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2000 DIGILAW 388 (CAL)

Purvi Communication (Pvt. ) Ltd. v. W. B. T. T.

2000-08-04

H.Banerji, S.B.Sinha

body2000
Judgment S.B. Sinha, J. Vires of section 4A (4a) of West Bengal Entertainment-cum-Amusement Tax Act, 1982 as amended by the West Bengal Finance Act, 1998 (hereinafter referred to 'as the Act') and the Rules framed thereunder is in question in this writ application. 2. The writ application had been filed, inter alia, on the ground that tax is sought to be levied on the petitioner, despite the fact that no taxable event has taken place on their dealings and thus the purported levy upon them is ultra vires Articles 14 and 246 of the Constitution of India being beyond the legislative field envisaged under Entry 62 of List II of the VIIth Schedule of the Constitution of India. 3. The basic facts of the matter is admitted. The petitioners are carrying on business as Multi System Operator (MSO) being engaged in receiving and providing TV signals only to the individual cable operators of various localities. According to the petitioners as they have not been exhibiting any performance or programme leading to the entertainment of the customers, which is performed by the Sub-Cable Operators (SCO), they are not liable to pay any tax. The petitioners raised the question of vires of the said Act before the West Bengal Taxation Tribunal. The opinion of the Tribunal on the said question was a divided one, whereas the learned Chairman held that the petitioners' claim was sustainable, the same was negatived by the other members. The respective area of operations of the petitioners vis-a-vis the Sub-Cable Operators may be noticed from the supplementary affidavit filed on behalf of the petitioners and the affidavit-in-opposition filed thereto by the respondent herein. The petitioners stated:- "On 25th January, 2000 during the course of hearing of the instant matter it was submitted by the learned senior Counsel of the petitioners on a query from the Hon'ble Members of the West Bengal Taxation Tribunal, that signal transmitted by the Multi System Operators (hereinafter referred to as "MSOs") if received by the individual consumer directly would not reproduce the required image/sound unless it is processed by some other apparatus. It was submitted that the so-called sub-cable operators or the local cable operators are the persons who process these signals received from the MSOs before transmitting them through cable to the individual consumer. It was submitted that the so-called sub-cable operators or the local cable operators are the persons who process these signals received from the MSOs before transmitting them through cable to the individual consumer. Upon hearing such submission of the learned senior Counsel of the petitioner the Hon'ble Members of the West Bengal Taxation Tribunal were pleased to direct this petitioners to file an affidavit stating therein the exact nature of the said processing of signals by the sub-cable operators and the apparatus required for such processing. In view of such direction the instant affidavit is being affirmed. I state that the signal transmitted by the MSOs are received by the so called sub-cable operators and before transmitting them to individual subscribers following functions/processing by some other apparatus are carried out so that the ultimate consumer i.e. the individual subscriber after receiving them on their respective TV sets get entertained; a) Amplifier-It amplifies the signals and synchronises them so as to make them capable of being received by the individual subscribers. Be it stated here that the video signals need to be boosted more and the audio signals require to be reduced so as to give the required out put which is capable of being received by the individual subscribers. b) Adopter-The function of this apparatus is for stepping down the signal in compressed manner so as to make them capable of being transmitted by the so-called sub-cable operators through cable to individual subscribers. This is required since the cables used by MSOs have huge capacity for carrying various signals (Bandwidth) and as such these cables cannot be used for connecting individual subscriber. c) Mixer- This is used to mix the signals at cable operators and generally this is done either to add additional VCR channels or to add additional satellite pay channels to meet the demands of their subscribers. The above function is subject to the terms and conditions as provided for in the respective agreements. c) Mixer- This is used to mix the signals at cable operators and generally this is done either to add additional VCR channels or to add additional satellite pay channels to meet the demands of their subscribers. The above function is subject to the terms and conditions as provided for in the respective agreements. I submit that unless the signals re-transmitted by the MSOs are processed as stated in the preceding paragraph by the so-called sub-cable operators the individual subscriber will not be able to receive the said signals in a manner so as to get entertained, and unless there is entertainment to the ultimate consumer the instant tax will become meaningless and there will be no nexus with the object of the said Act." The respondents however, submitted that the MSO's are directly responsible for entertaining the television viewers inasmuch as the Sub-Cable Operators merely act as their agents as would appear from different provisions of the agreement entered into by and between them. Alternatively it was submitted:- "I admit that the Sub-Cable Operators use amplifiers and mixers at their end. But I would like to emphasis that all these apparatus are used by the Sub-Cable Operators not because the signal received by them from MSOs need processing but because the Sub-Cable Operators have to transmit the signals to a large number of customers. In this connection, I would like to place before the Hon'ble Tribunal the function of each of the apparatus described in the supplementary affidavit herein-below: a) Amplifier-'Mcgrow-Hill Encyclopaedia of Science and Technology' (7th Edition, 1992) defined amplifier as : Amplifier is a device capable of increasing the magnitude or power level of a physical quantity that is varying with time, without distorting the wave shape of the quantity. I respectfully submit and state that the first requisite of an amplifier is that it shall not