HIGH COURT OF JUDICATURE AT ALLAHABAD Judgment reserved on 22.09.2011 Judgment delivered on 21.10.2011 Civil Misc. Writ Petition No.702 of 2011 Sharad Traders & Anr. Vs. State of U.P. & Ors. Civil Misc. Writ Petition No.755 of 2011 Saif Communications Vs. State of U.P. & Ors. Civil Misc. Writ Petition No.676 of 2011 Abhishek Marketing Vs. State of U.P. & Ors. Hon. Sunil Ambwani, J.
Hon. K.N. Pandey, J.
1. The petitioners are distributors of Set Top Boxes, Dish Antenas, Recharge Vouchers of Direct to Home Service (DTH) of M/s Sun Direct TV Pvt. Ltd. (Writ Petition No.702 of 2011); M/s Bharti Telemedia Ltd. (Writ Petition No.755 of 2011) and M/s Tata Sky Ltd. (Writ Petition No.676 of 2011), under the distributorship agreements.
2. By these writ petitions the petitioners have sought for declaration of Section 2 (f-1); (f-2); 3 (d) and 13 (2) of the Uttar Pradesh Cinemas (Regulation of Exhibition by means of Video) (Fourth Amendment) Rules, 2011 as ultra vires to the provisions of Indian Telegraph Act, 1885, and Art.14, 19 (1) (g), 246 and 265 of the Constitution of India. They have also prayed for quashing the notices dated 19.4.2011 and 26.4.2011 (in Writ Petition No.702 of 2011); notice dated 19.4.2011 (in Writ Petition No.755 of 2011) and notice dated 12.4.2011 (in Writ Petition No.676 of 2011) issued by the District Entertainment Tax Officer (Licensing Authority), Distt. Ghazipur directing them to obtain licenses as 'Television Signal Receiver Agency'.
3. We have heard Shri D.K. Singh assisted by Shri R.M. Saggi for the petitioner in Writ Petition No.702 of 2011, and Shri Bharat Ji Agrawal, Sr. Advocate assisted by Shri Ashish Misra in Writ Petition No.755 of 2011 and 676 of 2011. Shri Satish Chaturvedi, Additional Advocate General assisted by Shri A.C. Tripathi, Standing Counsel appears for the State respondents.
4. The Indian Telegraph Act, 1885, is the law relating to telegraph in India. It is an Act of ancient vintage enacted in the end of nineteenth century to regulate telegraph, when the signals were transmitted by mores code (the codes consisting of dots and dashes, or long or short sounds, used for transmitting messages by audible or visual signals on wires. With the rapid advance of science and technology in the field of telecommunications, the Act has been amended from time to time. The word 'telegraph' was amended in the year 1961, by Telegraph Laws (Amendment) Act, 1961, and thereafter in the year 2004 by Indian Telegraph (Amendment) Act, No.8 of 2004, with retrospective effect from 1.4.2002. The amended definition of 'telegraph', in the Indian Telegraph Act, 1985 reads as follows:-
"(1AA) 'telegraph' means any appliance, instrument, material or apparatus used or capable of use for transmission or reception of signs, signals, writing, images and sounds or intelligence of any nature by wire, visual or other electromagnetic emissions, radio waves or Hertzian waves, galvanic, electric or magnetic means.
Explanation- 'Radio waves' or 'Hertzian waves' means electro-magnetic waves of frequencies lower than 3000 giga-cycles per second propagated in space without artificial guide."
5. The Central Government in exercise of powers conferred in Sections 4 and 7 of the Indian Telegraph Act, 1885 and Section 10 of the Indian Wireless Telegraphy Act, 1933, made Radio Television and Video Cassettes Recorder Sets (Exemption from Licensing Requirements) Rules, 1985. These Rules were amended in the year 1986 by Notification dated 1st October, 1986; in 1989 by the Notification dated 17th July, 1989, and thereafter in 1997 by notification dated 16th July, 1997. By the last amendment vide notification dated 16th July, 1997, exemption was given from license to establish, maintain, work, possess or deal in radio television and video cassette recorder sets as well as special antenna, including dish antenna, satellite decoder and associated front-end converter, used or capable of being used for reception of transient images of fixed and moving objects direct from satellites operating in Broadcasting Satellite Service or Fixed Satellite Service, in frequency bands below 4800 MHz. This exemption was, however, not available for the Northeastern States, State of Jammu and Kashmir and Union Territories of Andaman and Nicobar, and Lakshdweep and Minicoy Islands. The reasons for bringing in these amendments was the advancement of technology of transmitting signals in the frequency band above 4800 MHz (commonly called Direct to Home Broadcasting Service). The Explanatory Memorandum to the amendment, for making it necessary for licensing of DTH Services is quoted as below:-
"Explanatory Memorandum- A new technology in satellite broadcasting, not yet introduced in India, which enables a satellite broadcaster to use digital compression and KU band transponders, transmitting signals in frequency band above 4800 MHz, (commonly called Direct To Home (DTH) broadcasting service) is on the threshold of entry into India. Presently a satellite broadcaster, under the existing technology based on use of a 'C' band transponder and frequencies in bands below 4800 MHz, normally distributes his programme only through a cable operator and through such cable operators, regulations of any undesirable and objectionable programme is feasible but under the new technology a satellite broadcaster can beam his programme directly from the satellite into Indian homes which can be received with the help of a very small sized dish antenna, which even defies detection if and when required and without the involvement of any intermediary like cable operator, thus establishing a direct link with households without any possibility of regulation by an intermediary or any Regulatory Authority. In a nutshell, the new technology would enable any broadcaster within or outside India to telecast or beam any programme of his choice directly to the houses and bedrooms of general public. It is apprehended that any broadcaster who decides to start the DTH service for reception in India could include a foreign entity unlinking his signals from outside the India soil without any control over either the nature or content of the programme.
Therefore, it has become necessary to ensure that no person should be allowed to start such a DTH service in India by establishing, maintaining, working possessing or dealing in any equipment that enables reception and dissemination of programmes from a DTH service in India."
6. The Indian Wireless Telegraphy Act, 1933 regulates the possession of Wireless Telegraphy Apparatus. Section 3 of the Act provides that no person, save as provided by Section 4, shall possess wireless telegraphy apparatus, except under and in accordance with a license issued under this Act. Under Section 4 the State Government may exempt any person or class of person from the provisions of the Act. Licenses under Section 5 are to be granted by the telegraphy authority constituted under the Indian Telegraph Act, 1885.
7. The petitioners are the distributors of M/s Sun TV Pvt. Ltd.; M/s Bharti Telemedia Ltd. and M/s Tata Sky Ltd., the companies licensed by and on behalf of the President of India acting through the Director, BPNL, Ministry of Information and Broadcasting, Government of India, New Delhi, under Section 4 of the Indian Telegraph Act, 1885 and Indian Wireless Telegraphy Act, 1933, licensed to establish, maintain and operate DTH platform. The terms and conditions appended to the license, relevant for the purposes of these writ petitions, are quoted as below:-
"6.5 The Licensee shall not carry the signals of a broadcaster against whom any regulatory body, tribunal or court have found the following.
