Entertainment tax on DTH unconstitutional: Court

[Karthik]

The Madras High Court has held that the imposition of 30 per cent entertainment tax on Direct-to-Home services in the State is unconstitutional and directed the State government to exempt DTH services from entertainment tax.

A Division Bench comprising justices Chitra Venkataraman and K. Ravichandra Baabu allowed batch of petitions challenging the levy imposed on DTH operators.

The State government amended the provisions of Tamil Nadu Entertainments Tax Act, 1939 in 2011 and issued a notification on October 12, 2011 through the Commercial Taxes and Registration Department seeking to levy 30 per cent Entertainment Tax on DTH operators.

Aggrieved over the tax, Tata Sky Network, Dish TV India Ltd, Bharti, Reliance, and Sun Direct filed writ petitions challenging the imposition of tax. They said such levy was discriminatory and in violation of Article 14 of the Constitution and sought a declaration that the amendments, and the relevant rules and notification was ultra vires and unconstitutional.

They also wanted the court to declare that the imposition of 30 per cent tax under Section 4(I) of the Tamil Nadu Entertainment Tax Act 2011 was “discriminatory and confiscatory”, and in violation of the equality clause of Article 14. They wanted a direction to the State government to exempt DTH services from Entertainment Tax and or the rate of tax to be reduced to nil in parity with cable networks as per a notification issued in 2008.

The petitioners also contended that the notice issued to them demanding the furnishing of security deposit of Rs. 46,50,000 was perverse and arbitrary.

R.Sivaraman, Special Government Pleader (Taxes), submitted that the State had the legislative competence to levy tax on entertainment as per the Constitution. The levy on DTH was not violative of the Constitution.

Allowing the petitions, the Bench held that “the State has the legislative competence to levy tax on entertainment. However, the impugned section 4(I) does not have a chargeable event. Hence it is a colourable piece of legislation and it is unconstitutional.”

They said: “In the absence of chargeable event, the impugned provision is unconstitutional. It is violation of Article 14 of the Constitution. Because there is no distinction between Cable Network and DTH.”

The Hindu : States / Tamil Nadu : Entertainment tax on DTH unconstitutional: Court

 

[harshbardhan]

Good decision. In my view now a days TV is not a medium of mere entertainment. Its a valid source of knowledge, medium for the govt. Itself to propagate its plans and many many such positive usage. So no need to burdened it with taxes to make it beyond the reach of common people.

 

[Gssran]

Yes it's a good decision.

 

[Pugazhbalaji]

Good decision

 

[SUNIEL]

Now pack price of dth may be come down. Hope for good

 

[mystic]

Good decision.... :tup

Now pack price of dth may be come down. Hope for good

Hope so..... :sp

 

[iS THAT ME]

Good decision.... :tup

Now pack price of dth may be come down. Hope for good

Hope so..... :sp

Damn...I wish I wasn't on Annual Pack !

 

[harshbardhan]

Now pack price of dth may be come down. Hope for good

Not so soon dear friend, the tax hungry govt.will not give up easily, it may proceed further by challamging the high courts decision in the supreme court.

 

[Bapun]

Entertainment tax: Court ruling levels the field, say DTH operators

CHENNAI, OCT. 23:
Direct-to-home television service providers have welcomed the Madras High Court’s decision to hold the imposition of 30 per cent entertainment tax on DTH services in Tamil Nadu as unconstitutional.

In his reaction to the judgment, Harit Nagpal, Managing Director of Tata Sky, said it really clarified a very basic point that two platforms serving the same purpose cannot be taxed differently. “There cannot be a different cost structure for the DTH and the cable industry.”

Salil Kapoor, Chief Operating Officer of Dish TV, said he hoped that other States also took cognisance of this judgment, as the DTH industry continues to be taxed heavily at both the Central and State levels.

R.C. Venkateish, Chief Executive Officer of the company, said Dish TV hopes that the Tamil Nadu Government ensures an early compliance of the order, as the entertainment tax levied on the DTH industry exerts undue pressure on operating efficiencies compared to cable TV operators.

He said this sector is currently reeling under multiple taxation with overall tax outflow of about 40 per cent, and this judgment would provide a level-playing field to the industry.

In 2011, the Tamil Nadu Government amended the provisions of the Tamil Nadu Entertainments Tax Act, 1939, and issued a notification on October 12, 2011 through the Commercial Taxes and Registration Department seeking to levy 30 per cent entertainment tax on DTH operators.

Aggrieved over this, DTH service providers filed writ petitions challenging the imposition of tax. They also contended that the notice issued to them demanding the furnishing of security deposit of Rs 46,50,000 was perverse and arbitrary.

Business Line : Industry & Economy / Info-tech : Entertainment tax: Court ruling levels the field, say DTH operators