wide
enough to comprehend in it, the luxury or comfort with which
a person entertains himself. It includes viewing a cinema film
inside a driving theatre along with a car/motor vehicle.
8.19 In Purvi Communication, the expression “entertainments”
under Entry 62 – List II was held to include performance,
film or programmes shown to the viewers through the cable
television network.
8.20 Thus, the expression “entertainments” is a word of general
import and in common parlance, it includes cinema shows,
dramatic performances, etc. The expression ‘entertainments’
used in Entry 62 - List II does not draw a distinction between
one who derives amusement and one who caters to it. It
covers both categories.
[2025] 5 S.C.R. 2357

State of Kerala & Another v.
Asianet Satellite Communications Ltd. & Others

8.21 This Court has interpreted the expression “entertainments” in
a broad and wide manner and not restricted to entertainment
in a public place. With the advancement of technology, there
can be entertainment provided within the private space or
the household also by means of television or other electronic
gadgets as well as in a motor vehicle. The growth of technology
is such that there is now entertainment available even on a
mobile phone (cell phone or even on a smart watch). Thus,
the expression “entertainments” cannot be interpreted in a
narrow, pedantic or in a myopic way. With the advancement in
technology, there can be several modes in which the activity
of entertainment can be provided or received. However, what
is essential is the object of providing or receiving signals etc.
which must be for the purpose of entertainment.

Amusement:
8.22 The expression “amusement” in Entry 62 – List II would mean
diversion, pass time or enjoyment or a pleasurable occupation
of the senses or that which furnished it vide M.J. Sivani vs.
State of Karnataka, AIR 1995 SC 1770.
8.23 Entry 62 - List II is a specific taxation entry on luxuries, including
taxes on entertainments, amusements, betting and gambling.
The expression “entertainments and amusements” would have
to be read ejusdem generis. The tax is thus on the activity
of “entertainments and amusements” as it is on the activity
of betting and gambling. Hence under Entry 62 - List II, the
specific power to tax an activity which is “entertainments and
amusements” is reserved with the State Legislature and cannot
be read within the scope and ambit of Entry 31 - List I which
is inherently restricted in its scope to include “broadcasting
and other like forms of communication” (Entry 31 – List I). We
say so for the following reasons:
8.23.1 First, when a specific entry regarding taxation is
provided in List II empowering the State Legislature
to levy tax on a subject, namely, “entertainments
and amusements” amongst other similar activities,
the same cannot be read by implication in an
entry of List I, namely, Entry 31 - List I which is a
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regulatory entry. This is because a taxation entry
is separate and distinct from an entry dealing on a
particular subject. This principle has been adequately
explained by this Court in several judgments such as
MPV Sundararamier and was followed in Hoechst
Pharmaceuticals as discussed above.
8.23.2 Second, a taxation entry or legislative power to levy
a tax on “entertainments and amusements” in the
instant case, cannot be split between Parliament
and the State Legislature when the said power is
expressly enumerated in Entry 62 - List II. This is
the constitutional scheme under the three Lists. This
is also evident on a perusal of the entries of List III
(Concurrent List) which empowers both the Union as
well as State Legislature to enact laws on subjects
mentioned therein and the power to levy a tax is
conspicuous by its absence.
8.23.3 Third, the object and purpose of Entry 62 - List II is to
tax the activity of “entertainments and amusements”.
8.23.4 Fourth, theatres and dramatic performances,
cinemas, sports, entertainments and amusements
are subjects enumerated in Entry 33 - List II and are
State subjects, therefore, regulation of such activities
within a State is complemented by the power of the
State legislature to also tax the said activity under
Entry 62 – List II. This is because what is being taxed
is an entertainment and amusement activity which is
squarely covered under Entry 62 - List II. Therefore,
the State legislature has the competence to tax the
activities enumerated in Entry 33 - List II.
8.23.5 Fifth, the contention of the assessees that the subject
being placed in Entry 31 - List I would also empower
only Parliament to impose a tax on the same by way
of implication under the said entry itself is not a correct
interpretation of the entries in the Lists.
8.23.6 Sixth, Entry 97 - List I can be invoked only when any
matter is not enumerated in List II or List III including
[2025] 5 S.C.R. 2359

State of Kerala & Another v.
Asianet Satellite Communications Ltd. & Others

any tax not mentioned in the said Lists. There is
no specific entry for levy of tax on entertainments
and amusements in List I. It is only in Entry 62 -
List II. Thus, Entry 62 - List II gives legislative
competence to a State Legislature to levy a tax
on, inter alia, “entertainments and amusements”.
This would also include a tax on organisation and
conduct of entertainments and amusements within
the State when permission has been given by a
State Government to conduct such an activity of
entertainments and amusements in whatever form it
may be. Thus, Entries 33 and 62 of List – II which,
inter alia, deal with “entertainments and amusements”
have to be interpreted identically and the expressions
given an identical meaning.
8.23.7 Seventh, when the State Government has the
legislative competence to levy a tax on, inter alia,
entertainments and amusements (as a specific
taxation entry is provided to levy tax on the said
activity under Entry 62 - List II), the said entry must
be interpreted comprehensively and not in a restricted
or narrow manner by excluding from the purview
of the said entry, taxation on entertainments and
amusements conducted through television by the
medium of broadcasting.
8.23.8 Eighth, such a power to levy taxes on entertainments
and amusements cannot be read into Entry 31 - List
I by implication or into Entry 97 - List I as a residuary
power. Such interpretation, if endorsed, would do
violence to the manner of interpretation of entries
in the Lists and prove to be contrary to the Articles
of the Constitution and judgments of this Court cited
above.
8.23.9 Ninth, if the State Government permits any species
of entertainments or amusements activity within the
State in terms of Entry 33 - List II, then the State also
has legislative competence to tax such an activity as
per Entry 62 - List II.
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8.23.10 Tenth, Entry 31 - List I is meant only for the purpose
of regulation. The said entry cannot be expanded to
cover the power to levy taxes on entertainments and
amusements by Parliament when such a power is
envisaged in Entry 62 - List II. Parliament, therefore,
cannot tax an entertainment or amusement activity,
on the strength of Entry 31 - List I. It may however
regulate the said activity to the extent permissible
under Entry 31 – List I. Any impost strictly for the
purpose of regulation of broadcasting is permissible so
long as it is not a tax on entertainment or amusement
which is only within the ambit of only Entry 62 - List II.
8.23.11 Eleventh, any entertainment or amusement activity
conducted by a private entity in a State or authorised
by a State Government can be regulated only by the
State Legislature. This is because Entry 33 - List
II which deals with, inter alia, entertainments and
amusements, also includes television entertainment.
The regulation could be of Cable Television operators
in the State.
8.24 The definition of broadcasting in Section 65(13) of the Finance
Act, 1994 as amended in 2001 is as per the meaning assigned
to it in clause (c) of Section 2 of the Prasar Bharti Act, 1990.
The said Act is made pursuant to Entry 31 – List I which deals
with posts and telegraphs; telephones, wireless, broadcasting
and other like forms of communications. The quintessence of
Entry 31 – List I is communication which could be through
various modes as referred to above. However, Entry 62 – List
II deals with taxes on luxuries which is a totally distinct entry
as opposed to communication which is the subject-matter of
Entry 31 – List I and within the nomenclature of the expression
“luxury”, is included inter alia entertainments and amusements.
8.24.1 Therefore, on a plain reading of the said entries,
it is very apparent that broadcasting is a form of
communication and entertainment is a species of
luxuries under Entry 62 – List II. There is no doubt
that there are various modes of entertainments. Geeta
Enterprises is a case which is restricted to certain
[2025] 5 S.C.R. 2361

State of Kerala & Another v.
Asianet Satellite Communications Ltd. & Others

modes of entertainments but with the advancement
of technology, we have noted that entertainment
could be through television and other digital devices
including cell phone or smart phone. The expression
“entertainments” in whatever mode it may be, come
within the nomenclature or genre of luxuries which
totally distinct from the expression “communication”.
It may be that the activity of entertainment is
achieved through communication and in that sense
could be through the mode of broadcasting and in
that sense, broadcasting and communication is for
the purpose of the entertainment. Hence, in our
view, the State Legislature were fully justified in
imposing entertainment tax under Entry 62 – List II.
That broad casting through T.V. cable network and
cable operators is for carrying out the activity of
entertainment and in pith and substance falls within
the scope and ambit of Entry 62 – List II. However,
the means adopted is through broadcasting which is
a means of communication under Entry 31 – List I
and therefore incidentally touches upon the subject
under Entry 31 – List I.
8.24.2 Insofar as the argument that broadcasting falls only
within the scope and ambit of Entry 31 – List I is
concerned, it has to be viewed only as a form of
communication and for the purpose of imposition of
service tax, broadcasting is given meaning which is
attributed to clause (c) of Section 2 of the Prasar Bharti
Act, 1990 which as already noted as a regulatory entry.
A regulatory entry cannot be a basis for imposition of
a tax as this Court way back in MPV Sundararamier
expressed. That a taxation entry is exclusive and de
hors a regulatory entry and cannot be read by way of
an implication into a regulatory entry. That apart, in
H.S. Dhillon, this Court has specifically stated that
if a tax falls within the scope and ambit of an entry
in a particular list then the same cannot be read
into the residuary list, namely, Entry 97 – List I. In
the circumstances, we find that the borrowing of the
2362 [2025] 5 S.C.R.

Supreme Court Reports

definition “broadcasting” from the Prasar Bharti Act,
1990 for the purpose of imposition of service tax on
a broadcaster and thereby including a person who
is in the entertainment industry to also liable to pay
service tax, is not a levy in the nature of entertainment
tax. Thus, a levy of service tax on a broadcaster
is not a levy on an activity which is in the realm of
entertainment. Conversely, a levy of entertainment
tax by a State under Enter 62 – List II is not a levy on
the activity/service of broadcasting but on the activity
of providing and receiving entertainment.
8.25 In conclusion we hold that the tax sought to be imposed
by the State Legislatures by way of the impugned Acts, is
traceable to the power conferred on the State Legislatures
under Entry 62 - List II. The said entry contemplates imposition
of taxes, inter alia, on the entire genus of “entertainments and
amusements”. The pith and substance of the provisions of
the State Act referred to above are in the realm of taxation of
providers/receivers of entertainment/amusement as luxuries
within the said Entry through the medium of television which
involves broadcasting service which is regulated under Entry
31 – List I as a form of communication in accordance with
Prasar Bharti Act, 1990.

Parameters of Taxation:
8.26 A legislative enactment which provides for the imposition of a
tax must specify the following parameters of taxation:
(i) The taxable event which forms the basis of levy,
also referred to as “subject” of a tax;
(ii) The measure of the tax;
(iii) The rate(s) of taxation; and
(iv) The incidence of the tax.
8.27 The said parameters are each distinct and must not be conflated
with the others. The components of tax, as stated above have
been characterised in Govind Saran Ganga Saran. In the said
case, it was also laid down that a legislative scheme which
[2025] 5 S.C.R. 2363

State of Kerala & Another v.
Asianet Satellite Communications Ltd. & Others

seeks to impose a tax, ought to define each of the aforestated
components with certainty and precision. The observations of
Pathak, C.J. in the aforesaid case can be extracted as under :
(SCC pp. 209-10, para 6)
“6. The components which enter into the concept
of a tax are well known. The first is the character of
the imposition known by its nature which prescribes
the taxable event attracting the levy, the second is
a clear indication of the person on whom the levy
is imposed and who is obliged to pay the tax, the
third is the rate at which the tax is imposed, and
the fourth is the measure or value to which the
rate will be applied for computing the tax liability.
If those components are not clearly and definitely
ascertainable, it is difficult to say that the levy exists
in point of law. Any uncertainty or vagueness in the
legislative scheme defining any of those components
of the levy will be fatal to its validity.”
8.28 This Court, in State of Karnataka, applied the aforesaid
parameters of taxation in the context of the State enactments
for collection of tax on conduct of lotteries that is encompassing
the activity of betting and gambling. Paragraphs 111.1 – 111.4
are apposite to the present case and they read as under:
“111.1. In the context of the tax sought to be
imposed by the impugned Acts, the basis of levy
is the conduct of lotteries within the State of
Karnataka or Kerala. In other words, the subject
of taxation is the conduct of lottery schemes,
by the Government of India or the Government of
other States, within the State of Kerala or Karnataka.
While it has rightly been stated by the learned
counsel appearing on behalf of the respondents that
the conduct of lotteries involves a host of events
such as formulation and notification of scheme of
lotteries, printing, transportation and sale of lottery
tickets, etc. all these events constituting the conduct
of the lotteries are ultimately for the participation of
2364 [2025] 5 S.C.R.

Supreme Court Reports

persons, within the State of Karnataka or Kerala.
Therefore, the subject of tax is the conduct of lottery
schemes, within the State of Karnataka or Kerala,
which is enabled by the propensity of persons to
participate in the lottery schemes.
111.2. The measure of taxation in the instant case is
the “draw”. The impugned legislations contemplate
two kinds of draws, namely, bumper draw and draw
other than a bumper draw.
111.3. The rate of tax, is a dependent variable and
is to be determined based on the measure. In the
instant case, the rate of tax under the Karnataka
Act, 2005 is Rupees one lakh and fifty thousand in
respect of a bumper draw and Rupees one lakh in
respect of any other draw. Similarly, in the Kerala
Act, 2005, the rate of tax is Rupees ten lakhs in
respect of a bumper draw and Rupees two lakhs
and fifty thousand in respect of any other draw.
111.4. The incidence of the tax is on the
promoters of the lotteries i.e. on the Government
of India or a the Government of a State or a Union
Territory or any country organising, conducting or
promoting a lottery, within the State of Karnataka
or Kerala, or any person or entity appointed by
the said Government or country in this behalf. The
impugned Acts require registration of promoters
and all provisions requiring filing of the returns of
draws and payment of tax, are to operate in relation
to promoters. Therefore, the incidence of the tax,
falls on the promoters of the lotteries.”
8.29 The above analogy be applied in the context of the legislative
enactments of the States under consideration and the following
table would bring out the aforesaid parameters of taxation in the
context of the activity of providing and receiving entertainment:
[2025] 5 S.C.R. 2365

State of Kerala & Another v.
Asianet Satellite Communications Ltd. & Others

Taxable Event
S. Measure Rate of Incidence
States or subject of
No. of Tax Tax of Tax
taxation
Assam Section
Section 3C
Amusements Section 3C read
1 read with Section 3C
and Betting Tax 3C with
S.2(4)
Act, 1939 S.3C(4)
Delhi
Entertainments Section
2 Section 7 Section 7 Section 7
and Betting Tax 7
Act, 1996
Gujarat
Section Section Section
3 Entertainments Section 6E(1)
6E(1) 6E(1) 6E(1)
Tax Act, 1977
Jharkhand Section 3
Section Proviso to
4 Entertainment Section 3 & Section
3 Section 3
Tax Act, 2012 4
Orissa
Section
5 Entertainment Section 7 Section 7 Section 7
7
Tax Act, 2006
Punjab
Section Section
6 Entertainment Section 3C Section 3C
3C 3C
Duty Act, 1955
Rajasthan
Section 4AAA
Entertainments Notification
read with Section Section
7 and S.O.443 dt.
Section 5 and 4AAA 4AAA
Advertisements 25.02.2008
6
Tax Act, 1957
Uttar Pradesh
Entertainment
and Betting Tax Section
Section 3
Act, 1979 as Section 3 read 3 read
8 Section 3 read with
amended by with S.2(a) with
S. 2(v)
U.P. Ordinance S.2(l)(vii)
No. 4 of 2009
w.e.f. 16.06.2009
Uttar Pradesh
Entertainment
and Betting Tax
Section
Act, 1979, as Section 3 Section
Section 3 read 3 read
9 amended by read with read with
with S. 2(g) with S.
Uttarakhand S. 2(g) S. 2(g)
2(g)
(Amendment)
Act, 2009 dt.
16.03.2009
2366 [2025] 5 S.C.R.

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8.30 The parameters of taxation when juxtaposed with the relevant
provisions of the State Acts under consideration, it is evident
that the parameters of taxation can be clearly discerned from
the aforesaid provision of the State Acts all relatable to the
subject “entertainment” on which the tax is levied coming
within scope and ambit of Entry 62 – List II.

Relevant case law:

Suresh:
9. The judgment of this Court in Suresh is relevant to the issues herein
and deserves deliberation. Suresh arose from an appeal against
the judgment of the High Court of Judicature at Madras in Tamil
Nadu Cable TV Organisers Association vs. Government of Tamil
Nadu, W.P. No.10013/1994 dt. 30.11.1994 (“Tamil Nadu Cable TV
Organisers Association”). In the aforesaid case, the constitutional
validity of sub-sections (2A), (2-B), (11) of section 3 and section 4-E
of the Tamil Nadu Entertainments Tax Act, 1939 as amended by Act
37 of 1994 (“1994 Act”) with the relevant Rules in G.O.P. No.265 dt.
18.08.1994 was under challenge. The purpose of the 1994 Act was
to levy entertainment tax on exhibition of films or moving pictures
or series of pictures through cable television.
“Cable television” was defined in clause (2-B) of section
3 as follows:
““cable television” means a system organised
for television exhibition by using a video
cassette or disc or both, recorder or player of
similar such apparatus on which pre-recorded
video cassettes 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.”
“Television exhibition” was defined in clause (11) of section
3 as follows:
““television exhibition” means an exhibition with
the aid of any type of antenna with a cable
[2025] 5 S.C.R. 2367

State of Kerala & Another v.
Asianet Satellite Communications Ltd. & Others

network attached to it or cable television, of
a 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 optic fibre
cable to a central system called the head-end.”
Section 4E is the charging section which was introduced for the first
time as follows:
“(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 per cent of the amount collected by way
of contribution or subscription or installation or connection
charges or any other charges collected in any manner
whatsoever for television exhibition.
(2) The tax levied under sub-section (1) shall be recoverable
from the proprietor.
(3) The provisions of this Act (other than Sections 4, 4B,
4D, 5, 5A, 5B, 5C, 5D, 5E, 5F, 5G, 6(1), 7 and 13) and
the rules made thereunder shall, so far as may be, apply
in relation to the tax payable under sub-section (1).”
9.1 It is relevant here to list the major issues of the writ petitioners
therein. They are as follows:
I. The State Legislature has no competence to pass the
impugned Act inasmuch as the subject falls entirely within
List I of Schedule VII to the Constitution.
II. The Union of India has passed a legislation viz., Cable
Television Network (Regulation) Ordinance 9 of 1994 and
also framed the Cable Television Rules of 1994. Thus, by
the doctrine of “occupied field”, the State Legislature has
no power to pass the impugned Act.
III. The impugned Act violates the provisions of Article 19(1)
(a) of the Constitution of India, as it operates as an
unreasonable restriction on the freedom of speech and
expression of the citizens of this country.
2368 [2025] 5 S.C.R.

