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.