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7. The petitioners in W.P.Nos.25872 and 25873 of 2011, viz., M/s.Bharat Business Channel Limited, contend that the services rendered by the petitioner therein cannot be subjected to entertainment tax. Contending that DTH service is essentially an activity and hence a service, the petitioner states that DTH is a form of telecommunication similar to mobile phone. Learned counsel appearing for the petitioners in these writ petitions adopted the submissions made in the other writ petitions.

8. The third set of writ petitions viz., W.P.Nos.27070 to 27072 of 2011 are filed by M/s.Dish TV India Limited; W.P.No.25987 of 2011 are filed by M/s.Sun Direct TV Private Limited and W.P.No.28978 of 2011 are filed by M/s.Reliance Big TV. The petitioners challenge the provisions under Section 4-I of the Tamil Nadu Entertainments Tax Act, introduced under the Tamil Nadu Act 25 of 2011, on the ground of discrimination. While conceding that the State has the jurisdiction to tax the entertainment content in DTH service, it is contended that the classification made, treating DTH as a distinct and separate class from cable TV, is violative of Article 14 of the Constitution of India. Comparing the entertainment content through cable TV and DTH and the treatment under the service tax provisions on cable TV operators and DTH providers, the petitioners contend that given the fact that the provisions of the Telecom Regulatory Authority of India Act, 1987, treat both the services alike in the matter of tariff fixation, taking note of the self-same entertainment content, there can be no such discriminatory/arbitrary classification under Section 4-E and Section 4-I of the Act. Referring to Tariff Order No.4 of 2008 dated 26.12.2008, Tariff Order No.5 of 2008 dated 26.12.2008 and the structure indicated in Tariff Order, 2010 and 2011, the petitioners pointed out to the detailed consultative process among the various stake-holders, that, ultimately, the Telecom Authority had fixed a uniform rate for DTH as well as for cable TV. It is stated that taking note of the viewing public interests and the content availability, the Central Government has fixed uniform rate, apart from the fact that the Telecom Authority have recommended digitalisation of cable TV with an addressable system, to bring about transparency in the conduct of business for the purposes of service tax levy as well as for better quality delivery to the subscribers. This indicates that there is no difference between DTH and Cable TV in the matter of providing entertainment. In other words, the content of entertainment under DTH is no different from those presented through cable TV services. Thus, in terms of content, rate and class of subscribers/viewers, DTH broadcasting services is similar to cable television services. Even though the mode of dissemination of information may be different between DTH broadcasting services and cable TV operators, both media are similarly placed in terms of content, information/ entertainment provided, rates charged and class of viewers. Referring to the Cable Television Network Regulation Amendment Ordinance, 2011, and presently the Act of 2012, issued by the Government of India, the petitioners pointed out that the drive in telecasting programmes today is through digitalisation. Cable TV analog services are stated to have given rise to many complaints, particularly as regards the escapement of the levy of service tax, by reason of there being no accounts maintained as to the number of subscribers catered to by the TV operators. Thus the Telecom Authority has issued directives to switch over to digital technology. In terms of the tariff treatment thus maintaining parity, the new Section 4-I, inserted by Act 25 of 2011, meeting out differential treatment, taxing DTH as distinct and separate class, is arbitrary, discriminatory and violative of Article 14 of the Constitution of India. The classification is not based on any intelligible differentia for adopting different rate of tax under Section 4-E and Section 4-I of the Act, thereby discriminating between the levy of tax on entertainment provided through Cable TV and the one through DTH. There is no rational nexus in classifying DTH as distinct and separate class from Cable TV with the object sought to be achieved by the law. Apart from that, the said levy is also violative of Article 19(1)(a) of the Constitution of India, since the tax imposed has a direct and immediate negative effect in restricting the use of DTH broadcasting services as a medium of dissemination and receipt of information, ideas and expression. The petitioners contend that if the incidence of levy under Section 4-I of the Act is passed on to the subscribers, that would decrease the subscriber base of the broadcaster; consequently, the imposition is a burdensome one. The petitioners have also challenged Section 4-I of the Act that insofar as the charging Section fails to specify the chargeable event, the Section is vague and fails to achieve the purpose of the enactment. Further, going by the language of Section 4-I of the Act, the levy is more in the nature of service tax.

Programs offered by cable vary from area to area whereas satellite gives you programs that are same everywhere. There are a lot more programs that one can watch on DTH which can never be accessible through cable.