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IV. The tax levied by the Amendment Act is not a ‘tax on
entertainment’ even as defined by the Act. It is a colourable
legislation and is a fraud on the legislative powers for the
following reasons:
a. Installation Charges and connection charges paid
by the viewer cannot form part of the charges for
entertainment.
b. In effect, it is a tax on trade, profession or calling,
falling within the scope of Entry 60 - List II read with
Article 276 of the Constitution of India.
c. The transmission through the Cable Television
Network is not only of films or moving pictures but
also of several educative programmes. In effect,
it is partly a tax on education. The entertainment
part of the transmission will be less than 10% of
the total transmission. As there is no provision for
apportionment of the tax on entertainment and on
other non-entertainment programmes, the entire levy
is illegal and invalid.
d. There is no nexus between the object of the legislation
and the provision contained in the Act, and therefore,
it is unconstitutional.
V. The provisions of the Act violates Article 14 of the
Constitution of India for the following reasons:
a. It does not impose a tax on Door darshan and those
who own a disc antenna including posh hotels and
other organisations.
b. The Act treats unequals as equals inasmuch as the
levy is the same with reference to rural operators as
well as urban operators.
VI. Essentially, the tax levied by the impugned Act is one on
private enjoyment by the people in their respective houses
and not on public entertainment.
VII. The provisions of the Act are unreasonable due to the
following reasons.
[2025] 5 S.C.R. 2369

State of Kerala & Another v.
Asianet Satellite Communications Ltd. & Others

a. The rate of tax is unduly exorbitant and wholly
unreasonable so as to practically annihilate the
business of the Cable TV Operators.
b. The provision for security deposit of Rs. 10,000
under Rule 21C is an unreasonable restriction on
the business.
c. The provision for inspection of the place from where
such television exhibition is provided, under Section
11 of the Act is unwarranted and an unreasonable
restriction on the business.
9.2 As regards Issue I questioning the legislative competence,
petitioners therein argued that the subject matter was governed
by Entry 31 and Entry 60 - List I or alternatively, it would fall
under the residuary Entry 97 - List I as it was a matter not
enumerated in List II or List III of the Seventh Schedule. It was
also argued that the Act defined “entertainment” to mean “a
horse-race or cinematograph exhibition to which persons are
admitted on payment” and this definition had been holding the
field since 1939 and therefore the expression ‘entertainment’ was
a nomen juris for “a horse-race or cinematograph exhibition”.
9.3 However, the High Court opined that modern statutes have
to be interpreted under new facts and situations and that old
meaning cannot be given to the expression used therein by
relying on the maxim contemporanea expositio est optima et
fortissima in lege (contemporaneous exposition is the best and
strongest in law). It then opined that the Indian Constitution
has always been held to be an organic instrument and the
expressions used in the Constitution cannot be restricted to
the facts and circumstances which prevailed at the time of the
passing of the Constitution. By relying on cases such as Geeta
Enterprises and Express Hotels, the High Court held that the
meaning of the word ‘entertainments’ used in Entry 62 - List II
is not confined to the definition of the said word as found in the
Madras Entertainments Tax Act, 1939 and that the impugned
Act falls within Entry 62 - List II.
9.4 With regard to Issue II dealing with repugnancy and occupied
field, the Court rejected the argument of petitioners that the
impugned Act is repugnant to the provisions of the Central
2370 [2025] 5 S.C.R.

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Ordinance 9 of 1994 since it had found that the subject-matter
fell within Entry 62 - List II.
9.5 On the contention regarding violation of Article 19(1)(a) of
the Constitution, the Court also rejected the argument that
the taxation curtails the freedom of expression of the various
national and international television operators by holding that
the Cable TV Operators are not prevented from expressing
their views on any particular matter.
9.6 As regards Issue IV(a), petitioners contended that the charges
for installation or connection are only for the purpose of laying
own connecting wires and cables which will not be a recurring
expenditure and they cannot be termed as charges paid for
the enjoyment of entertainment. The High Court rejected this
contention, noting that whatever amount was paid by the viewer
to the Cable TV Operator for installation or connection or for
transmission of different programmes, all that was intended as
payment for enjoying the entertainment. It also decided Issue
IV(b) in favour of the State noting that the incidence of tax was
on entertainment as such and not on any individual. As regards
Issue IV(c), the Court rejected the contention of the petitioners
that the tax was mostly on non-entertainment programmes which
were of high educational value, and since it was not possible
to apportion the tax between entertainment programmes and
non-entertainment programmes, the entire levy had to be struck
down as unconstitutional. It held that if the pith and substance
of the Act brought an enactment within the scope of a particular
legislative entry, it could neither be dissected into different parts
nor could it be held that the major part of it fell outside the
scope of the entry. It rejected the contention of the petitioner
as regards Issue IV(d) at the very outset.
9.7 Issue V dealt with Article 14 and the Court reiterated the
principles of law relating to classification in a fiscal enactment
that the legislature has wide latitude in such matters. It noted
that the classification was based on intelligible differentia having
nexus with the object of the enactment and that there was no
hostile discrimination whatsoever against Cable TV operators.
As regards the urban/rural classification, the Court noted that
merely because the operators in rural areas may not get as
[2025] 5 S.C.R. 2371

State of Kerala & Another v.
Asianet Satellite Communications Ltd. & Others

many customers as the operators get in urban areas, it cannot
be a ground to provide differential rates, as the incidence of tax
was on entertainment and it was the same whether the viewer
was in a village or a town or a city.
9.8 Issue VI invoked a right to privacy argument. According to the
petitioners, due to the imposition of tax, the charges for getting
such connections became out of reach for ordinary people and
hence were deprived of watching programmes on the television
in the privacy of their respective abodes. The Court dismissed
this contention as far-fetched. It also noted that the tax was
imposed only on the proprietor, and the law does not mandate
that the same be passed on to consumers.
9.9 With regard to Issue VII, the Court reiterated the well-settled
principle that it has no concern with the wisdom of the legislature
in prescribing the rate of tax. It opined that when there was
no prohibition in the Act against the proprietor passing on the
tax liability to the customers, there was nothing wrong in the
taxing enactment to prescribe the furnishing of security for the
proper payment of tax. It also held as regards provisions for
inspection that the Legislature was always entitled to make
provisions to enable the proper enforcement of the levy. Holding
so, it dismissed all the petitions.
9.10 The Supreme Court in Suresh upheld this decision of the
Madras High Court. It felt unnecessary to deal with all its
conclusions except the submissions relating to i) freedom of
speech and expression; ii) colourable legislation; and iii) the
rate of tax. It noted that the activity of the appellants therein
was a combination of two rights i.e. business and speech –
sub-clause (g) and (a) of clause (1) of Article 19 and that there
was no reason why the business part of it could not be taxed.
It also noted that the State had duly explained its reasons for
imposing tax at the rate of 40% and that since the appellants
also carried on business, it was their duty to share the burden
of the State by paying taxes like any other business.

Vasant Madhav Patwardhan:
9.11 A similar matter had come up before the Bombay High Court
in Vasant Madhav Patwardhan vs. State of Maharashtra,
2372 [2025] 5 S.C.R.

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2000 SCC OnLine Bom 244 wherein operators of Cable
Television filed a writ under Article 226 of the Constitution
challenging the constitutional validity of an amendment to the
Bombay Entertainments Duty Act, 1923. The said Act imposed
a tax on the entertainment provided by the Cable TV network.
9.12 The Bombay HC discussed Tamil Nadu Cable TV Organisers
Association and Suresh in detail. It noted that the judgments
above substantially covered the scope and controversy
raised before it and that the substance of the legislations
both in Maharashtra and Tamil Nadu were markedly similar.
It noted that the Constitution is an organic document and
that the vision of the founding fathers cannot, by a process
of artificial construction, be frozen at the scientific knowledge
and technology which was available at the point of time when
the Constitution was drafted. Consequently, it upheld the
competence of the State to levy the tax. An appeal against
this judgment before the Supreme Court in Civil Appeal No.
7167 of 2000 was dismissed on the ground that the “point
involved in this appeal is squarely covered by the judgment
of this Court in Suresh”.

Geeta Enterprises vs. Purvi Communication:
10. During the course of the arguments, learned senior counsel Sri KK
Venugopal submitted that the three Judge Bench judgment of this
Court in Purvi Communication is per incuriam as it did not follow the
reasoning of the coordinate Bench judgment in Geeta Enterprises
and therefore, the correctness of Purvi Communication must be
examined by a larger Bench of five judges.
10.1 While the three judge bench in Geeta Enterprises held that the
levy of entertainment tax necessitates that the entertainment in
question have a public colour, the coordinate bench deciding
Purvi Communication did not take note of the same and
erred in holding that state legislatures are competent to impose
entertainment tax under Entry 62 – List II on the services
rendered by Cable TV Operators. In that regard, Sri Venugopal
placed reliance on the judgment of the Constitution Bench of
this Court in State of M.P. vs. Abha Sethi, (1999) 4 SCC 32
wherein Geeta Enterprises was cited with approval and its
correctness affirmed.
[2025] 5 S.C.R. 2373

State of Kerala & Another v.
Asianet Satellite Communications Ltd. & Others

10.2 Learned senior counsel further argued that the 1979 Act was
amended in 2009 to introduce entertainment tax on DTH
services. Our attention was drawn to the charging section of
the 1979 Act i.e. Section 3, which, according to Sri Venugopal,
predicates the levy of entertainment tax upon “admission to
an entertainment”. It was argued that watching television
within the boundaries of one’s home cannot be considered
“admission to an entertainment”. Therefore, it was contended
that the charging section does not apply to the activity of the
assessees herein. Placing reliance on Bharat Sanchar Nigam
Limited, it was further argued that the dominant nature of the
activity of the assessees is that of broadcasting and this Court
must be circumspect in holding otherwise.
10.3 The crux of the submission was that in Geeta Enterprises,
the word ‘entertainment’, as used in section 2(3) of the Uttar
Pradesh Entertainment and Betting Tax Act, 1937 impugned
therein, was interpreted to require a ‘public colour’. He
submitted that such an interpretation was in line with the
meaning of the word ‘entertainments’ in Entry 62 - List II,
which has historically required a ‘public colour’. The relevant
paragraphs in Geeta Enterprises are as follows (p.818):
“Thus, on a consideration of the legal connotation of
the word entertainment as defined in various books,
and other circumstances of the case as also on a true
interpretation of the word as defined in s. 2 (3) of the
Act, it follows that the show must pass the following
tests to fall within the ambit of the aforesaid section :
1. that the show, performance, game or sport,
etc. must contain a public colour in that the
show should be open to public in a hall,
theatre or any other place where members
of the public are invited or attend the show.
2. …”
(emphasis supplied)

10.4 Sri Venugopal, learned senior counsel submitted that Purvi
Communication ignored this requirement of ‘public colour’ and
2374 [2025] 5 S.C.R.

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proceeded to hold that the performance, film or programme
shown to the viewers through the cable television network
came within the meaning of ‘entertainments’ under Entry
62 - List II to make law for the levy and collection of tax on
such entertainments.
10.5 Sri Shisodia, learned senior counsel, on the other hand
submitted that, as regards the question of whether cable TV
operators may be taxed under the impugned Act when it is
the subscribers who spend on entertainment, the judgment
of this Court in Purvi Communication squarely covers it.
Therein, this Court held that,
“37. In our view, the respondents as a cable operator,
for the purpose of levy and collection of tax under
Sub-section (4a) of Section 4A of the Act have direct
and close nexus with the entertainments made
available to the viewer through their cable television
network. The performance, film or programmes
shown to the viewers through the cable television
network come within the meaning of entertainments
and therefore within the legislative competence of
the State Legislature under Entry 62 of List II of
Seventh Schedule to the Constitution of India to
make law for the levy and collection of tax on such
entertainments.
38. A tax under Entry 62 of List II of Seventh
Schedule to the Constitution of India may be
imposed not only on the person spending on
entertainment but also on the act of a person
entertaining, or the subject of entertainment. It
is well settled by this Court that such tax may
be levied on the person offering or providing
entertainment or the person enjoying it.
xxx
39. In the tax matters, the State Legislature is free
to, if it has legislative competence, to choose the
persons from whom the tax levied on entertainments
is to be collected. In other words, what are taxed
[2025] 5 S.C.R. 2375

State of Kerala & Another v.
Asianet Satellite Communications Ltd. & Others

are the entertainments, which is very much within
the ambit of Entry 62 of List II of Seventy Schedule.”
(emphasis supplied)

10.6 We are of the view that Purvi Communication is not per
incuriam and need not be referred to a larger Bench. To
substantiate our reasons, let us revisit Geeta Enterprises and
Purvi Communication in light of Entry 62 - List II.
10.7 In Geeta Enterprises, the petitioner therein permitted persons
to enter the premises without any charge to view a show on
the video which consisted mainly of sports, games etc. played
on the screen of the video. Electronic machines were imported
from Japan and the mechanism for playing the machine was
so designed that a coin of fifty paise was to be inserted into a
strong box built within the machine, the keys of which was with
the manufacturer. After the show was over, a representative of
the manufacturing company would come, open the box collect
the money and pay the share of the hire-petitioner therein out
of the collected sale proceeds. The charge of inserting the
coin was released only from those who wanted to operate
the video machine at the rate of fifty paise for a show lasting
up to thirty seconds.
10.8 In Geeta Enterprises, the applicability of entertainment tax
on the video game installed by the petitioner therein was
under question. The modus operandi was that a machine with
a video screen was installed in the parlour of the petitioner.
There was no admission fee for people to enter the parlour,
but a coin of 50 naya paise was to be inserted into a strong
box built within the machine to play the video game. The
question was, whether this modus operandi would fall within
the interpretation of the word “Entertainment” as used in section
2(3) of the Uttar Pradesh Entertainment and Betting Tax Act,
1937 (hereinafter referred to as ‘the 1937 Act). Section 2(3)
of the 1937 Act provided that:
“entertainment” includes any exhibitional, performance,
amusement, game or short to which persons are
admitted for payment.”
2376 [2025] 5 S.C.R.

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10.8.1 This Court went into the different meanings of
‘entertainment’ to arrive at a conclusion that it has
been used in a very wide sense to include within its
ambit, entertainment of any kind including one which
may be purely educative. It rejected the contention
of the petitioner therein that video games do not fall
into the definition as no admission fee was charged
from the viewers. It held that (at p.817),
“…when a number of people without any
admission fee enter a hall for entertainment
and enjoy the games it becomes a public
show and the hall where the video
is played becomes a public hall and·
amounts therefore to a public exhibition
which is squarely covered by the first
limb (exhibitional) of the definition of
entertainment in Sub-section 3 extracted
above.”
(emphasis supplied)

10.8.2 Finally, the Court affirmed the views of the Allahabad
High Court in Gopal Krishna Agarwal vs. State of
Uttar Pradesh, (1982) All. L.J. 607 which held that
entertainment tax was leviable on video games. It
approved the High Court’s reasoning that,
“With the advance of civilization ·and
scientific developments new forms of
entertainment have come into existence.
Video Games are probably the latest
additions to the means of entertainment.
These games require skill and precision
as so many other games do. They are a
source of amusement and enjoyment to
those who participate in the games. Others
who stand by and watch also derive some
pleasure and amusement though not to the
same degree. Admission to the premises
where the Video Machines are installed
[2025] 5 S.C.R. 2377

State of Kerala & Another v.
Asianet Satellite Communications Ltd. & Others

may be free but payment is admittedly
made if one wants to play the game.
The money charged for use of the Video
Machine is an admission to entertainment
and the payment made by the person
who uses the Machine is the payment for
admission. In any case it is a payment for
admission.”
Section 3 of the 1937 Act, i.e. the charging section
imposed tax on all payment for admission to any
entertainment (entertainment tax). The question was,
whether or not the aforesaid show would fall within
the four corners of the expression “entertainment”
which was defined to include any exhibitional,
performance, amusement, game or sport to which
persons are admitted for payment under the said
statute. Having regard to the aforesaid definition
and bearing in mind the varying definitions of the
expression entertainment, it was observed that
Section 2(3) of the said Act required certain tests to
be applied in order to ascertain whether the activity
fell within the aforesaid section. It was in the context
of the definition of the expression entertainment in
the Act under consideration therein that this Court
laid down the test. Ultimately, this Court observed
that the video show in the instant case was exigible
to tax under Section 3 of the Act considered therein
and the Writ Petitions filed were dismissed. This
decision pertains to the period prior to the ushering
of television in the country.
10.8.3 On a reading of this judgment, it becomes clear that
the interpretation of the word ‘entertainments’ includes
newer forms of entertainment such as video games,
while at the same time it viewed entertainment to
have a public character.
10.9 Let us now consider Purvi Communication. In this case, the
respondent therein was carrying on business as a multi-system
operator (MSO) and engaged in receiving and providing TV
2378 [2025] 5 S.C.R.

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signals to individual cable operators of various localities.
Communication signals known as TV signals broadcasted
by various satellite channels were received and distributed
to sub-cable operators. The process involved in the business
consisted of establishment of the state-of-the-art control rooms
and spreading the cable networks. The said network signals
were being given to various sub-cable operators with whom
the respondents had franchise agreement. According to the
respondents therein, the object of the MSOs was to capture
signals from various satellites and to put all of them in proper
format/frequencies so that all those signals can travel together
in cables without encroaching upon and interfering with other
signals for the reception and distribution by the so-called cable
operators. The signals are transmitted through the satellites by
the various broadcasters from their earth up-linking stations
in various parts of the world.
Respondent No.1 therein entered into franchise agreement
with the individual cable operator of various localities and on
the basis of the said agreement, it transmitted the said signals
to the said individual sub-cable operators against a price. The
individual sub-cable operators on the basis of the monthly
subscription provided the said TV signals to the individual
subscribers of the locality.
10.9.1 The State of West Bengal sought to impose a
tax on MSOs engaged in receiving and providing
television signals to individual cable operators of
various localities by amending the West Bengal
Entertainment-cum-Amusement Tax Act, 1982 (“the
1982 Act”). Some of the relevant definitions under
the Act were with regard to the expressions “cable
operators”, “sub-cable operators”, “cable service”,
“cable television network”, “subscriber” and “gross
receipt”. The said Act was amended in 1998 by
omitting sub-section (4) of Section 4A and inserting
a new sub-section (4a) which provided that,
“(4a) Where any owner, or any person
for the time being in possession, of any
electrical, electronic or mechanical device,
[2025] 5 S.C.R. 2379

State of Kerala & Another v.
Asianet Satellite Communications Ltd. & Others

is a cable operator and receives through
such device the signal of any performance,
film or any other programme telecast, and
thereafter such owner or person, against
payment received or receivable,-
i. exhibits such performance, film or
programme through cable television
network directly to customers, or
ii. transmits such signal to a sub-
cable operator, who in turn provides
cable service for exhibition of such
performance, film or programme to
the customers,
such owner or person shall be liable to pay
tax from the month in which he exhibits
such performance, film or programme
or transmits such signal to a sub-cable
operator on the basis of his monthly gross
receipt at such rate, not exceeding twenty
five per centum of the monthly gross
receipt, as may be specified by the State
Government by notification published in
the Official Gazette.”
10.9.2 Aggrieved by the imposition of entertainment tax
and the demand notices issued, the respondents
therein challenged the vires of the 1998 Amendment
made to the 1982 Act as well as the demand notices
before the Taxation Tribunal and being aggrieved by
its decision approached the High Court under Article
226 of the Constitution.
10.9.3 It was contended on behalf of the sub-cable operators
that they were not providing any entertainment within
the meaning of Entry 62 – List II as providing the
cable link up to the viewers was the only role. That
the sub-cable operator was merely transmitting the
signals received by the cable operator which were
in the form of audio-video signal. Per contra, the
State of West Bengal in the said case submitted that
2380 [2025] 5 S.C.R.

