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North American Network Operators Group Date Prev | Date Next | Date Index | Thread Index | Author Index | Historical Re: Broadband ISPs taxed for "generating light energy"
Notice the date: October 10. That is the Indian equivalent of our April 1. Joe [email protected] wrote on 10/10/2006 10:28:13 AM: > > .. because they provide internet over fiber optic cables, which workby sending > pulses of light down the cable to push packets .. > > http://www.hindu.com/2006/10/10/stories/2006101012450400.htm > > So they get slapped with tax + penalties of INR 241.8 million. > > ________________ > > > Broadband providers accused of tax evasion > > Special Correspondent > > Commercial Tax Department serves notice on Airtel > > # Firms accused of evading tax on sale of `light energy' > # Loss to State exchequer estimated at Rs. 1,200 crore > > Bangalore: The Commercial Tax Department has served a notice on Airtel, owned > by Bharti Televentures Ltd., seeking payment of Rs. 24.18 crore as tax, > interest and penalty for the sale of `light energy' to its customers for > providing broadband through optical fibre cables (OFC). > > The department has been investigating alleged tax evasion by OFC broadband > providers, both in the public and private sectors, for selling lightenergy to > customers. "While the assessment on Airtel was completed and a > notice issued to > it for alleged tax evasion during the year 2005-06, no assessment has been > concluded on other OFC broadband providers," A.K. Chitaguppi, Deputy > Commissioner of Commercial Taxes, said. Other OFC broadband providers facing > tax evasion charges are public sector BSNL and private sector VSNL, Reliance, > Tata Teleservices and Sify. > > The Commercial Tax Department has estimated a loss of Rs. 1,200 > crore to the State exchequer in this regard since OFC broadband > providers have been operating in the State for several years. > > Mr. Chitaguppi said that OFC operates on light energy, which is artificially > created by the OFC providers and sold to customers for the purpose of data > transmission and information, on the OFC broadband line. Without such energy, > data or information cannot be transmitted. > > "Whoever sells light energy is liable to pay VAT as it comes under > the category > of goods, and hence its sale constitutes taxable turnover attracting VAT at > 12.5 per cent," he said. > > Bharti Televentures had approached the Karnataka High Court seeking to quash > the demand notice, but failed to get a stay when the case was heard by Justice > Shantanu Goudar on September 1. The judge rejected Bharti's plea seeking issue > of an injunction against any initiatives from the Commercial Tax Department on > the recovery of the tax. > > Bharti Televentures had contended in the High Court that re-assessment orders > passed by State tax officials and the issue of demand notice was not valid as > the disputed activity fell under the provision of service tax levied by the > Union Government and did not attract VAT. The High Court is expectedto take up > the case for hearing again in the next few days. > > `Business venture' > > The Commercial Tax Department has argued that the OFC broadband operators are > running a business venture after investing thousands of crores to put in place > a state-of-the-art set-up to artificially generate light energy and supply it > to its customers for their data transmission work. The characteristics of the > light energy constitute a moveable property, which has to be categorised as > `goods' as per the norms laid down by the Supreme Court. "In the process of > data transmission, other than light energy, no other elements are involved and > the customers are paying for the same. This proves that light energy > constitutes goods, which is liable for levy of tax. Therefore, the State has > every legal competence and jurisdiction to tax it," the department has > contended. > > It has taken serious note of the non-payment of taxes by the broadband service > providers. "Reporting a turnover and then claiming exemption is one thing. But > some of the OFC operators don't even report their turnovers," Mr. Chitaguppi > alleged.
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