Shared telecom infrastructure use is not a transfer of right to use goods and is not taxable as deemed sale.

Receipts from shared passive telecom infrastructure were not taxable as a deemed sale because the operators did not obtain exclusive possession, effective control, or legal possession of the equipment. The Court applied the settled distinction between a mere licence to use facilities and a transfer of the right to use goods, and found that shared access to tower space, shelter, mast, power management and allied facilities did not satisfy the ingredients of Article 366(29A)(d) or the Tamil Nadu Value Added Tax Act. The reassessment orders and consequential penalty demands were quashed.

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Issues: Whether the receipts from provision of passive infrastructure to mobile operators amounted to a transfer of right to use goods and, therefore, a taxable sale under Section 4 of the Tamil Nadu Value Added Tax Act, 2006.

Analysis: The arrangements showed that the petitioner provided tower space, shelter, mast, air-conditioning, power management and allied facilities on a shared basis to multiple operators. The levy under the extended definition of sale required a transfer of the right to use goods with exclusion of the owner and others, together with effective control and legal possession in favour of the transferee. On the facts, the infrastructure was not placed under exclusive control of any one operator, and the business model was not one of exclusive transfer but of shared access. The Court applied the settled distinction between a mere licence to use facilities and a transfer of the right to use goods, and held that the ingredients of a deemed sale were not satisfied.

Conclusion: The receipts were not exigible to tax under Section 4 of the Tamil Nadu Value Added Tax Act, 2006 because there was no transfer of right to use goods within Article 366(29A)(d) of the Constitution of India and Section 2(33)(iv) of the Tamil Nadu Value Added Tax Act, 2006.

Final Conclusion: The impugned reassessment orders and consequential penalty demands were quashed, and the writ petitions were allowed.

Ratio Decidendi: Shared access to passive infrastructure without exclusive possession or effective control in favour of the operator does not amount to a transfer of the right to use goods and cannot be taxed as a deemed sale.

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