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TMI Blog2019 (4) TMI 2106X X X X Extracts X X X X X X X X Extracts X X X X ..... n to a subscriber by the proprietor of any cable service or cable television network and which amount of tax is to be paid by the proprietor of an entertainment to the State Government - The enabling power vested in the Assessing Authority under the Act is to be exercised in the manner prescribed by the Rules and which have since been framed vide rules 19A and 23A of the Rules . Section 3AA of the Act read alongside rules 19A and 23A of the Rules makes the taxing event at the point where the entertainment reaches a subscriber through the cables. Now whether it is the MSO like the petitioner who not only is providing such entertainment to the subscriber directly but also through the Local Cable Operators or the Local Cable Operators, when providing such service to the subscribers, is to be termed as a proprietor , is a matter of adjudication in the backdrop of the statutory provisions - there are no confusion that the assessment orders passed for the assessment years put to question in this writ petition lacks foundation because it is not based on the number of subscribers rather is based upon the number of set top boxes, the details of which was available in the reg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ness of providing entertainment through cables and the procedure which it follows is detailed at paragraph 4 of the writ petition which runs under: A. The television channels uplink their encrypted content to a satellite. B. These encrypted signals of various television channels are then downloaded by entities like the petitioner, who are known as Multi System Operators (MSOs). C. The MSOs decrypt the content of various channels, and after converting them for transmission at a different frequency, re-encrypt them for transmission through cables to Local Cable Operators. D. The cable network of the MSOs transmits the signals to the Local Cable Operators (LCOs). E. For the purpose of transmitting the signal to the subscriber, the LCOs use their own cable network, which is wholly and solely owned by them. F. These subscribers have a contractual relationship with the LCO. They do not have a contractual relationship with the MSO. G. The MSO does not directly provide any content to the LCO s subscriber. H. It is very relevant to note that both MSOs and LCOs, in order to operate, have to be licensed under the provisions of the Cable Television Network (Regulation) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the petitioner would be pressing the other reliefs so prayed in the writ petition which questions the assessment orders for the period 2015-16 (4th quarter), 2016-17 (all quarters) and 2017-18 (1st quarter) not only on merits but also on the exercise of jurisdiction for according to Dr. Singh, the petitioner is not exigible to tax in so far as it is providing entertainment indirectly through Local Cable Operators to the subscribers. Learned counsel in support of his submission has relied upon a judgment of the Delhi High Court rendered in the case of SITI Cable Networks Limited vs. Government of NCT of Delhi and others arising from W.P.(C) 427 of 2014 and C.M. No.851 of 2014 which was heard analogous with other writ petitions to submit that it is raising identical issues that the MSO in Delhi had approached the Delhi High Court and when on a similar grievance being raised and the order of assessment being questioned as against pari materia statutory provisions, the contention of the MSO was upheld and the demand was set aside. According to Dr. Singh, the judgment of the Delhi High Court has also taken note of contrary view expressed in reference to the statutory p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... there is no confusion about the nature of impost. Perhaps the confusion as regarding the identity of the proprietor has led to the challenge because while according to Dr. Singh, it would be MSO when it provides entertainment to the subscriber through the cables directly and not when such MSO would be providing entertainment through the Local Cable Operators to the subscriber, in which situation, it would be the Local Cable Operators, the position is contested by Mr. Vikash Kumar, learned State Counsel to canvass that in either of the situation it would be MSO who would be treated to be the proprietor for the purpose of levy. We would reserve our opinion for the present and leave it open for the parties contesting to advance these arguments before the authority concerned because in the nature of the order passed by the Assessing Authority for the periods in question, we definitely intend to remit the matter back to the Assessing Authority not because, we have recorded our satisfaction on the inter-party merits but because of the manner of exercise by the Assessing Authority, which is de-hors the statutory provisions. Section 3AA of the Act read alongside rules 19A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an admitted position. As we have noted above, the taxing event happens when such connection reaches the subscriber who is defined under section 2(q) of the Act and means a person who receives the signal of cable television network at a place indicated by him to the cable operator without further transmitting it to any other person. The definition of a subscriber is self eloquent and literally means the consumer i.e. the end user of the connection because he does not further transmit the signal to any other person. The definition of a subscriber as found in section 2(q) of the Act is thus identifiable by a person and not by a set top box as has been done in the present case by the Assessing Authority, to pass the orders put to challenge. In our opinion the assessment orders having been passed on the basis of the details of the set top boxes found available in the record register of the petitioner and not the subscribers of such set top boxes, is grossly illegal and is de-hors the statutory provisions underlying Section 3AA of the Act which levies consolidated tax on the connection given to a subscriber and not on the set top box itself. In our opinion t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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