9911796707
| Discussions Forum | ||||||||||||
Home  Forum VAT + CST This
A Public Forum.
Submit new Issue / Query
My Issues
My Replies
|
||||||||||||
SET TOP BOX. RIGHT TO USE, VAT + CST |
||||||||||||
|
||||||||||||
SET TOP BOX. RIGHT TO USE |
||||||||||||
Dear experts Plz offer your constructive feedback on the following judgement since it has PAN India implications: Scope of Revision Petition - Set Top Boxes (STBs) are goods within the meaning of section 2(15) of the Karnataka Value Added Tax Act, 2003 or not - consideration for transfer of right to use STB - mutual exclusiveness of service tax and VAT - retrospectivity of Government notification dated 15.03.2021. Scope of Revisional Jurisdiction - HELD THAT:- Revision is more a matter of power of the Revising Authority than the right of revisionist. Several Statutes provide for suo moto Revision whereas suo moto Appeals are almost unknown - The scope of Appeal or Revision depends upon the text of the provision of a statute which creates the right of Appeal, or vests revisional power. It has been a long settled position of law that normally scope of Appeal is wider than that of Revision. Ordinarily, first appeal is both on law and facts unless the statute otherwise says. Thumbnail description of Section 65 - HELD THAT:- In terms of order on Revision, Assessment Orders have to be modified and any excess payment has to be refunded to and any deficit is to be made good by the Assessee, says Sub-section (9). Sub-section (10) (a) provides for review of the order made on Revision on the basis of facts that were not there when the Revision was decided. Sub-section (10) (b) empowers the government to make rules prescribing limitation period for Review and the manner in which Review should be preferred. Sub-section is on par with section 152 of Code of Civil Procedure, 1908 and it provides for rectification of mistakes in the order made in Revision. This would include order made in review as well. Rectification can be sought for at any time within five years; before effecting rectification, stakeholders need to be heard. Sub-section (12) provides for discretionary levy of cost while making orders on Revision. Question of law within the meaning of section 65 - HELD THAT:- It is well settled that a question may be treated as of law even if in Salmondian sense, it is not: when a finding of fact is recorded without evidence or contrary to evidence or founded on inadmissible evidence, ordinarily they are treated as questions of law. It may also arise when, on the basis of evidentiary material on record, no reasonable person in the armchair of the authority would have entered a finding, that has a bearing on the outcome of the proceeding. These are only illustrative. It is the specific case of Assessees that a finding in the form of answers in the affirmative has been recorded to the above questions without or contrary to evidentiary material; this has been done in disregard of decisions of Apex Court and High Courts. Therefore, it is opined that the preliminary objection as to maintainability of the Revision Petitions is not sustainable. Whether a set top box is goods u/s 2(15) of the Act - HELD THAT:- A Set Top Box is an appliance between cable outlet and a subscriber’s receiver, cannot be disputed. Regulation 2(z) of the Telecommunication (Broadcasting and Cable Services) Interconnection (Digital Addressable Cable Television Systems) Regulations, 2012 defines “Set Top Box” means a device, which is connected to, or is part of a television and which allows a subscriber to receive in unencrypted and descrambled form subscribed channels through an addressable system - It is not out of place to refer to a Central Government Office Memorandam dated 13.08.2014 which says that STBs fall within the definition of goods for the purpose of Central Sales Tax Act, 1956 and therefore, Form-C facility to be extended to them. STB is capable of exclusive use by the subscribers or not - HELD THAT:- Regulation 17 obligates every Multi Service Operator like the Assessees herein to provide to the subscribers STBs conforming to standard, set by the Bureau of Indian Standards, with a minimum warranty of one year, unless the subscriber himself has bought one on his own. There is a statutory obligation to repair the STBs within 24 hours of the complaint that too, free of cost. It is admitted before us by both the sides that the STBs are installed in the premises of subscriber only, albeit license to visit the same for service/repair is accorded under the subject agreements. In deciding the question, what are the goods involved in a sale transaction of the kind and with what intent the parties have entered into it, would assume importance. The seller and purchaser, the words being used in their widest amplitude have to be ad idem as to the subject matter of the arrangement. To this to be added, the intent of law also. In finding answers to questions of the kind, the approach of the court should be of a reasonable person of average intelligence. There being nothing to substantiate pervasive control of the Assessee over the STBs, merely because they have license to gain entry to the premises of the subscriber for periodic inspection/repair. Consideration for transfer of right to use STB - HELD THAT:- The simple question is whether the transfer of right to use STBs is for consideration