Supreme Court Reports

the cable operators were engaged in receiving and
providing TV signals to individual sub-cable operators
of various localities and such cable operators on
their part transmit the signals to their respective
subscribers, who are the actual consumers who get
the benefit of the entertainment from the signals. That
the signals received by the sub-cable operators are
utilized for providing information and entertainment
to their customers. That respondent No.1 before this
Court was a cable operator and the MSOs like the
respondent company were not only providing the input
to the localized cable operators in their business of
providing cable TV connections and transmission or
programme through cables but the MSOs were also
concerned with value added services like internet,
telephone and transmission of data. It was argued that
the respondent therein did not carry on any activity
which constituted entertainment or amusement. That
the MSOs were different from sub-cable operators.
It was contended that a cable operator in a locality
who is actually providing the entertainment to his
subscribers may be liable to pay tax but those who
function at an intermediary stage cannot be held
liable to pay the said tax.
10.9.4 It was further submitted that the taxable event,
namely, the act or activity of entertainment must
have a direct and proximate connection with the
assessee on which it falls and must itself constitute
entertainment. That unless an activity in question
qualifies as entertainment itself, the taxable event of
entertainment cannot arise. If the activity in question
is not the taxable event (entertainment), the levy
cannot be sustained.
10.9.5 The High Court of Calcutta allowed the writ petition
filed by the MSO and declared section 4A(4a) of the
1982 Act as ultra vires the Constitution.
10.9.6 On appeal by the State, the MSO submitted that
they merely capture signals from various satellites
and put all of them in proper format/frequencies
[2025] 5 S.C.R. 2381

State of Kerala & Another v.
Asianet Satellite Communications Ltd. & Others

for the reception and distribution by the sub-cable
operators. However, the Court allowed the appeal
by the State. While considering Section 4-A (4-a) of
the State Act, it was observed that the purpose of the
said provision was to levy and collection of the tax
from any person who provides cable service directly
to consumers or transmits to a sub-cable operators
through a cable television network and otherwise
controls or is responsible for the management and
operation of a cable television network and such
person has been defined as cable operator being a
taxable person exclusively for the purpose of levy and
collection of entertainment tax. Only when a cable
operator so defined receives through any electrical,
electronic and mechanical device, the signal of any
performance, film or any other programme telecast
and provides cable service directly to consumers or
transmits signals to a sub-cable operator through a
cable television network and otherwise controls or
is responsible for the management and operation of
cable television network, he would be liable. Therefore,
a cable operator is the source of entertainment to the
individual subscribers because, it is he who receives
the signal of performance, film, and any programme
which is transmitted or given to a large number of
sub-cable operators (although they call them as
cable operator). The viewers enjoy, or are entertained
by such performance, film, or programme because
of receiving and transmitting video or audio-visual
signals through coaxial cable or any other device by
the respondents. No entertainment can be presented
to the viewers unless a cable operator transmits the
video and audio signals to a sub-cable operator for
instantaneous presentation of any performance, film
or any programme on their TV screen. The sub-cable
operators are mere franchisees who receive signals
for transmission to the viewers only on payment of a
price promised or paid in terms of agreements entered
by and between them. Therefore, the respondents
as a cable operator have direct and proximate nexus
2382 [2025] 5 S.C.R.

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with the entertainment provided by them through their
cable television network and as such, they are the
taxable person in respect of their gross receipts in
relation to any month for providing entertainments
to the individual viewers. This Court observed that
the respondents therein as cable operators for the
purpose of levy and collection of tax had direct and
close nexus with the entertainments made available
to the viewer through their cable television network.
The performance, film or programmes shown to the
viewers through the cable television network come
within the meaning of entertainments and therefore
within the legislative competence of the State
Legislature under Entry 62 - List II to make law for
the levy and collection of tax on such entertainments.
This Court further observed in paragraphs 38 and
39 is as under:
“38. A tax under Entry 62 of List II of the
Seventh Schedule to the Constitution
may be imposed not only on the person
spending on entertainment but also on the
act of a person entertaining, or the subject
of entertainment. It is well settled by this
Court that such tax may be levied on the
person offering or providing entertainment
or the person enjoying it. The respondents
are admittedly engaged in the business
of receiving broadcast signals and then
instantaneously sending or transmitting
such visual or audio-visual signals by
coaxial cable, to subscribers’ homes
through their various franchisees. It has
been made possible for the individual
subscribers to choose the desired channels
on their individual TV sets because of cable
television technology of the respondents
and of sending the visual or audio-visual
signals to sub-cable operators, and instantly
retransmitting such signals to individual
[2025] 5 S.C.R. 2383

State of Kerala & Another v.
Asianet Satellite Communications Ltd. & Others

subscribers for entertaining them through
their franchisees. The respondents’ act is,
no doubt, an act of offering entertainment
to the subscribers and/or viewers. The
respondent is very much directly and
closely involved in the act of offering or
providing entertainment to subscribers who
are on his record. For the fact of offering or
providing entertainment to the subscribers
and/or viewers, the respondents receive
charges, which are realised or collected
by their franchisee from the ultimate
subscribers. Their franchisee, called as
sub-cable operator under the said 1982
Act having no independent role to offer or
provide entertainments to the subscribers
inasmuch as franchisees have to depend
entirely on the respondents’ communication
network and this communication network
of the respondents consists of receiving
and sending visual images and audio
and other information for preparation of
the subscribers and/or viewers; without
the communication network service of
the respondents, no entertainments can
be offered or provided to the subscribers
and/or viewers.
39. In the tax matters, the State Legislature
is free, if it has legislative competence,
to choose the persons from whom the
tax levied on entertainments is to be
collected. In other words, what are taxed
are the entertainments, which is very
much within the ambit of Entry 62 of
List II of the Seventh Schedule. It is the
respondents who as cable operator for the
purpose of the said 1982 Act are engaged
in the business of providing or offering
entertainments which include showing of
2384 [2025] 5 S.C.R.

Supreme Court Reports

films, various serials, cricket matches and
dramatic performances to the subscribers,
and the tax is imposed on the act of
offering such entertainments in this way
to such subscribers and/or viewers. The
entire communication network service is
built up and controlled by the respondents.
Whatever amount is received or receivable
by the respondent in respect of providing
such entertainments is taxable under sub-
section (4-a) of Section 4-A of the said
1982 Act which has a direct and sufficient
nexus with the entertainments.”
10.9.7 It is thus clear that the cable operator, respondent No.
1 is the exhibitor in this case and also the provider of
the entertainment to the customer. Hence, he alone
can be asked to pay the tax on the entertainment
that has resulted from this exhibition. This provision,
therefore, does not cross the bounds of Entry 62 -
List II and is intra vires. Providing a cable link up
to the viewers’ end is the only role of sub-cable
operator. It is, therefore, inconceivable that despite
putting forth the ready entertainment in the form of
signal on the cable line, the cable operator cannot
be said to be providing the entertainment within the
meaning of Entry 62 - List II. So long as the State
Act remains within the ambit of Entry 62 - List II and
is not offending the provisions of Article 286 of the
Constitution or the laws made thereunder, the State
Act’s validity is beyond question.
10.9.8 This Court further observed that in the said case,
respondent No.1 therein sends visual images and
audio signals for presentation to the individual
subscribers in their homes through their feeder line i.e.
coaxial cable or any other device used for transmitting
audio and visual signals in terms of clause (2) of the
said agreement. The franchisee has access to the
signals provided by respondent No.1. Therefore, it
cannot be disputed that the price or prices received
[2025] 5 S.C.R. 2385

State of Kerala & Another v.
Asianet Satellite Communications Ltd. & Others

or receivable by respondent No.1 is the amount
received or receivable by him for transmitting the
signal for exhibition of any performance, film or any
other programme telecast and the aggregate of such
prices or amounts is the gross receipt of respondent
No.1 in relation to any month or part thereof.
10.9.9 It was observed with reference to Western India
Theatres that existence of means or providing
entertainment would be sufficient to support a law
imposing tax thereon and that the means of providing
entertainment provides the nexus between the taxing
power and the subject of tax. It was further observed
that if one is looking at the means of providing
entertainment, both the cable operator and the sub-
cable operator play equally significant role in providing
such means of entertainment, namely, transmission
of signals received from the satellites. In one sense
the cable operator plays a more pivotal role than the
sub-cable operator since the signals are received
by him through his devices and transmitted while a
sub-cable operator makes provision for continued
instantaneous transmission of the signals.
10.9.10 It was further observed that the impugned legislation
was in pith and substance not relating to broadcasting
but one relating to entertainment within the scope and
ambit of Entry 62 – List II. Accordingly, the appeals
filed by the State of West Bengal were allowed by
setting aside the judgment of the Calcutta High Court.
10.9.11 On a perusal of the judgment in Purvi Communication,
it can be observed that there was no specific question
raised as to, whether, the act of transmission by
MSO has a ‘public colour’ to it. In fact, the Court
was never required to go into such a question, for
the impugned provision, i.e. section 4A(4a) of the
1982 Act, did not require such a ‘public colour’ to
the activities of MSO.
10.10 There are other substantial differences between Geeta
Enterprises and Purvi Communication as the table below
2386 [2025] 5 S.C.R.

Supreme Court Reports

enumerates due to which Geeta Enterprises and Purvi
Communication cannot be compared.

Geeta Enterprises Purvi Communication
Impugned Provision
Definition of ‘entertainment’ Amended section 4A(4a) of the
under section 2(3) of the 1937 1982 Act (West Bengal Act)
Act (UP Act)
Activity subject to taxation
Video game operated on Transmission of signals by
payment, in a parlour whose MSOs of any performance,
admission is free to public film or any other programme
telecast.
Date of Enactment of the provision impugned therein
1937 1998
Discussion on Entry 62 - List II
No Yes

10.11 It was submitted by Sri Venugopal, learned Senior Counsel
that the interpretation of the word ‘entertainments’ in Entry
62 - List II is restricted to ‘public entertainments’ and this
Court was not right in Purvi Communication to hold that the
impugned provision therein was constitutionally valid without
determining whether that provision fell within the restricted
interpretation of ‘entertainments’.

10.12 We do not agree with this limited interpretation of the word
‘entertainments’. We hold in line with the principle that words
in entries must be given a broad, liberal and expansive
interpretation. As discussed above, the impugned activity of
transmission in Purvi Communication would still fall under
its ambit.

10.13 It is true that in the earlier times, many people did not have
access to personal devices through which they could be
entertained. The entertainments, therefore, were mostly
restricted to those performed or displayed in public. With
developments in technology, it has become possible for
such entertainments to be experienced / enjoyed directly at
[2025] 5 S.C.R. 2387

State of Kerala & Another v.
Asianet Satellite Communications Ltd. & Others

home. In other words, what has changed is the manner in
which entertainments are accessed or consumed. Nowadays,
entertainment is available on a cell/mobile phone in our
hands. The forum or platform for entertainment as well as
the manner of perception has changed, namely, from direct/
live viewing to digital viewing but the content is essentially
the same, of course, with varieties of programmes, having
regard to the target viewers/audience of such entertainment,
etc. That, however, does not change the fact that such
entertainment is curated and transmitted for the benefit of
the public at large. Therefore, interpreting the activity taxed in
Purvi Communication in this manner, we hold that television
viewing via DTH would still fall within the ambit of “public
entertainments”.

10.14 We also take note that the question of interpretation of
‘entertainments’ in Geeta Enterprises pertained to the
interpretation of the 1937 Act and not Entry 62 – List II
as it appears in the Constitution. The judgment in Geeta
Enterprises can never be a binding precedent for the question
raised before this Court in Purvi Communication. Therefore,
whereas the scope of interpretation for Geeta Enterprises was
limited to interpretation of a provision in a statute we would be
remiss to hold Purvi Communication as per incuriam for its
failure to take note of Geeta Enterprises. Therefore, we find
no reason to doubt the correctness of Purvi Communication.

“Aspect Theory” or Aspect Doctrine: A Discussion
11. In Canada, the distribution of legislative powers is provided in Sections
91 and 92 of its Constitution Act, 1867, dividing entries between
the Federal Government (under section 91) and the Provincial
Government (under section 92). The ‘Aspect’ theory, also known as
the ‘double aspect doctrine’, is a tool of constitutional interpretation
used in Canada to resolve issues which arise when both the Federal
and the Provincial Governments have the right to legislate on a
subject matter.
11.1 Lord Haldane, in Union Colliery Co. of British Columbia vs.
Bryden, 1899 AC 580 at 587, commented on the ‘aspect
theory’ as follows:
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“It is remarkable the way this Board has reconciled
the provisions of section 91 and section 92, by
recognizing that the subjects which fall within section
91 in one aspect, may, under another aspect, fall
under section 92.”
11.2 The Constitution Bench of this Court, in Federation of Hotel
& Restaurant Association of India, explained this theory
by quoting from the book ‘Canada’s Federal System’ by AHF
Lefroy. The Bench noted as under:
“14. In Lefroy’s ‘Canada’s Federal System’ the learned
author referring to the “aspects of legislation” under
Sections 91 and 92 of the Canadian Constitution
i.e., British North America Act 1867 observed that
“one of the most interesting and important principles
which have been evolved by judicial decisions in
connection with the distribution of Legislative Power
is that subjects which in one aspect and for one
purpose fall within the power of a particular
legislature may in another aspect and for another
purpose fall within another legislative power.
Learned author says: “ ..... that by ‘aspect’ must
be understood the aspect or point of view of
the legislator in legislating the object, purpose,
and scope of the legislation that the word is used
subjectively of the legislator, rather than objectively
of the matter legislated upon.”
(emphasis supplied)

Criticism of its Use in Indian Context:
11.3 Some scholars have criticised the transposition of the
Canadian ‘aspect theory’ to Indian jurisprudence on the
ground that the framework of distribution of legislative
competence in Canada is different from that in India and
hence, that theory which is used in Canada cannot be
transposed to Indian contexts.
11.4 To substantiate this proposition, it is relevant to note that,
firstly, the aspect theory in Canada is used to resolve conflicts
[2025] 5 S.C.R. 2389

State of Kerala & Another v.
Asianet Satellite Communications Ltd. & Others

in legitimacy to legislate on all subject matters, rather than
restricting its use only to entries concerning taxation. In India,
the doctrine of pith and substance is predominantly used to
resolve conflicts when two entries in different Lists of the
Seventh Schedule to the Constitution conflict with each other.
As already noted, the doctrine of pith and substance means
that “if an enactment substantially falls within the powers
expressly conferred by the Constitution upon the legislature
which enacted it, it cannot be held to be invalid merely because
it incidentally encroaches upon matters assigned to another
legislature” [Goodyear India Ltd. vs. State of Haryana,
(1990) 2 SCC 71, para 71].
11.5 Secondly, as regards taxation in Canada, it appears that
Section 91(3) of the Constitution Act, 1867 therein empowers
their Parliament to legislate on “the raising of Money by any
Mode or System of Taxation” whereas, under section 92(2),
the Provinces therein are empowered to legislate only on
“Direct Taxation within the Province in order to the raising
of a Revenue for Provincial Purposes”. This means that the
Parliament therein has greater legislative competence to
impose a wide range of taxes, but the Provinces therein are
restricted to impose only direct taxes. Therefore, the scope
for the use of ‘Aspect theory’ in taxation matters is limited
in Canada. This distribution of taxation powers in Canada is
markedly different from that in India. Under our Constitution,
the subject matters of taxation available to Parliament are
enumerated in Entries 82 to 97 - List I and those available to
the State legislatures are in Entries 45 to 63 - List II. There is
no taxation entry in List III or the Concurrent List.
11.6 There are also alternate propositions as regards this theory.
For e.g., Sri Karthik Sundaram, in the book ‘Tax, Constitution
and the Supreme Court’ (OakBridge Publishing Pvt. Ltd.
2024, p.112), argues that “the ‘aspect theory’ can, in some
cases, be viewed as an exception to the doctrine of ‘pith and
substance’”. Contrarily, Sri V Niranjan, K.C. in Chapter 26
titled ‘Legislative Competence’ in the Oxford Handbook of the
Indian Constitution, argues that there is no distinction between
the doctrine of pith and substance and the aspect theory in
the Indian context.
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11.7 Despite the above observations, on a perusal of the cases in
India which have referred to this theory, it would be evident
that the use of ‘aspect theory’ in the Indian jurisprudence
differs from its usage in Canada and that it is home-grown
and innovated to suit the Indian context particularly in matters
relating to taxation. In other words, while we may have borrowed
the theory from Canada, its application in the Indian context
has been within the context of the framework of the Indian
Constitution. The theory is applied so as to save a provision
of taxation rather than to a situation where a legislature’s
competence to tax is determined. In other words, the aspect
doctrine is applied to ascertain whether a legislature can tax
on a particular aspect of a transaction/activity rather than on
competence of a legislature vis-à-vis the scope of entries in
List I or List II.
11.8 To elaborate, it is necessary to revisit some significant
judgments which have dealt with the concept of ‘Aspect
theory’ and some judgments that have laid down principles
for interpretation of entries governing taxation in the Seventh
Schedule to the Constitution.

Usage of Aspect Theory in the Indian Context:
11.9 In International Tourist Corporation vs. State of Haryana,
(1981) 2 SCR 364, the vires of Section 3(3) of the Haryana
Passengers and Goods Taxation Act, 1952 insofar as it
permitted the levy of tax on passengers and goods carried by
their carriages plying entirely along the National Highways was
questioned. The appellants therein argued that the Parliament
had the exclusive jurisdiction under Entry 23 read with Entry
97 - List I to legislate in respect of National Highways, including
levy of taxes on goods and passengers carried on National
Highways. This Court, however, noted that Entry 97-List I itself
is specific in that, in case of a tax, a matter can be brought
under that entry only if it is not mentioned in either of List
I or List II. This Court further opined that a regulatory and
compensatory tax should be upheld if there exists a “specific,
identifiable object behind the levy and a nexus between the
subject and the object of levy”. Having found this nexus, it
upheld the imposition of tax under the impugned section.
[2025] 5 S.C.R. 2391

State of Kerala & Another v.
Asianet Satellite Communications Ltd. & Others

11.10 Thereafter, in Federation of Hotel & Restaurant Association
of India, the Constitution Bench of this Court had to decide
the constitutional validity of the Expenditure Tax Act, 1987
(Central Act 35 of 1987) which envisaged a tax at 10 per cent
ad valorem on “chargeable expenditure” incurred in the class
of hotels wherein “room charges” for any unit of residential
accommodation were Rs. 400 per day or more per individual.
The Union sought to sustain the legislative competence to enact
the impugned law under Article 248 read with Entry 97 - List I.
11.10.1 One argument of the appellants therein relevant to
this case was that the law was, in pith and substance,
really one imposing a tax on luxuries or on the price
paid for the sale of goods. It is relevant to note here
that a tax on luxuries is an exclusive subject matter of
States under Entry 62 - List II. The other contention
was that the particular impost under the impugned law,
having regards to its nature and incidence, is really not
an “expenditure tax” at all as it does not accord with
the economists’ notion of such a tax. The question
therefore was whether the economists’ concept of
such a tax qualifies and conditions the legislative
power and whether “expenditure” laid out on what
may be assumed to be “luxuries” or on the purchase
of goods admits of being isolated and identified as
a distinct aspect susceptible of recognition as being
distinct field of tax legislation.
11.10.2 This Court referred to the ‘Aspect theory’ used in
Canada by quoting Lefroy’s ‘Canada’s Federal
System’ who opined that “one of the most interesting
and important principles which have been evolved by
judicial decisions in connection with the distribution
of legislative power is that subjects which in one
aspect and for one purpose fall within the power of
a particular legislature may in another aspect and for
another purpose fall within another legislative power.
“… that by ‘aspect’ must be understood the
aspect or point of view of the legislator in
legislating the object, purpose and scope
2392 [2025] 5 S.C.R.