DTH enables one to watch one program and record another which may be on at the same time. Such interactive services are not generally available through cable. Under DTH, Direct Video Recording lets pause, rewind and record any program one likes giving immediate control over live TV. However, in Cable, Video on Demand limits one to what the cable company eventually puts in its VOD library."

ARTICLE 14:

165. Shri.C.Natarajan, learned senior counsel appearing for the writ petitioners in W.P.Nos.25986, 25987, 28978 and 28979 of 2011, also questioned the amended provisions as violative of Article 14 of the Constitution of India. He pointed out that the differentiation made being one on technology, the same fails to have any reasonable relationship with the object of the Act sought to be achieved. Commenting on the averments in the counter that there is no case made out by the petitioners in treating DTH as different from cable TV, he submitted that the entertainment through DTH, though based on the technology development, in the absence of any entertainment difference shown in DTH, Article 14 stands attracted to the case and hence, the Section has to be held as discriminatory in character. Referring to the reliance placed on the decisions of the Supreme Court reported in (1989) 74 STC 157 (Express Hotels Private Ltd., V. State of Gujarat and another) and (1989) 3 SCC 698 (Elel Hotels and Investments Ltd. V. Union of India), he submitted that these decisions have no relevance in deciding the issue on entertainment tax and are distinguishable. He submitted that with all the technology difference, the tax is on entertainment. Thus, when the broadcasters and programmes are one and the same and subscribers are all similarly situated, as far as entertainment is concerned, the tariff order under TRAI treats them as forming one single class and there is no basis for classifying DTH with different rate structure. Referring to sub section (2) of Section 4-I, he submitted that the facility of recovery from the provider of DTH cannot provide a rational basis for the differential treatment contemplated under Section 4-I of the Act. While luxury and entertainment may provide classification, the levy being entertainment, there could be no rationality of treating the same class - cable TV and DTH, as distinct from each other for a differential treatment. Given the fact that the subscriber of Cable TV and DTH derive the same entertainment content from one source, a distribution through satellite and analog system does not change the content of entertainment. Thus, the object of the Act being to tax "entertainment", there could be no legal base for a classification, as has been done under the impugned provision. The number of channels provided and the technical refinement in telecasting, however matters very little while considering the subject matter of taxation, viz., entertainment. Referring to the tariff notification of Telecom Regulatory Authority of India, he pointed out that given the similarity in the content of entertainment offered, TRAI has not made any such distinction in the matter of tariff fixation too. Thus, with all attributes of entertainment in cable TV being there in DTH, the claim of the State based on technical difference fails to take note of this fundamental aspect in bringing the amendment to charge the entertainment. Thus, even assuming that the Section could stand as it is, it fails to satisfy the test of Article 14 of the Constitution. Touching on the submission of the State on the aspect of segment of the public covered by DTH and the principle of ability and capacity to pay having relevance in considering the differential treatment, learned senior counsel submitted that the State does not deny the source content and the broadcasters are the same for cable TV and DTH; the content that goes for telecasting does not undergo any change or differ on account of socio-economic and geographical aspects, nor the language a good basis for differential tax treatment; the fact that the State has the absolute authority to fix the rate of tax, by itself, would not be the end of the enquiry on Article 14 of the Constitution of India.

169. Learned senior counsel appearing for the State pointed out that in considering the issue on Article 14, one has to look at the nature of the industry and the technology development therein. From cable television network, advanced technology has taken one to receipt of signals through satellite. He contended that cable TV operators generated substantial employment to persons apart from providing self-employment to several cable operators. Pointing out that though the quality of service and the number of channels offered in Cable TV might not be of high definition as in the case of DTH, yet, the target group, which are catered by the cable operators, cannot be, in any manner, ignored. The niche provided by channels through DTH is certainly not available in a cable TV system. Thus DTH is a class apart from the cable TV which are run by large industrial houses. DTH is capable of employing few, which reaches the consumers directly. The nature of competition between DTH and cable TV is totally different; so too the subscriber's capacity to subscribe to DTH is vastly different from persons who opt for cable TV. He further pointed out that the industry, trade, the State and the Centre have treated cable TV and DTH as different groups. Going by the present effort for digitisation, it is clear that difference that exists stands as an ample testimony to the class differentia between cable TV network and DTH. In the circumstances, entertainment through DTH and Cable TV are different and there is no unequal treatment of equals. The classification made thus has nexus with the object, it being to raise money for use by the State. Judging by the socio-economic aspect too in providing an employment to many a person, cable TV stands apart from DTH. Cable TV is operated by small investors and small business houses and does not require huge investment.