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Furnish details of cable connections, Delhi Govt asks operators, MSOs wary of cascading effect

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MUMBAI: The Delhi government has ordered cable operators to furnish the number of subscribers, an attempt which seems to be driven by the idea of increasing entertainment tax collection. Cable operators generally pay entertainment tax based on the number of their connections. It is unclear whether the government plans to claim tax from retrospective effect or not, and what is the period it is claiming tax for.

Speaking to www.indiantelevision.com, the country's apex body for digital multi-system operators (MSOs) All-India Digital Cable Federation (AIDCF) secretary-general Saharsh Damani agreed that he had come across reports of local cable operators (LCOs) receiving tax notices. If the government were to demand and recover entertainment taxes from LCOs for the last 4-5 years, Damani opined, it would become difficult for the operators to survive commercially. If the LCOs were severely affected, it would obviously have had a cascading severe effect on the MSOs, he added.

A written communication has reportedly been sent to multi-system operators (MSOs) to submit details of their local cable operators and cable connections at the earliest, according to the entertainment tax department. However, Den Networks CEO SN Sharma, speaking to www.indiantelevision.com, denied receiving any communication so far. Damani also replied in the negative.

The department has reportedly asked MSOs, around 20 in Delhi, to provide details of their cable connections with each local cable operator (LCO). The department has also sought details of addresses and phone numbers of local cable operators under them, an official said. The decision has been taken to increase tax collection, the official said.

According to the department, the government had collected Rs 160.72 crore in taxes in the financial year 2014-15, while it increased to Rs 261.94 crore in the fiscal 2015-16.

The Delhi High Court had recently held that MSOs and LCOs distributing television signals to subscribers directly are liable to collect and pay entertainment to the government. The court’s decision came on pleas filed by four MSOs – Hathway Cable and Datacom Ltd, DEN Networks Ltd, IndusInd Media and Communications and SITI Cable Network Ltd. They had moved the court challenging the levy of entertainment tax and vires of the Delhi Entertainment and BettingTax Rules.

The four had sought quashing of the Delhi government’s 17 December, 2012, circular and show cause notices issued in January 2014 directing them to deposit tax beginning April 2013. Delhi had threatened to halt cable TV transmission of the MSOs by closing their headends. The government had stated that the assessment of the MSOs bared that they had been indulging in tax fraud in crore since April 2013. 

A bench of justices Sanjeev Sachdeva and Badar Durrez Ahemed, however, quashed the Delhi government’s December 2012 circular and show-cause notices served by its Department of Entertainment Tax asking the MSOs to to pay entertainment tax or face action.

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