HC slaps 10 lakh fine each on 7 telecom companies

While dismissing the petitions filed by seven private telecommunication companies challenging imposition of entry tax by the government in Kashmir, the High Court today imposed a fine of Rs 10 lakh each on the petitioners directing them to pay the entry tax to the state government.

On December 24, last year the Court had reserved the order after hearing hectic arguments from parties for two consecutive days. Today, in his order Justice Muzaffar Hussain Attar dismissed these writ petitions, upholding the state’s plea that the equipment brought in by these companies were being used for commercial purposes and should be subjected to entry tax.

The state government had contested the petitions pleading the Entry Tax Act was a regulatory measure to prevent evasion of sales tax by unfair traders.  The state government will now realise Rs 459 crore as entry tax from these telecommunication companies for the period of last five years.

Seven companies, on which the court has imposed a fine of Rs 10 lakh each are Bharti Airtel, Idea Cellular, Reliance Communications, Tata Services, Viom Networks, Bharti Infratel and Dishnet Communication.

The fine imposed on these companies shall be spent on welfare of orphans in the state, the court directed. The telecommunication companies had filed separate writ petitions before the High Court had challenged the constitutionality of J&K Entry Tax Act on the ground that it violates Article 301 of the Constitution of India.

The telecommunication companies have already deposited Rs 100 crore with the high court as entry tax as bank guarantees which the state can now encash. The state was represented by Advocate General M I Qadri while the petitioners were represented by Zafar A Shah and D S Thakur.

Shah while arguing the matter had said that imposition of entry taxes on these companies saying it is violation of free movement trade. “It is against the constitution. The equipment being imported by these companies in the state is for creation of infrastructure and not for sale. Therefore, it gives impetus to free flow of trade and the state legislature cannot do so,” Shah had told JK News.

On the other side, the government was represented by Supreme Court lawyer M L Verma who pleaded that the government’s imposition of taxes on equipment being imported by telecommunication companies in Kashmir at Lakhanpore is to prevent tax evasion under Sales Tax Act.

Mohammad Ishaq Qadri, Advocate General had pleaded the government stand arguing that these companies were using goods imported in the state for commercial purposes and not for any personal use. “They are offering services to our people but in turn they are earning out of these services. The regulatory taxes can be imposed on these companies,” Qadri quoted advocate Verma pleading before the court.

He had also submitted before the court that in case these companies are exempted from entry taxes, the government is bound to loose hundreds of crores annually. “In year 2000, these companies had imported equipment worth around Rs 22 crores and government tax due on this equipment was round about one crore rupees. These companies owe us around 120 crores of rupees as taxes. So we will fight this case tooth and nail,” Qadri claimed.

MHA gets tough on misuse of pre paid mobile connections

Acting tough on frequent complaints of SIM cards landing into the hands of militants and criminals, the Union Ministry of Home Affairs (MHA) has directed the Government to devise a fool proof mechanism to prevent misuse of mobile telephones especially pre-paid SIM cards, mainly by private telecom operators.

The Union Home Ministry had earlier banned pre-paid mobile connections but lifted the ban later on intervention of the State Government and assurances by the telecom operators that all out efforts would be made to ensure that the SIM cards didn’t fall in the hands of undesirable elements.

The MHA had also convened two to three meetings of telcos, having operations in Jammu and Kashmir, in New Delhi and directed them to devise mechanisms to prevent misuse of SIM cards.

As a sequel to MHA directions, Director General of Police (DGP) Kuldeep Khoda today convened a meeting of top brass of all seven telecom operators in Jammu and Kashmir and issued them specific directions to devise a fool proof mechanism and ensure that only genuine buyers were able to get the SIM cards.

The telcos, whose representatives were called by the DGP, included BSNL, Airtel, Aircel, Vodafone, Idea, Reliance and Tata Telecom Services. The DGP besides passing on the directions to the telecom operators also listened to their grievances and assured them full support but wanted that the MHA guidelines should be strictly adhered to so that the SIM cards didn’t fall in the hands of militants and criminals.

Mr Khoda has set up a separate Cell in the Police Headquarters, where the mobile operators would report their activities daily including the number of SIM cards issued, the persons to whom they had been issued including all particulars of the subscribers and the SIM cards issued to franchisees across the State. Besides, entire data pertaining to SIM cards would be sent daily to the Cell.

The Cell would be headed by DIG Crime Intelligence Vigilance (CIV) in Police Headquarters Gareeb Dass and assisted by SSP CIV Firdous Iqbal.

