TaxTMI 
TaxTMI 
TaxTMI 
2020 (6) TMI 84
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....rvice Agreement, the petitioner allows these Mobile Telecommunication Operators (MTO's) to install their active infrastructures such as Base Transceivers Station (BTS) and antenna/disk and other accessories required for providing mobile telecom services to their customers. The Base Transceivers Station (BTS) are sheltered inside the temporary shelter while the antenna/disk is placed on the tower/mast of the petitioner. 4. Petitioner had obtained registration under the TNVAT Act, 2006 and had procured various goods against 'C' Form for setting up passive infrastructure and filed returns under the TNVAT Act, 2006. The dispute in these Writ Petitions is confined to the Assessment Years 2008-09 and 2009-10. For these Assessment Years, the petitioner had declared the following taxable turnover under the provisions of the aforesaid Act:- Serial No. Assessment Year Taxable Turnover Declared Rs. Tax Paid Rs. 1 2008-09 1, 26, 68, 089 15, 81, 386 2 2009-10 0 0 5. These assessments were also completed accepting the returns filed by the petitioner vide two separate assessment orders dated 24.11.2011 in terms of Section 22(3) of TNVAT Act, 2006, based on the selfassessment of the ....
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....arges received is not only for permitting the mobile operator to mount their equipments on the tower but also for having used the other infrastructure facilities (viz. providing DG set, power management system, air conditioner, battery bank etc) as specifically required by the mobile operators and have been supplied by the dealer. The dealer offered two types of towers with infrastructure facilities. Those are Roof Top Tower and Ground Based Tower. Both the towers are having same infrastructure facilities. The agreements were entered with various mobile operators for a specific period. The authorized representative was requested to explain how the tower will be removed in the event of termination of agreement. The authorized representative stated that the towers are never permanently affixed to earth or on the multi-storied building and in the event of termination of agreement the towers are dismantled and relocated from one place to another with infrastructure facilities, the towers are shifted to some other place. Hence, it is evident that both the types of towers with infrastructures are "Movable" in nature. To the query with regard to functions of dealer's equipments ....
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....ment. In other words, during the period of agreement the facilities could not be transferred to any other mobile operator. Further the mobile operator has no right to sub let to others. "Goods" may be a tangible or an intangible and having utility, capable of being bought and sold, transmitted, transferred, delivered, stored and possessed. Hence, there is right to use the capacity of tower with infrastructure facilities as per the agreement. The consideration received from the mobile operators for offering access to towers with infrastructure facilities amounts to lease receipts falling under section 4 of the TNVAT Act, 2006. Moreover the equipments and infrastructures rented by the dealers were based on prior agreements of the contract which stipulates various clauses including liability to tax under VAT. In the agreement executed between them and the sharing operators, Clause 7.1.3 of the agreement specifically states about the sales tax/VAT chargeable which is extracted below. Clause: 7.1.3 "If any VAT /sales tax and and/or services tax is chargeable in respect of the Charges payable by the Sharing Operator hereunder, Indus shall provide the Sharing Operator with a v....
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....s not acceptable. Therefore, the turnover of Rs. 142,52,77,649.00 is assessed at 12.5% under section 4 of the TNVAT Act, 2006. In fine, the dealers are reassessed under section 27 of the TNVAT Act, 2006 on the following turnover in addition to the turnover already assessed based on the returns for the year 2008-2009 as detailed below. Details Turnover Tax due 1. Turnover and Tax originally reported Rs. 1,26,68,089.00 Rs. 15,81,386.00 2. Levy of tax on lease rental receipts at 12.5% Rs. 142,52,77,649.00 Rs. 17,81,59,706.00 Total and Taxable redetermined Rs. 143,79,45,738.00 Rs. 17,97,41,092.00 ** In view of the above discussion the contention of the dealer that they are providing only service and the receipts represent service charges is not acceptable. Therefore, the turnover of Rs. 637,01,41,587.00 is assessed at 12.5% under section 4 of the TNVAT Act, 2006. In fine, the dealers are reassessed under section 27 of the TNVAT Act, 2006 on the following turnover in addition to the turnover already assessed based on the returns for the year 2009-2010 as detailed below:- Details Turnover Tax due 1.Turnover and Tax originally reported Rs. Nil Rs. Nil 2. Levy of tax....
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....akhapatnam and Another, 1989 SCC OnLine AP 413. iv. State of A.P Vs. Rashtriya Ispat Nigam Ltd., (2002) 3 SCC 314. v. Idea Mobile Communication Limited Vs. Commissioner of Central Excise and Customs, Cochin, (2011) 12 SCC 608. vi. Vodafone Mobile Services Limited Vs. Commissioner of Service Tax, Delhi, 2018 SCC OnLine Del 12302. vii.Commissioner of Central Excise, Ahmedabad Vs. Solid and Correct Engineering Works and Others, (2010) 5 SCC 122. viii.Sirpur Paper Mills Limited Vs. Collector of Central Excise, Hyderabad, (1998) 1 SCC 400. ix. Federation of Hotel and Restaurant Association of India, Etc Vs. Union of India and Others, (1989) 3 SCC 634. x. Commissioner of Income Tax Vs. Arvind Investments Ltd., 1990 SCC OnLine Cal 376. xi. Bhagirath Ram Chand Vs. State of Punjab and Others, AIR 1954 PH 167. xii.Union of India and Others Vs. Bombay Tyre International Ltd. and Others, (1984) 1 SCC 467. 18. I have considered the arguments advanced by the learned counsel for the petitioner and the respondents. 19. Facts are not in dispute. The petitioner is a provider of "Passive Infrastructure Service" for the Mobile Telecommunication Operators (MTO). The petitioner acqui....
