The Delhi High Court has disposed of two long-pending petitions concerning the levy of entertainment duty on multi-service operators (MSOs), while extending for three months the interim protection earlier granted by the Bombay High Court to enable the petitioners to pursue appropriate legal remedies.
A Division Bench of Justice Prathiba M Singh and Justice Vikas Mahajan passed the order on July 6 in petitions filed by IndusInd Media & Communication Ltd. and Bhima Riddhi Digital Services, challenging provisions of the Maharashtra Entertainment Duty Act, 1923, as amended by the Maharashtra Entertainment Duty (Amendment and Continuance) Act, 2014.
The dispute concerns the liability of MSOs to pay entertainment duty on cable television services. MSOs provide cable signals either directly to subscribers or through local cable operators (LCOs), who then deliver the services to end-users.
The challenge arose after the Maharashtra government issued a resolution making MSOs liable for payment of entertainment duty and providing for joint and several liability of MSOs and LCOs in cases of non-payment. This followed a December 2012 circular of the Delhi government shifting the responsibility for collection of entertainment tax from LCOs to MSOs with effect from April 1, 2013.
The Bombay High Court had, meanwhile, granted interim protection to similarly placed petitioners on October 1, 2015, directing that no coercive steps be taken against them. The protection continued during the pendency of the proceedings.
The legal position was subsequently considered by the Delhi High Court in a connected batch led by Siti Cable Networks Ltd. v. GNCTD & Ors., decided on March 9, 2017. The Court held that where MSOs directly provide cable services to subscribers without the involvement of an LCO, they would be liable to collect and pay entertainment tax. Where the service is provided through LCOs, the respective LCOs would be liable for the tax concerning their subscriber networks.
This is one of the 48 petitions that were transferred to the Delhi High Court by the Supreme Court on April 1, 2016, pursuant to transfer petitions.
In view of the legal developments, the Delhi High Court noted that the issues raised in the present petitions had already been dealt with in connected proceedings and that the matter remained pending before the Supreme Court.
Advocate Upender Thakur sought continuation of the interim protection for a further period of three months to enable the petitioners to take appropriate steps in accordance with law.
The Bench accordingly disposed of the petitions and directed that the Bombay High Court’s interim order dated October 1, 2015 would continue for three months.
The Court also clarified that the petitioners would remain at liberty to avail themselves of remedies available to them in accordance with law.
The petitioners were represented by advocate Upender Thakur, while Central Government Standing Counsel Nidhi Raman appeared for the Union of India.
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