Broadband ISPs taxed for "generating light energy"

Matthew Black black at
Tue Oct 10 16:36:37 UTC 2006

A rather humorous article from a rhetorical perspective.
The reporter emphasizes the innocence of generating light
while ignoring its commercial aspects. Those light pulses
are very valuable to recipients. This tax seems to parallel
the U.S. Federal Excise Tax on photons and electrons
(i.e., telephone service). I don't see anything unusual here
other than a weak argument against taxing authority.

If you want to argue against the concept of taxation, be my
guest. But let's not obfuscate the real issue here. Tax
evasion often results in assessment of hugh penalties. Just
ask Spiro Agnew or Al Capone.

This is news?

matthew black
california state university, long beach

On Tue, 10 Oct 2006 19:58:13 +0530
  Suresh Ramasubramanian <ops.lists at> wrote:
> .. because they provide internet over fiber optic cables, which work by 
> pulses of light down the cable to push packets ..
> So they get slapped with tax + penalties of INR 241.8 million.
> ________________
> Broadband providers accused of tax evasion
> Special Correspondent
> Commercial Tax Department serves notice on Airtel
> # Firms accused of evading tax on sale of `light energy'
> # Loss to State exchequer estimated at Rs. 1,200 crore
> Bangalore: The Commercial Tax Department has served a notice on Airtel, 
> by Bharti Televentures Ltd., seeking payment of Rs. 24.18 crore as tax,
> interest and penalty for the sale of `light energy' to its customers for
> providing broadband through optical fibre cables (OFC).
> The department has been investigating alleged tax evasion by OFC broadband
> providers, both in the public and private sectors, for selling light 
>energy to
> customers. "While the assessment on Airtel was completed and a notice 
>issued to
> it for alleged tax evasion during the year 2005-06, no assessment has been
> concluded on other OFC broadband providers," A.K. Chitaguppi, Deputy
> Commissioner of Commercial Taxes, said. Other OFC broadband providers 
> tax evasion charges are public sector BSNL and private sector VSNL, 
> Tata Teleservices and Sify.
> The Commercial Tax Department has estimated a loss of Rs. 1,200 crore to 
>the State exchequer in this regard since OFC broadband providers have been 
>operating in the State for several years.
> Mr. Chitaguppi said that OFC operates on light energy, which is 
> created by the OFC providers and sold to customers for the purpose of data
> transmission and information, on the OFC broadband line. Without such 
> data or information cannot be transmitted.
> "Whoever sells light energy is liable to pay VAT as it comes under the 
> of goods, and hence its sale constitutes taxable turnover attracting VAT 
> 12.5 per cent," he said.
> Bharti Televentures had approached the Karnataka High Court seeking to 
> the demand notice, but failed to get a stay when the case was heard by 
> Shantanu Goudar on September 1. The judge rejected Bharti's plea seeking 
> of an injunction against any initiatives from the Commercial Tax 
>Department on
> the recovery of the tax.
> Bharti Televentures had contended in the High Court that re-assessment 
> passed by State tax officials and the issue of demand notice was not valid 
> the disputed activity fell under the provision of service tax levied by 
> Union Government and did not attract VAT. The High Court is expected to 
>take up
> the case for hearing again in the next few days.
> `Business venture'
> The Commercial Tax Department has argued that the OFC broadband operators 
> running a business venture after investing thousands of crores to put in 
> a state-of-the-art set-up to artificially generate light energy and supply 
> to its customers for their data transmission work. The characteristics of 
> light energy constitute a moveable property, which has to be categorised 
> `goods' as per the norms laid down by the Supreme Court. "In the process 
> data transmission, other than light energy, no other elements are involved 
> the customers are paying for the same. This proves that light energy
> constitutes goods, which is liable for levy of tax. Therefore, the State 
> every legal competence and jurisdiction to tax it," the department has
> contended.
> It has taken serious note of the non-payment of taxes by the broadband 
> providers. "Reporting a turnover and then claiming exemption is one thing. 
> some of the OFC operators don't even report their turnovers," Mr. 
> alleged.

More information about the NANOG mailing list