The Supreme Court on Thursday ruled that state legislatures and Parliament can levy entertainment tax and service tax respectively on DTH services provided to consumers.

A bench of Justices B V Nagarathna and N Kotiswar Singh said broadcast was a service and liable to service tax imposed by Parliament and the activity of entertainment under Entry 62-List II in the Constitution, PTI reported yesterday.

The entry deals with taxes on luxuries, including taxes on entertainments, amusements, betting and gambling.

The top court said no entertainment could be presented to the viewers unless the broadcaster transmitted the signals for instantaneous presentation of any performance, film or any programme on their television.

“Thus, there are two aspects in this activity — the act of transmission of signals of the content to the subscribers. The second aspect here concerns not only the content of the signals, but the effect of the decryption of the signals by the set-top boxes and the viewing cards inside these boxes provided by the assessees to the subscribers, which is providing and receiving of entertainment through the television,” the bench said.

Without the apparatus provided for by the assessees to decrypt the signals, the court noted, the subscriber would not be able to watch the transmitted content, which is consumed for entertainment.

“The television entertainment provided by them through their modus operandi, ie, by broadcasting, is a luxury within the meaning of Entry 62 – List II,” the bench said.

The DTH operators engaged in the activity of providing entertainment were liable to pay service tax on the activity of broadcasting under the provisions of the Finance Act, 1994, being further liable to pay entertainment tax, it held.