TaxTMI 
TaxTMI 
2014 (7) TMI 659
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....liable to pay service tax in the light of section 65(105) of Chapter V of the Finance Act, 1994, for which it is registered with the Government of India (Registration No. AAACR 4849RST011) under section 69 of the Finance Act, 1994 issued by the Superintendent (Registration), Service Tax, Division-II, Kolkata. 4. Respondent No. 4, Meghalaya Information Technology Society (MITS), Shillong, through Commissioner and Secretary to the Government of Meghalaya, entered into an agreement dated August 20, 2010 with petitioner No. 1 for providing network services throughout the State of Meghalaya. The said agreement was entered after Government of Meghalaya pro posed to set up Meghalaya State Wide Area Network (MSWAN) to modernize the communication set up of Government to implement e-Governance initiatives, improve administrative effectiveness and efficiency and accelerate the overall development of the State through improved Government interfaces. The implementation of MSWAN project was awarded to the petitioner by respondent No. 4 vide the aforesaid agreement dated August 20, 2010 on build, own, operate, transfer (BOOT) basis. The implementation of MSWAN on BOOT basis was required to be do....
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....r the financial year 2012-13, the service tax amounting to Rs. 14,92,001.31 was paid to respondent No. 6 (Commissioner of Service Tax).. 8. To import networking IT components and equipments for MSWAN project in the State of Meghalaya, the Assistant Commissioner of Taxes, Meghalaya, vide letter No. CTA(EB)38/10 dated September 1, 2010 addressed to Superintendent of Taxes (respondent No. 3) allowed transportation of materials by petitioner No. 1, for own use (not for sale). Similar permissions were granted vide letters dated December 1, 2010, December 9, 2010 and January 24, 2011, as respondent No. 2 was satisfied with the import as being made by the petitioners for their own use under the contract with the Government. 9. However, the Assistant Commissioner of Taxes, Meghalaya, vide his letter No. CTA-(EB)/13/10/185 dated March 7, 2011 asked respondent No. 4 to deduct tax at source from the bills of the petitioners. When the petitioner No. 1 received notice, he submitted an application for no deduction certificate before respondent No. 2 on the ground that no transfer of property in goods had taken place, no transfer of right to use goods was involved as personnel of petitioner No.....
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....tted an application dated March 30, 2012 before respondent No. 4 to release the payment without deducting tax at source under the MVAT Act. Respondent No. 2 (Commissioner of Taxes, VAT), vide letter dated April 4, 2012 asked respondent No. 4 to follow the directions given in the judgment and order passed by the Gauhati High Court specifically instructed MITS to bifurcate the amount involved in the supply of materials by ascertaining whether the petitioners supplied the materials free of cost or not. It was also mentioned in the said letter that if for the materials used or supplied in the service, the Government had paid cost, then only tax at source would be deducted at 13.5 per cent. It was also stated in the said letter dated April 4, 2012 by respondent No. 2 that in respect of amount of labour or services involved in execution of the project, no deduction of tax at source was to be made under the MVAT Act, 2003. 12. But respondent No. 4 (MITS) vide his letter No. ITR/17/2012/70, dated June 21, 2012 informed the petitioners of its decision to deduct tax at source on CAPEX portion of the payment received under the agreement and also directed the petitioners to raise its invoice ....
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....dvocate-General, whose opinion was sought in the matter advised the State Government and opined that the petitioners is "dealer" within the meaning of section 2(xvi) of the Meghalaya Value Added Tax Act, 2003. He (Dr. Todi) further opined that since gross turnover during the year exceeds the prescribed amount as such under section 2(xxxii) of the above Act, the petitioners are required to seek registration. The Additional Advocate-General (Dr. Todi) further opined that it will not be proper to issue certificate of no tax liability to the petitioners. Referring to section 2(xxxii), it is stated in the counteraffidavit that the transaction relating to the imported equipments is covered by definition of "sale" on which the petitioners are liable to pay tax. It is further stated on behalf of respondents Nos. 1 to 3 that merely for the reason that the petitioners are making payment of service tax, it cannot be said that they are exonerated from making payment of value added tax. 14. In the affidavit-in-reply of respondents Nos. 1 to 3, the petitioners have reiterated the averments made in the writ petition and relied on the principle of law laid down in Builders Association of India v.....
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.... MSWAN users, etc. GoM intends to set up MSWAN to link Government Offices at State Head Quarter, Shillong (hereinafter called as SHQ), District Head Quarter (hereinafter referred as DHQ), Sub-Division Headquarter (hereinafter referred as SDHQ) and Block Headquarter (hereinafter referred as BHQ) with each other. The MSWAN would be implemented on Build-Own-Operate and Transfer (BOOT) basis spread over a period of five (5) years to provide data connectivity, voice and video services to various offices of GoM and other locations as identified by the Government of Meghalaya. The MSWAN will have a suitable topology, use state-of-the art technologies and have capability/flexibility to expand/upgrade to cover all parts of the State. There are seven district headquarters, 8 sub-division headquarters and 39 block headquarters (refer annexure-II for details). The envisaged initial bandwidth for MSWAN is 2 Mbps (upgradable) for connecting SHQ with DHQ and DHQs with SDHQs/BHQs. All Government Departments are envisaged to be connected with MSWAN horizontally. Different Departments of GoM have implemented or are impleme....
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....ms or actions, including injury to and death of persons, arising from any act, accident or omission in connection with or arising out of the installation, presence, maintenance and operation of properties and facilities of the operator. 13.6 Control and possession. The operator shall be deemed to be in control and possession of the equipment necessary for the proper and normal operation of the MSWAN." Next relevant para No. 17.3 in the agreement reads as under: "17.3-It shall be the responsibility of the operator to provide internet connectivity from 4 Mbps up to 8 Mbps at SHQ as per requirement during the currency of agreement. The payment of such internet access and BW charges as levied by ISP shall be borne by MITS." Lastly, para 20.3 in the agreement which relates to transfer provides as under: "20.3 Transfer The operator shall transfer in good and working condition all equipment (without any liability) necessary for the proper and normal operation of the MSWAN including but not limited to all constructed sites, laid cables, software, technical designs, technical and operat....
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....ct for which the Constitution had to be amended and clause (29A) had to be inserted in article 366, must be kept in mind." 24. In State of Uttar Pradesh v. Union of India [2003] 130 STC 1 (SC); [2003] 3 SCC 239, the apex court in para 34 has observed as under (para 38, page 22 in 130 STC): "34. In regard to sale of goods where the service is incidental, the principle of non-separability will apply in the absence of a specific valid statutory provision; for example, in a restaurant/hotel, where food or other articles are sold, the supply of service like providing cutlery-washing liquid, towels, music, etc., is merely incidental and it would not be permissible to treat such service as a transfer of right to use the goods for the purpose of taxation under the relevant Sales Tax Act. Where, however, the supply of service as well as supply of goods are prominent objectives and they have been clubbed together under a composite contract, it would be possible to treat them separately; for example, where in a holiday package, transportation, boarding and lodging are separately treated, it would be possible to assess them separately, though covered under the same c....