distort the wave shape of the signal that it is amplifying. In fact, the amplifiers used by the Sub-Cable Operators do not change any wave shape of the signals received from the MSOs. The only function of the amplifiers is to strengthen the signals that get weaker as it travels through the cables. b) Adopter-I deny that use of adopter by a Sub-Cable Operator is essential for supply of signal to the individual consumers. In fact, majority of Sub-Cable Operators in Calcutta do not use this apparatus. The only function of the amplifiers is to strengthen the signals that get weaker as it travels through the cables. b) Adopter-I deny that use of adopter by a Sub-Cable Operator is essential for supply of signal to the individual consumers. In fact, majority of Sub-Cable Operators in Calcutta do not use this apparatus. For branching off to individual consumers, the cable operators normally use an apparatus known as splitter. c) Mixer-This is absolutely an optional apparatus. Normally, MSOs keep one or two bandwidth vacant, popularly known as channels, to be used by the cable operators to enable them to exhibit programme with assistance of VCR/VCP/VCD. If any cable operator desires to exhibit any film, performance or entertainment through the two vacant channels in addition to the programs transmitted by the MSOs only then a cable operator needs to use an apparatus known as 'Mixer'. I deny further that using the aforesaid apparatus, the signals received from the MSOs get processed at the end of Sub-Cable Operators and the signals received from MSOs are incapable of producing image and sound at the consumer's end." 4. Mr. Pradip Ghosh, the learned senior Counsel appearing on behalf of the petitioners, had drawn our attention to Entry 62 of List II of the 7th Schedule of the Constitution of India which reads thus :- "Taxes on luxuries, including taxes on entertainments, amusements, betting and gambling." According to the learned Counsel by reason of the said Entry taxes are primary liable upon luxuries, which would include taxes on entertainments and amusements. It is submitted that a tax can be levied only when a taxing event occurs. Such taxing event cannot be held to be existing in an abstract sense but in real sense and in the instant case, contends Shri Ghosh, the said question does not arise as imposition of levy should be made upon the viewer or the exhibitor. Entertainment tax, Mr. Ghosh would urge, can only be imposed on a show and thus, every relevant fact must be taken into consideration for the purpose of considering as to whether a person is engaged in a particular trading, calling or employment exhibiting the entertainment directly to the viewer. Entertainment tax, Mr. Ghosh would urge, can only be imposed on a show and thus, every relevant fact must be taken into consideration for the purpose of considering as to whether a person is engaged in a particular trading, calling or employment exhibiting the entertainment directly to the viewer. According to the learned Counsel, except in a case of deemed sale, no sales tax can be imposed and in support of the said contention, our attention has been drawn to the decisions of the Apex Court in the State of Madras vs. M/s. Gannon Dunkerley & Co. (Madras) Ltd., reported in AIR 1958 SC 560 , New Manek Chowk Spg. and Wug. Mills Co. Ltd. vs. Municipal Corporation of the City of Ahmedabad & Ors., reported in AIR 1967 SC 1801 and State of Uttar Pradesh & Ors. vs. Modi Distillery & Ors., reported in 1995 (5) SCC 753 , which eventually led to the constitutional amendment by way of insertion of clause 29A of Article 366 of the Constitution of India. The learned Counsel further submits that as admittedly the petitioners do not carryon any business of exhibiting any show which amounts to an entertainment by way of an operating the Cable TV s, they are not liable to pay any tax. 5. Mr. L.K. Gupta, the learned Counsel appearing on behalf of the respondents, on the other hand, submitted that the provision of section 4A (4a) of the said Act must be read as a whole. So read, contends the learned Counsel, it would be found that the petitioners herein are liable to pay tax as they are in fact the exhibitors of the show through the Sub-Cable Operators who are merely their agents. Drawing our attention to various clauses of the agreement entered into by and between the petitioner and the Sub-Cable Operator, the learned Counsel submits that the very fact that the petitioners are entitled to verify the accounts of the Sub-Cable Operators would clearly go to show that their exists a relationship of Principal and Agent as envisaged under section 182 of the Contract Act, between them, and, thus, the Principal, cannot by any stretch of imagination escape his liability. Strong reliance in this connection has been placed on Union of India vs. Kamal Kumar Goswami & Ors., reported in AIR 1974 Cal 231 . Strong reliance in this connection has been placed on Union of India vs. Kamal Kumar Goswami & Ors., reported in AIR 1974 Cal 231 . According to the learned Counsel, the petitioners merely appointed agents to work as their conduit pipes for the purpose of entertaining the viewers. The learned Counsel in this connection has drawn our attention to the statements made in paragraph 5 of the rejoinder affidavit, filed by the respondents as quoted supra and submitted that the objects for which gadgets are installed clearly go to show that the same not only are consistent with the terms of the agreement but also a clear pointer to the fact that the Sub-Cable Operators are merely agents. 6. 