(i) Refused access on a non-discriminatory basis to another DTH operator contrary to the Regulations of TRAI
(ii) Violated the provisions of any law relating to competition including the Competition Act.
ARTICLE-7 TECHNICAL STANDARDS AND OTHER OBLIGATIONS 7.1 The open Architecture (non-proprietary) Set Top Box, which will ensure technical compatibility and effective interoperability among different DTH service provides shall have such specification as laid down by the Government from time to time.
7.2 The Licensee shall ensure subscribers interest though a Conditional Access System (CAS) which will compatible with an open Architecture (non-proprietary) Set Top Box.
7.3 The Licensee shall ensure subscribers' interest through a subscriber Management System for an efficient, responsive and accurate billing and collection systems.
7.4 The licensee shall not use any equipment which is identified as unlawful.
7.5 All content provided by the DTH platform to the subscribes, irrespective of its source, shall pass through the encryption and conditional access system, located within the Earth Station, situated on Indian soil.
7.6. The Licensee shall provide access to various content providers channels on a non discriminatory basis.
7.7 The Licensee shall adhere to any guidance/ regulations which may be laid down by the Licensor in the interest of consumer such as pricing of bouquet (s) or tier (s) of channels, etc. 7.8 The Licensee shall carry channels of Prasar Bharti on the most favourable financial terms offered to any other channel."
8. In the State of U.P., entertainment by cinema, video cinema, cable television network, and the levy of entertainment tax is regulated by U.P. Cinemas Regulation Act, 1955; U.P. cinema (Regulation of Exhibition by means of Video) Rules, 1988; U.P. Entertainment and Betting Tax Act, 1979 and the U.P. Entertainment and Betting Tax Rules.
9. The U.P. Cinemas (Regulation) Act, 1955 (in short U.P. Act, 1955) makes provisions for regulating exhibitions by means of cinematograph, in the State of U.P. The Act No.1955 was amended by U.P. Act No.21 of 1986; U.P. Act No.12 of 1989; U.P. Act No.28 of 1995; U.P. Act No.15 of 2011 and lastly by U.P. Act No.25 of 2009 w.e.f. 16.6.2009. By these amendments the activities of entertainment such as video and cable services (in the year 1995), cable operators including proprietor of a hotel (in the year 2001), and DTH services (in the year 2009) were brought within the regulation of the U.P. Act of 1955.
10. The U.P. Entertainment and Betting Tax Act, 1937, enacted with reference to Entry No.35, 36 and 50 of the Provincial List of Government of India Act, 1935, was repealed, by the U.P. Entertainment and Betting Tax Act, 1979 enacted with reference to Entry 33, 54 and 62 of List II-State List, of the Seventh Schedule of the Constitution of India. The Act was amended by U.P. Act No.1 of 1982, U.P. Act No.29 of 1985, U.P. Act No.12 of 1989 and U.P. Act No.14 of 1990.
11. By an amendment by insertion of new Clause (aa) by Section 2 of U.P. Act No.21 of 1986, to the U.P. Cinemas Regulation Act, 1955, the expression 'exhibition by means of video' was defined and a comprehensive set of rules known as U.P. Cinema (Regulation of Exhibition by means of Video) Rules, 1988 were framed. The U.P. Entertainment and Betting Tax Act, 1979 was also consequently amended by U.P. Act No.12 of 1989, adding Section 4A and 4B for levying entertainment tax on video cinema, and video shows in public service vehicles and hotels.
12. In order to exercise some kind of control and regulate the activity, carried on by the cable TV operators, the Cable Television Networks (Regulation) Act, 1995 was enacted. The Central Government also made the Cable Television Networks Rules, 1994 under this Act. The Cable T.V. Operators challenged the notices issued for demand of entertainment tax under the amended provisions of the U.P. Entertainment and Betting Tax Act, 1979. In Universal Communication System & Ors. Vs. State of U.P. & Anr., 1995 (2) LBESR 123 the High Court dismissed all the writ petitions holding that the nature of activity carried on by cable TV operators is fully covered by the provisions of amended U.P. Entertainment and Betting Tax Act, 1979. The Court held in para 12 as follows:-
"12. Sub-clause (iii) of Section 2 (1) defines " payment for admission" as any payment made for the loan or use of any instrument or contrivance which enables a person to get normal or better view or hearing or enjoyment of the entertainment which without aid of such instrument of contrivance, such person would not get. Therefore, if any person charges any money for enabling any person to use any instrument or mechanical device which enables such person to get a normal view of the entertainment which without aid of such device, he would not get, it will come fully within the clutches of Section 3 of the Act. The programmes being broadcast by foreign media like B.B.C. Star T.V. and M.T.V. or by D.D. Metro cannot be received directly on television sets. The Cable T.V. operators receive the wireless signals on their dish-antennas and after processing them through electronic equipments, they are transmitted to television sets of the subscribers through the conducting metal wires. The role played by them will be clear from paras 2 and 8 of Writ Petition No.1353 of 1993- (Universal Communications System v. State of U.P. which are quoted below:
Para 2 "That several such satellites are visible in the sky over the Indian Sub Continent. The signals emitted and sprayed by any such satellite can be directly received and collected on an appropriately designed dish-shaped receptacle known as dish-antenna, aligned to face that satellite in the direct line of vision. The signals so received, can be fed to a television set by means of a conducting metal wire to recreate an audio-visual effect on the television screen.
Para 8 "That as already stated earlier, the signals are first collected and received by dish antenna. They are then processed and amplified in the control room of the petitioners and connected through special cables to the television sets of people, willing to pay a monthly maintenance charge. The number of channels transmitted through the cable varies from petitioner to petitioner depending upon the range of the equipment and facilities possessed by them. The entire set up is generally called Cable T.V. Network. The petitioners generally have upto a hundred customers each."
There cannot be slightest doubt that a subscriber gets a normal view of the programmes only with the use of instruments which are provided by the cable T.V. operator and without the aid of such instruments, these programmes cannot be viewed. For making use of those instruments the subscriber makes payment to the cable T.V. operator. The money paid by the subscriber is thus clearly a payment for admission to an entertainment. The activity carried on by the petitioners is thus fully covered by the provisions of Section 3 of the Act and they are liable to pay entertainment tax."
13. In order to cover modern means of entertainment, achieved due to advancement of technology including DTH services, the U.P. Cinema Regulation 1955 was amended in the year 2009, with the following statement of object and reasons:-
"STATEMENT OF OBJECTS AND REASONS The Uttar Pradesh Cinema (Regulation) Act, 1955 has been enacted to regulate public exhibition of film through cinematography or video.