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of the legislation that the word is used
subjectively of the legislator, rather than
objectively of the matter legislated upon.”
This Court further opined that,
“Indeed, the law ‘with respect to’ a subject
might incidentally ‘affect’ another subject in
some way; but that is not the same thing as
the law being on the latter subject. There
might be overlapping; but the overlapping
must be in law. The same transaction may
involve two or more taxable events in
its different aspects. But the fact that
there is an overlapping does not detract
from the distinctiveness of the aspects.”
(emphasis supplied)

11.10.3 Reference was made to Lord Simonds in Governor
General in Council vs. Province of Madras, (1945)
FCR 179: AIR 1945 PC 98 in the context of concepts
of Duties of Excise and Tax on Sale of Goods in the
following words:
“… The two taxes, the one levied on
manufacturer in respect of his goods, the
other on a vendor in respect of his sales,
may, as is there pointed out, in one sense
overlap. But in law there is no overlapping.
The taxes are separate and distinct
imposts. If in fact they overlap, that may
be because the taxing authority, imposing
a duty of excise, finds it convenient to
impose that duty at the moment when
the excisable article leaves the factory of
workshop for the first time on the occasion
of its sale. …”
11.10.4 Referring to the “aspect” doctrine stated in Laskin’s
“Canadian Constitutional Law”, the Constitution Bench
further noted that the “aspect” doctrine bears some
[2025] 5 S.C.R. 2393

State of Kerala & Another v.
Asianet Satellite Communications Ltd. & Others

resemblances to those noted above but, unlike them,
deals not with what the “matter” is but with what it
“comes within” … In this regard it was observed as
under:
“It is trite that the true nature and character
of the legislation must be determined with
reference to a question of the power of
the legislature. The consequences and
effect of the legislation are not the same
thing as the legislative subject matter.
It is the true nature and character of
the legislation and not its ultimate
economic results that matters.”
(emphasis supplied)

11.10.5 In other words, this Court held that the subject matter
of a tax is different from the measure of its levy
and that the measure of a tax does not determine
its essential character or of the competence of
the legislature. The Court therefore accepted the
submission of the learned Attorney General and held
that the distinct ‘aspect’, namely, the ‘expenditure’
aspect of the transaction fell within the subject-matter
of the Union and that it had the legislative competence
to impose a tax.
11.11 The Constitution Bench of this Court had to again decide on
similar facts in Elel Hotels & Investments Ltd. vs. Union of
India, (1989) 3 SCC 698 (“Elel Hotels & Investments”). In
this case, the Hotel Receipts Tax Act, 1980 imposed a special
tax of 15% on the gross receipts of certain hotels, where the
room charges for residential accommodation provided to any
person during the previous year was Rs.75 or more per day per
individual. The petitioners therein argued that the reliance on
Entry 82 – List I in support of the tax was wholly misconceived
and the tax in pith and substance was an impost under Entry
62 – List II reserved to the States. The respondents however
submitted that the word ‘income’ in Entry 82 – List I should not
be read in a narrow and pedantic sense, but must be given
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its widest amplitude. The Court agreed with the respondents
therein and opined that,
“The cardinal rule of interpretation is that the entries
in the legislative lists are not to be read in a narrow
or restricted sense and that each general word
should be held to extend to all ancillary or subsidiary
matters which can fairly and reasonably be said to
be comprehended in it…In construing the words in
a constitutional document conferring legislative
power the most liberal construction should be
put upon the words so that the same may have
effect in their widest amplitude.”
(emphasis supplied)

11.11.1 While this Court herein did not explicitly use the
‘aspect doctrine’, it is implied from its reasoning
that by interpreting the word ‘income’ liberally, the
impugned legislation had an aspect of ‘income’ and
hence the Union had the legislative competence to
impose tax on the subject-matter.
11.12 In State of West Bengal vs. Kesoram Industries Ltd., (2004)
10 SCC 201, the Constitution Bench of this Court summarised
the principles as regards interpretation of taxation entries in
List I and List II. While it did not explicitly refer to the ‘aspect
theory’, it opined on different aspects of a transaction as follows:
“141. As held in Goodricke Group Ltd. [1995 Supp
(1) SCC 707] which we have held as correctly
decided, this Court has noted the principle of law well
established by several decisions that the measure of
tax is not determinative of its essential character.
The same transaction may involve two or more
taxable events in its different aspects. Merely
because the aspects overlap, such overlapping
does not detract from the distinctiveness of
the aspects. In our opinion, there is no question
of conflict solely on account of two aspects of the
same transaction being utilised by two legislatures
for two levies both of which may be taxes or fees or
[2025] 5 S.C.R. 2395

State of Kerala & Another v.
Asianet Satellite Communications Ltd. & Others

one of which may be a tax and the other a fee falling
within two fields of legislation respectively available
to the two.”
(emphasis supplied)

11.13 In All India Federation of Tax Practitioners, the Court was
concerned with the constitutional validity of the levy of service
tax on Chartered Accountants, Cost Accountant and Architects
by Finance Act, 1994 and Finance (No. 2) Act, 1998, and the
legislative competence of Parliament to impose service tax
under Entry 97 - List I, in view of Entry 60 - List II which is
also a taxation entry and mentions, “Taxes on professions,
trades, callings and employments” and Article 276 of the
Constitution. This Court held that Entry 60 – List II which refers
to ‘professions’ cannot be extended to include services and
opined, “this is what is called as an Aspect Theory”. But it said
no more on the theory. However, from its reasoning that Entry
60 - List II concerns a tax on the status and cannot be read
to include every activity undertaken or service rendered by
a chartered accountant/cost accountant/ architect, this Court
suggested that the activity in question i.e. service rendered by
such professionals did not have an aspect that can be covered
by Entry 60 - List II which was only regarding being a part of a
particular profession. It was further observed that a tax cannot
be levied under the Finance Act, 1994 and its amendments
without service being provided whereas a professional tax
under Entry 60 - List II is a tax on his status. It is the tax on
the status as a Cost Accountant or a Chartered Accountant.
As long as a person or a firm remains in the profession, he/it
has to pay professional tax. That tax has nothing to do with
the commercial activities which he undertakes for his client.
Even if the chartered accountant has no work throughout the
accounting year, still he has to pay professional tax. He has
to pay the tax till he remains in the profession. This is the
ambit and scope of Entry 60 - List II which is a taxing entry.
Therefore, Entry 60 contemplates tax on professions, as such.
11.13.1 Referring to Western India Theatres Ltd. it was
observed that Entry 50 of the Provincial List of the
Government of India Act, 1935 contemplated a tax
2396 [2025] 5 S.C.R.

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on entertainment or amusement as objects on which
a tax was to be imposed and therefore it was not
possible to differentiate between the entertainment
provider and the entertainment receiver.
11.13.2 It was also highlighted that the importance of the
judgment in Western India Theatres Ltd. was in the
fact that it made a distinction between tax imposed
for the privilege of carrying on any trade or calling
on one hand and a tax on every show, that is to say
on every incidence of the exercise of the particular
trade or calling. It was held that if there was no show,
there was no tax. It was held that the impugned tax on
entertainment levied by the Cantonment Board was
a tax on the act of entertainment resulting in a show
and, therefore, the impugned law imposing tax on
entertainment fell under Entry 50 of the Provincial List
in Schedule VII to the Government of India Act, 1935
and not under Entry 46 of the Provincial List (similar to
Entry 60 - List II). Therefore, it was held that Bombay
legislature had power to enact the law imposing tax
on entertainment which had nothing to do with the
law imposing tax on the privilege of carrying on any
profession, trade or calling under Entry 46 (similar
to Entry 60 - List II in the present case). Therefore,
this Court had clarified the dichotomy between tax on
privilege of carrying on any trade or calling on one
hand and the tax on the activity which an entertainer
undertakes on each occasion. The tax on privilege to
practise the profession, therefore, falls under Entry
60 - List II. It is quite different from tax on services.
Keeping in mind the aforestated dichotomy, it is clear
that tax on service does not fall under Entry 60 - List
II. Therefore, Parliament has absolute jurisdiction and
legislative competence to enact the law imposing tax
on services under Entry 97 - List I.
11.14 In Union of India vs. Mohit Minerals Pvt. Ltd., (2018) 13
SCR 139 (“Mohit Minerals Pvt. Ltd.”), this Court explicitly
held that, “the principle is well settled that two taxes/imposts
which are separate and distinct imposts and on two different
[2025] 5 S.C.R. 2397

State of Kerala & Another v.
Asianet Satellite Communications Ltd. & Others

aspects of a transaction are permissible as “in law there is
no overlapping”.” In this case the bone of contention between
the parties was whether an Indian importer can be subject
to the levy of Integrated Goods and Service Tax (“IGST”)
on the component of ocean freight paid by the foreign seller
to a foreign shipping line, on a reverse charge basis. The
notifications impugned in the said case whether amounted to
leading to double taxation was considered.
11.14.1 The contention of the respondents therein was that
the transaction between the foreign exporter and
the respondents was already subject to IGST under
Section 5 of the IGST Act read with Section 3(7)
and 3(8) of the Customs Tariffs Act as “supply of
goods”, and an additional levy of IGST on imported
goods, that is on the supply of transportation service,
by designating the importer as the recipient could
amount to double taxation. The transaction involved
three parties, namely the foreign exporter, the
Indian importer and the shipping line. The first leg
of the transaction involved a CIF contract, wherein
the foreign exporter sells the goods to the Indian
importer and the cost of insurance and freight are
the responsibility of the foreign exporter. In other
words, the foreign exporter is liable to ensure that
the goods reach their place of destination and the
Indian importer pays the transaction value to the
exporter. The second leg of the transaction involved
an agreement between the foreign exporter and the
shipping line (whether foreign or Indian) for providing
services for transport of goods to the destination
i.e., in the territory of India. The appellant- Union
of India contended that the contract between the
foreign exporter and the foreign shipping line – of
which the Indian importer is not a party – cannot be
deemed to be a part of “composite supply” within
the meaning of Section 2(30) of the Central Goods
and Service Tax Act (“CGST Act”). It was contended
that while the first leg of the transaction, between the
foreign exporter and Indian importer, is (according
2398 [2025] 5 S.C.R.

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to the submission) a composite supply, the second
leg is an independent transaction. In this regard, the
Union of India relied on the decision of this Court
in State of Andhra Pradesh vs. Mc Dowell & Co,
(1996) 3 SCR 721 (“Mc Dowell”) to contend that a
single element can constitute a levy and a part of
the value for another transaction. Further the Union
Government urged that the levy is on different aspects
of the transaction.
11.14.2 This contention was not acceded to by this Court. It
was ultimately held that the impugned levy imposed
on the “service” aspect of the transaction is in violation
of the principle of “composite supply” enshrined under
Section 2(30) read with Section 8 of the CGST Act.
Since the Indian importer is liable to pay IGST on the
“composite supply”, comprising of supply of goods
and supply of services of transportation, insurance,
etc. in a CIF contract, a separate levy on the Indian
importer for the “supply of service” by the shipping
line would be in violation of Section 8 of the CGST
Act. Hence the appeal filed by the Union of India
was dismissed.
11.15 The judgment of this Court in Bharat Sanchar Nigam Limited
appears to have approached the application of ‘aspect theory’
differently. The principal issue which arose therein was,
whether, the nature of transaction by which mobile phone
connections (through SIM cards) are enjoyed is a sale or a
service or both. If it is a sale then the States are legislatively
competent to levy sales tax on the transaction under Entry
54 – List II but if it is a service, then the Parliament alone
can levy service tax under Entry 97 – List I but if the nature
of the transaction partakes of the character of both sale
and service, then the moot question would be whether both
legislative authorities could levy their separate taxes together
or only one of them. The contention of the appellants therein
was that the transaction in question was merely a service
and therefore only the Union had the competence to levy tax
thereon. However, the respondents States argued that the
transaction was a deemed sale under Article 366(29A)(d) of
[2025] 5 S.C.R. 2399

State of Kerala & Another v.
Asianet Satellite Communications Ltd. & Others

the Constitution read with the charging sections in their various
sales tax enactments and therefore they were competent to
levy sales tax on the transactions.
11.15.1 The impugned judgments therein had held that there
was a sale of SIM cards by the service providers to
the subscribers and that it is factually and legally
distinct from the activity of giving connection or
activation of SIM cards. However, this Court held that
the expression ‘goods’ do not include electromagnetic
waves or radio frequencies for the purpose of Article
366(29A)(d) and that the goods in telecommunication
are limited to the handsets supplied by the service
provider.
11.15.2 This Court clarified that what a SIM card represents
is ultimately a question of fact. That in determining
such an issue, the Assessing Authorities had to keep
in mind the principle that if the SIM card was not sold
by the assessee to the subscribers but was merely
part of the services rendered by the service providers,
then a SIM card could not be charged separately to
sales tax. However, if the parties intended that the
SIM card would be a separate object of sale, only
then it would be open to the Sales Tax Authorities to
levy sales tax thereon. Therefore, the Court held that,
as far as SIM cards were concerned, the issue was
left for determination by the Assessing Authorities.
11.15.3 Further, this Court noted that the State would have
had the power to separate the agreement to sell from
the agreement to render service and impose tax on
the sale, only if the transaction in truth represents
two distinct and separate contracts and is discernible
as such. It held that the test for composite contracts,
other than those mentioned in Article 366(29A),
would be the intention of the parties and if there
was no intention of sale of goods, then the State
cannot impose a sales tax even if the contract could
be disintegrated. Furthermore, the Court held that it
would be possible for the State to tax the sale element
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provided there is a discernible sale and only to the
extent relatable to such sale.
11.15.4 As regards the ‘aspect theory’, this Court noted that
the High Court in the impugned judgment therein
could not have used the theory to “enable the value
of the services to be included in the sale of goods
or the price of goods in the value of the service” and
that the ‘aspect theory’ merely deals with legislative
competence. It further noted, observing on the
judgment of this Court in Federation of Hotel &
Restaurant Association of India that:
“subjects which in one aspect and for
one purpose fall within the power of
a particular legislature may in another
aspect and for another purpose fall within
another legislative power. They might be
overlapping; but the overlapping must
be in law. The same transaction may
involve two or more taxable events in its
different aspects. But the fact that there
is overlapping does not detract from the
distinctiveness of the aspects”.
11.15.5 It further held that no one denies the legislative
competence of States to levy sales tax on sales
provided that the necessary concomitants of a sale
are present in the transaction and the sale is distinctly
discernible in the transaction. After narrating the
Constitutional history which led to the amendment of
Article 366 by insertion of clause (29-A) by the Forty
Sixth Amendment to the Constitution, it was observed
that of all the different kind of composite transactions,
the draftsman of the Forty Sixth Amendment chose
three specific situations namely, a works contract,
a hire-purchase contract and a catering contract to
bring them within the fiction of a deemed sale. Of
these three, the first and third involve a kind of service
and sale at the same time. Apart from these two
cases where splitting of the service and supply has
[2025] 5 S.C.R. 2401

State of Kerala & Another v.
Asianet Satellite Communications Ltd. & Others

been constitutionally permitted in sub clause (b and
f) of Clause (29-A) of Article 366, there is no other
service which has been permitted to be so split. It
was further observed that if there is an instrument
of contract which may be composite in form in any
case, other than the exceptions in Article 366 (29-
A), unless the transaction in truth represents two
distinct and separate contracts and is discernible as
such, then the State would not have the power to
separate the agreement to sale from the agreement
to render service and impose tax on the sale. The
test therefore for the composite contract other than
those mentioned in Article 366 (29-A) continues to
be: did the parties have in mind or intend separate
right arising out of the sale of goods? If there was
no such intention there is no sale even if the contract
could be disintegrated. The test for deciding whether
a contract falls into one category or other is to ask
what is the substance of the contract. In other words,
the court termed it ‘the dominant nature test’.
11.15.6 It was further observed that what a SIM Card
represents is ultimately a question of fact. It was also
observed that the States have the power to levy sales
tax on sales provided the necessary concomitants
of a sale are present in the transaction and the sale
is distinctly discernible in the transaction. This does
not however allow the State to entrench upon the
Union List and tax any service by including the cost
of such service in the value of the goods. Even in
those composite contracts which are by legal fiction
deemed to be divisible under Article 366 (29-A), the
value of the goods involved in the execution of the
whole transaction cannot be assessed to sales tax.
For the same reason the Centre cannot include the
value of the SIM Card, if they are found ultimately
to be goods, in the cost of the service.
11.15.7 Therefore, this Court did not apply the aspect theory
in the aforesaid judgment because it did not find
an aspect of sale in the activity of mobile phone
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connections. It was observed that the aspect theory
would not apply to enable the value of the services
to be included in the sale of goods or the price of
goods in the value of the service.
11.15.8 In the aforesaid case, reference was made to Gujarat
Ambuja Cements Ltd. vs. Union of India, (2005)
4 SCC 214. In this case, the writ petitions were filed
challenging the constitutional validity of Sections 116
and 117 of the Finance Act, 2000 and Section 158
of the Finance Act, 2003 by which the decision of
this Court in Laghu Udhyog Bharti vs. Union of
India, (1999) 6 SCC 418 (“Laghu Udhyog Bharti”)
striking down Rules 2 (1)(d)(xii) and (xvii) of the
Service Tax Rules, 1994 (as amended in 1997) was
sought to be overcome. The writ petitioners were the
customers or the clients of goods transport operator
and of forwarding and clearing agents. One of the
contentions raised was that the Parliament was not
competent to levy the service tax as it encroached
upon the States Government power as defined
in Entry 56 – List II which pertains to “taxes on
goods and passengers carried by road or an inland
waterways”. That Parliament could not by resorting
to the residuary Entry 97 – List I circumvent Entry
56 – List II and in the guise of levying service tax in
fact, levy a tax on transport of goods. The imposition
of service tax on the customers was challenged by
many of the writ petitioners in Laghu Udhyog Bharti
but in the later case the legislative competency to
levy service tax on carriage of goods by transport
operators was not considered. It was contended
that the subject fell under Entry 56 – List II and
therefore could not come within Entry 23 read with
Entry 97 – List I. This contention was not accepted.
In paragraph 27 of this judgment, it was observed
that there is a distinction between the object of
tax, the incidence of tax and the machinery for the
collection of the tax. The distinction is important but
is apt to be confused. Legislative competence is to
[2025] 5 S.C.R. 2403