6. Section 4A (4a) of the Act reads thus:- "(4a) Where any owner, or any person for the time being in possession, of any electrical, electronic or mechanical device, is a cable operator and receives through such device the signal of any performance, film or any other programme telecasts and thereafter such owner or person, against payment received or receivable – (i) Exhibits such performance, film or programme through cable television network directly to customers, or (ii) transmits such signal to a sub-cable operator who in turn provides cable service for exhibition of such performance, film or programme to the customers, such owner or person shall be liable to pay tax from the month in which he exhibits such performance, films or programme or transmits such signal to a sub-cable operator on the basis of his monthly gross receipt at such rate, not exceeding twenty-five per centum of the monthly gross receipt, as may be specified by the State Government by notification published in the Official Gazette: a) 'cable operator' means any person who provides cable service directly to customers or transmits signals to a sub-cable operator through a cable television network and other wise controls or is responsible for the management and operation of a cable television network; b) 'sub-cable operator' means a person, other than any owner or person who is a cable operator referred to in this sub-section, who, on the basis of an agreement, contract or any other arrangement made between him and such cable operator and provides cable service for exhibition of performance, film or any programme to the customers; c) 'Cable Service' means transmission or re-transmission of programmes including broadcast television channel signals or sattellite television channel signals or both through cables or by any other means; d) 'Cable Television Network' means any system consisting of a set of closed transmission' paths and associated signal generation, control and distribution equipment, designed to provide cable service for reception by multiple customers." 7. It is stated that the Sub-Cable Operators submitted a representation before the Hon'ble Finance Minister of State of West Bengal, stating:- "We being the cable operators are also interested to get ourselves registered with the prescribed authority as required under section 5 (a) of West Bengal Entertainment-cum-Amusement Tax Act, 1982. It is stated that the Sub-Cable Operators submitted a representation before the Hon'ble Finance Minister of State of West Bengal, stating:- "We being the cable operators are also interested to get ourselves registered with the prescribed authority as required under section 5 (a) of West Bengal Entertainment-cum-Amusement Tax Act, 1982. As we are interested to get ourselves registered as cable operators and we are holding license/registration under the Cable Television Network (Regulation) Act, 1995, it will be easier for the taxing authority also to maintain a list of cable operators of West Bengal for the purpose of identification as well as for the purpose of collection of tax inasmuch as cable operators interested to pay tax as has been assessed by the said Taxing Act of 1998 directly to the Taxing Authority. It may kindly be noted that as a holder/owner of a Video Cassette Recorder set or a player set, we are liable to pay the tax under subsection (4), as a cable operator, because transmit simultaneously the programme through the same is to be referred to in sub-section (4). However, we feel that we, the cable operators, only have made this Cable TV business stand on a positive base. We usually do the marketing, render direct service to the patrons, take necessary technical steps to maintain proper signal distribution to every customer end. The basic purpose of a signal provider is to feed a Cable Operator with signals received through Dish Antenas, which a Cable Operator did in the past and can do it even today at any time. When a group of Cable Operators receive signal from any signal provider, the arrangement is generally made to bring in uniformity and structured programming." 8. Although the eagerness on the part of the Sub-Cable Operators to pay tax is not very relevant for the purpose of present case, the same had been taken into consideration only for the purpose of showing that as in other States, Cable Operators as they are commonly known consider themselves to be carrying on their business venture independently and not as agents of the Cable Operators under the Act. Unfortunately in the impugned legislation the Sub-Cable Operators have not been brought within the taxation net at all. 9. Unfortunately in the impugned legislation the Sub-Cable Operators have not been brought within the taxation net at all. 9. Cable Operators are like film distributors but Sub-Cable Operators are the persons who actually exhibit the performance, film or programme upon receiving signals from the Cable Operators. The taxable event for imposition of tax would be the exhibition of programme, film, etc... A person who is not entertaining or is not being entertained thus, would not be liable for payment of entertainment tax. However, the petitioners do not come within the purview of the clause (i) of sub-section (4a) of section 4A as they do not exhibit such performance, film or programmes through Cable Television Network directly. 10. Two questions arise for consideration in this connection, whether; (a) clause (ii) of sub-section (4a) of section 4A is beyond the legislative competence of the State Legislature and alternatively; (b) the petitioners would come within the purview of clause (i) as they are the persons who exhibit such performance through Cable Television Network through the Sub-Cable Operators. 11. There cannot be any doubt whatsoever that the legislative field contained in the VIIth Schedule of the Constitution should be interpreted as having a wide amplitude but it is equally well settled that by giving wide interpretation to an Entry, a person should not be brought within the purview of the liability to pay tax, who is not liable therefor. In this case, a cable operator admittedly does not exhibit entertainment or performance to the viewers directly. Such performance or exhibition is brought before the viewers directly by the Sub-Cable Operators. By reason of clause (ii) of sub-section (4a) of section 4A, the petitioners who transmit such signals to a Sub-Cable Operator who in turn provides for cable service for exhibition of such performance, film and programme to the viewers have been brought within the purview of the said provision. In short, the cable operators alone have been made liable for payment of such tax whether exhibition of performance etc. to the viewers is done directly or indirectly. 12. In Stroud's Judicial Dictionary (Fourth Edn. Vol. 2, p. 916) the word 'entertainment' has been defined thus: “Entertainment…. for a public or special occasion"... is an entertainment in the sense of a gathering of persons for entertainment. "Entertainment" (Small Lotteries and Gaming Act, 1956) [clause 45, section 4(1)] included a tombola drive alone without accompanying festivities. 