Three months after the government amended the Delhi Entertainment and Betting tax to levy entertainment tax on direct-to-home (DTH) television services, two major players Tata Sky and Bharti Airtel are not paying the government its dues. Tata Sky has even challenged the amendment in the High Court.

In notices sent to both service providers on Tuesday, the Excise department has now slapped a penalty of 25 per cent of the total tax due. Tata Sky has been asked to pay Rs 1.5 crore, while Bharti Airtel has to pay Rs 18 lakh.

If the firms continue to ignore the notice from the Excise department, there is also a provision to stop the service entirely. Our DM recovery can even seize their equipment and seal their functioning, a senior official said.

The Delhi government had cleared the amendment in the Entertainment and Betting Act last year to include the provision of levying entertainment tax on DTH connections.

According to the amendment, Rs 20 is charged on all connections. For those with commercial connections like hotels and restaurants, the bar is higher at Rs 50 per month. Till now, only cable TV owners were paying the entertainment tax.

The government collects Rs 90 lakh per month from 4.5 lakh registered cable users in the Capital. After the amendment, the government is set to earn over Rs 1 crore per month.

Tata Sky, however, challenged the amendment in the High Court, contending that they are already paying a licence fee to the government. The entertainment tax is a state matter. Therefore, our contention is that we have the right to levy tax on them, a senior government official said.

Delhi has six players in DTH market. Tata Sky has the highest number of connections in Delhi, at over 3 lakh. Bharati Airtel has 71,000 connections.