2. With a view to covering modern means of entertainment achieved due to advancement of technology, as bringing them in the purview of license, and to prevent illegal activities of film/ video, it has been decided to amend the Uttar Pradesh Cinema (Regulation) Act, 1955 (U.P. Act No.3 of 1955 to provide for,
(a) introducing provision for adopting new electronic projection systems in the cinema halls of the State.
(b) defining the words multiplex, television signal receiver, television signal receiver agency and video;
(c) covering DTH service by bringing television signal receiver agencies under the purview of license;
(d) inspection of television signal receiver agencies;
(e) enhancing penalty on copyright offenders in relation to cinematograph or video exhibition and the punishment for the breach of laws and rules made under the said Act.
The Uttar Pradesh Cinema (Regulation) (Amendment) Bill, 2009 is introduced accordingly.
By order, P.V. Kushwaha, Sachiv."
14. The amendments carried out by the UP Act No.27 of 2009, in the U.P. Cinemas Regulation Act, 1955 relevant for the purposes of deciding these writ petitions, are quoted as below:-
"2(aa) "Cinematograph" includes any apparatus or electronic digital projection system or any other emerging analogeus technology other than video for the representation of moving pictures or series of pictures;
Explanation-Digital projection system is a set of electronic apparatus used for digital cinema exhibition receiving digital print delivery through hard disc or through satellite or otherwise.
(a-2) 'Multiplex' means a group or conglomeration of two or more than two cinema halls within the same premises with commercial, cultural and other entertainment related facilities, (f-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;
(f-2) 'television signal receiver agency' means a place 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.'
(g) 'Video' means any system, by whatever name called, or recording on, or reproducing from video cassette or any other device by whatever name called or transmitting through any recording medium or directly the moving visual images with or without sound.
(i) Words and expression not defined in this Act but defined in the Uttar Pradesh Entertainments and the Betting Tax Act, 1979 or the Cable Television Network (Regulation) Act, 1995 shall have the meaning assigned to them in the said Acts.
3. Save as otherwise provided in this Act, no person shall-
(a) give an exhibition by means of cinematograph, or
(b) given an exhibition by means of video, or
(c) keep a video library, or
(d) keep television signal receiver agency.
other than in a place licensed under this Act or otherwise than in compliance, with conditions and restrictions imposed by such licence.
6-A (1) The Licensing authority or any other officer authorised by him in this behalf may, with such assistance as may be necessary, enter, inspect and search at any reasonable time, any place ordinarily used or suspected to be used, for exhibition by means of cinematograph or video, or for keeping video library or television signal receiver agency, with a view to securing compliance of the provisions of this Act or the rules made thereunder and may seize such film and video cassettes as are found being exhibited or kept in contravention thereof.
8- (1) If the owner or person in charge of a cinematograph uses or allows it to be used, or fi the owner or occupier of a place permits that place to be used for exhibition by means of cinematograph, or if a person gives exhibition by means of video or keeps a video library or television signal receiver agency, in contravention of the provisions of this Act or of the rules made thereunder, and of the conditions and restrictions upon or subject to which licence has been granted under this Act, he shall be punishable [with simple imprisonment for a term which may extend to six months or with fine which may extend to ten thousand rupees, or with both] and in the case of continuing offence with a further fine which may extend to two thousand rupees for each day during which be offence continues.
(2) If any person prevents the entry of any officer duly authorised in this behalf, or otherwise obstructs such officer in the discharge of his duties imposed by or under this Act or the rules made thereunder, he shall be punishable with a fine which may extend to five thousand rupees.
(3) If any person commits or attempts to commit or abets the commission of offence of infringement of copyright in relation to a cinematograph or video film or a record embodying in part of sound track associated with the film, punishable under the Copyright Act, 1957 or exhibit or permits to be exhibited or sale, store, let on hire, distribute, exchange or put into circulation any infringed copy of cinematograph film or video cassette or any other device by whatever name called shall be punishable with imprisonment for a term which may extend to two years or with fine which shall not be less than twenty five thousand rupees but which may extend to five lakh rupees or with both.
(4) If a person, having been convicted of an offence punishable under sub-section (3) is again guilty of an offence punishable under that sub-section, he shall be punishable for the second or subsequent offence for a term of imprisonment which shall not be less than one year which may extend to two years or with fine which shall not be less than fifty thousand rupees but which may extend to five lakh rupees or with both."
13. (1) The State Government may make rules for purpose of carrying the provisions of this Act into effect.
(2) In particular and without prejudice to the generally of the foregoing power, rules made under this Act may provide-
(a) for the situation and regulation of the places at which and the conditions subject to which [exhibitions by means of cinematograph or video may be made or video libraries or television signal receiver agency, may be kept] (aa) for the imposition of composing charges not exceeding fifty thousand rupees, on payment whereof exemption under section 10 may be granted from the provisions of the rules relating to the site or building to be used for exhibition by means of cinematograph or video."
15. The State Government also correspondingly amended UP Entertainment and Betting Tax Act, 1979, to bring within its ambit DTH Services. The amendments made in the U.P. Entertainments and Betting Tax Act, 1979 relevant for the purposes of this case are quoted as below:-
"2. (a) 'admission to an entertainment' includes admission to any place in which [the entertainment is held or any place wherefrom entertainment is provided by means of the cable television network or Direct to Home service or any other emerging transmission by whatever name called;
(a-1) 'amusement park' means 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 for admission;
(f-1) 'Direct-to-Home service' means a system of distribution of multichannel television 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 race) to which persons are admitted for payment and in the case of cinematography exhibitions, includes exhibition of news-reels, 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;
(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 from time to time;] (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;
(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 named called, for television exhibition through cable television network or any other such 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 cooperative society including a cooperative 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 the 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;
(l-1) '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 additional 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;
(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 (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; (u) words and expressions 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, 1955 and the rules made thereunder." 16. By these amendments, the DTH Services were covered in the U.P. Cinemas Regulation Act, 1955, and U.P. Entertainment and Betting Tax Act, 1979. The Television Signals Receiver Agency was, however, not required to take out license, nor any provisions were made under the U.P. Cinemas Regulation of Exhibition by means of Video Rules, 1988 for the DTH service operators to take out licenses. These rules were thus amended by the U.P. Cinemas Regulation of Exhibition by means of Video (4th Amendment) Rules, 2011, providing for definition of cable operator, cable service, cable television network in the amended Rule 2 (a-1); (a-2); (a-3). Rule 9A requires the permanent buildings in the case of cable television network. Rule 2B defined license to mean written authorization by licensing authority to give exhibition by means of video or through cable television networks or to operate or keep video library or Television Signal Receiver Agency granted in Form-II, Form III or Form IIIA or Form IV as the case may be appended to the Rules. The amendments were also carried out in Rule 10, 11, 12, 15, 17, 18 and on Form-II. Rules inserted New Form-IIIA and Form IV. A new Rule 18 extended the provision of grant of license to the Television Signal Receiver Agency. Sub-rule 3 provided that the license shall be granted in Form-4 appended to the Rules. Rule 3 and the table appended to sub-rule (2) of Rule 18 are quoted as below:- "Rule as hereby substituted
18. Grant of Licence- (1) Every application for grant of licence or for renewal thereof for keeping a video library or television signal receiver agency shall be made to the Licensing Authority with full details of name of applicant, full address (permanent and local) and the place to be licenced alongwith documents mentioned in clause (a) or (b) below a the case may be.