State of Kerala & Another v.
Asianet Satellite Communications Ltd. & Others

be determined with reference to the object of the levy
and not with reference to its incidence or machinery.
There is a further distinction between the objects of
taxation in our constitutional scheme. The object of
tax may be an article or substance such as a tax
on land and buildings under Entry 49 - List II, or a
tax on animals and boats under Entry 58 - List II or
on a taxable event such as manufacture of goods
under Entry 84 - List I, import or export of goods
under Entry 83 - List I, entry of goods under Entry
52 - List II, or sale of goods under Entry 54 - List
II to name a few. Dealing with Entry 56 – List II it
was held that the subject matter of taxation under
that entry are goods and passengers. The phrase
“carried by road or natural waterways” carves out
the kinds of goods or passenger which or who can
be subject to tax under the entry. After making an
analysis of the entry with reference to the dictum
in Rai Ramakrishna vs. State of Bihar, AIR 1963
SC 1667, it was observed that entry 66 read with
Section 65 (41)(j) and 67 (m-a) in Chapter V of the
Finance Act, 1994 did not seek to levy tax on goods
or passengers but the service of transportation itself
which is a distinct levy from what is envisaged under
Entry 56 – List II. It may be that both the levies are
to be measured on the same basis but that does
not make the levy the same. Placing reference on
Federation of Hotels and Restaurant Association
of India, it was observed that service tax is not a
levy on passengers and goods but on the event of
service in connection with the carriage of goods; it
is not therefore, possible to hold that the Act in pith
and substance is within the States’ exclusive power
under Entry 56 - List II. It was further observed that
the point at which the collection of the tax is to be
made is a question of legislative convenience and
part of the machinery for realisation and recovery
of the tax. The manner of the collection has been
described as “an accident of administration; it is
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Supreme Court Reports

not of the essence of the duty”. It will not change
and does not affect the essential nature of the tax.
Subject to the legislative competence of the taxing
authority, a duty can be imposed at the stage which the
authority finds to be convenient and the most effective,
whatever stage it may be. The Central Government
is therefore legally competent to evolve a suitable
machinery for collection of the service tax subject
to the maintenance of a rational connection between
the tax and the person on whom it is imposed. By
Sections 116 and 117 of the Finance Act, 2000, the tax
is sought to be levied on the recipients of the service.
They cannot claim that they are not connected with
the service since the service is rendered to them. It
was observed that if in substance, the statute is not
referrable to a field given to the State, the Court will
not by any principle of interpretation allow a statute
not covered by it to intrude upon this field.
11.16 It is relevant at this juncture to discuss the judgment of this Court
in Imagic Creative. In that case, the appellant-company was
an advertising agency which used to create original concept
and design advertising material, brochures, annual reports etc.
for its clients. It used to file its returns for service tax under
Finance Act, 1994 and also for sales tax under Karnataka Sales
Tax Act, 1957. There was no express contract between the
appellant and their clients. But their purchase order and invoice
showed three categorical divisions; i) the amount of service
tax on the specific design and production; ii) the amount of
sales tax on the specified item on the first sale; and iii) when
certain items are outsourced, the tax payable on resale of the
said goods in terms of section 6(4) of the Karnataka Sales
Tax Act, 1957. The assessing authority concerned, however,
held that the entire activity undertaken by the appellant therein
was a comprehensive contract and hence the entire sale value
including the creation of concept and design, formed part of
the value of sale and was accordingly liable to tax. The said
order was confirmed by Tribunal as well as High Court.
11.16.1 The question before this Court was, whether, the
charges collect towards the services for the evaluation
[2025] 5 S.C.R. 2405

State of Kerala & Another v.
Asianet Satellite Communications Ltd. & Others

of the proto-type conceptual design (that is creation of
concept), on which service tax has been paid under
the Finance Act, 1994 as amended from time to time
are liable to tax under Karnataka Value Added Tax
Act, 2003. This Court allowed the appeal filed by the
appellant therein. It held that payments of service
tax as also Value Added Tax are mutually exclusive
and therefore, they should be held to be applicable
having regard to their respective parameters. It noted
that a distinction must be borne in mind between an
indivisible contract and a composite contract and
that if in a contract, an element to provide service
is contained, the purport and object for which the
Constitution was amended so as to insert Article
366(29A) must be kept in mind.
11.16.2 It was observed that the appellant in the said case
(Imagic Creative) admittedly was a service provider
and therefore was assessable to a service tax under
the Finance Act, 1994 which is a Parliamentary
statute. That while interpreting a taxing statute under
Article 246 of the Constitution read with Seventh
Schedule thereof, the Court may have to take
recourse to various theories including “aspect theory”,
as was noticed by this Court in Federation of Hotels
and Restaurant Association of India. It was further
observed that where a Parliamentary and State Act
come up for consideration, an endeavour has to be
made to see that provisions of both the Acts are made
applicable. That payment of service tax and also VAT
are mutually exclusive, they should be held to be
applicable having regard to the respective parameters
of service tax and the sales tax as envisaged in
a composite contract as contradistinguished from
an indivisible contract. It may consist of different
elements providing for attracting different nature of
levy. It is, therefore, difficult to hold that in a case of
this nature, sales tax would be payable on the value
of the entire contract, irrespective of the element of
service provided.
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Aspect Theory: Its Extent and Scope in India:
11.17 On a perusal of the significant judgments of this Court which
have used or referred to ‘aspect theory’, two observations can
be made at the outset: first, it is discerned that Courts in India
have not used ‘aspect theory’ in the manner that is applicable
in Canada; and second, there appears to be a lack of clarity
as to its conceptual contours. For e.g., there is no clarity on i)
the instances when ‘aspect theory’ needs to be applied; or ii)
whether ‘aspect theory’ has any relevance in determining the
legislative competence of the Union or a State in enacting a tax
legislation. The judgment in Bharat Sanchar Nigam Limited
opines that aspect theory is ‘merely concerned with legislative
competence’, whereas the judgment in Imagic Creative
expressly suggested that in the matter of interpretation of a
taxing statute, in the context of the Seventh Schedule of the
Constitution, the Court may have to take recourse to various
theories including the “aspect theory” as was noticed by this
Court in Federation of Hotels and Restaurants Association
of India. Amidst this uncertain jurisprudence, several impugned
judgments in the present cases have referred to the ‘aspect
theory’ to uphold the validity of several State legislations
imposing entertainment tax. It therefore becomes necessary
to examine the conceptual contours of this theory.
11.18 To appreciate the extent and the context of the use of ‘aspect
theory’ in India, it would be instructive to reiterate some well-
established principles of interpretation of taxation entries. Some
of the relevant principles are reiterated as follows:
i. In interpreting expressions in the Legislative Lists of the
Seventh Schedule of the Constitution, a wide meaning
should be given to the entries.
ii. In the scheme of the Lists in the Seventh Schedule, there
exists a clear distinction between the general subjects
of legislation and heads of taxation. They are separately
enumerated.
iii. As the fields of taxation are to be found clearly enumerated
in Lists I and II, there can be no overlapping in law.
There may be overlapping in fact, but there can be no
overlapping in law.
[2025] 5 S.C.R. 2407

State of Kerala & Another v.
Asianet Satellite Communications Ltd. & Others

iv. In the first instance, the pith and substance or true nature
and character of the legislation must be determined with
reference to the legislative subject matter and the charging
section;
v. The measure of tax is not a true test of the nature of tax;
vi. The same transaction may involve two or more taxable
events in its different aspects. Merely because the aspects
overlap, such overlapping does not detract from the
distinctiveness of the aspects.
11.19 Having noted few established principles of interpretation of
taxation entries, there are three specifics that must be kept in
mind while discussing this theory. The first is the taxation entries
provided for in List I and List II; the second is the legislation
which seeks to impose a tax on a subject-matter; and the
third is the activity on which tax is sought to be imposed by
the legislative enactment.
11.20 We observe that based on a reading of the cases discussed
earlier and the provisions of the Constitution, especially Chapter
I of Part XI of the Constitution which deals with legislative
relations between the Union and the States and distribution
of legislative powers, that the legislative competence is
determined by applying the doctrine of pith and substance
which governs the relation between the entries provided in
the three Lists of the Seventh Schedule while considering the
vires of a legislation impugned on the basis of the principle of
legislative competence. The aspect theory has no relevance
in determining the constitutionality of any provision on the
ground of legislative competence. Rather, aspect theory
concerns the relation between the legislation which seeks to
impose a tax on a subject-matter and the activity sought to
be taxed. In other words, the constitutional validity of a taxing
statute on the grounds of legislative competence has to be
examined in the context of the doctrine of pith and substance
as envisaged under Article 246 of the Constitution of India to
ascertain whether a particular legislature i.e., Parliament or a
State Legislature, as the case may be, has the competence
to legislate in relation to the particular field of legislation
while interpreting the field of legislation as epitomised in the
2408 [2025] 5 S.C.R.

Supreme Court Reports

respective entries in the three Lists. A broad perspective of the
entries must be envisaged. Once the contours of the entry under
which a legislation is made is ascertained, the next step is to
study the legislation in question in order to ascertain whether
it is covered or falls within the contours of an entry. If it does
fall within the contours of a particular entry in a particular List,
then that particular legislature which has enacted it would
have the legislative competence to enact such a legislation.
If it incidentally touches upon an entry in another List, it does
not render it invalid. That means that so long as a piece of
legislation is in pith and substance coming within an entry in
a particular List, it would be valid as the legislature which has
enacted, has the legislative competence to do so.
11.21 The aspect theory has really no role to play as regards
determining legislative competence of a particular legislation,
since the Constitution does not envisage such a test. However,
in the Indian context, the ‘aspect theory’ is relevant to determine
the applicability of a taxing statute on the activity sought to
be taxed i.e., whether the statute covers a transaction/activity
which falls within a specific taxation entry either in List I or in
List II. An activity may have multiple aspects on which different
legislatures can impose a tax falling within its legislative
competence. In such a situation, the courts would save the tax
from a challenge on the basis of the aspect theory by discerning
which aspect of the activity falls within the subject matter of
tax under a legislation relatable to a particular entry of a List
in the Seventh Schedule. Such a determination of the aspects
which are present in an activity is a factual inquiry. Thus, an
activity could be taxed by two different legislatures on the
basis of the entries in the respective Lists without there being
a clash and within their legislative competence. However, the
aspect of the activity which is being taxed must be relatable to
the legislation under a specific entry of a particular List so as
to be within legislative competence of a particular legislature.
11.22 This is in contrast to the applicability of this theory in Canada,
where this theory is used therein to determine legislative
competence of a federal or provincial legislature to enact a
particular law. The reason why we observe that the aspect
theory has no relevance in determining the constitutional
[2025] 5 S.C.R. 2409

State of Kerala & Another v.
Asianet Satellite Communications Ltd. & Others

validity of a legislation is that such a ground is not prescribed
anywhere in the Constitution. This Court in Mc Dowell held
that the power of the Parliament or, for that matter, the State
legislature, to legislate can be struck down by Courts on two
grounds and two grounds alone, viz., (i) lack of legislative
competence; and (ii) violation of any of the fundamental
rights guaranteed in Part-III of the Constitution or any other
constitutional provision. This Court was categorical in noting
that there was no third ground. Similarly, in Anjum Kadari vs.
Union of India, 2024 INSC 831, this Court had to decide
whether a statute can be struck down for violation of basic
structure of the Constitution, and based on a survey of prior
judgments, held as follows:
“55. From the above discussion, it can be concluded
that a statute can be struck down only for the
violation of Part III or any other provision of
the Constitution or for being without legislative
competence. The constitutional validity of a
statute cannot be challenged for the violation of
the basic structure of the Constitution. The reason
is that concepts such as democracy, federalism,
and secularism are undefined concepts. Allowing
courts to strike down legislation for violation of such
concepts will introduce an element of uncertainty in
our constitutional adjudication. Recently, this Court
has accepted that a challenge to the constitutional
validity of a statute for violation of the basic structure
is a technical aspect because the infraction has to be
traced to the express provisions of the Constitution.
Hence, in a challenge to the validity of a statute
for violation of the principle of secularism, it must
be shown that the statute violates provisions of the
Constitution pertaining to secularism.”
(emphasis supplied)

11.23 We have already discussed earlier in this judgment that in
case of an apparent overlapping between two entries, the
doctrine of pith and substance is applied to find out the true
character of the enactment and the entry within which it would
2410 [2025] 5 S.C.R.

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fall. This doctrine is not a judicial innovation, but is derived
from the phrase ‘subject to’ and ‘with respect to’ in Article
246 of the Constitution of India. However, such a derivation
cannot be made vis-à-vis ‘aspect theory’ from any provision of
the Constitution of India. Therefore, as far as determining the
constitutional validity of a taxing statute is concerned, when
it is challenged on the ground of legislative competence, it is
the doctrine of pith and substance that would be applicable,
rather than the aspect theory.
11.24 Thus, in our view, the aspect theory, in the Indian context,
comes into play at the level of determining the applicability of
a taxing statute on the activity sought to be taxed. Invariably,
an activity conducted by an assessee which is sought to
be taxed by a legislation, may have different aspects. The
aspect theory is used to determine if, in fact, there are
different aspects within the activity sought to be taxed and
whether, the taxable event which forms the basis of the levy
in a legislative enactment corresponds to any aspect in the
activity sought to be taxed.
11.25 It would be illustrative to consider the facts of the case in
Bharat Sanchar Nigam Limited to explain the application of
this theory. In that case, the principal question to be decided
was the nature of the transaction by which mobile phone
connections were enjoyed. On the one hand, the petitioners
therein contented that they were merely licensees under
Section 4 of the Telegraph Act, 1885 and that they provided
‘telecommunication services’ as provided under section 2(k)
of the Telecom Regulatory Authority of India Act, 1997. That
service tax was imposed on them under the Finance Act, 1994
on the basis of the tariff realised from the subscribers. They
further contended that in providing such service there were
in fact no ‘sales’ effected by the service providers and that
the SIM card was merely an identification device for granting
access and was a means to access services. On the other
hand, the States contented that the transaction was a deemed
sale under Article 366 (29A)(d) of the Constitution read with
the charging sections in their various sales tax enactments
and therefore they were competent to levy sales tax on the
transactions.
[2025] 5 S.C.R. 2411

State of Kerala & Another v.
Asianet Satellite Communications Ltd. & Others

11.26 This Court, inter alia, clarified that electromagnetic waves
or radio frequencies are not goods, and therefore, there
cannot be a ‘sale’ of such waves or frequencies. It held that
a telephone service is nothing but a service. That there was
no sale element apart from the obvious one relating to the
handset, if any. However, as regards SIM card, it observed
that “what a SIM card represents is ultimately a question
of fact as has been correctly submitted by the States”. It
held that if the parties intended that the SIM card would be
a separate object of sale, only then it would be open to the
Sales Tax Authorities to levy sales tax thereon. Therefore, as
far as SIM cards were concerned, the Court left the issue for
determination by the Assessing Authorities.
11.27 If we proceed to understand the above facts from the
perspective of aspect theory enunciated above, it would
be clear that the question in essence in Bharat Sanchar
Nigam Limited was whether there was an aspect of sale
in the activity of the petitioners therein and consequently,
whether the States could validly impose sales tax thereon.
This is nothing but a question of the applicability of the
various state enactments on the activity in question, rather
than a question of the validity of the enactment. The Court
ultimately held that electromagnetic waves were not ‘goods’.
However, it left the issue of SIM cards to the determination
of Assessing Authorities. This meant that, on a case-to-case
basis, the Assessing Authorities had to determine whether
there was an aspect of sale in the activity they sought to
bring to tax, by examining whether the parties intended that
the SIM card was a separate object of sale. In other words,
the Assessing Authorities had to make a factual enquiry as
to whether there was an aspect of sale in the activity they
sought to tax under the relevant sales tax legislation. If there
was an aspect of sale, then sales tax was leviable but if it
was purely service then sales tax could not be levied. But
what would be the position if an activity has an aspect of
sale as well as service? Applying the said analogy to the
instant case, the question is, what is the consequence if an
activity has an entertainment aspect as well as a service
aspect/element.
2412 [2025] 5 S.C.R.

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Application of Aspect Theory to the Case at hand:
11.28 To determine whether there are different aspects to the
activity conducted by the assessees herein which is sought
to be taxed by the Union under the Finance Act, 1994 (as
amended in different years) as a service tax and by the States
under different State legislations as entertainment tax, it is
first necessary to examine the taxable events which form the
basis of levy of the legislative enactments impugned herein.
Thereafter, the modus operandi of the activity undertaken by
the assessees herein needs to be understood. Thereafter, a
factual determination as to, whether, the taxable event which
forms the basis of the levy under the Central and the State
enactments corresponds to different aspects of the activity
under consideration must be undertaken.
12. Under the Finance Act, 1994 as amended from time to time, the
expression “broadcasting” is defined in Section 65(15) in terms of
clause (c) of Section 2 of the Prasar Bharti Act, 1990 which defines
it to mean the dissemination of any form of communication through
space or through cables intended to be received by the general
public either directly or indirectly through medium of relay stations
and all its grammatical expressions and cognate expressions are to
be construed accordingly. Under Section 65 (72) (zk) “broadcasting
agency” is a service provider and the service rendered by a such
an entity is a taxable service. The expression ‘taxable service’ is
defined in Section 65(105)(zk) to mean any service provided to a
client, by a broadcasting agency or an organization in relation to
broadcasting, in any manner.
12.1 Section 66 (5) of the Finance Act, 1994 as amended from time
to time is the charging section and service tax at the rate of
5% of the value of the taxable service (broadcasting service
in the instant case) as defined above is chargeable to tax.
Thus, the tax is 5% of the value of taxable services levied on
the service provider rendering broadcasting services.
12.2 The expression “broadcasting” has been expanded from
time to time to include not only dissemination of any form of
communication but also programme selection, scheduling or
presentation of sound or visual matter on a radio or a television
channel that is intended for public listening or viewing, as
[2025] 5 S.C.R. 2413

State of Kerala & Another v.
Asianet Satellite Communications Ltd. & Others

the case may be, irrespective of where the location of the
broadcasting agency is. In the year 2002, Section 65 (90)
(zk) was amended whereby the “broadcasting agency” could
provide service by its representative in India or any agent
appointed in India or by any person appointed to act on his
behalf in any manner. This is irrespective of whether encryption
of the signals of beaming thereof through satellite might have
taken place outside India or not.
12.3 The definition of “broadcasting” read with “broadcasting agency
or organization” was amended in the year 2003, wherein it
said that a “broadcasting agency” or organization means
any agency or organization engaged in providing service
in relation to broadcasting in any manner irrespective of its
location and includes inter alia a representative in India or
any agent appointed in India engaged in the activity of selling
of time slots for broadcasting of any programme or obtaining
sponsorships for programme or collecting the broadcasting
charges on behalf of the said agency or organisation.
12.4 In the year 2005, the Finance Act, 1994 was again amended
to define “broadcasting” to include a broadcasting agency
or an organization collecting the broadcasting charges for
transmission of electromagnetic waves through space or
through cables, direct to home signals or by any other means
to cable operator including multisystem operator or any other
person on behalf of the said agency or an organization through
any representative or agent appointed in India. Thus, service tax
was levied on direct to home (DTH) broadcasting services.

Modus Operandi of the Assessees and their aspects:
13. As regards the business of the assessees herein, they are DTH
broadcasting service providers licensed by the Central Government
in terms of the provisions of Section 4 of the Indian Telegraph Act,
1885 and Section 5 of the Indian Wireless Telegraphy Act, 1933.
Their modus operandi is that they set up a hub which enables them
to downlink signals from the satellites of various broadcasters of TV
channels (Star, BBC, etc.), then they uplink those signals to their own
Ku Band (such as INSAT 4CR satellite) designated transponders for
transmission of the signals in Ku band. These signals are received by
2414 [2025] 5 S.C.R.