The representatives of telcos have been asked to ensure that their entire day-to-day activities was reported to the Cell in Police Headquarters, where a data bank would be maintained of all Cell operators and the connections issued by them. The formalities obtained by the telcos while issuing the SIM cards would be subjected to scrutiny at the Cell and verified at their own level to ensure that the SIMs had been issued to genuine persons only after completion of all formalities.

"A fool proof mechanism was worked out at the meeting and telcos were asked to follow it to prevent misuse of SIM cards’’, Mr Khoda said, adding the telecom operators have been conveyed in categorical terms that monitoring facilities shouldn’t be misused at any cost.

He said all telecom operators providing services in Jammu and Kashmir have been issued proper proformas for checks and balances. The proformas would be maintained by the Cell operators and also given at the Cell set up in the Police Headquarters.

The State police chief conveyed to the telecom companies that there should be no compromise with national security as the SIM cards, issued without observing requisite formalities, could fall into the hands of militants and criminals and create problems for the security agencies, which were fighting the militancy.

Official sources said it was observed in the meeting that though most of the guidelines issued by the MHA before lifting ban on pre-paid connections were being observed, there were still some lacunas, which required to be overcome by the companies.

As far as the problems raised by the telecom companies were concerned, Mr Khoda assured that the problems falling within the jurisdiction of Police Headquarters would be addressed immediately while other issues would be taken up with the concerned departments.

It may be mentioned here that the MHA had imposed a ban on pre-paid mobile connections in Jammu and Kashmir a couple of years ago following complaints that a bulk of them had landed in the hands of militants and other anti-national elements including the Over Ground Workers (OGWs) of different militant outfits.

Thousands of pre-paid connections of various telecom operators were disconnected after fresh verifications.

The MHA had recently stated that the pre-paid connections could be warned again if their misuse was not stopped by the telcos.

Telecom companies earnings in j&k

The total revenue of the private GSM (Global System for Mobile Communications) cellular service providers for the 2ndquarter (Q2) April-June 2011 has gone up by Rs 22.19 crores from the previous quarter to reach Rs 187.99 crores in Jammu and Kashmir.

According to the latest figures released by the Cellular Operators Association of India (COAI) —the society dedicated to advancement of modern communication through cellular mobile telephone services— the telecom service providers managed total revenue of Rs 165.80 crores for the quarter January-March 2011 (Q1) in the state.

The Average Revenue Per user (ARPU), a measure used primarily by consumer communications and networking companies, for Jammu and Kashmir has gone up from Rs 133.12 in Q1 to Rs 144.52 in Q2, registering a growth of 8.56 per cent.“ARPU in J&K would be higher as people over here have more disposable income, entertainment expenditure, compared rest of circles in India, which they usually spend on telecom services,” said renowned global telecom analyst Jahangir Raina, who is CEO and director of research at iLocus, Research Company focused on the telecom industry.

The Bharti Airtel ltd., major telecom player in the state which has a base of 1,949,520 mobile users, has managed revenue of Rs 97.46 crores in the Q2 registering a growth of 11.98 per cent up from Rs 87.07 crores in Q1, 2011. While, ARPU of Airtel has gone up from Rs 150.51 for Q1 registering a growth of 12.29 per cent to reach Rs 169.01 for Q2, 2011.

The Dishnet Wireless, which has a 1,496,257 subscriber base in the state, has secured revenue of Rs 74 crores in the Q2 registering a growth of 14.07 per cent up from Rs 64.87 crores in Q1, 2011. While, the ARPU of Dishnet has gone up from Rs 128.31 for Q1 registering growth of 9.64 per cent to reach Rs 128.31 for Q2, 2011.

While, Vodafone Essar, which has a 607,948 subscriber base in J&K, manages revenue of Rs 13.48 crores in the Q2 registering a growth of 21.72 per cent up from Rs 11.08 crores in Q1, 2011. While, the ARPU of Vodafone has gone up from Rs 85.62 for Q1 registering negative growth of 1.48 per cent to reach Rs 84.35 for Q2, 2011.

IDEA Cellular, which has a 154,241 subscriber base in J&K, secures revenue of Rs 3.05 crores in the Q2 registering a growth of 8.24 per cent up from Rs 2.82 crores in Q1, 2011. However, the ARPU of IDEA has gone down from Rs 87.32 for Q1 registering decline of 8.83 per cent to slip Rs 79.61 for Q2, 2011.

To mention, the latest mobile subscriber figures of the telecom operators in the state have heavily gone down. Over three lakh mobiles subscribers have been barred here in the month ending September, 2011.