DTH: Madras HC stay on levy of entertainment tax

MUMBAI: In what can be termed as a relief for the direct-to-home (DTH) industry, the Madras High Court has put a stay on the Tamil Nadu state government‘s decision of imposing a 30 per cent entertainment tax on the DTH services in the State.

The Tamil Nadu Government had passed a Bill in September, this year, to levy 30 per cent entertainment tax effective 27 September. However, the leading DTH operator Dish TV had filed a petition in the High Court contesting the decision.

Dish TV had said that the government‘s decision is discriminatory and in violation of Article 14 of the Constitution of India, as the cable network is exempt from such a levy. 
Dish TV said in a statement that the High Court announced the petition challenging the validity of the levy on DTH services was taken up for hearing by Justice Chitra Venkatraman.

The order restrained the Department of Entertainment Tax from initiating any further proceedings - new or by way of the show-cause notice dated 14 November - and from recovering taxes. It directed Dish TV to furnish tax returns and deposit a security amount that equals half of the tax liability for a month in cash.

Dish TV MD Jawahar Goel said, "We welcome the stay. Entertainment tax is a burden on the common man for whom TV viewing is the cheapest form of entertainment and information."
The Jayalalitha government‘s decision to impose 30 per cent entertainment tax on DTH service providers would have helped Arasu Cable Corporation‘s activities as the DTH consumers may have to end up paying more.

The four southern states constitute 22 per cent of India‘s 38 million DTH population. Tamil Nadu is a very low ARPU (average revenue per user) market and with opportunities opening up for DTH after the launch of state-owned Arasu Cable, the steep entertainment tax could act as a deterrent.

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