Shared telecom infrastructure lacks exclusive possession and control, so no transfer of right to use goods arises for tax.

Passive telecom infrastructure supplied on a shared basis does not constitute a transfer of the right to use goods unless exclusive possession or control is transferred to the transferee. Applying Article 366(29A)(d) and the Tamil Nadu VAT definition of sale, the Madras High Court treated the arrangement as a shared service model because shelters, towers, air-conditioners, generators and related space were available to more than one operator and were not placed at the exclusive disposal of any single operator. The essential element of transfer of right to use was therefore absent, and the deemed sale demand could not be sustained.

---

---

Issues: Whether the petitioner's passive infrastructure facilities amounted to a transfer of right to use goods so as to constitute a deemed sale liable to tax under the Tamil Nadu Value Added Tax Act, 2006.

Analysis: The petitioner's business model involved providing shared passive infrastructure, including shelters, towers, air-conditioners, generators and related space, to more than one mobile telecommunication operator. A levy under the extended definition of sale could arise only if there was a transfer of the right to use goods with exclusivity in favour of the transferee. Applying the settled principles governing Article 366(29A)(d) of the Constitution of India and the corresponding statutory definition, the arrangement was examined as a shared service model rather than an exclusive transfer of possession or control. Since the infrastructure was not placed at the exclusive disposal of any one operator and the use was shared, the essential element of transfer of right to use was absent.

Conclusion: The petitioner's passive infrastructure did not amount to a deemed sale or transfer of right to use goods, and the tax demand could not be sustained.

---