(a) in the case of television signal receiver agency the application shall be accompanied with the following documents-
(i) a site plan in duplicate showing the location of premises in relation to adjacent premises and public thoroughfare on which the premises abuts.
(ii) documents showing the ownership or tenancy of the place or building or shop of the said agency.
(iii) documents regarding Photo identity and address Proof e.g. Election Photo identity Card, driving licence, Ration Card or any Photo identity card issued by recognised institution.
(iv) Documents regarding Bank guarantee of Rs.25,000.00
(v) the authority letter/ consent from the channel owner or his assignee.
(b) in the case of video library the application shall be accompanied with documents referred to in sub clause (i) and (ii) of clauses (a) and proof of residential address e.g. Election Card, Ration Card etc.:
Provided that any change in address shall be communicated immediately to Licensing Authority.
(2) The Licensing Authority may grant or renew the licence for a period not exceeding three financial years at a time for keeping a video library/ television signal receiver agency in a local area having population mentioned in Column 1 below, on payment of fee for one financial year or part at the rates specified in Column II or III, as the case may be, below:-
Column 1 (Population Column 2 Fees Column I (Local area) Column II (licence fee for video library) Column III (licence fee for television signal receiver agency) (a Less than two lakhs One thousand five hundred rupees.
(a) Municipal corporation, NOIDA and Greater NOIDA.
Five thousand rupees.
ten thousand rupees
(b) Two lakhs or more but less than five lakhs.
Three thousand rupees.
(b) Municipal broad Three thousand rupees.
Six thousand five hundred rupees
(c) Five lakhs or more Four thousand rupees.
(c) Town Area/ others places One thousand five hundred rupees.
Three thousand rupees (3) The licence shall be granted in Form IV appended to these rules.
17. The aforequoted amendments provided to cover DTH services under the Telegraph Act for the purposes of licensing by the Telecom Regulatory Authority of India to the companies beaming signals to be received by the dish antennas and thereafter to be decoded with the help of Set Top Boxes connected to the television for viewing the moving pictures. The DTH services were brought within the purview of regulation in the State of U.P. by amendments in U.P. Cinemas Regulation Act, 1955; U.P. Cinemas (Regulation of Exhibition by means of Video) Rules, 1988 and the U.P. Entertainment and Betting Tax Act, 1937 and the Rules framed there under. The Local Distributor defined as Television Signal Receiver Agency, distributing Dish Antennas and Set Top Boxes under an agreement with the license holder under the Telegraph Act, was thus required to obtain license by the U.P. Cinemas (Regulation of Exhibition by means of Video (4th Amendment) Rules, 2011 w.e.f. 31st March, 2011. The District Entertainment Tax Officers were designated by the State Government as Licensing Authorities. In District Ghazipur as in all other districts in the State of U.P. notices were issued by the Licensing Authority to all the Television Signal Receiver Agencies to obtain licenses under Rule 18 on Form-4. The license would require the Television Signal Receiver Agency to maintain records, and to collect and to pay entertainment tax in accordance with the provisions of U.P. Entertainment and Betting Tax Act, 1979, at such rates as may be prescribed by the State Government, for which the U.P. Entertainment and Betting Tax Act, 1979 was amended by U.P. Act No.25 of 2009 w.e.f. 16.6.2009.
18. The companies under license from Telecom Regulatory Authority of India under the Telegraph Act have filed writ petitions in which interim orders have been obtained not to collect and pay entertainment tax prior to 16.6.2009, when the U.P. Act No.25 of 2009 amending U.P. Entertainment and Betting Tax Act, 1979 came into force. They were, however, asked to pay entertainment tax for the period after 16.6.2009. We are informed that at Lucknow Bench of the Court writ petitions have been filed by the Licensee companies, in which directions have been issued to them holding license under the Indian Telegraph Act, to directly deposit entertainment tax, on the number of subscribers on the amount charged for DTH services.
19. Shri D.K. Singh and Shri Bharat Ji Agrawal, Sr. Advocate submit that the petitioners are distributors of dish antennas, set top boxes and recharge vouchers of DTH services of the licensed companies. These equipments are called consumer premise equipments, and viewing cards, which are solely owned by the company and are part of services provided to the end user. Under the agreement entered into by the licencee companies under the Telegraph Act with the consumers, these consumer premise equipment and viewing cards are not transferable. The distributors are only required to install the equipment and the viewing cards, after scanning them as per the terms and conditions of the agreement. They submit that under Entry 31 of Union List in the Seventh Schedule of the Constitution of India, the telegraph and broadcasting are exclusively within the legislative domain and competence of the Union. The parliament has exclusive powers under Art.246 (1) of the Constitution of India to make laws with respect to subject matters enumerated in Entry 31 of the Union List, which reads as follows:-
"31. Posts and telegraphs, television, wireless, broadcasting and other like forms of communication".
20. It is submitted that under Art.246 (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-2 of the Seventh Schedule (referred to as State List in the Constitution). Art.265 of the Constitution of India provides that no tax shall be levied or collected except by authority of law.
21. It is submitted that Telegraph under Section 3 (1AA) of the Indian Telegraph Act, 1955 defines telegraph, and which includes DTH services. The exclusive privilege under Section 4 of the Indian Telegraph Act, 1885 for granting license is with the Central Government on such conditions, and in consideration of such payment as it think fit. With the coverage of DTH services, the companies such as M/s Sun Direct TV Pvt. Ltd.; M/s Bharti Telemedia Ltd. and M/s Tata Sky Ltd. have been granted license by the Central Government on terms and conditions set out in such license. Section 7 of the Telegraph Act grants power to the Central Government to make rules for conduct of telegraphs. Rule 7 (2) (a) deals with forms of application to grant license, to establish or maintain working telegraph and fees thereof, conditions of license provided for restrictions. Section 20 of the Act refers to penalties that can be levied for violation of the provisions of the Act and the Rules. The apparatus such as dish antennas and set top boxes clearly fall within the definition of telegraph, on which the Central Government alone has the exclusive privilege for granting or establishing, maintaining etc. of telegraph or granting license for such purpose.
