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CHENNAI, APRIL 19:
The Supreme Court has held Direct to Home (DTH) service is taxable under the Finance Act, 1994, under which service tax is imposed by the Union Government.
Madhya Pradesh imposes a 20 per cent entertainment tax including on cinema theatres and circus. The State Government asked Tata Sky to cough up entertainment tax of 20 per cent on subscriptions collected from residents of Madhya Pradesh on the ground that it was offering entertainment.
But the Supreme Court pointed out that Tata Sky was a service provider. It had no place of entertainment within Madhya Pradesh. All it did was to make available a mix of entertainment, spiritual, sport and news-based channels to households and others through satellite. Those who subscribed to its services installed a small dish that received the signals and enabled them to view the channels.
Tata Sky, therefore, was not entertaining the subscribers at their homes; it was merely a facilitator, the service provider. Tata Sky had obtained a 10-year licence to provide DTH services from the Union Government under the Indian Telegraph Act, 1885, on payment of Rs 10 crore as upfront licence fee and a revenue share of 10 per cent.
In other words, apart from the initial fee of Rs 10 crore, the Union Government was entitled to get from Tata Sky 10 per cent of the gross revenue according to the audited accounts.
Tata Sky’s role is to carry the digitalised signals to the rooftops, as it were, of households. It was by no means a content provider so as to be cast in the role of an entertainer.
http://www.thehindubusinessline.com...er-only-a-service-provider/article4634029.ece
The Supreme Court has held Direct to Home (DTH) service is taxable under the Finance Act, 1994, under which service tax is imposed by the Union Government.
Madhya Pradesh imposes a 20 per cent entertainment tax including on cinema theatres and circus. The State Government asked Tata Sky to cough up entertainment tax of 20 per cent on subscriptions collected from residents of Madhya Pradesh on the ground that it was offering entertainment.
But the Supreme Court pointed out that Tata Sky was a service provider. It had no place of entertainment within Madhya Pradesh. All it did was to make available a mix of entertainment, spiritual, sport and news-based channels to households and others through satellite. Those who subscribed to its services installed a small dish that received the signals and enabled them to view the channels.
Tata Sky, therefore, was not entertaining the subscribers at their homes; it was merely a facilitator, the service provider. Tata Sky had obtained a 10-year licence to provide DTH services from the Union Government under the Indian Telegraph Act, 1885, on payment of Rs 10 crore as upfront licence fee and a revenue share of 10 per cent.
In other words, apart from the initial fee of Rs 10 crore, the Union Government was entitled to get from Tata Sky 10 per cent of the gross revenue according to the audited accounts.
Tata Sky’s role is to carry the digitalised signals to the rooftops, as it were, of households. It was by no means a content provider so as to be cast in the role of an entertainer.
http://www.thehindubusinessline.com...er-only-a-service-provider/article4634029.ece
