TaxTMI 
TaxTMI 
2019 (12) TMI 930
X X X X Extracts X X X X
X X X X Extracts X X X X
.... therein ? Learned counsel for the Telecom Company has straightway drawn attention of this Court towards a judgment delivered by the Division Bench of this Court in the case of M/s. Idea Cellular Ltd., Indore Vs. The Asstt. Commissioner of Commercial Tax, Indore and Ors., (W.P.No. 7631/2014, decided on 3/1/2017). This Court in the aforesaid case has dealt with the issue of imposition of Value Added Tax under the provisions of M. P. VAT Act, 2002 in respect of SIM Cards. This Court in the aforesaid case has held as under : In the present case, the respondents are charging on VAT from the petitioner Company for providing SIM replacement to customers and Lease Line Charges received from the customers. A SIM Card which is a short form of 'Subscriber Identification Module' contains a Computer Chip with pre-recorded instructions. It is a device which helps the service provider to identify the subscriber. It also enables the subscriber to access the service provider's network by means of electro-magnetic waves. SIM is merely a key to enter service provider's facility and use their services. The process of activation involves information being fed into the computer main....
X X X X Extracts X X X X
X X X X Extracts X X X X
....uthorities to levy sales tax thereon. There is insufficient material on the basis of which we can reach a decision. However we emphasise that if the sale of a SIM card is merely incidental to the service being provided and only facilitates the identification of the subscribers, their credit and other details, it would not be assessable to sales tax. In our opinion the High Court ought not to have finally determined the issue. In any event, the High Court erred in including the cost of the service in the value of the SIM card by relying on the aspects doctrine. That doctrine merely deals with legislative competence. As has been succinctly stated in Federation of Hotel & Restaurant Association of India Vs. Union of India (1989) 3 SCC 634- "subjects which in one aspect and for one purpose fall within the power of a particular legislature may in another aspect and for another purpose fall within another legislative power. They might be overlapping; but the overlapping must be in law. The same transaction may involve two or more taxable events in its different aspects. But the fact that there is overlapping does not detract from the distinctiveness of the aspects". 88. No one denies....
X X X X Extracts X X X X
X X X X Extracts X X X X
....9-2000, the appellant had floated a Scheme for rendering Telecom service to the subscribers in which hand sets were made available to the subscribers on non returnable basis along with the Sim Cards. The Department, levied tax on the value of the hand set and also the value of the Sim Cards which substituted the original Sim Cards on account of damage etc. for which extra charge was made. It was this levy of commercial tax which was assailed by the appellant. 3. Learned Counsel submits that insofar as the supply of hand set to the subscribers was concerned, it was not the main business of the appellant who was liable to pay only service tax under the provisions of Finance Act, 1994 with the result the appellant was not required to get itself registered as a 'Dealer' under the Commercial Tax Act, 1994 but on account of some mis-conception, application was made to the Department and a registration as 'Dealer' was obtained. Learned Counsel has referred to the decision in State of Tamil Nadu and Anr. v. Board of Trustees of the Port of Madras STC Vol. 114 1999 Page 520 and the decision in Bharat Sanchar Nigam Ltd. and Anr. v. Union of India and Ors. STC Vol. 145 2006 ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ied free of charge and the Sim Card substituted on payment of charges. It is only the Sim Card which is substituted on account of damage etc. and for which extra charge is made that the Authorities are charging commercial tax. However, the situation with regard to the supply of hand set is entirely different from the one present before Their Lordships and, therefore, we do not find that the contention of the appellant is substantiated by the ratio of the said decision. Reference has also been made to 114 STC Page 520. The said case was dealing with the incidental transaction of unservicable goods. The case of the appellant obviously is that it is not an unserviceable item which has been supplied to the subscriber but very much a hand set which is an essential component for receiving the service. Under these circumstances, the decision in Board of Trustees (supra) also does not further the case of the appellant. 7. In view of the above discussion, we do not find that these appeals give rise to any question of law, much less substantial, for decision in the appeal under Section 53(2) of the VAT Act. The Division Bench of Kerala High Court in the case of Commissioner of Central ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... of Central Excise & Customs, Cochin reported in (2011) 19 STJ 201 (SC), in paragraphs 12, 17, 18 and 19 has held as under : 12. A SIM Card or Subscriber Identity Module is a portable memory chip used in cellular telephones. It is a tiny encoded circuit board which is fitted into cell phones at the time of signing on as a subscriber. The SIM Card holds the details of the subscriber, security data and memory to store personal numbers and it stores information which helps the network service provider to recognize the caller. As stated hereinbefore the Kerala High Court had occasion to deal with the aforesaid issue and in that context in its Judgment pronounced on 15th February, 2002 in Escotel Mobile Communications Ltd. vs. Union of India and Others, reported in (2002) Vol. 126 STC 475 (Kerala), it was stated in paragraph 36 that a transaction of selling of SIM Card to the subscriber is also a part of the "service" rendered by the service provider to the subscriber. The Kerala High Court in the facts and circumstances of the case observed at paras 36 and 47 as under: - "36. With this perspective in mind, if we analyse the transaction that takes place, it appears to us that ther....
