"Entertainment tax is such a tax that can immediately snuff out any smile, if and when it appears on our faces. A day may come when the detectives of the government would roam about to find out signs of smiles, which would immediately be reported and fined."

This is the statement of the publisher of the magazine Aavishkar and of the chairman of All India Aavishkar Dish and Antenna Association Dr. Rastogi.

A notification of Delhi government appeared on 1 April 1998 announcing that all the cable TV customers in Delhi will have to pay entertainment tax. The cable operators would collect tax and deposit with the government. The tax on teh private Tvs was announced as 10 rupees per month and in hotel rooms as 50 rupees per month.

On the other hand, the cable TV operators say that in the 1995 Cable TV Act there was no provision of entertainment tax. The industry was brought under the Cinema Act and entertainment tax was applied. Entertainment tax has been applied differently states according to the wish of the respective governments. This logic of unequal entertainment tax is beyond common sense.

Though the government announced that the responsibility of collecting entertainment tax would be of the cable operators, it was not clear how could they do it. In any case, it is not an easy task to collect taxes from customers. Operators do not have any legal power, and if they become strict they loose the customers altogether. Otherwise too, the operators were reducing their rates due to stiff competition. The situation is that in some places the operators were charging only about 50 to 100 rupees. jawahar Goel the owner of Citi Cables explained the problem. " The Investment Commissioner says that the cable industry has not paid; but actually the industry has not taken this amount from the customer. If the cable operator has been paying taxes, then its from his own pocket. If an inspector is to be paid, it is to be done from the pocket of the operator."

According to the operators, the cable industry had received recognition some 7-8 years back, but till today the government has not done anything for it. They say that all the money is lying open and free but the goverment is not protecting it. On top of it they have to pay the entertainment tax. Many states have not even informed the people about it.

Various arbitrary arguments are being advanced in favour of the tax by different states. For example, in U.P. it is being said that the tax is introduced because operators are showing films on VCR. But the position is that after introducing the entertainment tax, the government has prohibited film screening through VCR's.

The government accuses the operators of hiding the number of their customers. Only recently, the tax department raided a big operator and arrested him. He had intimated about a certain number of customers, but during the raids the number turned out to be more. So he was to pay much more entertainment tax. The problem is not confined to the big operators. The smaller ones are also facing the music. Operators say that it is their compulsion. It is very difficult for them to collect the money for the pay channels as well as entertainment tax from the customers. Some operators suggest that the entertainment tax should be introduced not according to cable connection but the number of TV sets in each house.

It is possible that after the introduction of CAS, the controversy around the tax will sharpen. The reason is clear, most of the cable operators hide the real number of their customers and do not deposit the entertainment tax. Since they themselves are not able to collect legally and they are forced to keep their rates down, they face lot of problems. But those operators having monopoly do collect and just gobble up the money amounting to crores of rupees. On the otheer hand, the government proposes to keep an eye on the tax by introducing the CAS. The reason is that after the introduction of CAS the operators will not be able to hide the number of customers. The small operators will be hit most. They will now not only to have to collect the tax but also deposit it.