The court asks tax assessing officer to first determine whether the TV signal provider belongs to the company or the consumer
The High Court has asked the tax assessing officer to reconsider VAT on set-top boxes under the Karnataka Value Added Tax Act. This will determine whether a set-top box provided by DTH (direct to home) operators belongs to the company or the consumer who is in its possession after paying to use it. Conflicting claims were made by a DTH service provider and the tax authorities in the HC over this issue on Monday.
A leading DTH operator approached the HC after tax authorities demanded that tax be paid on STBs installed in the homes of consumers. The tax demand was for a period of four years. The counsel for the company claimed that there were only two charges collected from consumers: activation charges on the STB and monthly charges on channels that consumers view. The STB was not charged for and it belonged to the company. The controlling authority of the STB was the company and not the consumer, the court was told.
The company's counsel also told the court that a one-time activation fee was charged on an STB, and the cost of the STB was depreciated in its books of accounts. The agreement between the consumer and the company does not denote sale. So demanding both sales tax and VAT on the same thing was a case of duality.
The counsel for tax authorities argued that the company provides 12 months of warranty on the STB, to prove that the STB was indeed sold. The company's counsel argued that it transferred the warranty it got on STBs from the supplier to the consumer. This did not mean a transfer of rights.
The counsel for the company pointed out to two clauses in the agreement in which the company says that the STB would remain the sole property of the company, and that the customer is supposed to keep the STB in good and working condition. The HC then referred the case back to the assessing officer to consider the tax issue afresh according to law by taking into consideration the two clauses.
Ownership of DTH set-top box undecided in High Court - Bangalore Mirror
The High Court has asked the tax assessing officer to reconsider VAT on set-top boxes under the Karnataka Value Added Tax Act. This will determine whether a set-top box provided by DTH (direct to home) operators belongs to the company or the consumer who is in its possession after paying to use it. Conflicting claims were made by a DTH service provider and the tax authorities in the HC over this issue on Monday.
A leading DTH operator approached the HC after tax authorities demanded that tax be paid on STBs installed in the homes of consumers. The tax demand was for a period of four years. The counsel for the company claimed that there were only two charges collected from consumers: activation charges on the STB and monthly charges on channels that consumers view. The STB was not charged for and it belonged to the company. The controlling authority of the STB was the company and not the consumer, the court was told.
The company's counsel also told the court that a one-time activation fee was charged on an STB, and the cost of the STB was depreciated in its books of accounts. The agreement between the consumer and the company does not denote sale. So demanding both sales tax and VAT on the same thing was a case of duality.
The counsel for tax authorities argued that the company provides 12 months of warranty on the STB, to prove that the STB was indeed sold. The company's counsel argued that it transferred the warranty it got on STBs from the supplier to the consumer. This did not mean a transfer of rights.
The counsel for the company pointed out to two clauses in the agreement in which the company says that the STB would remain the sole property of the company, and that the customer is supposed to keep the STB in good and working condition. The HC then referred the case back to the assessing officer to consider the tax issue afresh according to law by taking into consideration the two clauses.
Ownership of DTH set-top box undecided in High Court - Bangalore Mirror
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