Supreme Court Reports

the dish antennae which are installed at the subscribers’ premises.
Since these signals are in encrypted form they are decrypted by the
Set-Top Boxes and the viewing cards inside these boxes enable
subscribers to view the various TV channels on their TV sets.
Invariably, the set-top boxes are installed without any consideration
and remain the property of the assessees.
13.1 If we closely examine the modus operandi of the activity
undertaken by the assessees, it would be evident that their
activity involves at least two aspects: the first, is the act of
relaying the signals from the satellites of various broadcasters
of TV channels, and the second, is the object of such relaying
of the signals, which is the effect of the content delivered to
the subscriber. This effect is nothing but the entertainment of
the subscribers. In other words, the activity of the assessees
involves at least two aspects which correspond to the subject-
matter of the levy under the Central Finance Act, 1994, namely,
broadcasting service and the respective State enactments as
providing entertainment to the subscribers.
13.2 It is the contention of the assessees that their activity merely
involves the relaying of the signals and they are in no way
related to the content that these signals carry and are not
concerned with providing entertainment. However, as held in
Purvi Communication, no entertainment can be presented
to the viewers unless the broadcaster transmits the signals
for instantaneous presentation of any performance, film or
any programme on their T.V. screen. The second aspect
here concerns not the kind of content of the signals, rather
it is the effect of the decryption of the signals by the Set-Top
Boxes and the viewing cards inside these boxes provided
by the assessees. Without the apparatus provided for by the
assessees to decrypt the signals, the subscriber would not be
able to watch the content that is transmitted, the content being
for the purpose of entertainment. In other words, the State
enactments are concerned about broadcasting for the purpose
of entertainment. It makes an assumption that whatever be the
content, the very act of presentation of any performance, film
or any programme on the T.V. screen leads to entertainment
which is reckoned to be a luxury. Therefore, the assessees
as DTH operators have direct and proximate nexus with Entry
[2025] 5 S.C.R. 2415

State of Kerala & Another v.
Asianet Satellite Communications Ltd. & Others

62 – List II. The entertainment provided by them through their
modus operandi is a luxury within the meaning of that entry.
13.3 Although, the case at hand is different from Purvi
Communication in two respects; however, in our view,
these differences are immaterial and only support the view
that the observations in Purvi Communication are squarely
applicable to the modus operandi of the assessees and the
second aspect herein. Firstly, in the present case, the mode
of transmission is through DTH broadcasting services and
not transmission via cable. Secondly, the present is a case
of direct transmission by the assessees to the customers
and not through a hierarchical network of cable operators. In
our view, both these differences do not detract from the view
of this Court in Purvi Communication that the activity of
providing and receiving broadcast signals and then relaying
them ahead is ‘no doubt, an act of offering entertainment to
the subscribers and/or viewers’ and, consequently, the State
legislatures are competent to enact laws under Entry 62 –
List II imposing taxes on entertainment. The first difference
noted above merely speaks to the difference in medium of
transmission and does not deviate from the essential nature
of the activity, as discussed in Purvi Communication. The
second differentiation, again, only makes clearer the proximity
of the assessees herein with the act of entertainment. In
some manner, it is fair to suggest that the defence of lack of
remoteness to the act of entertainment taken by the cable-
operators in Purvi Communication is, in fact, not available to
the assessees herein and therefore they are not on a better
footing, at least on this limited question.
13.4 Furthermore, with reference to our semantical survey of
‘entertainments’ above, the assessees are clearly engaged in
‘work in connection with, or for the purposes of, any cinema,
exhibition or entertainment.’ Juxtaposing our view with the
observations of this Court in Purvi Communication, we also
find that the activity of the assessees is an ‘action of providing
or being provided with amusement or enjoyment’.
13.5 The first aspect discussed above correlates with the imposing of
service tax by the Parliament, and the second aspect correlates
2416 [2025] 5 S.C.R.

Supreme Court Reports

with the imposition of entertainment tax by the States, through
their respective enactments. Thus, the activity of entertainment
falls within the scope and ambit of Entry 62 – List II as being
a specie of luxury. The service of broadcasting rendered falls
under Entry 97-List I. Therefore, both the taxes, one, by the State
Legislature and the other, by the Parliament are leviable on the
activity of the assessees herein. This is because by rendering
the service of broadcasting, the assesses are entertaining the
subscribers within the meaning of Entry 62-List II. There may
be an overlapping, in fact, inasmuch as different aspects of the
same activity is being taxed under two different legislations by
two different legislatures. But, there is no overlapping in law.
This is because the activity of broadcasting is a service and
liable to service tax imposed by the Parliament (Entry 97 – List
I) and the activity of entertainment is a subject falling under
Entry 62-List II and therefore, the assessees herein are liable
to pay entertainment tax as well. Hence, the State Legislatures
as well as the Parliament, both have the legislative competence
to levy entertainment tax as well as service tax respectively on
the activity carried out by the assessees herein.

Allahabad High Court’s Ruling on retrospective operation of
the Amendment:
14. Another question which arises in relation to the Impugned Judgment
dated 27.07.2012 of the Allahabad High Court is whether notices
issued before the Amendments of 2009 came in force could demand
entertainment tax for the period before express provisions in respect of
DTH services were inserted in the U.P. Entertainment and Betting Tax
Act, 1979 (‘the 1979 Act’). In other words, whether the amendments
were merely clarificatory in nature and entertainment tax on DTH
services could be levied retrospectively? A brief legislative history
of the 1979 Act is relevant for our consideration:
i. The Act was promulgated in 1979. Sub-clause (a) to Section
2 defined ‘admission to entertainment’ to include admission
to any place in which entertainment is held. Sub-clause (g) to
Section 2 defined ‘entertainment’. Section 2(l) defined ‘payment
for admission’. On a conjoint reading, Section 2(g) read with
Section 2(a) defined the scope of entertainment chargeable to
tax under Section 3 of the Act.
[2025] 5 S.C.R. 2417

State of Kerala & Another v.
Asianet Satellite Communications Ltd. & Others

ii. In 1995, to bring cable services within the scope of the Act,
the State Legislature vide U.P. Act No. 28 of 1995 amended
the 1979 Act by defining ‘cable services’ and ‘cable television
network’ and inserting Section 4C, a separate charging section
for levying entertainment tax on cable services. Sub-section (2)
of Section 4C provided that the tax payable under this section
shall be paid, collected and realized in such manner as may be
prescribed. Therefore, the collection machinery was prescribed
within the section itself.
iii. In 2001, the State Legislature by way of U.P. Act No. 15 of
2001 amended the 1979 Act again by inserting the definition
of ‘cable operator’.
iv. Pertinently, the U.P. Ordinance No. 4. Of 2009 dated 16.06.2009
amended several provisions of the 1979 Act to provide for
imposition of entertainment tax on DTH services. Sub-clause (a)
was amended to broaden ‘admission to entertainment’ to include
entertainment provided by means of cable television network
or DTH. After sub-clause (f) to Section 2, sub-clause (f-1) was
inserted defining ‘Direct-to-Home service’ to effectively expand
the scope of the charging section to include direct to home
services. The definition of ‘payment for admission’ in Section
2(l) was expanded by inserting sub-clause (vi) and sub-clause
(vii) which included ‘contribution or subscription or installation
and connection charges or any other charges’ collected for
television exhibition though cable television network or for the
purpose of DTH service. The State Legislature passed the bill
by which the Ordinance was promulgated into the Act which
was notified on 27th August 2009 and came into force w.e.f. on
16th June 2009.
v. On September 4th, 2009, a Notification No. 1672/XI-Ka.Ni.-6-
2009-M.(92)-2009 was issued under the Act notifying the rates
of entertainment tax. For DTH Services, Item No. 5 provided a
levy of 25 per cent out of each aggregate payment.
14.1 We may note that we are concerned only with the period prior
to 16.06.2009 i.e. the day prior to coming into force of the
express provisions for DTH services inserted in the 1979 Act.
14.2 The impugned judgment took note of the view of Patna High
Court in Sky Vision T.V vs. State of Bihar, 1995 (2) BJLR
2418 [2025] 5 S.C.R.

Supreme Court Reports

845 which had held that the imposition of entertainment tax on
cable operators was liable to be set aside in the absence of
specific charging section and relevant specific entry for cable
services. Impugned Judgment also noted the judgment of the
Uttarakhand High Court in Dish TV India Ltd. vs. State of
Uttarakhand, W.P. (M/S) No. 2562/2007 wherein the learned
Single Judge allowed a batch of writ petitions preferred by
service providers by holding that in absence of any specific
provision in the 1979 Act – the State of Uttarakhand had
adopted the 1979 Act - no entertainment tax can be levied
on DTH services. The Uttarakhand High Court also negatived
the argument that merely because express provisions to tax
cable services were present on the statute book they could be
broadly read to tax DTH Services. The learned Single Judge
had, despite holding in favour of the service providers, observed
that it was open to the legislature to introduce appropriate
amendments. Aggrieved, an appeal was preferred by the
State of Uttarakhand before the Division Bench in, inter alia,
Special Appeal No. 21/2009 which was also dismissed on the
ground that DTH services were not covered under the Act.
Aggrieved by the decision of the Division Bench, the State
had preferred SLP(C) No. 14605/2009 which was dismissed
in limine by this Court vide order dated 16.07.2009.
14.3 On the other hand, the Impugned Judgment cited with approval
the judgment of Madhya Pradesh High Court at Jabalpur in
Tata Sky Ltd. vs. State of M.P., W.P. No.10148/2009 which
had upheld the levy of entertainment tax on DTH services
even for the period when no specific provision was present in
the Madhya Pradesh Entertainments Duty and Advertisements
Tax Act, 1936 (‘M.P. 1936 Act’) for levy of entertainment tax on
DTH services. Some sections of the M.P. 1936 Act are relevant
to extract herein. Section 2(b) defined “entertainment” as:
“’Entertainment’ includes any exhibition, performance,
amusement, game or sport to which persons are
admitted for payment.”
14.4 Section 2(d) defined “payment for admission”. At the time of
consideration by the Madhya Pradesh High Court, Section
2(d) read as under :
[2025] 5 S.C.R. 2419

State of Kerala & Another v.
Asianet Satellite Communications Ltd. & Others

“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
entertainment ;
(iii) 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, 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
whatever name called, for providing access to any
entertainment, whether for a specific period or on a
continuous basis;
(v) any payment, by whatever name called for any
purpose 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;
(vi) any payment, made by a person, who having been
admitted to one part of the place of entertainment
is subsequently admitted to another part thereof, for
admission to which a payment involving tax or more
tax is required;
Explanation I.—Any subscription raised or donation
collected in connection with an entertainment in any
form shall be deemed to be payment for admission.
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.”
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Supreme Court Reports

14.5 Section 4 provided the machinery for effectuating the charge.
Pertinent for our interest is that Section 3-B, which was inserted
in the M.P. 1936 Act with effect from 01.04.2000, dealt with
cable operators. Sub-section (1) of Section 3-B dealt with
entertainment duty payable by cable operator and it made a
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, liable to pay
duty at the rate of twenty rupees per month per subscriber in
urban and cantonment areas.
14.6 The High Court, after surveying observations of this Court on
the scope of ‘entertainment’, held that even in the absence of a
specific section the inclusive definition of “entertainment” under
section 2(b) would subsume the “entertainments” provided
by DTH services and tax on DTH services can, therefore, be
realised from the service provider the said expression in any
case used in a plural sense under the Constitution.
14.7 Significantly, the aforesaid judgment of the Madhya Pradesh
High Court was overruled by this Court in Tata Sky Ltd. vs.
State of M.P., (2013) 4 SCC 656 (“Tata Sky v. M.P.”) holding
that DTH services are not covered by the provisions of Section
3 read with Sections 2(a), 2(b) and 2(d) of the M.P. 1936 Act.
It was noted that the history of legislative amendments showed
that the M.P. Act of 1936 was inadequate to bring shows by
video cassette recorder or video cassette and player and
cable T.V. operations within the tax net, and hence specific
sections were brought in. It was also noted by this Court that
the collection machinery for levy of entertainment tax on cable
TV operations was in-built and provided within the respective
provisions of Section 3-B and lay not within Section 4, which
provided the general collection machinery. Holding that as
the M.P. Act of 1936 was concerned only with place-related
entertainment, DTH services could not be brought within the
tax net.
14.8 Coming back to the impugned judgment, it was argued before
the Allahabad High Court that DTH services were not covered
under the U.P. Entertainment and Betting Tax Act, 1979 prior
to the 2009 amendments, and this was apparent from the fact
[2025] 5 S.C.R. 2421

State of Kerala & Another v.
Asianet Satellite Communications Ltd. & Others

that the State had to bring in specific amendments to levy
entertainment tax on DTH services as well as to prescribe
a charging machinery for such a levy, which was earlier
absent. Additionally, it was argued that there is no taxation
by implication and therefore the express provisions for levy of
entertainment tax on cable operators in the 1979 Act cannot
be given a reading so broad to also include DTH services.
Summarily, it was argued that substantial amendments were
brought in the Act which cannot be given retrospective effect.
However, this argument was negatived by the High Court by
observing that inclusion of the words ‘Direct-to-Home service’
in Section 2(f-1) and Section 2(l)(vi) and (vii) was only by way
of clarification to include DTH services.
14.9 According to the High Court, Section 3 i.e. the charging section
made it clear that the tax is on entertainment and when viewed
broadly, the emphasis of the Act was on entertainment and
not the means through which such entertainment was being
provided to the subscriber. Furthermore, the High Court did
not accept the contention of the writ petitioners therein that
there is a difference between cable services and DTH services.
Reliance was placed on the judgment of this Court in Purvi
Communication to observe that the tax is not on the vehicle
for transporting the contents and the method, but is on the
entertainment itself. Noting that as modern technologies
develop ‘it will not be necessary for the Act to be amended
again to impose entertainment tax on such entertainments’
as the principal activity will continue to remain entertainment
and not the method by which the entertainment is provided,
the High Court held that entertainment tax on DTH service is
liable to be paid both for pre-amended period as well as after
the amendments discussed above.
14.10 Useful to note is that both the learned Single Judge and the
Division Bench of the Uttarakhand High Court had concluded
that the State could not treat DTH service providers on par
with cable operators for levy of entertainment tax due to the
stark technological differences between the two. It stands
to reason that these technological differences also manifest
into the specificity and operations of these services. Similar
2422 [2025] 5 S.C.R.

Supreme Court Reports

provision for taxing cable operations was also present in the
M.P. Act of 1936.
14.11 As the Impugned Judgment was pronounced on 27.07.2012
and the judgment of this Court was pronounced on 16.04.2013,
the High Court did not have the benefit of this Court’s opinion
in Tata Sky v. M.P. Even otherwise, in our view, there needs
to be a specific inclusion of DTH services within the ambit of
entertainment in the charging provision of the relevant taxing
statute. In the absence of specificity, the lacuna of a missing
taxable event persists insofar as bringing DTH services within
the taxing net is concerned. It is trite law that no vagueness
can be permitted in taxing statutes neither can a tax be levied
by implication. Precisely this lacuna was sought to be filled by
way of substantial amendments brought in by Amending Act
of 2009. Furthermore, when the charging Section 4C levied
entertainment tax on a ‘cable television network’ providing cable
service, the statutory definitions of ‘cable service; and ‘cable
television network’ could not be so broadly read to include
DTH services. Inserted in 1995, Section 2(ee), in essence,
defined cable service to mean the ‘transmission by cables of
programmes’ and Section 2(eee), in essence, defined ‘cable
television network’ to mean a system designed to provide
‘cable service for reception by multiple subscribers;’. In our
view, to countenance reading in DTH service in the aforesaid
carefully incised definitions would be to militate against the
literal meaning of words. We need not reiterate that the activity
of the DTH service does not involve transmission by cables
of programmes. For these reasons, we are of the view that
the State of U.P. cannot take strength from the unamended
1979 Act to levy entertainment tax for any period before the
amendments came in force. Consequently, the conclusion
of the Allahabad High Court that the entertainment tax on
DTH service is thus liable to be paid both for pre-amended
period as well as after the amendment is not correct. The
amendments made cannot be construed to be a clarification
to include the DTH service as a new technology and method
within the purview of the Act. Hence, in the above context and
to the limited extent, the appeal filed against the judgment of
the Allahabad High Court is allowed.
[2025] 5 S.C.R. 2423

State of Kerala & Another v.
Asianet Satellite Communications Ltd. & Others

State of Kerala vs. Asianet:
15. By the impugned order dated 28.06.2012 passed in W.P.(C) No.
33966/2006 (R), the Kerala High Court, while hearing the matter after
it being remanded by this Court, held that the impugned provisions
of The Kerala Tax on Luxuries Act, 1976(for short, ‘the Kerala Act
of 1976’) which authorized the levy and collection of luxury tax on
cable TV operators only with connections of 7500 or above was
discriminatory and hence the impugned provision was struck down
for being unconstitutional and invalid.
15.1 The proceedings in the first round of the same writ petition
are germane to the impugned judgment. By judgment
dated 27.08.2009 the High Court had initially dismissed the
writ petition filed by Cable TV Operators challenging the
constitutional validity of levy of luxury tax with effect from
01.04.2006. However, this Court by order dated 03.02.2011
in C.A. 1433-34/2011 had remanded the matter back to the
Kerala High Court to consider the additional grounds under
Article 14 raised by the Cable TV Operators.
15.2 While hearing the matter upon remand, the impugned judgment
dated 28.06.2012 was passed. Pertinent to note is that by
way of amendment dated 11.11.2011 all cable operators
were deleted from the purview of the Kerala Act of 1976
w.e.f. 01.04.2011. Hence, the impugned judgment was only
concerned with recovery of arrears of luxury tax for the period
2006-2010.
15.3 By way of the Kerala Finance Act, 2006, the State legislature
amended the Kerala Act of 1976 and introduced luxury tax on
cable TV operators @ Rs.5/- per connection to be collected
and remitted from every subscriber of cable TV. Initially, the
amendment made with effect from 01.04.2006 was challenged
on several grounds: firstly, the service provided by the cable
TV operators did not amount to “luxury” within the meaning
of Entry 62 - List II as well as the definition of “luxury”
contained in the Act. Secondly, the impugned provisions were
discriminatory and violative of Article 14 of the Constitution
in as much Direct to-Home operators providing the same
service to consumers were not subjected to luxury tax. As the
2424 [2025] 5 S.C.R.

Supreme Court Reports

Kerala High Court dismissed the writ petition, the cable TV
operators challenged the decision before this Court. During
the pendency of the appeals in this Court, the Government
of Kerala retrospectively amended the Kerala Act of 1976
by exempting cable TV operators who had less than 7500
connections w.e.f. 01.07.2006. As the writ petitioner therein
came within the taxing net, this retrospective amendment
was used as a new ground before this Court along with the
argument that the Kerala High Court had not considered the
challenge on the anvil of Article 14 of the Constitution with
reference to Direct-to-Home operators who were also providing
the same service.
15.4 In the second round of litigation before the High Court, the first
contention raised by the cable TV operators was that Section
2(ee) of the Kerala Act of 1976 defines “luxury”, however,
cable TV connection cannot be considered a “luxury” as it
is subscribed by a large number of people in the State and
monthly contribution is only around Rs.200/-. This argument
was rejected by the High Court relying on the decision of this
Court in Purvi Communication. It noted that even though
“entertainment” as such is not specifically defined under the
Kerala Act of 1976 and only the expression “luxury” is, the
High Court noticed that Entry 62 - List II specifically covers
“entertainments” separately and therefore the State can levy
tax on “entertainments” as tax on “luxury” under the said entry
of the Constitution.
15.5 Furthermore, relying on Bharat Sanchar Nigam Limited, the
High Court held that the same transaction may attract liability as
service tax as well as liability for tax under any other permissible
in law. Therefore, the High Court held that the service rendered
by cable TV operators involved “entertainment” to subscribers
and attracted luxury tax as well as service tax.
15.6 However, the third contention raising an Article 14 challenge
by the cable TV operators was accepted by the High Court.
The High Court held that by way of the 2010 Amendment
retrospectively exempting all cable TV operators who
have less than 7500 connections from tax liability was an
unreasonable classification made as the cable TV operators
[2025] 5 S.C.R. 2425

State of Kerala & Another v.
Asianet Satellite Communications Ltd. & Others

who have above 7500 connections are discriminated by
making them solely liable to pay luxury tax. After noting
that the amendment puts more than 90% of the operators
outside the taxing limit, it was observed that the classification
defeats the intent of the legislation as the incidence of tax
is intended to be on the subscribers for the entertainment
they enjoy, and the cable TV operator is only a collecting
agency by virtue of the charge on them under the Act. That
the subscriber is agnostic to whether the facility enjoyed by
him is provided by a cable TV operator serving above or
below 7500 connections and that such a distinction enables
the subscriber to avoid tax liability by joining an operator with
less than 7500 connections. Finally, the High Court noted
that the Amendment of 2011 had completely deleted cable
TV operators from the purview of the Kerala Act of 1976 and
that the matter only served the purpose of collecting arrears
from the cable TV operators with connections above 7500
for the period from 2006 to 2010.
15.7 Although the High Court had already accepted the Article 14
argument, the Cable TV Operators requested the High Court
to consider the additional ground of discrimination and violation
of Article 14 with reference to the DTH operators, who provide
the same service as cable TV operators to the subscribers. The
High Court while rejecting this contention held the argument
is academic in nature because during 2006 when luxury
tax was introduced on cable TV operators, Direct-to-Home
connections (DTH) were not in vogue and as and when the
DTH operations became extensive, the Government introduced
luxury tax on DTH operators. It was observed that the ground
of discrimination cannot be considered hypothetically or
theoretically and it has application only when the parties in
relation to whose operations discrimination is alleged also are
in actual and effective business.
15.8 Therefore, in sum and substance, the provisions of the state
Act authorizing levy and collection on Cable TV Operators with
connections of 7500 or above was declared as unconstitutional
for being discriminatory and violative of Article 14 of the
Constitution.
2426 [2025] 5 S.C.R.

