TaxTMI 
TaxTMI 
TaxTMI 
2010 (3) TMI 764
X X X X Extracts X X X X
X X X X Extracts X X X X
....e on its part to deduct and pay under section 194H. 2.1 The applicant-company, Vodafone Essar Cellular Ltd., formerly Hutchison Essar Cellular Ltd., formerly BPL Mobile Cellular Ltd., is a cellular mobile service provider, providing cellular mobile telephony services to its users in Kerala through a network of distributors. The company is providing the said service, which includes provision of SIM cards, recharge coupons, service tickets, etc., in two formats, i.e., post-paid and pre-paid. The services rendered by the distributors, including toward provision of SIM cards and recharge coupons to the customers (which could be further through the agency or medium of the wholesalers and/or retailers), in respect of the post-paid scheme are, admittedly, services and consequently, the charges allowed by the assessee-company thereto for the same only a commission (which stands defined under section 194H as under) and, thus, again admittedly, exigible to deduction of tax there-under:- Explanation - For the purpose of this section, - "commission or brokerage" includes any payment received or receivable, directly or indirectly, by a person acting on behalf of another person for services r....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ing subject to extensive external regulation, i.e., by the Telephone Regulatory Authority as well as Government of India - the same having security implications, as well as those internally formulated by the company for exercising proper control over its affairs, and the distributors, thus, only act for and on behalf of the assessee-company at all times, as a link in the service chain, and the relationship between them and the service-provider, both de facto and de jure, is one of Principal and Agent. The service relationship, i.e., in respect of the service(s) provided, of which the provision of the SIM card (and recharge coupons) supplied by the service provider is but an integral part, is only between final consumer and the assessee-service provider, in whom the rights in the card vest, and who only can de-activate it at any time, denying the access through its network, and thereby either terminating or suspending the service. The 'selling arrangement' between the company and the distributors would not take away the character of the margin allowed to the latter as remuneration for their services, being thus only 'commission'. There is no basic difference between the servic....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ed to address the same in deciding its appeals. It has relied, in deciding the present appeals, on a decision dated 13-2-2009 by the jurisdictional High Court in the case of BPL Mobile Cellular Ltd. v. Union of India [in W.P.(C) 29202 of 2005 (B)], which had, at the time of hearing (17-3-2009) not even seen the light of the day, being unreported at the relevant time, and even as the same stood delivered in the context of a different statute, and without confronting it to the assessee. Reliance in this context stood placed on the decision by the Tribunal in the case of Plaza Investments (P.) Ltd. v. ITO [2007] 108 ITD 239 (Mum.), wherein it stands held that a rectifiable mistake could arise even on application of mind to the matter as where the Authority arrives at a wrong conclusion because of a simple mistake. 4.2 The ld. D.R., on the other hand, strongly supported the impugned order, which it was submitted stands passed, on an exhaustive consideration and analysis of the issues involved by the Tribunal, correctly appreciating the facts and, further, placing reliance on the binding decision by the jurisdictional High Court which has a direct bearing on, nay is on the same issue a....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... (a) the incorrect understanding of facts (grounds 1, 2, 6, 7, 8 & 9); (b) no-consideration of the decision in the case of Gordon Woodroffe & Co. (supra) (ground 3); (c) non-disclosure of the basis in distinguishing the decision in M.S. Hameed's case (grounds 4, 10); (d) non-adjudication of the Ground III(2) by the Tribunal (ground 5); and (e) reliance on an unreported decision by the jurisdictional High Court on which even the Department did not place reliance (ground 11). 5.2 Before we proceed to take up for consideration each of the grounds (of objection) raised by the assessee-applicant, it would be in order to visit the matter of the scope of the power of rectification available to the Tribunal under section 254(2) of the Act. The principles and, consequently, limitations, thereof being well established, so that the same may be taken as part of the well-settled law, we may nevertheless only say that the prerequisite for exercising the same would be the finding of a "mistake' and, further, one that is apparent from the record. A mistake, by definition, is one which would render any....
X X X X Extracts X X X X
X X X X Extracts X X X X
....hich is even otherwise only understandable, with all of them operating on the basis of licences secured from the Government of India, providing the same set of services. Secondly, it reflects a unanimity in the understanding of those underlying transactions or activities by the different service providers (themselves), the Revenue, and the Tribunal. The different view is in the applicability of the provision of section 194H of the Act, nevertheless, i.e., in spite of the nature of the transactions being what it is. And which is again only understandable, for if there is lack of clarity about the transaction(s) itself, there can be no correct application of law, and which would require the resolution of those difference(s), and where not resolved, itself a subject matter of lis. However, we do not observe any such ambiguity with regard to the activities undertaken by the cellular operators, requiring resolution, being the same for all of them, which is also apparent from the reliance afore-referred by the opposing parties, even as they, for their separate reasons, opine differently qua the applicability of the provision of section 194H of the Act. The details of the services rendere....