12. In Stroud's Judicial Dictionary (Fourth Edn. Vol. 2, p. 916) the word 'entertainment' has been defined thus: “Entertainment…. for a public or special occasion"... is an entertainment in the sense of a gathering of persons for entertainment. "Entertainment" (Small Lotteries and Gaming Act, 1956) [clause 45, section 4(1)] included a tombola drive alone without accompanying festivities. The monologue or patter of a comedian, even if delivered at an entertainment provided by an institution whose activities are partly educational, was held to be a "variety entertainment" within the meaning of the section. Similarly in Words and Phrases, Judicially Defined (Vol. 2, pp. 206-207) the word entertainment has been defined thus: "Entertainment is something connected with the enjoyment of refreshment-rooms, tables, and the like. It is something beyond refreshment; it is the accommodation provided, whether that includes a musical or other amusement or not." Similarly in Words and Phrases (permanent Edn. Vol. 14-A, p.353) 'entertainment' has been defined thus: 'An entertainment is a source or means of amusement; a diverting performance, especially a public performance, as a concert, drama, or the like.' "Entertainment" denotes that which serves for amusement, and "amusement" is defined as a pleasureable occupation of the sense, or that which furnishes it, as dancing, sports, or music. Likewise in Reader's Digest Family Word Finder at p. 264, 'entertainment' has been defined thus: "Entertainment-amusement, diversion, distraction, recreation, fun, play, good time, pastime, novelty, pleasure, enjoyment, satisfaction." In Webster's Third New International Dictionary the word 'entertainment' has been defined at p. 757 thus: "entertainment"-the act of diverting, amusing or causing someone's time to pass agreeably. Something that diverts, amuses, or occupies the attention agreeably. A public performance designed to divert or amuse. Similarly in the Concise English Dictionary by Hayward and Sparkes the word 'entertainment' has been defined thus: "the art of entertaining, amusing or diverting, the pleasure afforded to the mind by anything interesting, amusement, other performance intended to amuse." Similarly in the Black's Law Dictionary, VIIth Edition, the word 'entertain' has been defined to mean: "1) To bear in mind or consideration to give judicial consideration to the Court them entertained motions for continuance. 2) To amuse or please 3) To receive (a person) as a guest or provide hospitality to (a person)." What is an entertainment has not been defined in the Act or in Article 366 of the Constitution of India. 2) To amuse or please 3) To receive (a person) as a guest or provide hospitality to (a person)." What is an entertainment has not been defined in the Act or in Article 366 of the Constitution of India. Entertainment is a common noun, and not an abstract one. 13. In Cantonment Board Poona vs. Western India Theatres Ltd., reported in AIR 1954 Bom. 261 , it has been held that an entertainment being a physical expression or exhibition of entertainment like a film show, is an entertaining programme or performance actually being held. The Court emphasised on the use of the word in plural and observed as follows:- "The plural necessarily indicates that the word is used as a common noun and not abstract one. Entertainment a show in the case of drama, a performance, and in the case of cricket, a match." The observations of Chagla, J. in 1956 Bombay 1 is very apposite: "The entertainment or amusement contemplated (under Entry 50 List II of GOI Act, 1935) is something "objective" outside the person amused or entertained." 14. The aforesaid decision of the Bombay High Court in AIR 1954 Bom. 261 in the case of Western India Theaters Ltd. was affirmed by the Supreme Court in Western India Theatres Limited vs. Cantonment Board, Poona, AIR 1959 SC 582 . While affirming the decision of the Bombay High Court, the Supreme Court observed in paragraph 7 "The entry, as we have said, contemplates a law with respect to these matters regarded as objects and a law which impose a tax on the act of entertainment is within the entry whether it falls on the giver or the receiver of that entertainment. It is a tax imposed on every show...." More recently in Venkateshware Theatre vs. State of A.P., AIR 1993 SC 1947 , the Supreme Court was called upon to decide the vires of the A.P. Entertainment Act, 1939 and it was held that the entertainment tax was not a tax on a person, but a tax on an activity, namely, entertainment and so long as the tax is imposed on an activity that constitutes entertainment, it does not matter as to how the amount of tax is measured. Some view was taken in the following cases: Liberty Talkies vs. State of Gujarat, (1971) 1 SCC 471 , Markand Saroop Agarwal vs. M.M. Bajaj, (1979) 1 SCC 116 . Some view was taken in the following cases: Liberty Talkies vs. State of Gujarat, (1971) 1 SCC 471 , Markand Saroop Agarwal vs. M.M. Bajaj, (1979) 1 SCC 116 . In Western India Theatres Ltd. vs. Cantonment Board, Poona, reported in AIR 1959 SC 582 , it has been held that with a view to imposing entertainment duty, it must be shown that the same is being levied on the entertainment, which is actually held and not an entertainment which is theoretically or capable of being held. Levy of a tax of a notional entertainment in that case was held to be unconstitutional. 15. The case at hand is somewhat similar to a decision of the Full Bench of Kerala High Court in The Municipal Council, Kottayam vs. K. Mahadeva Iyer & Ors., reported in AIR 1971 Kerala 92, wherein it was observed :- "In our view, for the reasons we have already stated in full, the premise on which this holding proceeds, namely, that the legal liability to pay the tax is really on the entertained and not on the proprietor, and that the latter is merely a collecting agency, has no basis in the provisions of the Act." Taxing statute as is well settled must be construed having regard to the text and context, where the language is clear a taxing statute may attract the principles of literal or strict construction. [See Orissa State Warehousing Corporation vs. Commissioner of Income Tax, reported in 1994(4) SCC 197 and V.V.S. Sugars vs. Government of Andhra Pradesh & Ors., reported in 1999(4) SCC192]. 