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Court orders stay on Tamil Nadu DTH entertainment tax

The Madras High Court has imposed a stay on the Tamil Nadu State Government's decision to impose a 30% entertainment tax on direct to home (DTH) satellite TV services, following a petition by Dish TV.

Dish TV has contested that the state government's new Bill was discriminatory and in violation of Article 14 of the Constitution of India, as it exempts cable TV networks from the 30% entertainment tax expected of its rival DTH platforms.

Justice Chitra Venkatraman of the High Court will now hear the DTH operator's petition.

"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," said Jawahar Goel, managing director, Dish TV.

Tamil Nadu State Government has been instructed to stay the new levy, which has been effective since 27 September. The Department of Entertainment Tax has been prevented from initiating any further proceedings to recover taxes.

The court has also directed Dish TV to furnish tax returns and deposit a security amount that equals half of the tax liability for a month in cash.

The four southern states of India reportedly account for 22% of India's 38 million direct to home (DTH) subscribers, although Tamil Nadu provides low average revenues per user (ARPU) for operators.

India's six private DTH operators – Dish TV, Sun Direct, Tata Sky, Airtel Digital, Reliance Digital, and Videocon d2h – are subject to entertainment tax in many other states, as well as the union government imposed service tax, but are generally unhappy about what they feel is excessive taxation.

Sun Direct, owned by Kalanithi Maran, reportedly has the largest share of the DTH market in Tamil Nadu, and a 17% share across all India – although cable is still the predominant means of receiving television throughout the country. There are some 20 million cable TV viewers in Tamil Nadu, and distribution of cable services there is also currently dominated by the Maran family.

The DTH entertainment tax in Tamil Nadu was expected to boost state-run Arasu Cable Corporation, which was relaunched earlier this year by the government to provide a competitor to Sumangali Cable Vision, part of the Sun TV Network.

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