Integrated telecommunication service charges are not deemed sales where the instrument works only within the exchange and line system.

Rental charges for telephone connections and instruments were held not to amount to a sale or deemed sale under the Haryana General Sales Tax Act, 1973, because the subscriber received an integrated telecommunication facility rather than a separate transfer of goods. The instrument installed at the premises was usable only as part of the connected exchange and line system, and the charge covered the combined service, not the right to use goods in isolation. On that basis, the assessment orders and demand notices were without jurisdiction and liable to be quashed.

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Issues: Whether the rental charges received for telephone connections and instruments amounted to a sale or deemed sale by way of transfer of the right to use goods under the Haryana General Sales Tax Act, 1973, so as to render the assessment orders and demand notices valid.

Analysis: The charging structure for telephone service showed that the instrument installed at the subscriber's premises was not a usable article in isolation and became effective only when connected with the telegraph lines and exchange system. The charge was for the integrated telecommunication facility, including the connecting lines and instrument, and not for a separate transfer of goods. Mere rental under the measured rate system or message rate system could not be equated with a sale or deemed sale of goods within the meaning of the Act.

Conclusion: The rental charges did not constitute a sale or deemed sale of goods, and the assessment orders and demand notices were without jurisdiction and liable to be quashed.

Ratio Decidendi: A charge for an integrated telecommunication facility, where the instrument is usable only as part of the exchange and line system, is not a transfer of the right to use goods and does not amount to a deemed sale under the sales tax law.

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