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....nced on behalf of the petitioner and the respondents. The petitioner no doubt provides passive infrastructure service to be Mobile Telecommunication Operators (MTO.). Under the business model, the petitioner has the real estate namely the lease of land on which it has erected a temporary shelter which is equipped with Air Conditioners and is connected with power supply generators and antenna. In the temporary shelter, the Base Transceivers of Mobile Telecommunication Operators are placed. Next to be temporary shelter the transmission tower/mast is erected. The power generator, which is part of the power management system of the petitioner, is also in the same vicinity to ensure continuous supply of power to BTS etc. Inside the temporary shelter optimal temperature is maintained with the air-conditioners. 35. The shelter can accommodate Base Transceivers (BTS) and exercise of 2 or more Mobile Telecommunication Operators (MTO's). The Base Transceivers are connected to the antenna with the feeder cables which run on the mast/transmission towers of the petitioner. 36. The nature of activity undertaken by the petitioner clearly indicates that no doubt there is a provision of service....
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....9A)(d) of the Constitution of India, inasmuch as, there was delivery of possession of the goods by transfer (Department of Space) to the transferee (customer) and in law, the transferee had effective control over the goods, i.e., "space segment capacity" in the transponder of satellite, though its technical operation was handled by the Department of Space. 42. In BSNL Vs. Union of India, (2006) 3 SCC 1, the Hon'ble Supreme Court observed that "Gannon Dunkerley [State of Madras Vs. Gannon Dunkerley & Co. (Madras) Ltd., (1958) 9 STC 353 : AIR 1958 SC 560 : 1959 SCR 379] survived the Fortysixth Constitutional Amendment in two respects. First with regard to the definition of "sale" for the purposes of the Constitution in general and for the purposes of Entry 54 of List II in particular except to the extent that the clauses in Article 366(29-A) operate." 43. It further observed that "By introducing separate categories of "deemed sales", the meaning of the word "goods" was not altered. Thus, the definitions of the composite elements of a sale such as intention of the parties, goods, delivery, etc. would continue to be defined according to known legal connotations." It further observe....
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....ent of fees, consideration does pass from the patient or client to the doctor or lawyer for the documents in both cases." 48. While answering the above illustration, in para 45, the Court observed as under:- 45.The reason why these services do not involve a sale for the purposes of Entry 54 of List II is, as we see it, for reasons ultimately attributable to the principles enunciated in Gannon Dunkerley case [State of Madras v. Gannon Dunkerley & Co. (Madras) Ltd., (1958) 9 STC 353 : AIR 1958 SC 560 : 1959 SCR 379] , namely, if there is an instrument of contract which may be composite in form in any case other than the exceptions in Article 366(29-A), unless the transaction in truth represents two distinct and separate contracts and is discernible as such, then the State would not have the power to separate the agreement to sell from the agreement to render service, and impose tax on the sale. The test therefore for composite contracts other than those mentioned in Article 366(29-A) continues to be: Did the parties have in mind or intend separate rights arising out of the sale of goods? If there was no such intention there is no sale even if the contract could be disintegrated....
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....latter case it is lacking We may have many examples to indicate this difference." 51. In Aggarwal Bros. Vs. State of Haryana, (1999) 9 SCC 182, the Hon'ble Supreme Court has held that when the assessee had hired shuttering in favour of contractors to use it in the course of construction of buildings it was found that possession of the shuttering materials was transferred by the assessee to the customers for their use and therefore, there was a "deemed sale" within the meaning of subclause (d) of clause (29-A) of Article 366. 52. The Hon'ble Supreme Court in BSNL case supra ultimately while dealing with the issue as to whether electromagnetic waves are not "goods" or not within the meaning of Article 366(12) of the Constitution of India and whether the telephone instrument given by BSNL to its subscribers amounts to transfer of right to use or not concluded that the constitutional amendment under Article 366(29-A) of the Constitution was not loosely drawn and must proceed on the basis of the parameters of "sale" were carefully defined. The Court concluded that there is no sale element apart from the obvious one relating to the handset, if any, that and any other accessory suppli....
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....f such use including any permissions or licences required therefor should be available to the transferee; (d) for the period during which the transferee has such legal right, it has to be the exclusion to the transferor-this is the necessary concomitant of the plain language of the statute viz. a "transfer of the right to use" and not merely a licence to use the goods; (e) having transferred the right to use the goods during the period for which it is to be transferred, the owner cannot again transfer the same rights to others. 55. Thus, it is evident that wherever extended definition of "sale in Article 366(29-A) are attracted the transaction can be taxed both under the provisions of TNVAT Act, 2006 and under the provisions of Finance Act, 1994. However, it is for Assessing Officers under the respective enactments to determine the value of the two transactions and collect tax. 56. In the present case, no transfer of right to use goods as contemplated under Article 366(29-A) (d) and Section 2(33)(iv) of the TNVAT Act, 2006 is discernable. Even though the temporary shelter and the mast are goods within the means of Article 366(12) and Section 2(21) of TNVAT Act, 2006 yet the....