MUMBAI: The Supreme Court has delivered a one-two punch to India’s broadcasters, ruling on Thursday that they must cough up both service tax and entertainment tax on their activities. The decision ends years of legal wrangling over whether television companies could dodge the double whammy.
A bench led by justice B V Nagarathna and justice N K Singh declared that parliament and state legislatures both have the constitutional chops to levy their respective taxes. The 321-page judgment—longer than most television programmes—essentially told broadcasters they cannot have their cake and eat it too.
“The two taxes target different aspects of the same activity,” the court explained, rather like taxing both the recipe and the meal. Parliament’s service tax under the Finance Act hits the broadcasting service itself, whilst states’ entertainment tax treats television as a luxury under Entry 62 of the Constitution’s List II.
The judges were having none of the broadcasters’ arguments that they should pay only service tax to the central government. “No entertainment can reach viewers unless broadcasters transmit signals,” justice Nagarathna noted. “There are two aspects: transmitting signals and providing entertainment through set-top boxes that decrypt them.”
This legal drama began with a clutch of cases from various high courts, with Kerala versus Asianet Satellite Communications taking the starring role. Broadcasters had argued they were merely in the signal-transmission business, not the entertainment game. The Supreme Court was not buying this technicality.
The ruling overturns a 2012 Kerala high court decision that had favoured cable operators over DTH (direct-to-home) providers, calling such discrimination unconstitutional. The Supreme Court said this earlier judgment got it wrong—both cable and DTH operators are in the entertainment business and should be taxed accordingly.
For India’s broadcasting industry, already grappling with cord-cutting and streaming competition, this represents yet another headache. The ruling makes clear that technological differences in how entertainment is delivered do not exempt anyone from the taxman’s reach.
The court’s message is unambiguous: whether you beam signals from satellites or snake cables through neighbourhoods, if you are in the business of keeping Indians glued to their screens, you will pay through the nose for the privilege.