or it is free. The Authorities and the Tribunal have held that the consideration for right to use STB is Rs. 2,000/-. That estimate is made inter alia on the basis of a clause in the Inter-connect Agreement that obtained between the Assessees and their local cable operators. A clause in the agreement prescribes Rs. 2,000/- payable by the local operator if STB is damaged or it is not used for the purpose for which it is installed - The authorities having accumulated expertise in the matter have formed a considered opinion that a sum of Rs.2,000/- is the consideration for transferring the right to use the STBs. A Court exercising a limited revisional jurisdiction cannot run a race of opinions with the authorities and Tribunals which have recorded concurrent findings. Service tax and VAT are mutually exclusive or not - HELD THAT:- There can be levy of more than one tax on a subject matter, if incidence of each of the taxes is different from the other and such taxes may be imposed under different statutes. A tax on the sale of goods is envisaged under Entry 54 of List II (Sales Tax) of Schedule 7 of the Constitution and the taxable event is transfer of goods including fictional sale envisaged under Article 366 (29A). In the case at hand, sales tax is levied under the State Enactment. There the State is not levying tax on service aspect of the transaction, since that exclusively belongs to the domain of the Parliament, which has enacted Finance Act, 1994 - In the case at hand, sales tax is levied under the State Enactment. There the State is not levying tax on service aspect of the transaction, since that exclusively belongs to the domain of the Parliament, which has enacted Finance Act, 1994. Retrospectivity of Government notification dated 15.03.2021 - HELD THAT:- Sub-section (2) of Sec. 174 has to be read with sub- section (3) of Sec. 164. Added, sub-section (4) of Sec. 174 in a way enacts Sec. 6 of the Mysore General Clauses Act, 1899. In view of this, it cannot be assumed that the tax regime during the transition period between repeal of 2003 Act and enactment of 2017 Act, was ever intended to be left as a vacuum creating a limited/partial tax heaven, in the mere absence of a notification under sub-section (2) of Sec. 174. If legislature intended to make operation of sub- section (1) of Sec. 174 dependent upon a notification to be issued under sub-section (2), the language of the provision would have been much different. An argument to the contrary would offend the tax jurisprudence evolved over centuries, in civilized jurisdictions. Therefore, the vehement submission made on behalf of the Assessees that the notification of 2021 could not have been issued with retrospective effect, pales into insignificance. Conclusion - i) STBs are goods within the meaning of section 2(15) of the Act, capable of exclusive use by subscribers, and that the right to use them is transferred for valuable consideration. ii) Service tax and VAT are not mutually exclusive. iii) The notification dated 15.03.2021 could have retrospective effect. Petition dismissed. Posts / Replies Showing Replies 1 to 6 of 6 Records Page: 1
Dear Sir, This is w.r.t. para no.(ii) of "Conclusion" above. "Service Tax and VAT are mutually exclusive. Therefore, transaction which is liable to Sale Tax, Service Tax cannot be demanded".--------- -Supreme Court in the case of Imagic Creative Pvt. Ltd. - 2008 (1) TMI 2 - SUPREME COURT
Dear Sir According to me, the Karnataka High Court judgement (supra) is subjective and it has to pass through the “test of terms agreement” of Set Top Box, although ii is installed in the consumer’s premises. 2025 (2) TMI 883 - KARNATAKA HIGH COURT This reminds me the essential “functionality test” pronounced by the Supreme Court in Safari Retreat - 2024 (10) TMI 286 - SUPREME COURT. Let’s see how the assessees respond. Thanks for your feedback Sir.
Dear Sir, I think you are hinting towards the category of, "Right to Use of Tangible Goods Service". Transaction of allowing another person to use the goods without giving legal right of possession and effective control (not to be treated as sale of goods but service). Am I right, Sir
Dear Sirji You are absolutely right. However with due respect to the Karnataka High Court judgement dated 18/02/2025 [2025 (2) TMI 883 - KARNATAKA HIGH COURT], I wish to refer here another judgement of the same High Court dated 05/10/2025 rendered by single bench in the case of Bharti Telemedia Limited Vs. Deputy Commissioner of Commercial Taxes [Audit 4.5] Bangalore [2015 (10) TMI 2864 - KARNATAKA HIGH COURT] had quashed the levy of VAT on Set Top Box with directions to re-examine the terms and conditions of the agreement between the DTH operators and the customers. Besides the High Courts of Maharashtra and Punjab have held that, Set Top Box installed at the customers premises is not liable to VAT. Rather it was taxable under Service Tax. Therefore in my considered opinion, the issue needs to more technological deliberation by the subject experts as regards to the functioning of Set Top Box and who retains the effective control, instead of looking at it through the prism of taxability under VAT or Service Tax. Disclaimer: The contents of this discussion is purely for academic purpose and not for use before any authorities and the authors are not responsible for any consequences thereof.
