SC refuses relief to Den Networks against VAT on set-top box deployment
This story was originally published at 13:08 IST on 4 June 2025
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NEW DELHI – The Supreme Court on Wednesday refused to stay the Karnataka High Court order that upheld the levy of value added tax against Den Networks Ltd. on deployment of set-top boxes at subscriber premises. The court also refused to stay the consequent recovery proceedings, totalling INR 228.92 million, against the company by the tax department. The top court issued notices to the state of Karnataka, the deputy commissioner of commercial taxes (audit) and others on Den Networks' plea and tagged the case with similar pending matters.
Den Networks, which is engaged in the business of providing cable television services, was registered as a "multi-system operator". The petitioner had entered into "interconnection" agreements with local cable operators under which Den Networks was transmitting television signals via cables to such operators for onward transmission to subscribers.
Den Networks was of the belief that there was no transfer of right to use set-top boxes and consequently, no value added tax was paid on deployment to subscribers' premises. However, the state value added tax authorities said that the deployment of set-top boxes to the subscriber premises was tantamount to transfer of right to use the set-top boxes and the consequent levy of value added tax under the Karnataka Value Added Tax Act, 2003.
The value added tax authorities raised demands totalling INR 228.92 million, inclusive of interest and penalties, for financial years 2008-09 (Apr-Mar) and 2011-12 to 2015-16 against Den Networks. After several litigations, the Karnataka High Court in February upheld the levy of value added tax against Den Networks, following which the company moved the apex court.
The petitioner said the set-top box was being used by it in order to render its service of transmission of cable television signals. The high court ought to have appreciated that effective control was with the petitioner itself inasmuch as it could restrict, block, unblock the decryption of cable television signals over the set top boxes at its own end and this access or power did not vest with the local cable operators and subscribers, said Den Networks.
At 1305 IST, the shares of Den Networks were up 0.6% at INR 36.40 on the National Stock Exchange. End
IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT
Reported by Surya Tripathi
Edited by Vandana Hingorani
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