X X X X Extracts X X X X
X X X X Extracts X X X X
....gh Court in the case of M.S. Hameed (supra) stands duly considered by the Tribunal vide paras 39 and 60 of its Order) and, in view of the afore-stated basic position, becomes distinguishable on facts [refer para 5.3 (supra)]. There is no relationship between the final purchaser of the ticket, who is responsible for paying the sale price of ticket to the lottery agent, and the State Government which issues the tickets to the agents for a price calculated to yield a margin thereto, while in the present case there is a direct and continuing relationship of provision of services, toward which only the SIM card and recharge coupons stand procured by the 'purchaser' through the channel of the distributors, et. al. There is, in fact, no de facto purchase or sale of any goods. The assessee questions the finding by the Tribunal of it being responsible for removing the occasion for the credit of the commission amount to the account of the distributors, as being de hors its agreement with the distributors and, thus, only on an undisclosed basis, amounting to a mistake. We do not find it as so. Firstly, once the basic subsisting relationship is between the service-provider and the customer, wh....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ground 10 above) stated to have been not considered or brushed aside by the Tribunal in passing its Order, each of which we find it to have, leading to it formulating the issue which, in light thereof, would require to be resolved (refer: para 45 of its order), and which it proceeds to address per the ensuing paragraphs. An Order, it may be appreciated, is not to be read as a, or as is a, Statute. It is not the question of the words employed, but what it seeks to convey in substance, that is relevant; the Tribunal in the instant case finding itself in agreement with the Revenue's case. In fact, most of the decisions cited by the assessee we find to have been also cited and considered by the Tribunal per its two contrary decisions cited by the opposing parties before it in the present case. And which only signifies that the said decisions are not directly applicable, and that a different view, i.e., than that advocated therein, is possible. And which brings us to the decision in the case of BPL Mobile Cellular Ltd. (supra). 5.5 Finally, with regard to the basic position aforesaid; firstly, it is not possible for us in rectification proceedings to comment thereon, being a considered....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tra Kutch Stock Exchange Ltd. [2008] 305 ITR 2274 (SC)]. We are conscious and regardful of the fact that there could be a propriety issue here; the decision having not been cited during and, consequently, subject to hearing, which the principle of natural justice demands. However, we find no infirmity or disregard of the principle of audi alteram partem, and which would perhaps also explain the non-raising by the applicant, i.e., specifically, of this ground before us. The Writ Petition (C) 29202 of 2005 dated 14-10-2005 is by the assessee itself and stands placed on record, in the form of a paper-book, which also includes other writ petitions in the matter before the Apex Court, so that both the parties as well as the Tribunal were only too conscious of the said proceedings; the issue under reference; and its relevance to the present case. A synopsis of the same in the form of a letter from the assessee's Advocate filing the Writ Petition stands enclosed along with. The same clarifies the assessee's stand per the same, i.e., that there is no sale in respect of SIM cards and recharge coupons and the transaction in respect of the same only constitutes a service, further claiming it ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... it upholding the Revenue's stand. To contest the said finding(s) in rectification proceedings is, under the circumstances, wholly unwarranted. 5.6 Next, we discuss the issue of the non-consideration of the decision in the case of Gordon Woodroffe & Co. (supra) by the Tribunal in rendering its decision. The applicability of the same, in view of the judgment the Apex Court in the case of BSNL (supra), followed by the decision by the jurisdictional High Court in its own case of BPL Mobile Cellular Ltd. (supra), relied upon by the Tribunal, holding of there being no sale of SIM cards (including recharge coupons), but only a service, it is difficult to accept the assessee-applicant's contention of the impugned order as having been passed disregarding the said decision relied upon by assessee before it, which thus is only in conformity with the law as settled by the Hon'ble Apex Court. This would also incidentally meet the assessee's argument that it is not necessary to regard the provision of the SIM card as its sale, or use the word 'sale' to describe the said phenomenon and, thus, allow oneself to be misled by the said word. And, that one may well use the word 'deliver' or 'parted w....