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2015 (11) TMI 46 - TRIPURA HIGH COURTLevy of VAT on set top boxes (STB) - Whether the petitioners-assessees are liable to pay value added tax (VAT) in terms of the Tripura Value Added Tax Act, 2004 (for short, "the TAVT Act") in respect of contracts entered into by them with the customers whereby they have agreed to provide direct-to-home (DTH) service to the customers in the State of Tripura - Held that:- As far as STBs are concerned they are in total control of the customer. Under his effective control the STBs are installed in the house of the customer. He can use the STB when he wants to. He can use the STB to view whichever channel he wants to view. He may or may not use the STB. The company does not even have the power of enter ing the premises of the customer. Most importantly as per the terms of the agreement, the companies are responsible for the functioning of the STBs only for a period of 6 (six) months. The warranty is valid only for six months and thereafter there is no warranty. Therefore, if STB of a customer is spoiled after six months he will have to pay for repair or replacement of the same. We are of the considered view that this amounts to transfer of the right to use goods. - after the Forty-sixth Amendment the sale element of all the six contracts covered under clause (29A) of article 366 are separable and may be subjected to sales tax. Finally in para 92, the apex court again held that when a telephone connection is given there may be transfer of right to use goods and where both composite contract of service and sales is concerned the State may impose tax on the sale elements provided there is discernible sale and only the sale element can be taxed. State is assessing the tax solely on the basis of the value of the STBs as given in the books of account of the petitioners. The petitioners claim depreciation, etc., on these STBs and the valuation given by the petitioners is the value of the goods, the right to use which has been transferred to the customers. This is easily separable and discernible and the State has the full authority to levy value added tax on the sale part of the transaction, i.e., the value of the STBs. - no merit in the petitions - Decided against assessee.
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