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2014 (4) TMI 223 - HC - VAT and Sales TaxLevy of VAT / Tax on sharing of the mobile towers - sharing of passive infrastructure - Nature of services and whether it amounts to transfer of tax due - Pre-deposit, interest and penalty Held that - Prima facie it would appear that the facts of the present case are closely similar, if not, entirely identical to the appeals that this Court had dealt with in Indus Towers Ltd. V. Union of India 2013 (6) TMI 294 - DELHI HIGH COURT - Consequently, the activity being subjected to VAT does not prima facie arise - Tribunal s impugned order requiring pre-deposit of 20% of the tax and interest and 10% of the penalty amount is set aside - stay granted.
Issues:
1. Correctness of the order of the VAT Tribunal requiring pre-deposit for hearing appeals. 2. Nature of services provided by registered dealers in rendering cellular mobile telephonic services. 3. Applicability of previous court decisions on similar cases to the present matter. Issue 1: Correctness of the VAT Tribunal's pre-deposit order The appellants, registered dealers providing cellular mobile telephonic services, contested an assessment subject to objections. The OHA rejected their contentions, leading them to approach the Tribunal. The Tribunal directed a pre-deposit of 20% tax, 10% interest, and penalty payment before hearing the appeals. The appellants argued against this pre-deposit requirement, citing decisions from the High Court and Andhra Pradesh High Court on similar cases involving value-added services. The High Court, after considering the submissions and previous decisions, found the present case closely similar to the cases dealt with previously. Consequently, the High Court set aside the Tribunal's order for pre-deposit and allowed the appeals to be heard on merits. Issue 2: Nature of services provided by registered dealers The service in question, acknowledged by the revenue for taxation, was the sharing of passive infrastructure, specifically mobile towers, by the appellants. The High Court analyzed the nature of these services and whether they constituted a transfer of tax dues. Referring to previous decisions, the High Court concluded that the activity being subjected to VAT did not prima facie arise in the present case. Therefore, the Tribunal's order for pre-deposit was deemed incorrect, and the appeals were directed to be heard on their merits. Issue 3: Applicability of previous court decisions The appellants relied on the decisions of the High Court and Andhra Pradesh High Court in similar cases to argue against the pre-deposit requirement imposed by the Tribunal. The High Court, after examining the facts and the effect of those decisions, found the present case closely resembling the cases previously dealt with. Consequently, the High Court set aside the Tribunal's order for pre-deposit, allowing the appeals to proceed to be heard on their merits based on the similarities with the previous cases. In conclusion, the High Court allowed the appeals, set aside the Tribunal's order for pre-deposit, and directed the appeals to be heard on their merits based on the analysis of the nature of services provided and the applicability of previous court decisions to the present matter.
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