22. It is submitted that under the Indian Wireless Telegraphy Act, 1933, Rule 2 (1) defines 'wireless communication' and Rule 2 sub-rule (2) defines 'wireless telegraphy apparatus'. The license to possess 'wireless telegraphy apparatus' under the Act can be granted by the Central Government. The Act provides for offence and penalties and punishment for violation of the provisions of the Act and the Rules made thereunder. The radio television and video cassette recorder sets are exempt from Licensing Requirement Rules, 1985. The broadcasting satellite services "or fixed satellite services" shall be deemed to be wireless telegraphy apparatus for the purposes of Indian Wireless Telegraphy Act, 1933 (after its amendment on 25.10.1986). The DTH services were covered by an amendment made to the Rules in the year 1997. On 9.1.2011, the 1997 Rules were amended, whereby Rule 4 was omitted and Rule 3 was amended, whereby DTH services were allowed. The cumulative reading of the Indian Telegraph Act, 1885; Indian Wireless Telegraphy Act, 1933 and various rules framed thereunder make it absolutely clear that it is only the Central Government, which has the exclusive power to regulate DTH apparatus. In Ramkrishna Dish Antenna System Vs. The Deputy Superintendent of Police, Markaput & Ors., AIR 1989 AP 295 the Andhra Pradesh High Court held that the apparatus such as dish antenna and other equipments are recognized as telegraph within the unamended definition of telegraph under the Indian Telegraph Act.
23. It is submitted that by the amendments under challenge in the U.P. Cinema of Regulation Act, 1955 by which new sub-sections (f-1) and (f-2), Section 3 were inserted; and the U.P. Cinemas (Regulation of Exhibition by Means of Video), (4th Amendment) Rules, 2011, seeking to bring within its ambit of license under Rule 2 (b) and 18 the Television Signal Receiver Agency, strives to cover DTH services within its purview. They submit that the State has no power to make laws to regulate in any manner DTH service, which is a broadcasting service. Entry 33 of State list of the Seventh Schedule cannot include subject matters of Entry 31 of Union Lit. Entry 33 of the State list of the 7th Schedule reads as follows:-
"33. Theaters and dramatic performances; cinemas subject to the provisions of entry 60 of List-1; sports, entertainments and amusements."
24. It is submitted that the Rules framed under Section 13 of the U.P. Cinemas Regulation Act, 1955, so far as they deal with regulating and licensing the DTH apparatus are ultra vires, the provisions of Telegraph Act, 1885, Indian Wireless Telegraphy Act, 1933 and the Constitution of India. The license granted to the company is for the whole of the country, and is not limited to the State of U.P. No other State has covered the DTH service under the license to be granted by the State in purported exercise of authority to regulate DTH service under Entry 33 of the State list pertaining to entertainment.
25. Learned counsel appearing for the petitioners have relied upon judgments in State of Bihar Vs. Mangal Sao, AIR 1963 SC 445; the State of Kerala Vs. K.P. Govindan Tapioca Exporter, AIR 1975 SC 152; Synthetics and Chemicals Ltd. & Ors. Vs. State of U.P. & Ors., (1990) 1 SCC 109; State of U.P. & Ors. Vs. Vam Organic Chemicals Ltd. & Ors., (2004) 1 SCC 225; CCE Vs. Chhata Sugar Company ltd., (2004) 3 SCC 466; State of West Bengal Vs. Kesoram Industries Ltd. & Ors., (2004) 10 SCC 201; Godfrey Phillips India Ltd. & Anr. Vs. State of U.P. & Ors., (2005) 2 SCC 515 and Mohan Meakin Ltd. Vs. State of H.P. & Ors., (2009) 3 SCC 157 in support of their submissions that the State Government under Item 33 of List II has no power to legislate on the subject of 'telegraph', which is exclusively covered under Entry 31 of List-1 of the Seventh Schedule. Under Art.246 (3) of the Constitution of India; the State Government cannot make laws on the subjects, which are exclusively covered under the Union List.
26. The rates of license fees to be paid by the Television Signal Receiver Agency, under Rule 18 of the 4th Amendment Rules, 2011, and the slabs are provided in Rule 18. These provide license fees for video library in column-2 and for Television Signal Receiver Agency in column-3, at fixed and different rates based on population for local areas such as Municipal Corporation (Noida and Greater Noida); Municipal Board, and Town Area/ other places. For population of less than 2 lacs a fees of Rs.10,000/- for Municipal Corporation (Noida and Greater Noida); Rs.6500/- for Municipal Board; and Rs.3000/- for Town Area and other places is prescribed. The petitioners carrying on their business in Ghazipur are required to pay license fee of Rs.3000/- per annum.
27. Shri D.K. Singh submits that Art.199 (2) and 110 recognises two concepts of fees, namely fees for license and fees for services rendered. He submits that bill shall not be deemed to be money bill by reason only that it provides for imposition of fine, or other pecuniary penalties or for demand of fees for license or fees for services rendered or by reason that it provides imposition, abolition, alteration or regulation of tax by any local body or body for local purposes. Fee can be charged for license to part with privilege such as telecom license, liquor license, mining lease, etc. The fees can also be charged from persons or persons for recurring expenses in running subject services, for which benefits are provided to such person or persons on the doctrine of quid pro quo. He submits that in the present case the places run by the petitioner are licensed under the Shop and Commercial Establishment Act, 1962, and the Rules of 1963, made thereunder. The petitioners are paying registration fees under these Rules. The State Government is not justified the levy of fees, as no details of expenses incurred have been given. Infact no expenses can be incurred for services provided to Television Signal Receiver Agency. The provisions of the Act are not merely regulatory. Very high rates has been prescribed, imposing common burden, which is by way of tax. Hundreds of distributors of various companies paying fees to the State Government will add to the revenue of the State exchequer, which clearly amounts to levy tax on telegraph. Entry 33 of the State List does not support tax. Since the activities are not regulatory but to levy tax, the fees is clearly violative of Art.264 of the Constitution of India. The levy of licensee fee is also excessive, confiscatory, unreasonable and is thus arbitrary being violative of Art.14 and 19 (1) (g) of the Constitution of India. The fee is therefore liable to be set aside. He has relied upon the judgments referred to as above and specially in Vam Organic Chemicals Ltd. (Supra); Chhata Sugar Company Ltd. (Supra) and Kesoram Industries Ltd. (Supra) to assail the levy of fees.
