Hon’ble Mr. Justice Krishnan Ramasamy issued the interim stay after hearing Mr. P. Wilson, senior advocate representing the government company. The petitioner, TACTV, challenged the demand made by the Joint
Hon’ble Mr. Justice Krishnan Ramasamy issued the interim stay after hearing Mr. P. Wilson, senior advocate representing the government company. The petitioner, TACTV, challenged the demand made by the Joint
The petitioner stated in the Writ Petition that it operates as a Multi-System Operator (MSO) within a statutory framework governed by the Cable Television Networks (Regulation) Act, 1995, the Telecom Regulatory Authority of India Act, 1997, and related regulations. TACTV transmits signals to Local Cable Operators (LCOs), who, in turn, service the end customers and there is no direct nexus with end consumers by TACTV.
Under interconnection agreements with LCOs, made in compliance with Regulation 12 of the Telecommunication (Broadcasting and Cable) Services Interconnection Regulations, 2017, TACTV is obligated to transmit signals to the LCOs, while the LCOs are responsible for delivering services to the end consumers. Revenue collected from customers is shared equally between TACTV and the LCOs, with TACTV raising invoices on the LCOs for its share and paying GST accordingly. The LCOs, as independent entities, also issue invoices to customers. The LCO’s have to pay their GST liability and Petitioner cannot be held responsible for their inaction. There is a revenue-sharing interconnection agreement between TACTV and the LCOs, which includes provisions for paying respective taxes, including GST.
However, the Directorate General of GST Intelligence (DGGI), Coimbatore Regional Unit, initiated an investigation into the business operations of TACTV. Following the investigation, the DGGI issued Show Cause Notice proposing a demand for GST for the period from July 2017 to March 2022, related to the GST component not paid by the Local Cable Operators, along with applicable interest and penalties.
It is an admitted case that TACTV has discharged its GST obligations for the revenue share it received from LCO’s without any default.
The core allegation of GST department in the Show Cause Notice was that TACTV was the actual supplier of cable television services to the end customers, while the LCOs merely facilitated the supply. It was claimed by department that since TACTV’s name and logo appeared on the broadcast feed, the Subscriber Management System (SMS) was centrally maintained by TACTV, and customers subscribed through applications routed via LCOs, TACTV should be considered the supplier liable for paying GST on the total consideration collected from customers, including the portion retained by the LCOs. Furthermore, it was alleged that many LCOs, being unregistered due to low turnover, did not remit GST on their revenue share, leading to tax evasion.
Mr P. Wilson appearing for TACTV submitted before the High Court, that as an MSO, it merely transmits signals to the LCOs, who are separate legal entities independently providing last-mile connectivity to customers. He emphasized that TACTV’s relationship with the LCOs is governed by interconnection agreements according to the Telecommunication (Broadcasting and Cable) Services Interconnection (Addressable Systems) Regulations, 2017. TACTV raises invoices on the LCOs for its share of revenue and pays GST accordingly, while the LCOs, as distinct suppliers, bill and collect charges from the customers. Mr Wilson submitted that TACTV has not received or retained the amounts collected by the LCOs and submitted that such revenue could not be considered as income in its hands under Section 2(31) of the GST Acts.
He submitted that without appreciating the documents as well as reply filed by TACTV ,the Respondent proceeded to issue the order confirming the entire demand and recovery of the amount of ₹285,04, 79,342 along with interest and penalty for equivalent amount of Rs ₹285,04, 79,342 and threatened with attachment of bank deposits of TACTV the Tamilnadu Government company.
After hearing the arguments of Mr P Wilson, the High court granted interim stay of the confirmation demand and Recovery order.
