Wednesday, 22 January 2014

MSOs get relief from Delhi HC in entertainment tax case

Three national multi-system operators (MSOs)—DEN Networks, Hathway Cable & Datacom, and IndusInd Media and Communications—have got interim relief from the Delhi High Court against the show-cause notice served by the Department of Entertainment Tax which asked the MSOs to pay entertainment tax or face action. 
The Delhi HC has ordered the state entertainment tax authority not to take any coercive measures against the three MSOs till final orders. However, Siti Cable did not get any relief as the HC has asked it to deposit the quantum decided by the entertainment tax department. 

The HC has also asked DEN and Hathway to deposit tax to the tune of Rs. 3 crore (Rs 30 million) and Rs. 2 crore (Rs 20 million) respectively. 
The HC has given four weeks’ time to the Delhi government to file its replies in the case. The matter has now been listed for 13 March. 
The three MSOs filed separate petitions in the HC challenging the Entertainment Tax Officer’s (ETO) order asking the MSOs to deposit entertainment tax beginning April 2013. The ETO threatened to stop cable TV transmission of the MSOs by shutting off their headends. 
DEN and Hathway argued that they are not liable to pay entertainment tax from April since they have started consumer billing only from November. They also argued that the local cable operators (LCOs) have been collecting money from the ground and not the MSOs. 
DEN also argued that the entertainment tax must be collected only on actual collections. The MSO also sought clarity from the tax department whether entertainment tax is paid on per subscriber or per set-top box (STB) basis. 
While Siti Cable adhered to pay entertainment tax, its argument was about the quantum of the tax. IMCL, on the other hand, argued in its petition that the LCOs must pay entertainment tax as they own the customers. The LCOs also get entertainment tax licence, so they should pay the entertainment tax, argued IMCL.


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