28. Shri Bharat Ji Agrawal has in addition to the aforesaid cases relied upon M/s Ujagar Prints & Ors. Vs. Union of India & Ors., (1989) 3 SCC 488; the Second Gift Tax Officer, Mangalore Vs. D.H. Nazareth, (1970) 1 SCC 749; Bharat Sanchar Nigam Ltd. & Anr. Vs. Union of India & Ors., (2006) 3 SCC 1; Association of Leasing and Financial Service Companies Vs. Union of India & Ors., (2011) 2 SCC 352 and Bharat Sanchar Nigam Ltd. & Anr. Vs. Union of India, (2006) 3 SCC 1 in submitting that the State Government does not have competence to legislate on the subject of telegraph under Entry 31 of the Union List. He submits that the State Government has clearly transgressed its legislative powers. In M/s Ujagar Prints & Ors. (II) Vs. Union of India & Ors. (Supra) it was held that the entries to the legislative lists are not source of the legislative power but are merely topics or fields of legislation and must receive a liberal construction inspired by a broad and generous spirit and not in a narrow pedantic sense. The expression 'with respect to' in Art.246 brings in the doctrine of 'pith and substance' in the understanding of the exertion of the legislative power and wherever the question of legislative competence is raised, the test is whether the legislation, looked at as a whole is substantially 'with respect to' the particular topic of legislation. If the legislation has a substantial and not merely a remote connection with the entry, the matter may well be taken to be legislation on the topic. The State can, where the legislation is assailed for lack of legislative competence, support it on the basis of any other entry within the legislative competence of the legislature. The competence to legislate flows from Art.245 and 246 and the other Articles following in Part XI of the Constitution. In supporting a legislation sustenance could be drawn and had from a number of entries. The legislation could be a composite legislation drawing from several entries.
29. In the Second Gift Tax Officer, Mangalore (Supra) the Supreme Court held that there is no entry in the Union Lit or the concurrent list mentioning the gift tax. The Parliament purported to use its powers derived from Entry 97 of the Union List read with Art.248 of the Constitution. The pith and substance of the Gift Tax Act is to place tax on the gift of property, which may include land and buildings. It is not a direct tax on land and buildings. The land and buildings are valued to find out the total amount of gift and what is tax is the gift. The value of the land and building is only a measure of the value of the gift. Within the ambit of an entry the exercise of power is as plenary as any Legislature can possess. The entries themselves do not follow any logical classification. Since they are likely to overlap occasionally, it is usual to examine the pith and substance of legislation with a view to determine as to which entry they can be substantially related, a slight connection with another entry notwithstanding. In Association of Leasing and Financial Services Companies (Supra), the Supreme Court held that tax on services is different and distinct from tax on sale of goods. The Parliament has not divested itself of the powers to impose service tax. The tax on services is within the legislative competence of parliament under Art.248 read with Entry 97 of List-1.
30. In Bharat Sanchar Nigam Ltd. (Supra) the Supreme Court held that if the goods in question are the electro-magnetic waves, or radio frequencies, which carry the voice message or other data in a telephone call, the telephone service is nothing but service. The nature of transactions is a composite transaction of service and sale. There may be transfer of a right to use the goods in providing of a telephone connection, it is possible for States to tax the sale element providing there is a discernible sale and 'dominant intention' test is satisfied, but only to the extent relatable to such sale. There may not be any transfer of user of any goods in electromagnetic waves or radio frequencies as these are not deliverable goods. The goods in such a transaction are limited only to handsets or other works provided by service provider, which can be taxed under the sales tax laws. The Supreme Court further held that the integrity of the license to provide telephone services cannot be broken into pieces nor can telecom service rendered by service providers be so mutilated. The question whether SIM cards are goods was left open.
31. Shri Satish Chaturvedi, AAG appearing for the State of U.P. has relied upon the object and reasons for amending U.P. Cinemas Regulation Act, 1955, given in the extraordinary gazette of the State of U.P. dated 9th September, 2009. He submits that with rapid advancement of science and technology of communication, modern means have been achieved for entertainment. Earlier only radio, cinema and television were covered along with other forms of entertainment as the means of entertainment by moving pictures. With the development in communication technology, facilitating communications through satellites in Geo-Stationary Orbits, circling the earth, new electronic projection systems are provided, with facilities of decoding signals in cinema halls; for receiving signals by DTH services, and decoding them for viewing moving pictures on television. The companies licensed under the Telegraph Act have appointed distributors as Television Signal Receiver Agencies, to distribute and install dish antennas and set top boxes for decoding the signals. The object is to receive wireless signals beamed from earth station, to be received by satellite by dish antennas and decoded for the purposes of entertainment.
32. Shri Chaturvedi has cited the provisions of the U.P. Cinemas Regulation Act, 1955 as amended in 2009; the U.P. Entertainment and Betting Tax Act amended in 2009 and the U.P. Cinemas (Regulation of Exhibition by means of Video) (4th Amendment) Rules, 2011 made under Section 13 of the U.P., Cinemas Regulation Act, 1955. He relies upon the definition of ''admission to entertainment' under Section 2 (a); ''entertainment' under section 2 (g); ''direct to home service' under Section 2 (f-1); ''Ku Band' under Section 2 (i-1); ''payment for admission' under 2 (l); ''place of entertainment' under Section 2 (l-1) and ''proprietor' under Section 2 (m), to submit that the State Government by these amendments has kept pace with the new technology used in entertainment and for which it has legislative competence to regulate under Entry 33 of List-II. He submits that the State Government is not licensing the possession of instruments but for entertainment. All amendments made under these Acts and Rules by the State Government are for the purposes of regulating entertainment. The entertainment tax is levied on proprietor, which includes Television Signal Receiver Agency as distributor of the licensee under the Telegraph Act.
33. Shri Satish Chaturvedi has relied upon South Indian Film Chamber of Commerce, Madras & Ors. Vs. Entertaining Enterprises, Madras & Ors., (1995) 2 SCC 462, in support of his submission that under the Tamilnadu Exhibition of Film on Television Screen through Video Cassette Recorder (Regulation) Act, 1984, the license given to a person to keep a video cassette library and to keep letter of consent from the first owner of the copyright in any of such film or assignee thereof, so that he may not infringe the copyrights, and for which he can be punished under the Act, is no ground to held that the State legislature losses the legislative competence, which it has on the subject of cinema in List-II of the Seventh Schedule. Setting aside the judgment of the Madras High Court the Supreme Court held that when a regulatory legislative measure is enacted by a legislature on a subject within its competence, requires a person to obtain a license for doing certain business concerned with the subject and impose certain restrictions upon such person to make him conduct the business, lawfully, it could be regarded as legislative provision, which is ancillary to the main subject of the regulation. Once the subject of regulation is found within the pith and substance of the covered legislative competence namely cinema, ancillary provisions, by which the business is required to be run lawfully, and not to violate any provisions of law such as Copyright Act would not take it away from the competence of the State Government.
34. Shri Satish Chaturvedi has relied upon M/s Hoechst Pharmaceuticals ltd. & Ors. Vs. State of Bihar & Ors., (1983) 4 SCC 45; Vam Organic Chemicals ltd. & Anr. Vs. State of U.P. & Ors., (1997) 2 SCC 715, in submitting that the State Government was within its legislative competence to provide for license of DTH services, which is a new technology used for entertainment.
