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53. Shri Bharat Ji Agrawal submits that the order dated 11.6.2004 passed by the District Magistrate, Ghaziabad raising a demand of entertainment tax and penalty against M/s New Era Entertainment Network Ltd. & Ors. v. State of U.P. (Writ Petition No.839 of 2004), is grossly illegal and is also without jurisdiction. The District Magistrate has levied entertainment tax on the sale of set top boxes, and the subscription. The DTH services were introduced in the year 2003. The set top boxes were not sold by the petitioner company. These were sold by separate company. There were only 76 DTH connections of M/s New Era Entertainment Network Ltd. in the State of U.P. A reply was submitted by the petitioner, which was not considered by the District Magistrate. He relied upon an inspection report, and did not consider the reply and the evidence led by the petitioner. The entertainment tax cannot be imposed on the sale of set top boxes, which are goods within the meaning of Trade Tax Act.

56. Shri K.N. Tripathi submits that downloading the signals and decrypting them with the help of set top boxes is service, which cannot be included within the meaning of entertainment. If the entertainment tax can be charged on set top box by the same manner, it should be charged on hearing aid also. The amendments have increased the scope of levy of entertainment tax on the direct to home service the intention of which can be gathered from the objects and reasons. Shri Tripathi has relied upon Kumar Jagdish Chandra Sinha & Ors. v. Mrs. Eileen K. Patricia D'Rozarie, AIR 1995 SC 515 (para 13) in which the Supreme Court held that it is undoubtedly true that the statement of objects and reasons accompanying a legislative Bill cannot be used to ascertain the true meaning and effect of the substantive provisions of the legislation, but it can certainly be pressed into service for the limited purpose of understanding the background, the antecedent state of affairs and the object the legislation seeks to achieve.

71. The TV signals transmitted from the Broadcasting Centres are in encrypted format. They are decrypted/ decoded by the set top box, with the help of the viewing card inside the set top box for the customers to be able to view the service. The subscribers have to obtain a connection for which they pay monthly charges. The set top boxes are provided to the customers free of cost without any consideration, for facilitating effective receipt and entertainment of DTH service. The set top boxes were earlier sold but that thereafter under the new schemes they continue to be the property of the petitioners' broadcasting DTH services. When a new connection is given, the subscriber gets the applicable charges for occupation and is thereafter required to pay subscription charges based on his choice of channels, apart from free channels. The service provided, thereafter, is a pre-paid service, wherein the subscriber is required to purchase recharge vouchers for the choice of channels with convenient mode of payment, to which he subscribes on his request.

91. The challenge to the notices on the ground that information collected by the District Magistrates regarding the number of subscribers and the amount charged is not reliable, would require consideration of facts in each case. The argument that the petitioners did not sell the set top boxes and that some other agency had sold the set top boxes and further that number of subscribers in the State of U.P. is much less than the numbers, which has been found by the District Magistrate or assessment of Entertainment Tax Commissioner is a question of fact, subject to right of appeal provided under the Act.