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Re: Broadband ISPs taxed for "generating light energy"
- From: Matthew Black
- Date: Tue Oct 10 12:39:42 2006
A rather humorous article from a rhetorical perspective.
The reporter emphasizes the innocence of generating light
while ignoring its commercial aspects. Those light pulses
are very valuable to recipients. This tax seems to parallel
the U.S. Federal Excise Tax on photons and electrons
(i.e., telephone service). I don't see anything unusual here
other than a weak argument against taxing authority.
If you want to argue against the concept of taxation, be my
guest. But let's not obfuscate the real issue here. Tax
evasion often results in assessment of hugh penalties. Just
ask Spiro Agnew or Al Capone.
This is news?
california state university, long beach
On Tue, 10 Oct 2006 19:58:13 +0530
Suresh Ramasubramanian <[email protected]> wrote:
.. because they provide internet over fiber optic cables, which work by
pulses of light down the cable to push packets ..
So they get slapped with tax + penalties of INR 241.8 million.
Broadband providers accused of tax evasion
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,
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 light
customers. "While the assessment on Airtel was completed and a notice
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
tax evasion charges are public sector BSNL and private sector VSNL,
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
created by the OFC providers and sold to customers for the purpose of data
transmission and information, on the OFC broadband line. Without such
data or information cannot be transmitted.
"Whoever sells light energy is liable to pay VAT as it comes under the
of goods, and hence its sale constitutes taxable turnover attracting VAT
12.5 per cent," he said.
Bharti Televentures had approached the Karnataka High Court seeking to
the demand notice, but failed to get a stay when the case was heard by
Shantanu Goudar on September 1. The judge rejected Bharti's plea seeking
of an injunction against any initiatives from the Commercial Tax
the recovery of the tax.
Bharti Televentures had contended in the High Court that re-assessment
passed by State tax officials and the issue of demand notice was not valid
the disputed activity fell under the provision of service tax levied by
Union Government and did not attract VAT. The High Court is expected to
the case for hearing again in the next few days.
The Commercial Tax Department has argued that the OFC broadband operators
running a business venture after investing thousands of crores to put in
a state-of-the-art set-up to artificially generate light energy and supply
to its customers for their data transmission work. The characteristics of
light energy constitute a moveable property, which has to be categorised
`goods' as per the norms laid down by the Supreme Court. "In the process
data transmission, other than light energy, no other elements are involved
the customers are paying for the same. This proves that light energy
constitutes goods, which is liable for levy of tax. Therefore, the State
every legal competence and jurisdiction to tax it," the department has
It has taken serious note of the non-payment of taxes by the broadband
providers. "Reporting a turnover and then claiming exemption is one thing.
some of the OFC operators don't even report their turnovers," Mr.