32. Shri Satish Chaturvedi submits that for the purposes of regulation, the levy of fees can be justified. Where the regulation is the main purpose, the fee or earning out of it has to be treated as incidental. Where the State has powers to regulate entertainment, a license fee provided to take out license and to comply with its conditions, is pure and simple regulatory fees. He submits that nature of fees and its quantum is not such on which it could be treated as compensatory fees for requiring the State Government to justify its levy on the principle of quid pro quo. He has relied upon Secunderabad Hyderabad Hotel Owners Association & Ors. v. Hyderabad Municipal Corporation, Hyderabad & Anr., AIR 1999 SC 635; Corporation of Calcutta & Anr. Vs. Liberty Cinema, (1965) 2 SCR 477; and Vam Organic Chemicals Ltd. & Anr. Vs. State of U.P. & Ors., (1997) 2 SCC 715 in submitting that fee in the present case is simply a license fee, which is regulatory in nature. It is not by way of common burden nor it may be treated as compensatory fees or tax.
35. We find that the argument made on behalf of the petitioners overlooks the fundamental principles of legislation by the Central Government and the State Government, under the three lists in the Seventh Schedule, guided by Art.245 and 246 and Part XI of the Constitution of India, and the pith and substance rule developed by the Supreme Court in interpreting the legislation by Central and State Governments.
36. In State of West Bengal Vs. Keso Ram Industries Ltd. (Supra) it was held by the Supreme Court that various entries in the three lists are not 'powers' of legislation but 'fields' of legislation. The entries in the lists being merely topics or fields of legislation, they must receive a liberal construction inspired by a broad and general, and not in a narrow pedantic sense. The words of expression implied in drafting the entries must be given the widest possible interpretation. This is because the application of the subjects to the lists is not by way of scientific or logical definition but by way of mere simplex enumeratio of broad categories. A power to legislate as to the principal matter specifically mentioned in the entry shall also include within its expanse the legislation touching incidental and ancillary matters. In para 138 of the majority opinion the Supreme Court held:-
"It is well settled that it is for the legislature to draft a piece of legislation by making the choicest selection of words so as to give expression to its intention. The ordinary rule of interpretation is that the words used by the legislature shall be given such meaning as legislature has chosen to assign them by coining definitions contained in the interpretation clause and in absence thereof the words would be given such meaning as they are susceptible of in the ordinary parlance, may be by having recourse to dictionaries. However still, the interpretation is the exclusive privilege of the Constitutional Courts and the Court embarking upon the task of interpretation would place such meaning on the words as would effectuate the purpose of legislation avoiding absurdity, unreasonableness, incongruity and conflict. As is with the words used so is with the language employed in drafting a piece of legislation. That interpretation would be preferred which would avoid conflict between two fields of legislation and would rather import homogeneity. It follows as a corollary of the abovesaid statement that while interpreting tax laws the Courts would be guided by the gist of the legislation instead of by the apparent meaning of the words-used and the language employed. The Courts snail have regard to the object and the scheme of the tax law under consideration and the purpose for which the cess is levied, collected and intended to be used. The Courts shall make endavour to search where the impact of the cess falls. The subject matter of levy is not to be confused with the method and manner of assessment or realisation."
37. The Supreme Court further held in Kesoram's case that in the scheme of the lists in the Seventh Schedule, their exists a clear distinction between the general subjects of legislation and heads of taxation. They are separately enumerated. Tax 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 distinct matter for the purposes of legislative competence. The power to tax is not an incidental power. Although legislative powers include all incidental and subsidiary powers, the power of regulation and control is separate and distinct from the power of taxation, and so are the two fields for the purposes of legislation.
38. In State of Punjab & Ors. Vs. Amritsar Beverages Ltd.& Ors., (2006) 7 SCC 607 the Supreme Court held that constitution is living organ. It has to be interpreted differently having regard to different societal situation. Creative interpretation had to be resorted to by the Court so as to achieve balance between age old and archaic laws on the one hand and advances in technology on the other. The judiciary has to respond to the needs of the changing scenario in regard to development of technologies. It has to use its own interpretation principles to achieve a balance.
39. The advances made by science and technology in communications has opened up new means of entertainment. The coloured pictures and the new sound systems have made cinema a wholesome entertainment. The development in technology in wireless telegraphy, and the transmissions of digital signals through satellites has facilitated entertainment while sitting at home.
40. The technology of satellite broadcasting based on the use of C- Band Transponder and frequencies in bands below 4800 MHz distributing programmes through a cable operator to the television sets in the homes, underwent a radical change after the advent of technology in satellite broadcasting using digital compression and Ku band transponder transmitting signals in frequency band above 4800 MHz commonly called DTH service, made its entry. Under the new technology a satellite broadcaster can beam his programme directly through the satellite, into homes, which can be received with the help of very small sized dish antenna, with or without involvement of any intermediary like a cable operator. A direct link can now be maintained with the television sets in homes without any possibility of regulation by intermediary.
41. The new technology enables any broadcaster within or outside India to beam any programme directly to the homes without linking his signals from inside the Indian soil. The definition of telegraph under the Indian Telegraph Act, 1885 enacted more than century ago was found inadequate to regulate this new technology. The Indian Telegraph Act, and the Indian Wireless Telegraphy Act, 1933 had to be amended in the year 2004, to include any appliance, instrument material or apparatus used or capable of use for transmission or reception of signs, signals, writing, images and sounds or intelligence of any nature by wire, visual or other electromagnetic emissions, radio waves or Hertzian waves, galvanic, electric or magnetic means. In order to protect the integrity of the transmission, which could now reach to the homes directly from foreign soil and to bring it under regulatory regime of the laws of the country, as also to provide for protection of intellectual property rights and the social and cultural norms, licensing was provided under the Indian Wireless Telegraphy Act for the wireless telegraphy apparatus under certain conditions, which provide amongst others to establish and maintain installation of the uplink earth station in India, including monitoring facility and to commission the DTH platform after obtaining wireless operational license. The condition of the licensing by TRAI served the purpose of regulating DTH services, which include notified TV channels. The conditions of license also provide for uplinking of only such TV channels, which are registered TV channels to be carried out or included in DTH service, vide orders of BPNL dated 11th May, 2006. No licensee could carry or include in his DTH service in television broadcast or channel, which is not registered by the Central Government for being viewed within the territory of India. The licensee is prohibited from carrying any channels prohibited by Ministry of Information and Broadcasting. Under Clause 6 of the license the objectionable or obscene messages or communication inconsistent with the laws of India, use of facility or service in anti-national activity and the programmes against the interest of national security are prohibited. The TRAI under the Indian Telegraph Act 1885 amended from time to time and the Indian Wireless Telegraphy Act, 1933, has secured a regime guided by a policy to protect Indian audience from the exposure to DTH services. All these laws with its amendments are within the purview of regulating telegraph and wireless telegraphy by the Central Government under Entry 31 of List-I in the Seventh Schedule, including post and telegraph, telephones, wireless, broadcasting and other like forms of communication.
