Supreme Court Upholds Dual Taxation on Broadcasting

Supreme Court Upholds Dual Taxation on Broadcasting

Why in the News?

On May 22, 2025 the Supreme Court ruled that both the Centre and States can levy separate taxes on broadcasting services — service tax by the Centre and entertainment tax by States — without legal overlap, affirming constitutional validity.

About Supreme Court’s Key Ruling:

• A Bench of Justices B.V. Nagarathna and N. Kotiswar Singh upheld the constitutional validity of dual taxation on broadcasting.
• The Centre can levy service tax on broadcasting as a service under the Finance Act, 1994.
• States can impose entertainment tax on cable operators and service providers under Entry 62 of the State List.

No Overlapping of Taxes

• The court clarified there’s no legal overlap, as two distinct aspects are being taxed:
  • Service component taxed by Parliament (Entry 97 – Union List).
  • Entertainment aspect taxed by States (Entry 62 – State List).
• Dual taxation broadcasting is legally permissible since different legislatures target different dimensions of the same activity.

Broad Definition of Entertainment

• Justice Nagarathna emphasized a broad and liberal interpretation of “entertainment.”
• With technological advancements, entertainment occurs via TVs, mobiles, smartwatches, etc., even in private spaces.
• Thus, entertainment falls within the ambit of “luxury” as defined under the State List, justifying the State’s right to tax.

This landmark judgment on dual taxation broadcasting is expected to have significant implications for the broadcasting industry and state revenues.