16. In Commissioner of Income Tax vs. Patel Bros. & Co. Ltd., reported in 1995(4) SCC 485 , the Apex Court states the law thus:- "Generally, 'entertainment expenditure' is an expression of wide import. However, in the context of disallowance of 'entertainment expenditure' as a business expenditure virtue of sub-section (2-A) of section 37, the word 'entertainment' must be construed strictly and not expansively. Ordinarily, 'entertainment' connotes something which may be beneficial for the mental or physical well being but is not essential or indispensable for human existence. A bare necessity, like ordinary meal, is essential or indispensable and, therefore is not 'entertainment'. If such a bare necessity is offered by another, it is hospitality but not entertainment. Unless the definition of 'entertainment' includes hospitality, the ordinary meaning of 'entertainment' cannot include hospitality. A bare necessity, like ordinary meal, is essential or indispensable and, therefore is not 'entertainment'. If such a bare necessity is offered by another, it is hospitality but not entertainment. Unless the definition of 'entertainment' includes hospitality, the ordinary meaning of 'entertainment' cannot include hospitality. For this reason, the expenditure incurred in extending customary hospitality by offering ordinary meals as a bare necessity, is not 'entertainment expenditure' without the aid of the enlarged meaning given to the words by Explanation 2 inserted w.e.f. 1-4-1976. The definition in Explanation 2 is not the ordinary meaning of the words 'entertainment expenditure', but the enlarged meaning given for the purpose of the Act w.e.f. 1-4-1976." 17. In A. Suresh & Ors. vs. State of Tamil Nadu & Anr., reported in 1997(1) SCC 319 , the Apex Court while considering the provisions of Tamil Nadu Entertainment Tax Act noticed:- "For a proper appreciation of the appellants' contentions, it is necessary to examine the nature of the activity carried on by the appellants. The appellants are carrying on the business of providing entertainment. Their main activity is to show films and other material using the video cassette or disc with the help of VCR, disc player or a similar apparatus. By means of cables, the TV sets in the homes of the subscribers are linked to their apparatus with a view to enable the subscribers to receive the programmes relayed by the appellants. For this service, each subscriber is charged a particular amount every month. This is their business. It may be true that providing entertainment is a form of exercise of freedom of speech and expression. It is quite likely that they also relay the programmes broadcast by Doordarshan and other TV networks and some of them may be informative in nature or educational in character but the fact remains that their activity is a combination of two rights i.e., business and speech-sub-clauses (g) and (a) of clause (1) of Article 19. There is no reason why the business part of it cannot be taxed. If tax can be levied upon entertainment provided by cinemas, if taxes can be levied upon the Press, it is un-understandable why the appellants' activity cannot be taxed. Certainly, the appellants cannot claim that their activity is of more significance to society than that of the Press. There is no reason why the business part of it cannot be taxed. If tax can be levied upon entertainment provided by cinemas, if taxes can be levied upon the Press, it is un-understandable why the appellants' activity cannot be taxed. Certainly, the appellants cannot claim that their activity is of more significance to society than that of the Press. Where the freedom of speech gets intertwined with business it undergoes a fundamental change and its exercise has to balanced against societal interests. In Secy., Ministry of Information and Broadcasting, Govt. of India vs. Cricket Assn. of Bengal, one of us (B.P. Jeevan Reddy, J.) stated the proposition, flowing from the decided cases, in the following words: (SCC p. 297, para 201) Providing entertainment is implied in freedom of speech and expression guaranteed by Article 19(1)(a) of the Constitution subject to this rider that where speech and conduct are joined in a single course of action, the free speech values must be balanced against competing societal interests." It was held that the State has to levy a tax in terms of Article 265 of Constitution of India. Sub-section (1) of section 4E of the Tamil Nadu Entertainment Tax Act, reads thus:- "Section 4E(1). Notwithstanding anything contained in sections 4 and 7, there shall be levied and paid to the State Government a tax hereinafter referred to as the entertainments tax calculated at forty per cent of the amount collected by way of contribution or subscription or installation of connection charges or any other charges collected in any manner whatsoever for television exhibition." 18. The said decision is a pointer to the fact that by reason of such Cable Television Network, the same purpose is being achieved, which is done by exhibiting films in Cinema Hall. For achieving the ultimate object of exhibiting a film, only the exhibitor can be brought within the taxation net and not the distributor of the film. To achieve the net result of exhibiting a film those who have anything to do with the making of the film may contribute to the entertainment, but in law they are not liable to tax. 19. In this connection it is relevant to note that even in Bombay Entertainment Duty Act, the charging section reads thus:- "Section 3(1). To achieve the net result of exhibiting a film those who have anything to do with the making of the film may contribute to the entertainment, but in law they are not liable to tax. 19. In this connection it is relevant to note that even in Bombay Entertainment Duty Act, the charging section reads thus:- "Section 3(1). There shall be levied and paid to the State Government on all payments for admission to any entertainment (except in the case of video games and exhibition by means of any type of antena or cable television) a duty (hereinafter referred to as 'entertainments duty') at the following rates, namely :- (a)......" In Delhi Entertainment and Betting Tax Act, 1996, the charging section reads thus:- "3. Entertainment tax and Betting tax authorities.