Supreme Court Reports

Submissions:
15.9 On behalf of the State of Kerala, Sri Shishodia, learned senior
counsel, has argued that the State has a wide discretion in
selecting the persons or objects it will tax, and that a statute
is not open to attack on the ground that it taxes some persons
or objects and not others, vide East India Tobacco Company
vs. State of Andhra Pradesh, (1963) 1 SCR 404 (“East India
Tobacco Company”).

Judgments relied upon by State of Kerala:
15.10 A few of the judgments relied upon by Sri Shishodia, learned
Senior Counsel appearing for the State of Kerala, in support
of his contentions, are discussed as follows:
15.10.1 As regards the applicability of tests of discrimination
in a taxing law, this Court in East India Tobacco
Company held that while taxation laws must also
pass the test of Article 14, in deciding whether a
taxation law is discriminatory or not, it is necessary
to bear in mind that the State has a wide discretion
in selecting the persons or objects it will tax, and that
a statute is not open to attack on the ground that it
taxes some persons or objects and not others. This
Court noted that it is only when the law operates
unequally within a range of its selection and such
inequality cannot be justified on the basis of any
valid classification, that the law would be violative
of Article 14 of the Constitution.
15.10.2 Further, this Court in P.M. Ashwathanarayana
Setty vs. State of Karnataka, (1989) Supp. (1)
SCC 696 (“P.M. Ashwathanarayana”) and in R.K.
Garg vs. Union of India, (1981) 4 SCC 675 noted
that the State enjoys the widest latitude where
measures of economic regulation are concerned, and
that courts give a larger discretion to the Legislature
when it comes to matters of the latter’s preferences
of economic and social policies. As further held in
Federation of Hotel & Restaurant Association of
India, the test of the vice of discrimination in a taxing
law are, therefore, less rigorous.
[2025] 5 S.C.R. 2427

State of Kerala & Another v.
Asianet Satellite Communications Ltd. & Others

15.11 On the question of the constitutionality of classification on
the basis of criterion such as scale of operations, profits of
businesses, etc., the following judgments were cited:
(i) In Kodar vs. State of Kerala, (1974) 4 SCC 422, this
Court rejected a contention that the impugned provision
therein imposing different rates of tax upon different
dealers depending upon their turnover which in effect
meant that the rate of tax on the sale of goods would vary
with the volume of the turnover of a dealer was violative
of Article 14 of the Constitution. This Court held that a
legislative classification making the burden of the tax
heavier in proportion to the increase in turnover would
be reasonable. As regards the reasoning for the same,
this Court noted,
“A classification, depending upon the quantum
of the turnover for the purpose of exemption
from tax has been upheld in several decided
cases. By parity of reasoning, it can be said
that a legislative classification making the
burden of the tax heavier in proportion to the
increase in turnover would be reasonable.
The basis is that just as in taxes upon income
or upon transfers at death, so also in imposts
upon business, the little man, by reason of
inferior capacity to pay, should bear a lighter
load of taxes, relatively as well as absolutely,
than is borne by the big one. The flat rate is
thought to be less efficient than the graded one
as an instrument of social justice. The large
dealer occupies a position of economic
superiority by reason of his greater volume
of his business.”
(emphasis supplied)

(ii) Similarly, in Kerala Hotel and Restaurant Association vs.
State of Kerala, (1990) 2 SCC 502, the question before
this Court was, whether, the taxing of only the sale of
costlier cooked food in posh eating houses (determined
2428 [2025] 5 S.C.R.

Supreme Court Reports

on the basis of their annual turnover or as determined
by Tourism Department of Government of India) while
exempting cooked food sold in modest eating houses
at lesser prices violates Article 14 of the Constitution.
This Court held that the classification so made cannot
be termed as arbitrary, as it was within the limits up to
which the legislature is given a free hand for making
classification in a taxing statute.
(iii) Further, the question in Ganga Sugar Corporation
Ltd. vs. State of Uttar Pradesh, (1980) 1 SCC 223
was, inter alia, whether the differential purchase tax
imposed by weight, and not price, of sugarcane bought
by factories and units, at one rupee 25 paise per quintal
and 50 paise per quintal respectively, was discriminatory.
This Court held that:
“A classification based on scale of operations,
product manufactured and other substantial
differences bearing on production capacity,
profits of business and ability to pay tax, is
constitutionally valid and the feeble contention
counsel put forward that there is discrimination
between owners of factories and units must fail
without much argument.”
15.12 That, this Court has held that it is for the State to decide
what economic and social policy it should pursue and what
factors advance those social and economic policies, vide P.M.
Ashwathanarayana.
15.13 Reliance was also placed on the decision of this Court in
Federation of Hotel & Restaurant Association of India
wherein this Court, in the facts therein, held that the basis of
classification in enactment cannot be said to be arbitrary or
unintelligible, nor as being without a rational nexus with the
object of law. In that case, a hotel where a unit of residential
accommodation was priced at over Rs 400 per day per
individual was classified as luxury in the legislative wisdom
by virtue of the economic superiority of those who might enjoy
its custom, comforts and services.
[2025] 5 S.C.R. 2429

State of Kerala & Another v.
Asianet Satellite Communications Ltd. & Others

15.14 It was also contended that the High Court erred in relying
on statistics regarding the cable TV operators and their
subscribers to hold that more than 90% of the operators being
outside the scope of taxation detracts from the intent of the
legislation. It was contended that such an exercise is one
only within the executive domain. In the same vein, it was
also argued that economic legislation is empirical in nature
as well as based on experimentation and therefore, ordinarily
must allow for greater latitude to be given to the legislature.
Reliance was also placed on TwyFord Tea Co. vs. State
of Kerala, 1970 (1) SCC 189 to contend that in matters of
classification for taxation the burden of proof is on the person
alleging discrimination and such burden is heavier when a
taxing statute is challenged.
15.15 In our view, the facts of this case, C.A. No 9301/2013, and
the issues raised herein stand on a different footing from
other cases in this batch of appeals, which is concerned
with the imposition of levy on DTH operators. After the 2010
amendments, the structure of charging section i.e. Section
4 qua cable operators stood as such:
(i) Sub-clause(ii) to sub-Section (1) to Section 4 provided
for levy of luxury tax in respect of any luxury provided
by cable operators;
(ii) Sub-clause(iv) to the first proviso to sub-Section (1) to
Section 4 provided that sub-Section(1) would not apply
to cable operators with seven thousand and five hundred
or connections or less; and
(iii) Second Proviso to sub-Section (1) to Section 4 provided
that cable operators with seven thousand and five
hundred or less connections shall not be liable to tax
from 1st July, 2006.
15.16 Pertinently, the Finance Act, 2011(Act No. 16 of 2011) deleted
all cable operators from the purview of the Kerala Act of 1976.
Therefore, the impugned judgment dated 28.06.2012 is only
concerned with the levy of luxury tax on only on cable TV
operators from 2006-2010.
2430 [2025] 5 S.C.R.

Supreme Court Reports

15.17 In our view, the High Court erred in holding that the
classification was unreasonable and lacked any rational
nexus with the objects of the Kerala Act of 1976. Indeed,
the intent of a taxing statute is to broaden the tax base and
raise revenue for the State, however it is also settled law
that the judiciary will ordinarily allow for greater latitude to
be given to the legislature and defer to its economic wisdom
in taxing statutes. In Income Tax Officer, Shillong vs. R.
Takin Roy Rymbai, (1976) SC 670, this Court had usefully
held that:
“… Given legislative competence, the legislature
has ample freedom to select and classify persons,
districts, goods, properties, incomes and objects
which it would tax, and which it would not tax. So
long as the classification made within this wide and
flexible range by a taxing statute does not transgress
the fundamental principles underlying the doctrine
of equality, it is not vulnerable on the ground of
discrimination merely because it taxes or exempts
from tax some incomes or objects and not others.
Nor the mere fact that tax falls more heavily on some
in the same category is by itself a ground to render
the law invalid. It is only when within the range of
its selection, the law operates unequally and cannot
be justified on the basis of a valid classification, that
there would be a violation of Article 14.”
15.18 Further in M/s Hoechst Pharmaceuticals Ltd. vs. State of
Bihar, AIR 1983 SC 1019, it was observed that:-
“….On questions of economic regulations and related
matters, the Court must defer to the legislative-
judgment. When the power to tax exists, the extent
of the burden is a matter for discretion of the law-
makers. It is not the function of the Court to consider
the propriety or justness of the tax or enter upon the
reality of Legislative policy. If the evident intent and
general operations of the tax legislation is to adjust
the burden with a fair and reasonable degree of
equality, the constitutional requirement is satisfied. ...”
[2025] 5 S.C.R. 2431

State of Kerala & Another v.
Asianet Satellite Communications Ltd. & Others

15.19 We find that the aforesaid observations of this Court squarely
exposit the fallacy in the reasoning of the High Court. Even
if the statistics presented before the High Court regarding
the cable TV operators and their subscribers evinced that
the exemption given by the amendment and retrospective
exemption granted by the proviso pushed 90% of the operators
outside the scope of taxation, the High Court ought to have
taken note of the apparent intent of the legislature to tax only
those with more than 7500 connections. The High Court was
obligated to glean the intent of the legislation by accounting for
the exemption provided and not by masking it. The exemption
and the proviso, inserted by way of an amendment, was clearly
a statutory tool employed by the legislature to give effect to
its conscious decision to levy tax only on the cable operators
with more than seven thousand and five hundred connections.
Furthermore, there is no reason for striking down a law as
unconstitutional merely on the premise that the subscriber
could evade or avoid tax liability simply by taking services of
an operator with less than seven thousand and five hundred
connections. Where the legislation is passed in accordance
with constitutional prescriptions, a good faith presumption
is accorded to the legislature. Similarly, it is presumed that
the legislature acted with due and elaborate understanding
of the societal context for which it legislates. Herein, the
legislature perhaps factored that operators with more than
7500 connections ordinarily give add-on features that closely
relate to the character of luxury. Be that as it may. Unless a
violation of fundamental rights or lack of legislative competence
is proved, Courts must be circumspect in interfering with the
validity of legislations. It is trite law that this threshold is even
stricter in economic legislations.
15.20 In any event, if the High Court was of the view that the
exemption created was unconstitutional then the correct course
would have been to strike down the exemption and direct
recovery of tax payable from all assessees for the relevant
time period in accordance with sub-section (1) of Section 4.
Instead, the High Court has done the opposite. It declared
as unconstitutional the provisions of the Kerala Act of 1976
authorizing levy and collection on Cable TV Operators with
2432 [2025] 5 S.C.R.

Supreme Court Reports

connections of seven thousand and five hundred and above.
As a result, the revenue payable by a category of assessees
who do not fall within the exemption clause is stalled. This not
only affects the State’s exchequer but also does not further the
plea of equality pressed into service by the assessees. The
High Court could have struck down the exemption and directed
all cable TV Operators to pay the tax. Instead, while holding
that there was a discrimination and violation of Article 14 of
the Constitution the High Court has granted an exemption to
even the assessee who was liable to pay the entertainment
tax under the Kerala Act. By placing the assessee on par
with those exempted from payment of entertainment tax, the
principle of equality is not applied in its true spirit to the facts
of the case. Rather, the High Court has treated unequals as
equals, which is in fact a detriment to the plea of equality
raised by the petitioner assessee. Rather than striking down
the proviso, if the High Court was of the opinion there was a
violation of the equality clause under the Constitution, the High
Court has extended the exemption clause to the assessee
also, which is impressible. As a result, no cable TV operator
would have to pay any entertainment tax. This lacuna in the
judgment requires a course connection and hence that portion
and particularly paragraph No.6 of the judgment of Kerala
High Court dated 28.06.2012 is set aside. The writ petition
filed by the assessee is dismissed and the civil appeal filed
by the State of Kerala is liable to be allowed and is allowed.
15.21 For the aforesaid reasons, the judgment of the Kerala High
Court is liable to be set aside only on the question of holding
that the levy of luxury tax on cable TV operators above 7500
connections being discriminatory and violative of Article 14
of the Constitution of India and thereby declaring it to be
unconstitutional.

Jharkhand High Court’s Ruling:
16. The Jharkhand Entertainment Tax Act, 2012 was published in the
Gazette on 27.04.2012. It was however, under Section 1(3), to
come into force on such date as the State Government might, by
notification, direct. The Act was notified by the State Government only
on 14.05.2012 with effect from 27.04.2012 i.e. the date of publication.
[2025] 5 S.C.R. 2433

State of Kerala & Another v.
Asianet Satellite Communications Ltd. & Others

We do not find any merit in the argument of the appellants that the
State Government could not have directed the Act, a taxing statute,
to come into force with effect from a date anterior to the date of the
notification.
16.1 It was contended before the High Court that the Notification
dated 14.05.2012 issued by the State Government under
Section 1(3) of the Jharkhand Entertainment Tax Act, 2012
appointing 27.04.2012 as the date of implementation of the
Act suffers from the vice of imposing retrospective taxation
in the absence of any express legislative provision providing
for it. This argument was rejected by the High Court vide
the impugned judgment. The High Court speaking through
Bhanumati, C.J. (as Her Ladyship then was), vide the impugned
judgment, has relied on the decision of this Court in A. Thangal
Kunju Musaliar vs. M. Venkatachalam Potti, (1956) 29 ITR
349 (“A. Thangal Kunju Musaliar”), wherein the controversy
concerned The Travancore Taxation on Income (Investigation
Commission) Act, 1949 (“Travancore Act”) passed by the
Travancore legislature on 07.03.1949. The Act was, under
Section 1(3), to come into force on such date as the Travancore
Government might have by notification in the Government
Gazette appointed. No notification was issued by the
Travancore Government up to 01.07.1949 when the Travancore
State and the Cochin State integrated into the United State of
Travancore and Cochin. On 01.07.1949, the United State of
Travancore and Cochin promulgated an ordinance whereby all
existing laws of Travancore were continued in force till altered,
amended or repealed by competent authority and the “existing
law of Travancore” was therein defined to mean any law in force
in the State of Travancore immediately prior to 01.07.1949.
On 26.07.1949, a notification was issued under Section 1(3)
bringing the Travancore Act into force retrospectively from
22.07.1949. It was contended before the Constitution Bench
of this Court that the notification dated 26.07.1949 could not
be given retrospective effect from 22.07.1949, in absence of
any express provision.
16.2 We are conscious the enactment concerned therein did not
impose a tax. However, the question herein simply is, whether,
the Notification dated 14.05.2012 was bad in law for bringing
2434 [2025] 5 S.C.R.

Supreme Court Reports

the Act into operation with effect from the date of publication. In
A. Thangal Kunju Musaliar, this Court had repelled a similar
argument observing that in exercise of the power conferred
by Section 1(3), the Government had the power to issue the
notification bringing the Act into force on any date subsequent
to the passing of the Act. To give retrospective operation would
be to commence the Act from a date prior to the date of its
passing which was not the case in either A. Thangal Kunju
Musaliar or is before us. For these reasons, we find that the
High Court was correct in observing that even though the
date of commencement as fixed in the notification might be
anterior to the date of notification, the State Government had
the power to bring into force the Act from the date of Gazette
publication.

Summary of Discussion and Conclusions:
17. We summarise our discussion and conclusions as under:
17.1 The Civil Appeals filed by the appellants/assessees arising from
the judgments of the High Courts of Delhi, Gauhati, Gujarat,
Jharkhand, Madras, Orissa, Punjab & Haryana, Rajasthan and
Uttarakhand are dismissed. The appeal filed by the State of
Kerala is allowed. The appeals arising out of the judgments
of Allahabad High Court are allowed in part.
17.2 The provisions relevant to this case under the Kerala Tax on
Luxuries Act, 1976; Uttar Pradesh Entertainment and Betting
Tax Act, 1979; Rajasthan Entertainments & Advertisements Tax
Act, 1957 and the Rules thereunder; Gujarat Entertainment
Tax Act, 1977 and Gujarat Entertainment Tax (Exhibition by
means of Direct-to-Home Broadcasting Services) Rules,
2010; Jharkhand Entertainment Tax Act, 2012 and Jharkhand
Entertainment Tax Rules, 2013; Punjab Entertainment Duty
Act, 1955 (Amendment in 2010); Delhi Entertainment and
Betting Tax Rules, 1997; Assam Amusements and Betting Tax
Act, 1939; Orissa Entertainment Tax Rules, 2006, along with
the Orissa Entertainment Tax (Amendment) Tax Rules, 2010
are upheld. The correctness of the findings of the High Court
of Madras with regard to the charging section in the State
enactment being defective is assailed by the State of Tamil
[2025] 5 S.C.R. 2435

State of Kerala & Another v.
Asianet Satellite Communications Ltd. & Others

Nadu in separate appeals which are not part of this batch
of appeals, and accordingly have not been taken up for our
consideration herein.
Insofar as the Andhra Pradesh Entertainment Tax Act, 1939
(as adopted by State of Telangana) is concerned, we do not
express any opinion as the challenge and applicability of the
same is pending before the High Court of Andhra Pradesh.
All contentions regarding the assessment orders arising under
the Andhra Pradesh State enactment are kept open to be
advanced before the appropriate forum.
17.3 The Writ Petitions filed before this Court under Article 32 of
the Constitution of India are accordingly disposed of.

Constitutional Scheme regarding distribution of Legislative
Powers:
17.4 Article 246 of the Constitution of India emphasises on
Parliamentary supremacy. Also, the residuary powers of making
laws or imposing a tax on any matter not mentioned under
the Concurrent List or State List vest with the Parliament (vide
Article 248 read with Entry 97 - List I).
17.5 Entry 31 – List I deals with various forms of communications
including broadcasting. The said Entry does not deal with
entertainments or amusements as luxuries. Entry 97 – List I
deals with any other matter not enumerated in List II or List
III including any tax not mentioned in either of those lists.
Entry 31 - List I is a regulatory entry while Entry 97 - List I,
inter alia, can be the basis for imposition of any tax such as
service tax as per the provisions of the Finance Act, 1994 and
its subsequent amendments.
17.6 Entry 33 - List II, inter alia, deals with entertainments and
amusements which is a regulatory entry. Taxes on luxuries
including taxes on entertainments and amusements can be
levied by the State under Entry 62 - List II. While Entry 33 -
List II is a regulatory entry, Entry 62 – List II is a taxation entry,
both dealing, inter alia, with entertainments and amusements.
17.7 Having regard to the judgments of this Court in MPV
Sundararamier and H.S. Dhillon, we observe that under
2436 [2025] 5 S.C.R.

