Cabinet DecisionsLegislation Updates

Union Cabinet has approved the proposal for revision of the guidelines for obtaining the license for providing Direct-To-Home (DTH) broadcasting service in India. The salient features of the decision are:

  • License for the DTH will be issued for a period of 20 years in place of the present 10 years. Further the period of License may be renewed by 10 years at a time.
  • License fee has been revised from 10% of GR to 8% of AGR. AGR will be calculated by deduction of GST from GR.
  • License Fee will be collected on a quarterly basis in lieu of presently annual basis.
  • DTH operators shall be permitted to operate .to a maximum of 5% of its total channel carrying capacity as permitted platform channels. A one-time non-refundable registration fee of Rs.10,000 per PS channel shall be charged from a DTH operator.
  • Sharing of Infrastructure between DTH operators. DTH operators, willing to share DTH platform and transport stream of TV channels, on voluntary basis, will be allowed. Distributors of TV channels will be permitted to share the common hardware for their Subscriber Management System (SMS) and Conditional Access System (CAS) applications.
  • The cap of 49% FDl in the existing DTH guidelines will be aligned with the extant Government (DPIIT’s) policy on FDl as amended from time to time.
  • The decision will come into effect as per revised DTH guidelines are issued by the Ministry of Information and Broadcasting.
  • The proposed reduction is intended to align the license fee regime applicable to Telecom sector and will be prospectively applied. The difference may also enable DTH service providers to invest for more coverage leading to increased operations and higher growth and thereby enhanced and regular payment of License Fee by them. Registration fee for Platform Services is likely to bring a revenue of approximately Rs. 12 Lakhs. Sharing of infrastructure by the DTH operators may bring in more efficient use of scarce satellite resources and reduce the costs borne by the consumers. Adoption of the extant FDI policy will bring in more foreign investment into the country.

The DTH is operable on the pan-India basis. DTH sector is a highly employment-intensive sector. It directly employs DTH operators as well as those in the call centres besides indirectly employing a sizeable number of installers at the grass-root level. The amended DTH guidelines, with longer license period and clarity on renewals, relaxed FDI limits, etc., will ensure a fair degree of stability and new investments in the DTH sector along with employment opportunities.


Cabinet

[Press Release dt. 23-12-2020]

Case BriefsTribunals/Commissions/Regulatory Bodies

Customs, Excise and Services Tax Appellate Tribunal (CESTAT): A Division Bench of Anil Choudhary (Judicial Member) and P. Anjani Kumar (Technical Member), allowed an appeal in order to find out that whether the appellant were liable to pay Service Tax under the Head “Franchise Services” on their activity of granting license to third party-crane operators for providing their crane (wheel mounted) in the Port area for providing services of loading and unloading, etc. with the help of the crane have collected license fee from the crane operators.

Appellant being a statutory body, a Port Trust, operating in the major Port at Mangalore are registered with the Service Tax Department. Section 42 of the Major Port Trust Act, 1963 provides that the Board “Port Trust” shall have the power to undertake services including – notwithstanding anything contained in this section, Board may, with the sanction of the Central Government authorities engage any person to perform any of the services mentioned in sub-section 1, on such terms and conditions as may be agreed upon. It appeared to Revenue that this activity of the appellant- granting of license to operate the crane in the Port area to the licensee, such license fee is chargeable to Service Tax under the Head “Franchise Services”. Accordingly, SCN was issued invoking the extended period of limitation; penalties were imposed under Sections 78, 76 & 77 read with Rule 7(c). Thus, the instant petition was filed.

The Counsel for the appellant, Bhanu Murthy put forth the cases of Vishakhapatnam Port Trust v. CCE, 2019 (27) GSTL 244 (Tri. Hyd) where it was held that license fee and Royalty received by Port Trust towards licensing others to perform certain functions within port area is not liable to Service Tax under the Head “Franchise Services” and Cochin Port Trust v. CCE, 2011 SCC OnLine CESTAT 4248.

The Tribunal while allowing the appeal relied on the judgment of Cochin Port Trust and held that the matter was no longer res integra and the same had been decided in favour of the assessee in the mentioned case by Kerala High Court quoting that:

“The amounts paid by IGTPL to CPT is only in respect of the right conferred on the IGTPL to carry out the port services; for provision of which the users of the port would pay a fee. In such circumstances, definitely the Revenue earned by IGTPL will be taxed under the Finance Act, 1994 specifically under sub-clause (lxxxii) of Section 65. It is a percentage of that, which the IGTPL pays to CPT, in lieu of surrendering their rights to carry out and provide port services in the subject terminals. There is no port service by the CPT to IGTPL. We hence find the order of the Tribunal to be perfectly in order.”

[New Mangalore Port Trust v. C.C.E. & S.T., 2020 SCC OnLine CESTAT 166, decided on 31-08-2020]


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Legislation UpdatesNotifications

S.O. 1398(E) —In exercise of the powers conferred by clause (46) of Section 10 of the Income-tax Act, 1961 (43 of 1961), the Central Government hereby notifies for the purposes of the said clause, ‘Visakhapatnam Special Economic Zone Authority’, an authority constituted by the Central Government, in respect of the following specified income arising to that authority, namely:—

(a)  Lease Rent (charged as per Government prescribed rate);

(b)  Receipts from I-Card and Permit fees;

(c)  Allotment fee in respect of Standard Design Factories;

(d)  Auction/bid amount in respect of Plots/Building which fall vacant;

(e)  Transfer charges in respect of Plot/Building;

(f)  Fee for Issue of Form-I for exemption of Building Plans;

(g)  Processing fee for approval of Building Plans, conveying NOC’s etc.;

(h)  Site usage charges from Service Providers;

(i) License fee for allotment of Staff Quarters to the Staff; and

(j) Interest earned on (a) to (i) above.

2. This notification shall be effective subject to the conditions that Visakhapatnam Special Economic Zone Authority,-

(a)  shall not engage in any commercial activity;

(b)  activities and the nature of the specified income shall remain unchanged throughout the financial years; and

(c)  shall file return of income in accordance with the provision of clause (g) of sub-section (4C) of Section 139 of the Income-tax Act, 1961.

3. This notification shall be deemed to have been applied for the assessment year 2018-2019, and shall apply with respect to the assessment years 2019-2020, 2020-2021, 2021-2022 and 2022-2023.

[Notification No. 25 /2019/F. No. 300196/62/2018-ITA-I]

[Notification dt: 19-03-2019]

Ministry of Finance