- (1) For carrying out the purposes of this Act, the Government shall by notification appoint a person to be the Commissioner of Entertainment and Betting Tax. (2) To assist the Commissioner in the execution of his functions under this Act, the Government may appoint as many Deputy Entertainment Tax and Betting Tax Commissioners, Entertainment and Betting Tax Officers, Additional Entertainment and Betting Tax Officers, Inspectors, Sub-Inspectors and such other persons with such designations as the Government thinks necessary. (3) The Commissioner shall have jurisdiction over the whole of the National Capital Territory of Delhi and the other persons appointed under sub-section (2) shall have jurisdiction either over the whole of the National Capital Territory of Delhi of such areas or subjects as the Commissioner may specify. (4) The Commissioner appointed under sub-section (1) and other officers appointed under sub-section (2) shall exercise such powers as may be conferred, and perform such duties as may be required, by or under this Act." In other status, therefore, only the Cable Operators who perform identical jobs of Sub-Cable Operators under the Act had been made liable to pay tax. The definition of Cable Network in the said Acts is in pari materia with the impugned Act. Similar statutory provisions exist in Gujarat, Maharashtra, Madhya Pradesh, Andhra Pradesh, Punjab and Bihar where only tax has been levied on Cable Operators which term as noticed hereinbefore is pari materia with the term 'Sub-Cable Operators' under the West Bengal Act. 20. In M/s. Geeta Enterprises & Ors. Similar statutory provisions exist in Gujarat, Maharashtra, Madhya Pradesh, Andhra Pradesh, Punjab and Bihar where only tax has been levied on Cable Operators which term as noticed hereinbefore is pari materia with the term 'Sub-Cable Operators' under the West Bengal Act. 20. In M/s. Geeta Enterprises & Ors. vs. State of Uttar' Pradesh & Ors., reported in 1983(4) SCC 202 , the Apex Court considered the definition of the word 'Entertainment' from various dictionaries and held:- "A perusal of the various shades, aspects, forms and implications of the word 'entertainment' as defined in the aforesaid books clearly leads to an irresistible inference that the word 'entertainment' has been used in a very wide sense so as to include within its ambit, entertainment of any kind including one which may be purely educative." Reference in this connection may also be made to Silver Screen Enterprises a firm & Ors. vs. The State & Anr., reported in AIR 1956 Pun 203. The aforementioned dicta in M/s. Geeta Enterprises (supra) has been followed by the Apex Court in State of Madhya Pradesh & Anr. vs. Abha Sethi (Smt.) , reported in 1999(4) SCC 32 . 21. Would the question of 'deemed entertainment' arise in this case when admittedly the cable operators are not exhibiting any performance of programme directly to the viewers? The answer to the aforementioned question must be rendered in the negative. In the State of Madras vs. M/s. Gannon Dunkerly & Co. (Madras) Ltd., reported in AIR 1958 SC 560 , it was held that for the purpose of constituting a sale so as to enable the authorities to levy sales tax, there must be an actual sale. In New Manek Chowk Spg. and Wvg. Mills Co. Ltd., etc., vs. Municipal Corporation of the City of Ahmedabad & Ors., reported in AIR 1967 SC 1801 , it was held :- "He argued that apart from the definition in certain Acts and deeming provisions contained therein, plant and machinery can never be said to form part of the land or included in land or building. Counsel conceded that entries in legislative lists were certainly to be construed very widely but even then no artificial meaning or arbitrary extension of the meaning of the words in an entry could be allowed." Yet again is State of U.P. & Ors. Counsel conceded that entries in legislative lists were certainly to be construed very widely but even then no artificial meaning or arbitrary extension of the meaning of the words in an entry could be allowed." Yet again is State of U.P. & Ors. vs. Modi Distillery & Ors., reported in 1995(5) SCC 753 , the Apex Court traced the history of imposition of alcoholic liquor for human consumption in the context of the decision of the Apex Court in Synthetic and Chemicals Ltd. vs. State of U.P., reported in 1990(1) SCC 109 and held :- "The process of obscuration, concerned in the Group 'C' cases, needs explanation. The process of obscuration takes place in the manufacture of rum, other than white rum. Therein caramel is added to plain spirit. This results in obscuration or an apparent but not actual loss of prooof gallons, that is, of alcoholic strength. It is upon this apparent loss that the State seeks to levy excise duty. The aspect of obscuration is dealt with in Rule 775 of the D.P. Excise Rules. 1910. This rule indicates that the caramel is added to plain spirit. In the writ petition out of which Special Leave Petition No. 3211 of 1980 arises, it was averred thus: 'Because at the stage at which caramel is added no spirit is ready or available for human consumption and as such no duty be levied at that stage.' In the reply filed by the State there was no denial of the averment. It is, therefore, clear that the obscuration is not of alcoholic liquor for human consumption and the levy of excise thereon is beyond the State's power." (Emphasis supplied) In State of Maharashtra & Ors. vs. Sundaram Finance & Ors., reported in 2000 AIR SCW 2255, the Apex Court interpreted the word 'operator' strictly for the purpose of Bombay Motor Vehicles (Taxation of Passengers) Act, holding that financer of hire purchased vehicle in possession of vehicle on default in payment of instalments cannot be treated as operator nor can he be denied fresh registration of vehicle in its name on the ground of non-payment of passenger tax by hire purchaser. 22. It may be noted that in the case of "luxury" under the same Entry 62, the provision for air-conditioning i.e. fitting an air-conditioner with electrical fixture and with supply of electricity was held to be included in 'luxury'. 