The Patna High Court observed that the entertainment tax collected by Commercial Tax Officers under Bihar Entertainment Tax Act is ultravires of the 101st Constitutional Amendment.
The petitioner, M/s DEN Networks Limited, is a Multi System Operator (MSO) who is mulcted with the liability to pay Entertainment Tax under the Bihar Entertainment Tax Act, 1948, as the proprietor who has the ultimate control in the transmission of programs; which he receives from a satellite and through the Local Cable Operators (LCO), broadcasts to the subscribers.
The counsel for the appellant raised the issue of the State having been denuded of the power to levy and collect tax after the 101st Amendment to the Constitution and argued that 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.
The Advocate General contended that Section 174(e) of the Bihar Goods and Services Tax Act, 2017 provides for assessment proceedings, adjudication and any other legal proceedings or recovery of arrears, in respect of any tax to be levied or imposed as if the repealed Acts had not been so repealed under the provisions of the BGST Act. In the above circumstances, the entire period under consideration, dealt with by the impugned order in the writ petition, would be covered by the Bihar Entertainment Tax Act, despite its repeal.
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. Entry 62 has been substituted permitting levy and collection by the local bodies thus denuding the State’s power to levy and collect taxes as provided in the Bihar Entertainment Tax Act and the Rules, by the Commercial Tax Officer.
The Two-Judge Bench of the Patna High Court comprising Chief Justice K. Vinod Chandran and Justice Madhuresh Prasad observed that “Entertainment tax levied under the Bihar Act of 1948 was a levy and collection made by the State through its Commercial Tax Officers, validly legislated under Entry 62 of List II as it existed prior to 101st Amendment. It cannot be sustained after the 101st Amendment as the amendment to Entry 62 required the levy and collection to be by a local self-government institution and not the State Government.”
“The tax as it was levied on entertainments under the Bihar Entertainment Tax Act, 1948 cannot survive after the 101st Amendment since it is not levied and collected by a local self-government institution. The State also is denuded of the power to make an enactment in the nature of the Bihar Entertainment Tax Act, 1948 after the 101st Amendment” the Bench concluded.
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