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TMI Blog2011 (4) TMI 234X X X X Extracts X X X X X X X X Extracts X X X X ..... telecom companies and that very much falls within Article 366(29A)(d) of the Constitution - Held that: - the right to use the goods has been transferred by the petitioner to the telecom companies and that very much falls within Article 366(29A)(d) of the Constitution. - VAT is applicable - State government can recover amount from central government - For the assessment years in question, the amount is paid by the petitioner to the 1st respondent and it is for the State to seek for recovery of the amount so paid by the petitioner to the 1st respondent in a separate proceedings based on the judgment rendered herein. Further, in future, it is for the petitioner to file returns/assessment under the provisions of sections 3 and 4(1b) of the VAT Act, 2003 - Petition is allowed partly - 2459-2482 OF 2011 (T RES) - - - Dated:- 7-4-2011 - HULUVADI G RAMESH, J. B.G. Chidananda Urs for the Petitioner. N.R. Bhaskar and Shivayogiswamy for the Respondent. ORDER 1. Petitioner is a company registered under the Companies Act, 1956 engaged in providing infrastructure service in relation to cellular telephones. He having entered into contract with various telecom/cellular op ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e building or on earth does not lose its form of equipment. 5. According to the petitioner, as per Article 246(1) of the Constitution, it is the exclusive domain of the Centre to make laws in respect of matters enumerated in List I in the VIIth Schedule and having enumerated imposition of 'service tax' on service element of a contract, the levy of service tax on the facility of providing mobile telephone towers for various service provider would oust the jurisdiction of the State to impose VAT on such immovable structure. Referring to various judgments of the Apex Court and other courts, petitioner's counsel contended that petitioner has already remitted the entire service tax due to the Centre. Directing the petitioner to pay tax as per section 2(29)(d) of the VAT Act is impermissible and also it would be in the form of double jeopardy. As against the order of the assessing authority at Annexures C and CI, petitioner has come up before this Court to exercise efficacious remedy under Article 226 of the Constitution and praying not to insist upon for redressal before the appellate forum as the matter involves a Constitution stipulation and since it also involves subst ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the agreement between the petitioner and the telecom companies. Certain goods are used for erection of towers and thereafter, after assembling the equipment, lease is extended to different telecom companies as per the agreement entered into between the parties. It is stated that as per section 29 clause 2(d) of the VAT Act, it is permissible to levy tax on transfer of right to use any goods for cash or deferred payment or valuable consideration. The agreement entered into provides for certain identification of terms in infrastructure equipment and on that basis, stating that it is in the form of a lease agreement and infrastructure provider gives the right to use the equipment to the parties to the agreement, possession and effective control of those equipment also lies with the telecom companies and, it is clear that it is not immovable property like land or building as such, the petitioner company is liable to pay tax on the transfer of right to use goods as per law. As per the conditions of the agreement entered into by the petitioner with the telecom companies, the petitioner company maintains the equipment on behalf of telecom companies and the effective control lies with th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he case of Hutchison Max Telecom (P.) Ltd. (supra) held that the equipment installed cannot be considered as movable goods as they are embedded in the earth or on a building and cannot be shifted without damage and, adopting the test of damage, shifting cannot be done without damage, the act of dismantling from a permanent site would render such goods not marketable and accordingly contended that the activity involved is in the nature of service and more a permanent structure by way of movable property over which the VAT Act cannot be made applicable and there is no question of transfer of right to use goods. Learned counsel has also referred to the case of Triveni Engg. Indusries Ltd. (supra) as to the test of mobility wherein the Apex Court with reference to combining and fixing of steam turbine and complete alternator permanently on a platform at the premises of the customer to form a turbo alternator, in the context of imposing excise duty, has held that the goods are movable property and cannot pass the test of mobility and therefore, does not attract the provisions of Central Excise Act. 10. Hutchison Max Telecom (P.) Ltd.'s case (supra), of course is based on the pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ered so as to attract service tax. 12. The respondent State has also relied upon the following decisions: 1. Tamil Nadu Kalyana Mandapam Association v. Union of India [2006] 4 STT 308 (SC) 2. 20th Century Finance Corpn. Ltd. v. State of Maharashtra [2000] 119 STC 182 (SC) 3. BSNL's case (supra) 4. Sirpur Paper Mills Ltd. v. Collector of Central Excise AIR 1998 SC 1489 5. Jaiprakash Industries Ltd. v. CCT [2010] 36 VST 152 (Uttarakhand) 6. Modern Decorators v. CTO [1990] 77 STC 470 (WBTT) 7. Jasper Aqua Exports (P.) Ltd. v. State of Andhra Pradesh [2011] 37 VST 481 (AP) 8. Tata Sky Ltd. v. State of Punjab [2011] 37 VST 1 (Punj. Har.) 9. Antrix Corpn. Ltd. v. Asstt. CCT 2010 (69) KLJ 174 (Kar.). 13. The Division Bench of this Court in Antrix Corpn. Ltd.'s case (supra), referring to various terms and conditions entered into between the parties in the agreement in similar context, has observed in paragraphs 51 and 52 of the order that in case of 'space segment capacity' which is termed as 'leased capacity', also involves surrender of lease capacity, however as regards control, it has observed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llular operators in the form of transfer of rights to use the goods and the superstructure which cannot be easily dismantled without damage but, can be reinstalled elsewhere. As and when there is termination of the agreement with the land/building owner, necessarily the equipment installed though it was attached to the civil structure i.e., platform, can be easily removed and replaced elsewhere and that stands the test of mobility. It is also the argument of the learned Advocate General that the facts and decisions rendered by the Apex Court referred to by the petitioner are in a different context and accordingly, submitted that the reassessment orders passed by the authority is in accordance with law and it attracts the provisions of the VAT Act and not Service Tax. 18. In reply, petitioner's counsel submitted that it is not as if they are not paying tax at all and being registered under the Service Tax Act, they are paying tax and for the assessment years 2007-08 and 2008-09, service tax has been paid. Once again asking the petitioner to pay tax to the State amounts to double jeopardy and double taxation is not upheld or recognised elsewhere. Accordingly, he has sought fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed and installed elsewhere. Having held that it attracts the provisions of the VAT Act based on the accounts maintained, the authority proposed to impose VAT. 21. Various decisions rendered and referred to by the petitioner's counsel are in the context - what is movable and immovable. As a matter of fact finding, the reassessing authority having regard to the nature of the equipment used and its fixation to the earth i.e., civil foundation or on the roof of the building for proper functioning and the nature of the activity that is being transferred to the customers viz., telecom companies to use the equipment i.e., the tower raised and in consideration petitioner receives some amount which are in the form of rents, has proposed tax under the provision of VAT Act, treating it as lease of movable. Further, having regard to the nature of the agreement entered into and the nature of transaction, the effective control is with the petitioner and, the component of delivery is also involved and the maintenance and over all control is also with the petitioner, it could be specifically said that the right to use the goods has been transferred by the petitioner to the telecom companies ..... X X X X Extracts X X X X X X X X Extracts X X X X
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