X X X X Extracts X X X X
X X X X Extracts X X X X
....insic sale value and it is supplied to the customers for providing telephone service to the customers. This aforesaid stand of the Sales Tax authority is practically the end of the matter and signifies the conclusion. 18. The sales tax authorities have themselves conceded the position before the High Court that no assessment of sales tax would be made on the sale value of the SIM Card supplied by the appellant to their customers irrespective of the fact whether they have filed returns and remitted tax or not. It also cannot be disputed that even if sales tax is wrongly remitted and paid that would not absolve them from the responsibility of payment of service tax, if otherwise there is a liability to pay the same. If the article is not susceptible to tax under the Sales Tax Act, the amount of tax paid by the assessee could be refunded as the case may be or, the assessee has to follow the law as may be applicable. But we cannot accept a position in law that even if tax is wrongly remitted that would absolve the parties from paying the service tax if the same is otherwise found payable and a liability accrues on the assessee. The charges paid by the subscribers for procuring a SIM ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ator from the subscriber and, therefore, once it has been held by the Hon'ble Supreme Court that no sales tax can be charged for providing a SIM, the question of charging it on replacement of a SIM, does not arise. The impugned order passed by the assessing authority dt. 31/7/2014 and the Notice dt. 31/7/2014 deserves to be quashed. The other issue in respect of of VAT on lease line charges is only in the present Writ Petition (WP No. 7631/2014) and is covered by the judgment delivered by the Division Bench of this Court in the case of Bharti Infratel Ltd., Vs. State of Madhya Pradesh and others (W.P.No. 5340/2013, decided on 20/8/2015), wherein the Division Bench of this Court while deciding the issue of infrastructure charges received in respect of mobile towers has held that such charges are of the nature of service charges and are not liable for VAT since the mobile towers all along remain in control and possession of the Company and hence there is no sale. In the case of lease line charges also this very principle applies since a subscriber of a lease line does not become the owner of the line either by control or by possession and hence such charges are only for service....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ny similar right in favour of the sharing operator. 36. There are other provisions in the MSA which control the right of the sharing operator to gain access to the site and the passive infrastructure . For instance, Clause 3.1.2 states that the access shall be limited to the purpose of carrying out operation and maintenance activities and that too only to the authorised representatives or properly authorise subcontractors of the sharing operator. Clause 1.8 of the Schedule 2 of the MSA has to be read along with the above clause. The tables set out in this schedule providing for payment of service credits by petitioner to the sharing operators for failure to achieve the uptime service levels and those prescribing payment of service credits by petitioner to the sharing operators for non-submission of the reports and providing for stiff penalties for any failure on the part of petitioner show that it is the responsibility of petitioner to ensure that the passive infrastructure functions to its full efficiency and potential, which in turn means that it has to be in possession of the passive infrastructure and cannot part with the same in favour of the sharing telecom operators. Wit....
X X X X Extracts X X X X
X X X X Extracts X X X X
....r as defined in Section 52 of the Easements Act, 1952. A licence cannot in law confer any right; it can only prevent an act from being unlawful which, but for the licence, would be unlawful. A licence can never convey by itself any interest in the property; e) The entire MSA has to be read as a whole without laying any undue emphasis upon a particular word or clause therein. What is permitted under the MSA is a licence to the telecom operators to have access to passive infrastructure and a permission to keep equipments of the sharing telecom operator in a prefabricated shelter with provision to have ingress and aggress only to the authorized representatives of the mobile operator. 39. In the matter of Indus Towers Limited v. Union of India decided on 18th April, 2013 [Writ Petition (C) No.4976/2011] almost a similar question was raised by the petitioner therein before the Delhi High Court and the Division Bench of Delhi High Court in complete agreement with the view taken by the Karnataka High Court in the case of M/s. Indus Towers Limited v. The Deputy Commissioner of Commercial Tax &four others (supra) has allowed the writ petition. 40. For these reasons, we are of the view....