Power To Collect Entertainment Tax No Longer Vest In The State After 101st Amendment: Patna High Court

The Patna High Court has held that the power to collect entertainment tax would no longer vest in the state after the 101st Amendment.

The bench of Chief Justice K. Vinod Chandran and Justice Madhuresh Prasad has observed that the 101st Constitution Amendment Act substituted Entry 62 of List II to the extent that the power to levy and collect entertainment tax was bestowed only upon local self-government institutions and not the state.

The petitioner is a Multi System Operator (MSO) who is liable to pay entertainment tax under the Bihar Entertainment Tax Act, 1948. The assessee, as the proprietor, has the ultimate control over the transmission of programs, which he receives from a satellite and, through the Local Cable Operators (LCO), broadcasts to the subscribers.

Earlier, the petitioner was before the High Court when an assessment order was passed based on the number of set-top boxes recorded in the petitioner's register. The Court found that the Assessing Officer has resorted to a short-cut method to extract money from the petitioner by resorting to a special mode of recovery without even identifying the subscribers for the purpose of levying.

The assessment orders were quashed, and the Assistant Commissioner, Commercial Taxes, Patna North Circle, Patna, was directed to redo the assessment. The court, while remanding the matter, observed that there is no expression on the interparty merits and that all issues would be left open for consideration before the Assessing Authority. The assessing authority, after notice to the petitioner, carried out a fresh assessment.

The assessee raised the issue of the state having been denuded of the power to levy and collect taxes after the 101st Amendment to the Constitution. Entry 62 of List II to the Seventh Schedule of the Constitution of India, which is the field of legislation conferring the power to tax on the state, was substituted, enabling the levy and collection to be made by the Panchayats, etc. After the 101st Constitutional Amendment, the state has absolutely no power to continue with the levy as per the Act of 1948. The 101st Amendment also brought in the Goods and Services Tax regime.

The court has held that the repeal and the saving clause provided under the BGST Act do not inure to the benefit of the state since the enactment and the levy made by it cannot be sustained after the 101st Amendment.

Case Title: M/s DEN Networks Limited Versus The State of Bihar

Citation: 2023 LiveLaw (Pat) 57

Case No.: Civil Writ Jurisdiction Case No.24647 of 2019

Date: 18-05-2023

Counsel For Petitioner: Sujit Ghosh, Sriram Krishna, Tushar Vaibhav, Kamal Deo Sharma, Asray Behera

Counsel For Respondent: Vikash Kumar, Akash Chaturvedi, Rewati Kant Raman

Click Here To Read The Order