2006 (11) TMI 540 - SC - Service Tax

Supreme Court: Hotels Providing TV Services to Guests Are Consumers under TRAI Act

HOTEL & RESTAURANT ASSOCIATION Versus STAR INDIA PVT. LTD.

The Supreme Court held that members of the Appellants' associations (hotels) are consumers under the TRAI Act, entitled to invoke TDSAT's jurisdiction. ... Whether the members of Appellants - Associations are consumers and, thus, were entitled to invoke the jurisdiction of TDSAT in terms of Section 14 of TRAI Act? Whether the Tariff Orders issued by TRAI on 15-1-2004 and 1-10-2004 are inapplicable to members of Appellants - Associations, i.e., hotels on the ground that those are commercial establishments? Whether it is necessary or not to fix the tariff for commercial purposes in order to bring greater degree of clarity and to avoid any conflicts and disputes arising in this regard? Held that:- Appeal allowed. direct those members who are taking signals through cable operators to disclose the details as directed by TDSAT within three weeks from date. Cable operators, if TDSAT so directs, may be impleaded as parties and/or some of them in representative capacities. The matter in relation to those who are taking supply through the cable operators is being remitted to TDSAT. It would be open to the parties to adduce additional evidences. Until an appropriate order is passed by TDSAT, by way of an interim measure, the members of Appellants - Hotel & Restuarant Association and those members of Hotel Association who are taking supply through cable operators shall pay in terms of the Order dated 7-3-2006 but the same shall be subject to the ultimate order that may be passed by TDSAT. All other informations, if any, as directed by TDSAT, shall be furnished. TRAI to carry out the processes for framing the tariff. While doing so, it must exercise its jurisdiction under Section 11 of the Act independently and not relying on or on the basis of any observation made by the TDSAT to this effect. It goes without saying that all the procedures required for framing the said tariff shall be complied with.In the event TRAI frames tariffs, the members of Appellants -Associations would be entitled to prefer appeals there against. All contentions in that behalf are left open. Issues Involved:1. Whether the members of the Appellants - Associations are consumers and thus entitled to invoke the jurisdiction of TDSAT in terms of Section 14 of TRAI Act.2. Whether the Tariff Orders issued by TRAI on 15-1-2004 and 1-10-2004 are inapplicable to members of the Appellants - Associations, i.e., hotels, on the ground that those are commercial establishments.Issue-wise Detailed Analysis:Issue 1: Consumer Status of Members of Appellants - AssociationsThe primary contention was whether the members of the Appellants - Associations (hotels) are consumers under the TRAI Act, thus allowing them to invoke TDSAT's jurisdiction. TDSAT had opined that hotels are neither consumers nor subscribers, stating that the commercial relationship between hotels and broadcasters or cable operators does not qualify them as subscribers or consumers under the 1995 Act.However, the Supreme Court disagreed, noting that hotels provide various amenities, including television services, to their guests as part of their overall service package. The Court emphasized that the definition of 'consumer' under the TRAI Act does not exclude commercial establishments. It held that the members of the Appellants' associations are consumers because they receive TV signals for their guests and do not retransmit these signals to other persons. Thus, the hotels remain subscribers under the TRAI Act, and their guests do not have any privity of contract with broadcasters or cable operators.The Court also clarified that the definition of 'consumer' in the Consumer Protection Act, 1986, which excludes commercial users, does not apply to the TRAI Act. The TRAI Act's definition of 'consumer' includes any subscriber of broadcasting services, and this definition prevails over the Consumer Protection Act's definition.Issue 2: Applicability of Tariff Orders to Commercial EstablishmentsThe second issue was whether the Tariff Orders issued by TRAI on 15-1-2004 and 1-10-2004 apply to commercial establishments like hotels. TDSAT had concluded that the Tariff Orders were intended for domestic consumers and did not apply to commercial consumers.The Supreme Court found that the TRAI Act and the subsequent Tariff Orders did not explicitly distinguish between domestic and commercial consumers. The Court noted that the nature of TV signal supply is identical for both domestic and commercial consumers. It held that TRAI had not made any distinctions in its regulations or orders that would exclude commercial consumers from its purview.The Court emphasized that TRAI's jurisdiction includes fixing tariffs and laying down terms and conditions for providing services to all consumers, including commercial ones. The Court directed TRAI to exercise its jurisdiction under Section 11(2) of the TRAI Act independently and consider all relevant factors while framing new tariffs.ConclusionThe Supreme Court allowed the appeals, holding that the members of the Appellants' associations are consumers under the TRAI Act and that the Tariff Orders apply to them. The Court remitted the matter to TDSAT for further proceedings concerning those members taking signals through cable operators. It also directed TRAI to frame tariffs independently, considering the interests of all stakeholders.