Recently the Supreme Court ruled that both Centre and States can levy separate taxes on broadcasting services without legal or constitutional conflict.
Key Highlight SC Ruiling
No Overlap: The Court held that there is no factual or legal overlap as each authority taxes a distinct component of the activity.
Broadcasting services involve two taxable aspects, service provision (Centre) and entertainment delivery (State).
Legislative Competence: The Centre taxes broadcasting under the Finance Act, 1994 (service tax), while States tax entertainment under respective State laws.
Interpretation of ‘Entertainment’: The term ‘entertainment’ was interpreted broadly, including digital and home-based services delivered via smart devices.
Constitutional Provisions
Union Power: Under Entry 97 of Union List, Parliament’s residuary power allows it to impose service tax on broadcasting.
State Power: Under Entry 62, State List, States have exclusive power to levy entertainment tax on content consumed by subscribers.
Seventh Schedule Scope: The Seventh Schedule ensures division of tax powers between Centre and States, and this ruling affirms its harmonious interpretation.
Article 246A: It empowers both Parliament and State Legislatures to make laws regarding the Goods and Services Tax (GST)
It grants concurrent powers to the Centre and States for GST on intra-State supplies and exclusive power to Parliament for inter-State supplies, ensuring a unified indirect tax framework while respecting the federal structure
Significance of the Ruiling
Clarity in Taxation: This judgment provides constitutional clarity on how multiple aspects of a single activity may be taxed without conflict.
GST Rationalisation: Further streamlining under GST may be required to subsume remaining entertainment taxes and reduce taxpayer confusion.
Judicial Guidance: This ruling sets a precedent on federal taxation powers, aiding in future interpretation of Concurrent and Separate taxation domains.
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Comprehensive coverage with a concise format Integration of PYQ within the booklet Designed as per recent trends of Prelims questions हिंदी में भी उपलब्ध
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