Dear all Plz refer the following as well: Levy of service tax - value of turnover towards cable network service charges and sale of Set Top Box (STB) as shown in the Profit & Loss account enclosed with ITR-V Income Tax Return for the Financial Year 2014- 2015 in terms of the Finance Act, 1994 - HELD THAT:- Though the SCN was issued in the present case prior to the issue of the instructions dated 26.10.2021, the crux of the above instructions squarely apply to the present case. Firstly, the original authority did not discuss the issues under consideration for coming to a conclusion and for confirming the demands raised in show-cause notice, and the learned Commissioner (Appeals) had upheld such order, on the basis of the decision taken by the Tribunal in the case of UCN Cable Network Pvt. Ltd. [2016 (9) TMI 188 - CESTAT MUMBAI] without discussing how the present facts of the case fits in to such relied upon decision. The issue of supply of Set Top Box (STB) by the MSO to their customer, whether it would amenable to levy of service tax or not, was examined by the Co-ordinate Bench of this Tribunal in the case of Dish TV India Limited Vs. Commissioner of Central Excise and Service Tax, Aurangabad [2023 (7) TMI 1238 - CESTAT MUMBAI], wherein it was held that supply of STBs by the appellants is not a service, rather it is a deemed sale, leviable to VAT under the State legislature. The appellants themselves have correctly determined the service tax payable by them, from their financial records duly certified by the Chartered Accountant, and thus have fulfilled all the requirements for discharge of service tax liability along with applicable interest and penalty voluntarily, before filing this appeal before the Tribunal on 28.06.2021. In the above circumstances and on the basis of the discussions, there are no strong grounds found to hold that the appellants did not pay service tax in respect of the differential amount demanded in the show cause proceedings, owing to the reason that the service tax on the taxable value of turnover relating to the financial year 2014-2015 as detailed, have been duly paid by the appellants and the same has been accepted by the Department. Conclusion - The nature of activity undertaken by the DTH operator in providing STB to a subscriber, is provision of an equipment, which is one-time activity, and it is not a part of DTH service in providing television channels for viewing by the subscriber. STBs are deemed sales and not subject to service tax. The impugned order set aside - appeal allowed.
Dear all Refer the following on the subject of " transfer of right use the goods": Levy of service tax or VAT - deemed sale - activity of renting out cinematographic equipment by the appellant - transfer of "right to use" the equipment - HELD THAT:- Under Section 66 of the Finance Act, 1994, there shall be levied a tax at the rate of 12% of the value of the taxable services referred to in subclause (zzzzj) of clause (105) of Section 65 of the Finance Act, 1994. The “taxable service” means any service provided or to be provided to any person, by any other person in relation to supply of tangible goods including machinery, equipment and appliances for use, without transferring right of possession and effective control of such machinery, equipments and appliances. Therefore, where right of possession and effective control is transferred, then it will not be a taxable service. Consequently, if it is not a taxable service, then certainly service tax is not leviable under Section 66 of the Finance Act, 1994. There is not only a transfer of right of possession, but also effective control. The order-in-original has proceeded on an erroneous interpretation of the provisions of this agreement that possession and effective control has not been transferred to the hirer. This conclusion of the adjudicating authority not gareed upon. It is clear from the agreement that the equipments have been supplied for hire and possession and effective control has been transferred to the hirer. The possession and effective control has been transferred. If it is not so, why will the owner reserve a right to inspect the equipments as and when required. If the possession and effective control is still with the owner, he would not need the hirers' permission to inspect. If effective possession and control has not been transferred, why the hirer has to make it known to the owner regarding loss or destruction or damage, after such loss or damage occurs - If possession and effective control is still with the owner or has not been transferred to the hirer, why would the hirer make a statement that he has taken inspection of the goods and he is satisfied with the condition thereof and the owner shall not be liable for any defects. Conclusion - There shall be a deemed sale where there is transfer of the right to use any goods for any purpose – whether or not for a specified period, for cash, deferred payment or other valuable consideration. From the documents and particularly from the clauses reproduced above, it is quite clear that there has been a transfer of the right to use equipments for valuable consideration. Even in clause 29A of Article 366 of the Constitution of India, the only requirement is there should be transfer of the rights to use the goods for valuable consideration. Factually, there has been. The order-in-original cannot be sustained, as it was without jurisdiction. The same is quashed and set-aside - Appeal disposed off. Page: 1 |
||||||||||||
.jpg)