22. It may be noted that in the case of "luxury" under the same Entry 62, the provision for air-conditioning i.e. fitting an air-conditioner with electrical fixture and with supply of electricity was held to be included in 'luxury'. Similarly, connecting cable to a viewer's TV set and making the required signals available to the TV set may amount to "provisions" for "entertainment" in the context of the facts of the instant case, if one goes further behind that stage, and reaches the stage where the applicant company receives signals from satellite or other mechanism and transmits the signals to the "sub-cable operator", then that is too remote, too distant, from the "provision" for entertainment. If the tax is sought to be levied at that stage on the petition, it loses the character of entertainment tax under Entry 62 of List II. Then it takes the character of tax on the calling or profession of the company as MSO, and it attracts Entry 60 of List II. Similarly, if in the case of air-conditioner, luxury tax under Entry 62 List II is not levied on hotel, but on someone else, then the tax is to be levied either on the seller or the manufacturer. In that event, tax will not be one under Entry 62, but will be either sales tax or excise duty. It has been held in Ramnarain vs. State of U.P., (1956) SCR 664 (673), that it is the substance of the levy and not the form that determines the nature of the tax and the name given by the legislature is not conclusive for this purpose. In Diamond Sugar Mills vs. State of U.P., AIR 1962 SC 652 (655), it was cautioned that the Court should guard against extending the meaning of the words beyond their reasonable connotation in an anxiety to preserve the power of the legislature. The State Legislature was competent to levy the tax on the "entertainer", i.e. the "sub-cable operator" and/or the "entertained", namely, the viewer or the customer. But not on the cable operator (MSO) who merely transmits signal to the sub-cable operator. 23. The State Legislature was competent to levy the tax on the "entertainer", i.e. the "sub-cable operator" and/or the "entertained", namely, the viewer or the customer. But not on the cable operator (MSO) who merely transmits signal to the sub-cable operator. 23. In Express Hotels Private Ltd. vs. State of Gujarat & Anr., reported in 74 STC 157, where upon strong reliance has been placed by the learned Counsel appearing on behalf of the State, the Apex Court was considering the vires of section 4 of West Bengal Act of 1972; wherein luxury was the taxable event which was defined as providing for air-conditioning, meaning thereby making the facility of air-conditioning immediately available. It is one thing to say that a luxury is provided for, irrespective of the fact as to whether it is used or not but it is another thing to say that luxury is not provided for at all. 24. In the instant case, the entertainment itself being a taxable event anything which falls short thereof would come within the purview thereof, and, thus, beyond the legislative competence inasmuch as no legal fiction has been created to bring also the petitioners within the tax net, as has been done in the case of 'sales' by inserting clause 29A in Article 366 of Constitution of India. 25. Let us now consider the second question raised by the learned Counsel for the respondent – Section 4A (4a), as indicated hereinbefore, makes an owner or person liable to pay tax from the month in which he exhibits such performance. The word 'owner or any person' refers to a person who is in possession of any electrical, electronic or mechanical device. The extent of or the nature of such device thus, in terms of the provisions of the State Act is of no moment. Such device, must be used for exhibiting performance film or programme through cable sub-division network. Cable sub-division network has been defined in explanation 'd'. Cable television network thus, would encompass within its fold, any system consisting of set of close transmission paths designed to provide cable service, which is meant for reception by multiple customers. Cable service, however, has been defined in explanation 'c' appended to the impugned provision as meaning transmission or retransmission of programmes including broadcast television channel signals or sattellite television channel signals both through cables and any other things. Cable service, however, has been defined in explanation 'c' appended to the impugned provision as meaning transmission or retransmission of programmes including broadcast television channel signals or sattellite television channel signals both through cables and any other things. The 'cable service' thus, provides for an extended television or cable TV network as it embraces within its fold not only transmission but also retransmission of cable television network within the meaning of explanation 'd' aforementioned. Sub-Cable Operator which term as noticed hereinbefore is in pari materia that the word cable operator in the other statutes means a person other than any owner or person who is a cable operator and on the basis of an agreement contract or any otherwise arrangement made between him and such cable operator not only receives signals from such cable operator and provides cable service for exhibition of performance film or any programmes to the customers, It is not in dispute that the petitioners had entered into agreements with the Sub-Cable Operators, as a result whereof certain rights and obligations have been created between the parties. Cable operators in terms of explanation 'a' either provides cable service directly to customers in which event they would come within the purview of clause (i) aforementioned or may transmit signal to said sub-cable operators through a cable television network, or otherwise control and be responsible for the management or operations of the cable television network. If a cable operator transmits to sub-cable operator, his liability to pay tax would have come only within the purview of clause (ii) which for the reasons aforementioned have been held to be ultra vires. The statute thus, proceeds on the basis that there would be a Cable Operator and a sub-cable operator and the latter is entitled to exhibit performance film or programme through cable television network directly to customers upon having entered into such an agreement. The statute thus contemplates exhibition of such performance indirectly by Cable Operators through Sub-Cable Operators. It is one thing to say that the Sub-Cable Operator is merely a man of straw or a facade or a smoke and screen but it is another thing to say that a cable operator cannot engage a Sub-Cable Operator at all. The statute thus contemplates exhibition of such performance indirectly by Cable Operators through Sub-Cable Operators. It is one thing to say that the Sub-Cable Operator is merely a man of straw or a facade or a smoke and screen but it is another thing to say that a cable operator cannot engage a Sub-Cable Operator at all. The very fact that the Cable Operator and a Sub-Cable Operator have been defined separately clearly go to show that both in the eyes of law are separate entities and thus, are not principals and agents. That being the position in