TaxTMI 
TaxTMI 
2010 (4) TMI 983
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....rt, "the 1994 Act") pertaining to the assessment period four quarters ending on March 31, 2005. The petitioner-company, as claimed in this petition, is engaged in the business of providing cellular mobile telephone service (CMTS) to various subscribers in India including West Bengal. In the course of providing such CMTS, the petitioner-company during the year in question supplied or caused to be supplied subscriber identification module card (SIM card) and recharge coupon vouchers (also known as cash cards). As it appears from the order dated June 26, 2007, respondent No. 1 held that SIM cards were goods and supply of SIM cards by the petitioner-company to its distributors fell within the meaning of sales of taxable goods as per provision of the 1994 Act. Similarly, it was held by respondent No. 1 that supply of recharge coupon vouchers against consideration meant sale of goods. The petitioners are represented by Sri R.N. Bajoria, senior advocate, Sri S.K. Bagaria, Sri Atish Ghosh and Sri Niladri Khanna, advocates, whereas Sri P. Basu, senior advocate along with Sri B. Bhattacharyya, advocate, represent the respondents. Both the sides have submitted written notes of arg....
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....d extension with the telephone service. Except for this purpose and use, it has no other utility." Explaining the nature of recharge coupon vouchers, it is submitted by the learned senior advocate that the petitioner has two categories of its telecom services--(i) prepaid and (ii) post-paid. Recharge coupon vouchers are not required for the subscribers who make payment towards telecom services availed of by them on receipt of the bills. But in respect of small consumers, such payments are collected in advance through selling of recharge coupon vouchers as it is not feasible and economical for the petitioners to raise so many individual small bills. But such claimant cannot also be ignored from the business point of view as growth of telecom services depends on connectivity and extensive use of such services. Had there been no presence of an agent in between the service provider (the petitioners) and the service user, the position would have been otherwise. In that event it could have been inferred that the consumer is making payment against purchase of recharge coupon vouchers for the intended service he would like to avail of. The learned senior advocate refers to some pro....
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....low: "Actionable claim means a claim to any debt, other than a debt secured by mortgage of immovable property or by hypothecation or pledge of movable property, or to any beneficial interest in movable property not in the possession, either actual or constructive, of the claimant, which the civil courts recognize as affording ground for relief, whether such debt or beneficial interest be existent, accruing, conditional or contingent." The learned senior advocate relying on the definition as above argues that recharge coupon vouchers are the acknowledgement of advance receipt of money for rendering telecom services in future. The recharge coupon vouchers represent the right to get the services equal to the value they represent. They represent the beneficial interest in the contract for receiving telecom services which are movable property. Irrespective of whether such beneficial interest is existent or accruing or conditional or contingent it would be an actionable claim. It is, therefore, submitted by the learned senior advocate that recharge coupon vouchers are nothing but actionable claim and are not goods falling within the meaning of "goods" as defined in ....
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...." It is, therefore, stressed further that recharge coupon vouchers are nothing but actionable claims and their transferability could not alter or change their character. The learned senior advocate admits that these recharge coupon vouchers are not made available directly to the consumers (subscribers) who are availing of the services rendered by the service provider (petitioner) because of difficulty in reaching the large number of individual consumers but at the same time, it is argued that the mode of transfer of an asset does not change the nature and character of an asset. Transfer of such recharge coupon vouchers through distributors/agents only facilitates rendering of services to consumers/subscribers. The manner of transferring such recharge coupon vouchers is only incidental to the service being provided by the service providers/petitioner. Before concluding his submission that recharge coupon vouchers are not goods but actionable claims not exigible to sales tax on transfer, he draws a line of distinction between the facts of the case of Tamil Nadu Kalyana Mandapam Assn. v. Union of India [2004] 135 STC 480 (SC) relied upon by the respondents in the instant case. ....
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....t. Moreover, "any liability under any guarantee" as appearing in the definition of debt under clause (8) of article 366 of the Constitution of India is not applicable in this case as actionable claim must be an unsecured debt. It is argued that concept of guarantee is akin to the concept of secured debt and, therefore, in order to qualify as unsecured debt, the said matter must relate to money and nothing else. It is further argued that concept of liability under a guarantee is never the same as the concept of liability under general contract. Recharge coupon vouchers are reaching to the ultimate consumers in two stages--first one from the service provider to the distributors/agent and thereafter from the distributor/agent to the ultimate consumer. In the instant case, the transfer of recharge coupon vouchers from the service providers to its distributors/agents against consideration is the issue under scrutiny. He, therefore, addresses the question as to whether such recharge coupon vouchers can be termed to be a beneficial interest in a movable property which is not in a possession of the claimant. It is admitted by him that honourable apex court in the case of Sunrise ....
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....r has no direct access to the service provider and the sales of such recharge coupon vouchers are made in two stages, the character of the transaction between the service provider and its distributors is required to be determined. It has already been discussed hereinbefore that subject to the determination by the honourable Calcutta High Court, where a petition of this petitioner is lying pending, the petitioner for the time being accepts the transaction made with its distributors/agents as sale transaction. But it disputes the taxability of recharge coupon vouchers claiming such vouchers as actionable claims. In support of the submission, learned senior advocate, Sri Bajoria, relied on a decision of the honourable apex court in the case of Sunrise Associates [2006] 145 STC 576. The honourable apex court in that case was considering whether lottery tickets were goods and were liable to sales tax. The honourable apex court concluded that ". . . there was no sale of goods within the meaning of the Sales Tax Acts of the different States but at the highest a transfer of an actionable claim. . .". The honourable apex court also drew a line of distinction between actionable cla....
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.... right to get back the money if the telecom service is not available. It is now a settled position that an actionable claim is transferable and transferability of a right or interest does not change the nature and character of an actionable claim. The respondents further rely on the definition of "goods" and "property" as given under clause (7) and clause (11), respectively of section 2 of the Sale of Goods Act, 1930 and contend that "talk time does not contain the general property in goods which on the other hand can at best be treated as a special property". As regards this contention of the respondents, we would like to refer to the observation made by the honourable apex court in the case of Sunrise Associates [2006] 145 STC 576. Paragraphs 34, 35 and 36 of the said judgment are reproduced hereinbelow: "34. The word 'goods' for the purposes of imposition of sales tax has been uniformly defined in the various sales tax laws as meaning all kinds of movable property. The word 'property' may denote the nature of the interest in goods and when used in this sense means title or ownership in a thing. The word 'may' also b....