The Hindu : Karnataka / Bangalore News : Broadband firms to be brought into tax net

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Friday, Aug 03, 2007
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Karnataka

Karnataka - Bangalore

Broadband firms to be brought into tax net

Staff Reporter

Test case against one company pending in court
State urged to draw Centre’s attention to the issue

Bangalore: The Government will make efforts to bring private broadband service providers into the tax net, Deputy Chief Minister B.S. Yediyurappa asserted on Thursday.

Replying to a call attention by Leader of the Opposition H.K. Patil, Salim Ahmed and others in the Legislative Council, Mr. Yediyurappa said that it had been brought to the Government’s notice that it could tax broadband service providers. As test case, it had imposed a tax of Rs. 25 crore on Bharti Televentures Ltd. (Airtel). The company had contested the Government’s decision in the High Court and the case was pending, he said.

The Government had also constituted a 32-member legislature committee to look into the matter. The committee had submitted a comprehensive report, he said.

The report said that the Government could collect an estimated tax of Rs. 3,000 crore from 49 listed broadband companies operating in the State. Besides, there was also a possibility of the State collecting a minimum of Rs. 300 crore for the lease of radio frequencies. The countrywide tax potential from broadband companies was an estimated Rs. 50,000 crore, Mr. Yediyurappa said.

Congratulating the Government, Mr. Patil, however, said the Government had slept over the report for five months despite knowing its revenue earning potential for the entire country.

Supported by Chairman B.K. Chandrashekar, Mr. Patil, V.R. Sudarshan (Congress) and M.P. Nadagouda (JD-S) suggested that the Government draw the Centre’s attention to the issue.

On Wednesday, Mr. Patil said that taxes totalling Rs. 1 lakh crore had not been collected from the country’s broadband service providers who offer their services through optical fibre cable (OFC) network, over the past five years.

Taxes amounting to Rs. 15,000 crore had not been collected from 49 such service providers in Karnataka alone over the same period. His argument was that the broadband service providers were using artificially created light energy for transfer of data. Pointing out that electrical energy had been declared as “goods” by the Supreme Court, he said even artificially created light energy was considered “goods” and value added tax of 12.5 per cent was to be levied on such goods.

Panel takes note

Subordinate Legislature Committee Sachidanand (JD-S) alleged that the committee had also taken note of the tax evasion. He said some officials had tried to prevent the committee from discussing the issue by arguing that the matter was sub judice. But the Law Secretary, who examined the issue, said that the matter could be discussed since the court was yet to admit a plea in this regard.

Probe sought

Mr. Patil demanded the constitution of a judicial commission to conduct an inquiry into the tax evasion. He also suggested that an authority headed by a High Court judge be set up to decide taxation measures related to such technical and complicated issues. Mr. Patil also appealed to Prime Minister Manmohan Singh to intervene and take measures to recover the tax dues from the broadband service providers. V.R. Sudarshan (Congress) demanded a CBI inquiry into the episode.

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