law, the submission of Mr. Gupta that it is the Cable Operators who are working through Sub-Cable Operators namely their agents and thus, they are liable to be taxed cannot be accepted. A statute as is well known must be read as a whole. It must be construed reasonably so as to give effect to each word employed therein. If the submission of Mr. Gupta is to be accepted, the word 'directly' used in clause (i) of sub-section (4a) of section 4A of the Act becomes otiose. A bare reading of the provisions as quoted (supra) would clearly show that the Legislature in their wisdom contemplated a Cable Operator a Sub-Cable Operator as having different status, one, who is providing for the material for exhibiting films, performance of programme and another who is actually doing so. By reason of receiving signal through cable service network, the cable operators are not showing the performance directly unless on fact, it is found to be so as provided for in the first part of explanation 'a' appended to section (4a) of section 4A of the Act. Unless such facts are clearly held and found out by taking recourse to the materials on records. We are of the opinion that the contention of Mr. Gupta cannot be accepted. There are various attributes for holding the relationship of principal and agent. 26. In Union of India vs. Kamal Kr. Goswami & Ors., reported in AIR 1974 Cal 231 , this court was considering one of such attributes. We are of the opinion that the contention of Mr. Gupta cannot be accepted. There are various attributes for holding the relationship of principal and agent. 26. In Union of India vs. Kamal Kr. Goswami & Ors., reported in AIR 1974 Cal 231 , this court was considering one of such attributes. In the fact of that case the provisions of section 182 of the Contract Act had to be taken recourse to having regard to the fact that the arguments advanced therein was that the dealings between the parties were as principal and principal and not as principal and agents, whence no such pleading had been raised at all. 'Explanation' as is well known, has four functions as has been held, in S. Sundaram Pillai, etc. vs. V.R. Pattabiraman, reported in AIR 1985 SC 582 , wherein it is stated :- "We have now to consider as to what is the impact of the explanation on the proviso which deals with the question of wilful default. Before, however, we embark on an enquiry into this difficult and delicate question, we must appreciate the intent, purpose and legal effect of an explanation. It is now well settled that an explanation added to a statutory provision is not a substantive provision in any sense of the term but as the plain meaning of the word itself shows it is merely meant to explain or clarify certain ambiguities which may have crept in the statutory provision. Sarathi in 'Interpretation of Statutes' while dwelling on the various aspect of an explanation observes as follows:- (a) The object of an explanation is to understand the Act in the light of the explanation. (b) It does not ordinarily enlarge the scope of the original section which it explains, but only makes the meaning clear beyond dispute." The learned Judges referred to various treaties on interpretations of statutes and held:- "Thus, from a conspectus of the authorities referred to above, it is manifest that the object of an explanation to a statutory provision is- (a) to explain the meaning and intendment of the Act itself. (b) an explanation cannot in any way interfere with or change the enactment or any part thereof but where some gap is left which is relevant for the purpose of the explanation, in order to suppress the mischief and advance the object of the Act it can help or assist the Court in interpreting the true purport and intendment of the enactment, and (c) it cannot, however, take away a statutory right with which any person under a statute has been clothed or set at naught the working of an Act by becoming an hindrance in the interpretation of the same." 27. In the instant case the explanation had been used both for the purpose of explaining the various terminologies used in the Act and thereby obscurity, if any, had been cleared. We also may find therefrom the dominant object of the Act. It is also well settled that although, the State has been given a wide power to bring various sections of people within the tax net, in the event two interpretations are possible interpretation which helps the tax-payer should be accepted. When a provision of statute is ultra vires, it must be declared as such. In such a case the provision cannot be read down or read up even to uphold the constitutionality. 28. In D.T.C. Majdoor Congress vs. Delhi Transport Corpn., reported in AIR 1991 SC 101 , the Apex Court observed :- "A statute can be declared to be valid where any term has been used in the Act which per se seems to be without jurisdiction but can be read down in order to make in constitutionally valid by separating and excluding the part which is invalid or by interpreting the word in such a fashion in order to make it constitutionally valid and within jurisdiction of the legislature which passed the said enactment by reading down the provisions of the Act. This, however, does not under any circumstances mean that where the plain and literal meaning that follows from a bare reading of the provisions of the Act, Rule or Regulation is that it confers arbitrary, uncanalised, unbridled, unrestricted power to terminate the services of a permanent employee without recording any reasons for the same and without ad-hearing to the principles of natural justice and equality before the law as envisaged in Article 14 it can read down to save the said provision from constitutional invalidity by bringing or adding words in the said legislation such as saying that it implies that reasons for the order of termination have to be recorded. In interpreting the provisions of an Act, it is not permissible where the plain language of the provision gives a clear and unambiguous meaning that it can be interpreted by reading down and presuming certain expressions in order to save it from constitutional invalidity." 29. For the reasons aforementioned we are of the opinion that clause (ii) of sub-section (4a) of section 4A of the Act is ultra vires the Constitution. This application is, therefore, allowed but in the facts and circumstances of this case there will be no order as to costs. H. Banerji, J. : I agree. Application is allowed.