42. The telegraphy with its technological advances, giving it an increased capacity to reach home directly, has enormous potential of entertainment, on which the exclusive power of regulation has been given to the State Government under Entry 33 in the State list, including theaters and dramatic performances, cinemas, subject to the provisions of Entry 60 of List 1 (providing for sanctioning of cinematograph films for exhibition namely censure), sports entertainment and amusements. The State Government has the legislative power in such case to regulate entertainment by advanced telegraphy and also to levy tax on it under Entry 62, which provides for tax on luxuries, including tax on entertainments, amusements, betting and commercial.
43. The State legislation in order to keep pace with advanced technology amended the U.P. Act, 1955, to include DTH services in the year 2009. The U.P. Entertainment and Betting Tax Act, 1979 was correspondingly amended in the same year. The licensing, however, did not cover the local distributor defined as Television Signal Receiver Agency under the amendment carried out in the U.P. Cinema Regulation Act, 1955. The State Government thus thought it fit and found it appropriate to license the place from where the Television Signal Receiver Agency was carrying out its operations. This activity is different than the cable service as defined under the U.P. Cinema Regulation Act, 1955. The State Government in licensing the place from where Television Signal Receiver Agency was operating by keeping his books and equipments, did not seek to regulate the equipment and apparatus of telegraph, but the entertainment, which is made possible through such equipment and apparatus. The amendments in the U.P. Entertainment and Betting Tax Act, 1979 brought about charges in the definition of 'admission to entertainment', to include DTH service or any other emerging transmission by whatever name called, including DTH Service Ku Band, payment for admission to include any payment by person to the proprietorship of DTH or any other service by whatever name called by way of contribution or subscription or installation of the connection charges for the purposes of direct to home service, with the aid of set top box or any other device of the like nature, which connects television sets or any other device at residential or non-residential place or connection holder directly to the satellite without passing through an intermediary such as cable operator. The words place of entertainment to include a place, where books of accounts or any other relevant records pertaining to entertainment or entertainment of providing cable service by direct to home service or broad-band service under Section 2 (l-1) or change of definition of proprietor under Rule 2 (m) as well as definition of Television Signal Receiver and Television Signal Receiver Agency, was only for the purposes of regulating and for taxing entertainment.
44. Coming to the argument that license fees is compensatory fees, and that State is obliged to justify it on the principles of quid pro quo, it will be useful to refer to the principles laid down by the Supreme Court in this regard in Corporation of Calcutta & Anr. Vs. Liberty Cinema (Supra). The respondent, who was the owner and licensee of the cinema theater had been paying licensee fee of Rs.400/- per year on that basis. In 1958 the Corporation of Calcutta by resolution changed the basis of assessment of fees. Under the new method the fee was to be assessed at rates prescribed per show, according to the sanctioned seating capacity of the cinema house and the respondents had to pay fee of Rs.600/- per year. It was argued that levy was tax, and not fee in return of service, and was not commensurate with the cost incurred by the Corporation in providing the services; the levy was thus invalid and was also violative of Art.19 (1) (f) and (g) of the Constitution of India. The Supreme Court held that the Calcutta Municipal Corporation Act does not intend to use the word 'fee' as referring only to a levy in return for services. The words used are fees for the license and these words do not necessarily mean a fee in return for services. The Act does not provide for any service of a special kind being rendered resulting the benefits of the person to whom it may be imposed. The Act permits bye-laws to be framed for regulating the inspection, supervision and control amongst others of cinema houses, but it is not obligatory to make such bye-laws. The inspection to be carried out is to see, that the terms of the license are observed and not service to them. Following, The Commissioner, Hindu Religious Endowment, Madras Vs. Shri Lakshmindra Thirtha Swamiar of Sirur Mutt, 1954 SCR 1005, and The Hingir Rampur Coal Co. Ltd. Vs. State of Orissa, 1961 (2) SCR 537, the Supreme Court held that whether a particular levy is fee or a tax, has to be decided only by reference to the terms of the section. Its position in the Act cannot determine its nature and imposition, which is tax and not a fee, cannot become fee by reason of its having being placed in a certain part of statute. Where the Municipal Corporation as autonomous body has to perform various statutory functions, and is given power to decide when and in what manner functions are to be performed, its needs will vary from time to time with the prevailing exigencies. Its power to collect tax is necessarily limited to the extant required to be discharged for its functions. The Supreme Court held that no doubt increase in the rate of fee was large, but considering the available seating capacity, it cannot be said to be unreasonably high.
45. In Secunderabad Hyderabad Hotel Owners Association (Supra) the fee for running hotel business was held to be regulatory. In para 9 the Supreme Court held:-
"It is, by now, well settled that a licence fee may be either regulatory or compensatory. When a fee is charged for rendering specific services a certain element of quid pro quo must be there between the service rendered and the fee charged so that the licence fee is commensurate with the cost of rendering the service although exact arithmetical equivalence is not expected. However, this is not the only kind of fee which can be charged. Licence fees can also be regulatory when the activities for which a licence is given require to be regulated or controlled. The fee which is charged for regulation for such activity would be validly classifiable as a fee and not a tax although no service is rendered. An element of quid pro quo for the levy of such fees is not required although such fees cannot be excessive."
46. On these settled principles of law, we are of the view that the challenge to both legislative competence of the State Government to make amendments in the U.P. Cinema (Regulation) Act, 1955 and the U.P. Cinemas (Regulation of Exhibition by means of Video) (4th Amendment) Rules, 2011, is without any substance. The State Government has legislative competence to regulate the entertainment. The DTH services, as the latest technological advance, in the field of telegraphy, can be, and is used for entertainment, which is subject to regulation under Entry 33 of the State list. The amendments clearly fall within the legislative competence of the State Government. There is no repugnancy between the two laws. A repugnancy arises as it was held in M/s Hoechst Pharmaceuticals Ltd. & Ors. (Supra), when the law made by Parliament and a law made by the State Legislature, occupy the same field with respect to anyone of the matters enumerated in the concurrent list, and there is direct conflict between the two laws. We further hold that the license fees, for taking out a license by the Television Signal Receiver Agency under the U.P. Cinema Regulation Act, 1955 as amended by UP Act No.27 of 2009, from the place from where he is running the business, and where he keeps his books of accounts, apparatus and equipments, under Rule 18 of the U.P. Cinemas (Regulation of Exhibition by Means of Video) (4th Amendment) Rules, 2011 on Form IV, is not a compensatory fees, which may require the State Government to justify its levy on the principles of quid pro quo. It is a license fee for taking out license, with an object to regulate entertainment.
47. All the writ petitions are consequently dismissed.
48. There shall be no order as to costs.
Dt.21.10.2011 SP/