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the Constitution of India, the power to tax is not an incidental
or ancillary power. The power to tax cannot be implied within
a regulatory entry under our Constitution. There is also a
distinction between the power to regulate and control and the
power to tax. However, occasionally a levy may be imposed
as a regulatory measure. Thus, the taxation entries under List
I and List II (there being no taxation entry in the Concurrent
List) are clearly demarcated within the scope of the entries
in the aforesaid respective Lists. The effect of this principle
is that the subject of taxation is considered to be a distinct
matter for the purposes of legislative competence and the
power to tax cannot be deduced from the general legislative
entry as an ancillary power.
17.8 Also, a power to legislate as to the principal matters specifically
mentioned in the entries shall also include within its expanse,
a legislation touching upon incidental and ancillary matters.
This principle is derived from the use of the expression “with
respect to” in Article 246 of the Constitution.
17.9 As a sequitur, reliance can be placed on the dictum of this
Court (majority opinion) in H.S. Dhillon to observe that Entry
97 - List I which is a residuary entry relatable to Article 248
of the Constitution cannot be invoked or pressed into service
when a particular entry empowering the Parliament or the
Legislature of a State to pass laws regarding the taxation on
any subject is specifically enumerated either in List I or List II.
17.10 Consequently, as there is no taxation entry in List III, both
the Parliament as well as the Legislature of the State cannot
have competence to levy tax on any one subject of a List.
17.11 Fee in respect of any of the matters in the three Lists does
not include the power to levy tax. The distinction between the
levy of fee and levy of tax is clear and it is not necessary to
go into that aspect in these cases, except to reiterate that
there is no entry for taxation in the Concurrent List - List III.
17.12 While interpreting taxation entries in List I or List II, i.e.,
while determining the legislative competence to levy a tax,
all efforts must be made to interpret them in such a way
as to give expansive content and meaning to the same
[2025] 5 S.C.R. 2437

State of Kerala & Another v.
Asianet Satellite Communications Ltd. & Others

having regard to the constitutional scheme under which the
distribution of legislative powers has been envisaged in the
Seventh Schedule and bearing in mind the object and intent
behind them and also the advances made in human thought
and technology.
17.13 The expression “subject to” and “with respect to” in Article 246
of the Constitution aids the applicability of the doctrine of pith
and substance to find out the true character of the enactment
and the entry within which it would fall. The said doctrine is
applied to resolve an issue regarding legislative competence
of a legislature to enact a particular law in relation to a subject
relatable to an Entry in a List under the Seventh Schedule
of the Constitution. Any apparent conflict with respect to an
entry in another List is resolved on the basis of the pith and
substance doctrine.

Service Tax:
17.14 The expression “broadcasting” has been assigned the
meaning as per clause (c) of Section 2 of the Prasar Bharti
(Broadcasting Corporation of India) Act, 1990 in terms of
definition clause in Section 65(13) of the Finance Act, 1994
as amended by the Finance Act, 2001. Under the Prasar
Bharti (Broadcasting Corporation of India) Act, 1990, the
expression “broadcasting” includes dissemination of any form
of communication by transmission of electro-magnetic waves
through space or through cables intended to be received
by the general public either directly or indirectly through the
medium of relay stations.
17.15 The expression “broadcasting” and “broadcasting agency or
organization” has been re-defined with the object of expanding
the same. A television program broadcast in India for the
general public is a taxable service in relation to broadcasting,
even if the encryption of the signals and beaming thereof
through the satellite might have taken place outside India.
17.16 With the passage of time, the expression “broadcasting” has
included transmission of electro-magnetic waves through
space or through cables, Direct to Home signals or by any
means to cable operator, including multi-system operator
2438 [2025] 5 S.C.R.

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or any other person acting on behalf of the said agency or
organisation through its branch office, agent, representative
appointed in India or by any person who acts on its behalf.
17.17 Section 65(72) (zk) defines “taxable service” to include
broadcasting agency as a service provider. Thus, if any
service is provided to a client by a broadcasting agency or
organization in relation to broadcasting in any manner, it
would be a taxable service.
17.18 The expression “broadcasting agency or organization” means
any agency or organization engaged in providing service in
relation to broadcasting in any manner either having its place
of business in India or outside India, through its branch office,
subsidiary or representative in India or any agent appointed
in India or any person acting on their behalf.
17.19 Section 66 provides for the charge of service tax which is a
charging section. The service tax on a broadcasting agency
is at the rate of five per cent of the value of taxable services
i.e., five per cent of the gross amount charged by the service
provider. Broadcasting service is a taxable service and the
broadcasting service provider is required to pay service tax
under the provisions of the Finance Act, 1994 as amended
from time to time.

Tax on Luxuries: Entertainments & Amusements
17.20 Bearing in mind the meaning of “entertainments” and
“amusements” and since they come within the scope of
“luxuries”, therefore, the State legislature has legislative
competence to impose entertainment tax under Entry 62 - List
II as a tax on luxuries.
17.21 The expression “tax on luxuries” has been discussed,
inter alia, in Express Hotels, A.B. Abdul Kadir, Godfrey
Phillips, Western India Theatres, Federation of Hotels
and Restaurant Associations of India.
17.22 The expression “entertainments/ entertainment” has been
discussed in the cases of Geeta Enterprises, Drive-in
Enterprises and Purvi Communications. The expression
“entertainments/entertainment” includes within its scope and
[2025] 5 S.C.R. 2439

State of Kerala & Another v.
Asianet Satellite Communications Ltd. & Others

ambit not only the provider of entertainment but also the
receiver, inter alia, through the medium of television. Thus,
entertainment through television network either through cable
television or DTH through set-top box with the object of
providing entertainment to the viewer can be taxed in terms
of Entry 62 - List II.

Parameters of Taxation under State Enactments:
17.23 The four parameters of taxation as enumerated by this Court
in Govind Saran Ganga Saran with respect to various
provisions of the State enactments under consideration have
been dissected in the form of a tabulation in para 8.29 of this
judgement which is extracted as under:

Taxable Event
S. Measure Rate of Incidence
States or subject of
No. of Tax Tax of Tax
taxation
Assam Section
Section 3C
Amusements Section 3C read
1 read with Section 3C
and Betting 3C with
S.2(4)
Tax Act, 1939 S.3C(4)
Delhi
Entertainments
2 Section 7 Section 7 Section 7 Section 7
and Betting
Tax Act, 1996
Gujarat
Section Section Section
3 Entertainments Section 6E(1)
6E(1) 6E(1) 6E(1)
Tax Act, 1977
Jharkhand Section 3
Proviso to
4 Entertainment Section 3 Section 3 & Section
Section 3
Tax Act, 2012 4
Orissa
5 Entertainment Section 7 Section 7 Section 7 Section 7
Tax Act, 2006
Punjab
Section Section
6 Entertainment Section 3C Section 3C
3C 3C
Duty Act, 1955
2440 [2025] 5 S.C.R.

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Taxable Event
S. Measure Rate of Incidence
States or subject of
No. of Tax Tax of Tax
taxation
Rajasthan
Notification
Entertainments Section 4AAA
Section S.O.443 Section
7 and read with
4AAA dt. 4AAA
Advertisements Section 5 and 6
25.02.2008
Tax Act, 1957
Uttar Pradesh
Entertainment
and Betting
Tax Act, 1979
Section 3 Section 3
as amended Section 3 read
8 read with Section 3 read with
by U.P. with S.2(a)
S.2(l)(vii) S. 2(v)
Ordinance
No. 4 of
2009 w.e.f.
16.06.2009
Uttar Pradesh
Entertainment
and Betting
Tax Act, 1979, Section 3 Section 3 Section
Section 3 read
9 as amended read with read with read with
with S. 2(g)
by Uttarakhand S. 2(g) S. 2(g) S. 2(g)
(Amendment)
Act, 2009 dt.
16.03.2009

Geeta Enterprises and Purvi Communications:
17.24 We do not find any contradiction in the judgments of this
Court in Geeta Enterprises and Purvi Communications
as the judgement in Geeta Enterprises has to be restricted
to payment of tax on video games under the provisions of
the 1937 Act of Uttar Pradesh in which there has been no
discussion under Entry 62 - List II. For ease of reference,
paragraph 10.10 of this judgment is extracted as under:
10.10 There are other substantial differences between Geeta
Enterprises and Purvi Communication as the table
below enumerates due to which Geeta Enterprises and
Purvi Communication cannot be compared.
[2025] 5 S.C.R. 2441

State of Kerala & Another v.
Asianet Satellite Communications Ltd. & Others

Geeta Enterprises Purvi Communication
Impugned Provision
Definition of ‘entertainment’ Amended section 4A(4a) of
under section 2(3) of the the 1982 Act (West Bengal
1937 Act (UP Act) Act)
Activity subject to taxation
Video game operated on Transmission of signals by
payment, in a parlour whose MSOs of any performance,
admission is free to public film or any other programme
telecast.
Date of Enactment of the provision impugned therein
1937 1998
Discussion on Entry 62 - List II
No Yes

17.25 The discussion on the content and meaning, scope and ambit
of the expression ‘entertainments’ in Geeta Enterprises
is not comprehensive. This is because, having regard to
the advances in technology resulting in varied forms of
entertainments through various media and in a variety of
ways, not only in a public place but also in the confines
of private space such as a home, through mobile or a cell
phone or smart watch and other personal devices etc., the
expression ‘entertainments’ must be given a broad, liberal
and expansive meaning than what has been discussed in
Geeta Enterprises by this Court.

Aspect Theory:
17.26 Aspect theory or double aspect doctrine is a tool of
constitutional interpretation used in Canada to resolve issues
which arise when both the federal and provincial government
have the right to legislate on a subject. This Court has applied
the aspect theory in Federation of Hotel and Restaurants
Associations of India, Elel Hotels & Investments, All India
Federation of Tax Practitioners and cases such as Mohit
Minerals Pvt. Ltd. and in Bharat Sanchar Nigam Limited.
(in a different way).
2442 [2025] 5 S.C.R.

Supreme Court Reports

17.27 In India, there appears to be no clarity on the application
of the aspect theory in the Canadian sense. One of the
reasons being that in India, both the Parliament as well as
the State Legislature do not have powers to levy tax on the
same subject. The aspect theory has been applied in India
essentially to ascertain whether an activity would fall within
the scope and ambit of an enactment and whether the said
enactment in pith and substance would fall within an Entry
of a particular List of the Seventh Schedule so as to confer
legislative competence to tax that aspect of the activity. As
a result it can be said that one aspect of an activity, say
broadcasting service, can be amenable to service tax, while
the other aspect of the same activity, namely, providing (of)
entertainment to television viewers (as that is the object of
broadcasting) can be amenable to “luxury tax” under Entry
62 List – II of the Constitution which could be levied on the
recipients of such entertainment or on the service providers
who are essentially broadcasters. Broadcasting service being
a taxable service under the provisions of the Finance Act,
1994, read along with the amendments made from time to
time would enable both the Parliament to impose service tax
on broadcasting service and the State Legislatures having the
legislative competence to levy entertainment tax on those who
provide entertainment to the recipients (television viewers) to
impose a luxury tax.
17.28 We follow the judgment of this Court in Western India
Theatres Ltd. in observing that Entry 62 - List II contemplates
a tax on entertainments or amusements as objects on
which a tax can be imposed and therefore it is not possible
to differentiate between an entertainment provider and an
entertainment receiver.
17.29 If the above reasoning is applied, then both entertainment
tax as well as service tax can be imposed on the activity
of broadcasting through television for the purpose of
entertainment of the subscriber or the receiver thereof. The
two taxes are different aspects of the same activity which
enable two different legislatures to impose tax under distinct
taxation entries in two different Lists.
[2025] 5 S.C.R. 2443

State of Kerala & Another v.
Asianet Satellite Communications Ltd. & Others

17.30 The principle is well settled that two taxes which are
separate and distinct imposed on two aspects of an activity
are permissible, as in law, there is no overlapping. This is
because the taxes are relatable to distinct taxation entries in
separate legislative Lists.
17.31 In the instant case, the Parliament under the Finance Act, 1994
and its amendments is not imposing a tax on entertainment.
Such a tax is being imposed by the State Legislatures as
entertainment is a luxury within the meaning of Entry 62
- List II. In the same way, the Finance Act along with its
amendments seeks to impose a tax on the service rendered
by the broadcasting agency which is imposed under Entry
97 List – I. In the same vein, under Entry 62 List – II, the
State Governments are not imposing any service tax on the
assessees.
17.32 While applying the aspect theory on any activity from the point
of view of two legislatures (Parliament and State Legislature),
in the instant case, imposing tax on an activity, the following
well established principles of interpretation of tax may as
stated in paragraph 11.18 be borne in mind:
“11.18 To appreciate the extent and the context of the
use of ‘aspect theory’ in India, it would be instructive
to reiterate some well-established principles of
interpretation of taxation entries. Some of the relevant
principles are reiterated as follows:
i. In interpreting expressions in the Legislative Lists
of the Seventh Schedule of the Constitution, a
wide meaning should be given to the entries.
ii. In the scheme of the Lists in the Seventh
Schedule, there exists a clear distinction
between the general subjects of legislation
and heads of taxation. They are separately
enumerated.
iii. As the fields of taxation are to be found clearly
enumerated in Lists I and II, there can be no
overlapping in law. There may be overlapping
in fact, but there can be no overlapping in law.
2444 [2025] 5 S.C.R.

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iv. In the first instance, the pith and substance or
true nature and character of the legislation must
be determined with reference to the legislative
subject matter and the charging section;
v. The measure of tax is not a true test of the
nature of tax;
vi. The same transaction may involve two or more
taxable events in its different aspects. Merely
because the aspects overlap, such overlapping
does not detract from the distinctiveness of the
aspects.”
17.33 The doctrine of pith and substance is applied to consider the
vires of a legislation impugned on the basis of the principle of
legislative competence in the context of legislative relationship
between the Centre and the State. We observe that the
aspect theory has no relevance, as such, in determining the
constitutionality of any provision on the ground of legislative
competence in India. Thus, the constitutional validity of a taxing
statute on the ground of legislative competence has to be
examined in the context of the doctrine of pith and substance
as envisaged under Article 246 of the Constitution of India
read with the respective entries in the List. Once the contours
of an entry under which a legislation is sought to be made is
ascertained, the next step is to study the legislation in question
in order to ascertain whether it falls within the contours of that
Entry. If it does fall within the contours of a particular entry
in a particular List, then that particular legislature which has
enacted it would have the legislative competence to enact
such a legislation. But a legislation incidentally touching upon
an entry in another List does not render it invalid, it means
that so long as a piece of legislation is in pith and substance
falling within an entry in a particular List, it would be valid
as the legislature which has enacted it, has the legislative
competence to do so.
17.34 On the other hand, the aspect theory is relevant to determine
the applicability of a taxing statute on the activity or transaction
sought to be taxed i.e., whether the statute covers an activity
which falls within a specific taxation entry, either in List I or
[2025] 5 S.C.R. 2445

State of Kerala & Another v.
Asianet Satellite Communications Ltd. & Others

in List II. Thus, an activity could be taxed by two different
legislatures on the basis of the entries in the respective
Lists without there being a clash and within their legislative
competence. However, the aspect of the activity which is being
taxed must be relatable to the legislation under a specific
entry of a particular List so as to be within the legislative
competence of a particular legislature.
17.35 Thus, the aspect theory is used to determine if, in fact, there
are different aspects within the activity sought to be taxed
and whether the taxable event which forms the basis of the
levy in a legislative enactment corresponds to any aspect in
the activity sought to be taxed.
17.36 This is in contrast to the applicability of this theory in Canada,
where this theory is used therein to determine legislative
competence of a federal or provincial legislature to enact a
particular law.
17.37 While applying the aspect theory to the present case,
it is noted that the activity of broadcasting is for the
purpose of entertainment of the subscriber as held in Purvi
Communications. No entertainment can be presented to
the viewers unless the broadcaster transmits the signals
for instantaneous presentation of any performance, film
or any programme on their television. Thus, there are two
aspects in this activity; the first is the act of transmission
of signals of the content to the subscribers. The second
aspect here concerns not only the content of the signals,
but the effect of the decryption of the signals by the Set-Top
Boxes and the viewing cards inside these boxes provided
by the assessees to the subscribers, which is providing and
receiving of entertainment through the television. Without
the apparatus provided for by the assessees to decrypt
the signals, the subscriber would not be able to watch the
content that is transmitted, the content being for the purpose
of entertainment. The television entertainment provided by
them through their modus operandi i.e., by broadcasting, is a
luxury within the meaning of Entry 62 - List II. The assessees
who are engaged in the activity of providing entertainment are
liable to pay service tax on the activity of broadcasting under
the provisions of the Finance Act, 1994 read with relevant
2446 [2025] 5 S.C.R.

Supreme Court Reports

amendments and are also liable to pay entertainment tax
in terms of Entry 62 - List II as being a specie of luxuries.
Therefore, both the taxes, one by the State Legislature and
the other, by the Parliament are leviable on the activity of the
assessees herein. This is because by rendering the service of
broadcasting, the assesses are entertaining the subscribers
within the meaning of Entry 62 - List II.
There is no overlapping in fact or in law, inasmuch as different
aspects of the same activity are being taxed under two different
legislations by two different legislatures. This is because
the activity of broadcasting is a service and liable to service
tax imposed by the Parliament (Entry 97 – List I) and the
activity of entertainment is a subject falling under Entry 62 -
List II and therefore, the assessees herein are liable to pay
entertainment tax as well. Hence, the State Legislatures as
well as the Parliament, both have the legislative competence
to levy entertainment tax as well as service tax respectively
on the activity carried out by the assessees herein.
17.38 As far as the judgment of the Allahabad High Court dated
20.07.2012 is concerned, we observe that the High Court could
not have construed the amendments made to the UP Act of
1979 as a clarification to include the DTH service which is a
new technology, within the purview of the original Act. Hence,
to that limited extent, the appeal filed against the judgment
of the Allahabad High Court is allowed in part.
17.39 The judgment dated 28.06.2012 passed by the Kerala High
Court which declared the levy and collection of luxury tax on
cable TV operators with connections of 7500 or above as
unconstitutional for being discriminatory is incorrect.
17.40 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 is discrimination and violation of
Article 14 of the Constitution against the assessees herein.
As a result, the High Court has granted an exemption to
the assessee who is liable to pay entertainment tax under
the Kerala Act. As a result, unequals have been treated as
equals which is detrimental to the plea of equality sought to
be raised by the assessee.
[2025] 5 S.C.R. 2447

State of Kerala & Another v.
Asianet Satellite Communications Ltd. & Others

17.41 In the circumstances, paragraph 6 of the judgment of the
Kerala High Court dated 28.06.2012 is set aside. The Writ
Petition filed by the assessee before the High Court is
dismissed and the Civil Appeal filed by the State of Kerala
is allowed.
Parties to bear their respective costs.

Result of the case: Matters disposed of.

†
Headnotes prepared by: Bibhuti Bhushan Bose