Kashmir court imposes fine on cellular companies

In a landmark judgement by a Kashmir court, seven leading telecom companies have been asked to shell out around Rs 200 crore as entry fee into the state and faced with fine of Rs 10 lakh.

"The non-payment of taxes has affected the people. Compensating the people in absolute terms may 

not be possible. The petitioners by investing the tax money in business activities have benefited themselves at the cost of public welfare and common good," said justice Muzaffar Attar on Monday while dismissing the petition filed by the telecom complains.

The court imposed a fine of Rs 10 lakh on leading cellular companies Bharti Airtel, Idea Cellular, Tata Tele Services, Viacom, Infratel, Reliance Communications and Dishnet. 

These companies had filed a petition before the court seeking exemption from the entry tax. In separate petitions, these companies had challenged the decision of entry tax imposed by the government. The grounds for challenging the tax was that "the companies import goods into the state for creating infrastructure and for providing telecom and mobile services." The companies pleaded that they never indulged in the sale of equipment and demanded exemption of the tax imposed on them.

However, prouncing judgement in favour of the state government, justice Attar observed that the determined taxes are the revenue of the state. "The amount collected in the reservoir of the state is being spent on the welfare programs benefiting the people at large," said the judge.

"The non payment of taxes has affected the people. Compensating the people in absolute terms may not be possible. The petitioners by investing the tax money in business activities have benefited themselves at the cost of public welfare and common good...in order to inculcate respect for laws, the petitioners are saddled with costs of Rs 10 lakh," said the judge, adding "this amount each writ petitioner shall have to pay towards the government. The amount shall be spent on welfare of orphans."

The landmark judgement help state to raise around Rs 459 crore as entry tax from the companies for a period of last five years.

The state government's counsels argued that the J&K entry tax act was both a charging and remedial act and is a regulatory measure to prevent menace of tax evasion.

"The constitutional validity of entry tax can not be questioned as the same is protected under the constitution," said the counsel for state while defending the entry tax on the companies.

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