Suresh, Etc. Vs. State of Tamil Nadu
& Anr  INSC 1480 (21 November 1996)
Jeevan Reddy, K.S. Paripoornan B.P. Jeevan Reddy, J.
Entertainment Tax Act, 1939 was enacted to impose the tax on entertaninments.
By Act 37 of 1994 the Act was amended to bring within its purview what is
called `cable television'. The expression `cable television' is defined in
clause 2-B of Section 3. The definition reads:
Television' means a system organised for television exhibition by using a video
cassette of disc or both, recorder or player of similar such apparatus on which
pre-recorded video casettes 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." The expression "television exhibition",
occurring in the above definition, is defined in clause (11) of Section 3 in
the following words:
exhibition' means an exhibition with the aid of any type of antenna with a
cable nit-work attached to it or cable television, of 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 ontic fiber cable to central
system called the head end." The expression "entertainment" is
defined in Clause (4) of Section 3 thus:
`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
subscription, or installation or connection charges or any other charges
collected on any manner whatsoever.
Explanation - For the purposed of this clause
and other provisions of this Act, `Cinematograph exhibition' includes
exhibition of film on Television screen through Video Cassette Recorder and
through cable television network." Section 4-E is the charging section so
far as cable television is concerned. Sub-section (1) thereof provides:
(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 percent of the mount collected by way of
contribution or subscription or installation or connection charges or any other
charges collected in any manner whatsoever for television exhibition." A
number of writ petitions were filled in the Madras High Court challenging the
validity of the Amendment Act.
grounds of challenge, which are reiterated before us, are the following:
The State Legislature has no legislative competence to enact Amendment Act
inasmuch as the subject matter of the enactment falls exclusively within the
province of Parliament i.e., list 1 of the Seventh Schedule to the
The impugned Act is of no effect since the field is already occupied by Cable
Television Net-work (Regulation) Ordinance 9 of 1994 issued by President of
India and the subsequent enactment made by Parliament replacing the ordinance.
The Amendment Act is violative of the freedom of speach and expression
guaranteed to the petitioners by Article 19(1)(a) of the Constitution.
The Amendment Act is colourable piece of legislation.
tax in truth and effect is a tax on education inasmuch as the bulk of the programmes
shown on cable television are educative programmes. The entertainment
constitutes less than 10 per cent of the programmes shown by them.
The Amendment Act is violative of Article 14 of the Constitution since it does
not levy the tax on Doordarshan and other establishments and associations (like
star-hotels and multi-storey housing complexes) providing entertainment through
The tax is not on public entertainment but on private enjoyment i.e., on people
having entertainment sitting in their homes.
The rate of tax is prohibitive and is designed to kill the cable television in
the interest of cinema theatres.
of the State, in addition to disputing each of the above contentions, was that
since the cable television is akin to cinema entertainment - though provided in
a different manner, taking advantage of technological advancements - it is
treated on par with cinema entertainment in the matter of levy of entertainment
tax. If one is good and unexceptionable, so is the other, they say.
High Court has dealt with each of these contentions advance by the writ
petitioners separately and exhaustively and rejected each of them. Since we
agree with the reasoning and conclusions arrived at by the High Court on all
the issues, we think it unnecessary to deal with the above submissions except
contentions No. 3, 4 and 7. Leave granted in all the special leave petitions.
submissions of the learned counsel for the appellants (with respect to
contentions 3, 4 and 7 referred to above) are to the following effect:- The
appellants not only show films on their net-work using video-cassette/disc and
recorder but also relay the programmes broadcast by Doordarshan, B.B.C, C.N.N.,Star
T.V. and other similar T.V. net-works. Most of the programmes shown by them ar
educative in nature. The entertainment part is hardly 10 per cent. In any event
providing entertainment is also part of freedom of speech and expression. By
levying tax at the rate of 40 per cent of the appellants` collections, the
State is casting an unbearable burden upon the appellants. It is not possible
for the appellants to survive in business of providing entertainment if they
are made to pay tax at the said rate.
immediate and direct effect of taxation at the said rate is to deprive the
appellants of their fundamental right of freedom of speech and expression. It
is really being done to help the cinema operators whose business is said to
have been adversely affected by the entry of cable television.
if some films are shown by the appellants, that does not detract from the fact
that to substantial degree, the programmes relayed by them are educative and
informative in nature. Exhibition of films is providing entertainment.
entertainment is also a mode of exercise of their freedom of speech and
expression - and that connot be taxed.
matter of fact, they perform the same function as that of Doordarshan and yet
they are being subjected to prohibitive rate of taxation while Doordarshan goes
sest free, say the counsel.
proper appreciation of the appellants contentions, it is necessary to examine
the nature of the activity carried on by the appellants. The appellants are
carrying on the business of providing entertainment. Their main activity is to
show films and other material using the video-cassetts or disc with the help of
a V.C.R., disc player or a similiar apparatus. By means of cables, the T.V.
sets in the homes of the subscribers are linked to their apparatus with a view
to enable the subscribers to receive the programmes relayed by the appellants.
For this service, each subscriber is charged a particular amount every month.
This is their business. It may be true that providing entertainment is a form
of exercise of freedom of speech and expression. It is quite likely that they
also relay the programmes broadcast by Doordarshan and other T.V.
and some of them may be informative in nature or educational in character but
the fact remains that their activity is a combination of two rights i.e.,
business and speech - sib-clauses (g) and (a) of clause (1) of Article
There is no reason why the business part of it cannot be taxed. If tax can be
levied upon entertainment provided by cinemas, if taxes can be levied upon the
Press, it is ununderstandable why the appellants` activity connot be taxed.
