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Delhi HC adjourns entertainment tax case till 27 May

MUMBAI: The Delhi High Court has adjourned the entertainment tax case involving multi-system operators (MSOs)—Hathway Cable & Datacom, DEN Networks, Siti Cable and IndusInd Media and Communications Ltd (IMCL)—till 27 May as the Entertainment Tax Department’s reply in the case was not on record due to late filing.

The HC had in January given interim relief to three national MSOs—Hathway, DEN and IMCL—against the show-cause notice served by the Department of Entertainment Tax which asked the MSOs to pay entertainment tax or face action.

The HC has given four weeks’ time to the Delhi government to file its replies in the case.

The court had ordered the state entertainment tax authority not to take any coercive measures against the three MSOs till final orders. However, Siti Cable did not get any relief as the HC asked it to deposit the quantum decided by the tax department concerned.

The HC had also asked DEN and Hathway to deposit tax to the tune of Rs 3 crore ( Rs 30 million) and Rs 2 crore ( Rs 20 million) respectively.

The three MSOs filed separate petitions in the HC, challenging the Entertainment Tax Officer’s (ETO) order asking the MSOs to deposit entertainment tax beginning April 2013.

The ETO threatened to stop cable TV transmission of the MSOs by shutting off their headends.

DEN and Hathway argued that they were not liable to pay entertainment tax from April since they had started consumer billing only from November.

They also argued that it was the local cable operators (LCOs), not the MSOs, who had been collecting money from the ground.

DEN also argued that the entertainment tax must be collected only on actual collections. The MSO also sought clarity from the tax department whether the tax is paid on per-subscriber or per-set-top box (STB) basis.

While Siti Cable agreed to pay entertainment tax, its argument was about the quantum of the liability.

On the other hand, IMCL argued in its petition that the LCOs must pay entertainment tax as they owned the customers. The LCOs also got entertainment tax licence, so they should pay the entertainment tax, it said.