2022 (4) TMI 1354 - HC - VAT and Sales Tax

Demand of tax - transfer of right to use of telephone handset by the customers of the assessee - transfer of right of use - exclusion of service portion - Section 10 (B)) of Trade Tax Act - assessment year 2003-04 - HELD THAT - The issue involved in the present revision has already been decided by another Bench of this Court in BHARAT SANCHAR NIGAM LIMITED VERSUS COMMISSIONER TRADE TAX U.P. LUCKNOW 2019 (11) TMI 535 - ALLAHABAD HIGH COURT , in which the matter was remanded to the Tribunal for fresh decision within a period of one year after affording opportunity of hearing to the parties concerned. The present revision is allowed on the same terms as enumerated in the referred order - the matter is remanded to the Tribunal to pass a fresh order, after affording opportunity of hearing to the concerned parties, within a period of one year from the date of receipt of a copy of this order before the authority concerned. Appeal allowed by way of remand.

Summary

Issues:
Challenging order passed by Tribunal on tax demand for transfer of right to use of telephone handset, questions of law raised, legality of assessment order, tax liability sustainability, justification of Tribunal's different orders for different assessment years.

Analysis:
The revision challenged the Tribunal's order on tax demand for the transfer of right to use telephone handsets by customers. The questions of law raised included the legality of the assessment order, following Supreme Court directions, sustainability of tax liability, and justification of different orders by the Tribunal for various assessment years. The revisionist argued that a similar issue had been decided by another Bench, leading to a remand for fresh consideration. The Additional Chief Standing Counsel did not dispute this contention.

The Tribunal's order in a related case highlighted the importance of specific grounds of appeal raised by the assessee regarding the absence of transfer of right to use landline telephone sets. The Tribunal's reasoning was deemed unacceptable as it did not adequately address the challenges raised by the assessee. The Tribunal's simplistic approach of considering fixed charges as consideration for transfer of right to use was criticized for not delving into the evidence, agreements, and other relevant materials to determine the true nature of the transactions.

The judgment emphasized the necessity for a thorough examination of evidence to ascertain the presence of a transfer of right to use and the subsequent apportionment of amounts subject to tax. Without proper analysis and apportionment, the assessment of tax liability would remain ambiguous. The judgment also referred to a similar case involving SIM cards, where a remand was ordered for a fresh decision due to legal similarities. Consequently, the Tribunal's order was set aside, and the matter was remanded for a fresh decision, allowing the parties an opportunity to present additional evidence.

In conclusion, the revision was allowed, following the terms of the previous order, remanding the matter to the Tribunal for a fresh decision within a specified timeframe. The questions of law were answered accordingly, emphasizing the need for a comprehensive assessment based on evidence and legal principles.