Certainly, the appellants cannot claim that their activity is of more
significance to society than that of the Press. Where the freedom of speech
gets intertwined with business it undergoes a fundamental change and it`s
exercise has to be balanced against societal interests. In Secretary, Ministry
of Information and Broadcasting, Government of India & Others v. Cricket
Association of Bengal & Others [1995 (2) S.C.C. 161] one of us ( B.P. Jeevan
Reddy, J.) stated the proposition, flowing from the decided cases, in the
following words: "Providing entertainment is implied in freedom of speech
and expression guaranteed by Article 19 (1)(a) of the Constitution subject to
this rider that where speech and conduct are joined in a single course of
action, the free speech values must be balanced against competing societal
interests." (at page 297).
with respect to the freedom of Press, this Court said in Express Newspapers v.
Union of India [1985 ( S.C.C 641]:
industry enjoys two of the fundamental rights, namely the freedom of speech and
expression guaranteed under Article 19(1)(a) and the freedom to engage in any
profession, occupation, trade, industry or business guaranteed under Article
19(1)(g) of the Constitution, the first because it is concerned with the field
of expression and communication and the second because communication has become
an occupation or profession and because there is an invasion of trade, business
and industry into that field where freedom of expression is being exercised.
While there can be no tax on the right to exercise freedom of expression, tax
is leviable on newspaper industry. But when such tax transgresses into the
field of freedom of expression and stifles that freedom, it becomes
unconstitutional. As long as it is within reasonable limits and does not impede
freedom of expression it will not be contravening the limitation of Article
19(2). The delicate task of determining when it crosses from the area of
profession, occupation, trade, business of industry into the area of freedom of
expression and interferes with that freedom is entrusted to the courts."
In other words, only when taxes are levied not for raising revenues but for
killing the appellants` business, can they legitimately complain.
Court also quoted with approval, in the said decision, the following statement
of law in Corpus Juris Secundum (Vol.16) says at page 1132:
Taxing and Licensing. - The constitutional guaranties of freedom of speech and
of the press are subject to the proper exercise of the government's`s power of
taxation, and reasonable license fees may be imposed on trades or occupation
concerned with the dissemination of literature or ideas.
general rule, the constitutional guaranties of freedom of speech and of the
press are subject to the proper exercise of the government`s power of taxation,
so that the imposition of uniform and non-discriminatory taxes is not invalid
as applied to persons or organisations engaged in the dissemination of ideas
through the publication or distribution of writing. The guarantee of freedom of
the press does not forbid the taxation of money or property employed in the
publishing business, or the imposition of reasonable occupations concerned with
the dissemination of literature or ideas." Dealing with the power of the
State to levy taxes, the Court observed: "Taxation is the legal capacity
of sovereignty or one of its governmental agents to exact or impose a charge
upon person or their property for the support of the government and for the
payment for any other public purposes which it may constitutionally carry
out." In this view of the matter, the only question is whether the level
of taxation is not within reasonable limits and whether it`s incidence is such
as to disable the appellants from exercising their free speech right. Though
the appellants have alleged that the tax imposed is too heavy and is intended
to drive them out of their business with a view to help the cinema theatres, no
material has been placed before us to substantiate the said averment. The respondent`s
case is that the cable television has taken the place of cinema. It has
replaced the cinema to certain degree. The cable television is performing the
very same function as is performed by the cinema. Cinema also provides
entertainment. It also provides educational programmes.
according to the learned counsel for the State, major chunk of the programmes
shown on cable television are pure and simple entertainment and that they are
mainly engaged in showing films which are broadcast either by T.V. net-works or
relayed by the appellants with the help of a V.V.R. Counsel complained that
some of the programmes shown by the appellants are having a deleterious effect
upon the young and impressionable. With a view to promote their business
counsel submitted, the appellants are showing programmes designed to cater to
base instincts and vulgar tastes. It is accordingly submitted that the rate of
entertainment tax levied upon cable television at the same level and on the same
par as the entertainment tax levied upon cinema theatres is neither
unreasonable nor excessive. It is submitted that the levy of entertainment tax
at 40 per cent of the collections is no higher than the rate of tax levied upon
the cinema. It is also brought to our notice that the rate of taxation has
since been down 20 per cent. If the levy of entertainment tax at the rate of 40
per cent or thereabouts on the cinema theatres is not impermissible, it is
submitted, the levy of entertainment tax at the same or lesser rate on cable
television cannot also be held to ba bad.
inclined to agree with the submission of the learned counsel fro the State of Tamil Nadu. The reason given by the State for
imposing tax at the rate of 40 per cent is duly explained by the State and we
do not see any flaw in it. Since the appellants also carry on business it is
their duty to share the burden of the State by paying taxes like any other
business. The entertainment tax is an indirect tax. It is meant to be and is passed
on to the consumer i.e., subscriber. In the case of indirect taxes, levy at
more than 100 per cent of the value of the goods is not unknown e.g., in the
case of customs and central excise duties. As a matter of fact, even in the
case of direct taxes, levy at a rate higher than 50% is regular feature. Of
course, these are instances not involving free speech right and stand upon a
also unable to see any substance in the grievance that taxes are only levied
upon them and not upon the Doordarshan. We do not think that there can be any
comparison between Doordarshan and the appellants.
is a government organisation which is supposed to act in furtherance of public
interest. It is not a business carried on by the Government. The revenues
collected by it by permitting advertisements are only intended to defray part
of the huge expenditure the Government incurs on establishing and maintaining
the broadcasting system throughout the country. By no stretch of imagination
can the appellants claim any similarity with the Doordarshan.
the above reasons the appeals and writ petitions fail and are dismissed. There
shall be no order to costs.