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TMI Blog2013 (6) TMI 81X X X X Extracts X X X X X X X X Extracts X X X X ..... consideration together and disposed of by this common order. For the purpose of convenience, the parties are referred to as they are arrayed to in Writ Appeal Nos. 3403-3439/2011 arising out of W.P. Nos. 11508/2011 and 12693-12727 of 2011. Factual Matrix 2. The assessee - M/s. Indus Towers Limited is a Company incorporated under the Companies Act, 1956, having its registered office in New Delhi and engaged in providing Passive Infrastructure and related operations and maintenance services to various telecommunication operators in India on a shared basis. The assessee is registered with the Department of Telecommunications (DoT) for providing Passive Infrastructure Services to mobile phone operators. The nature of services provided by the assessee was envisaged by Government of India initiative "MOST" (Mobile Operators Shared Towers). The DoT in a bid to create a high quality, low-cost, rapid, wide coverage mobile telecommunication network in India sought to propose, through the project "MOST", a system of sharing of passive infrastructure by the various telecom service providers. 3. The main object of sharing the infrastructure is for ensuring economy by avoiding ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ring etc., are used to ensure 24 x 7 power supply and to convert 240 Volts AC current into-48 DC current required for smooth running of BTS and other equipments. The air conditioners are used to keep the temperature below 35 degrees celsius inside the shelter room for smooth running of BTS. The assessee is also responsible for safety of the operators' equipments at its site. For all these services (site access, power supply, power conversion, air conditioning and safe keeping), the assessee receives a consolidated service revenue from its customers. 5. The right, title, possession and control in the passive infrastructure located at the telecommunication site including and not limited to the tower, shelter, diesel generator sets, batteries, air conditioners and electrical and civil works including any enhancement carried out by the assessee vest solely with the assessee. 6. The sharing operator i.e., the telecom service providers, on execution of a service contract, has the right to install equipments such as BTS equipment, associated antennae and active infra network equipments and other requisite equipments required to provide telecommunication services by them to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for the Operation and Maintenance Services in relation to each site. All the infrastructure and equipments including passive infrastructure located at the site is controlled, managed and owned by the assessee. However, the Sharing Operator will be responsible for the operation and maintenance of their equipments, for which purpose, access will be provided to the authorized employees/sub-contractors of the Sharing Operator. The assessee retains the right to provide access to the site including any infrastructure to other telecom service providers, for any purpose at, its discretion. The Sharing Operators also retain the right to seek passive infrastructure services from other Passive Infrastructure Service Providers. The assessee is responsible for obtaining the necessary clearances/permissions/approvals from local/municipal authorities/departments. For undertaking the said infrastructure sharing activity, the assessee collects service fees. The fees shall be determined in accordance with the Master Service Agreement. The charges that are determined in the said agreement are in the nature of service charges. The Sharing Operators are charged by the assessee for the Site Access ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rental basis as per the agreement entered into between the assessee and the other telecom companies. Respondent has verified the agreement entered into between the parties. On verification of the agreement they noticed that the cellular operator shall maintain on all the active infrastructure equipment identification marks to show that the equipment is the property of the cellular operator. Under the terms and conditions in the lease agreement, it is evident that the infrastructure provider has given their right to use the equipment exclusively to the telecom company. No immovable property like land or building has been transferred or the right to use any immovable property has been transferred. The right to use the said equipment has been transferred exclusively to the telecom company. Therefore, the assessee is liable to pay the tax on the transfer of right to use goods and the levy cannot be found fault with. After referring to various other clauses it is stated that, the fuel charges are paid by the cellular company and the equipments are maintained on behalf of cellular company and only the possession and effective control lies with the cellular operator. Any changes of secur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... required place. From the perusal of the photographs, it is also seen that all the cable wires are outside and not laid into the earth or not embedded to any civil structure and these cables are movable. From the above facts and narration of the transactions of the assessee and the activities carried on by the assessee, the telecom towers are movable property and the leasing of these towers by collecting rentals are deemed to be a sale exigible to tax under the provisions of the KVAT Act, 2003. 10. The learned single Judge, after clubbing all the writ petitions, which were pending before him, where identical issues were raised, passed the impugned order disposing of all the writ petitions. The reasoning of the learned single Judge in holding that the activity carried on by the assessee falls under Article 366(29-A)(d) of the Constitution is as under :- "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 func ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... addition to that, they are also challenging the order passed by the learned Single Judge who has set aside the interest and penalty levied. The Union of India has filed third batch of writ appeals where, if the order of the learned Single Judge is given effect to, they have to return the service tax collected from these assessees under the provisions of the Finance Act, 1994. Rival Contentions 12. The learned Senior Counsel Sri. Venkataraman appearing for these assessees, assailing the impugned order contended that the assessees are the owners of Passive Infrastructure. It consists of a tower on a piece of land or roof top of a building, pre-fabricated shelters, DG sets, battery bank, power plant, power interface unit, air conditioners with some electrical works accessories like antennas, duplexers, combiners, transceivers, alarm extensions buses, control system etc. The same is operated and maintained by the assessees under the agreement entered into between the assessee and the shared operators. They give restricted access of their infrastructure to the service providers on non-exclusive terms. All rights, title, interest and ownership of the passive infrastructure&n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l. Therefore, he submits that having regard to the nature and the terms of the contract, the activity carried on by the assessee, the purpose for which the shared operators have access to passive infrastructure, it is a contract of pure services and no element of sale is involved. Therefore, the learned Single Judge without proper application of mind, has erroneously held that the transaction in question falls within the mischief of Article 366(29A)(1)(d) of the Constitution of India. 14. Sri N.R. Bhaskar, learned Counsel appearing for Union of India contended, that the nature of activity carried on by the assessee and also the nature of transaction under the agreement is a case of simple service contract. The assessees have rightly registered themselves as service providers under the Finance Act, 1994 and they have been paying the service tax. There is no element of sale involved. It is a pure case of extending service and therefore, the question of imposing VAT on the same aspect would not arise. The learned Single Judge has not properly appreciated this aspect and committed an error in holding that the nature of the activity amount to deemed sale and the State Govern ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... x. It is in accordance with law and therefore no case for interference is made out. However, he contends that the learned Single Judge was not justified in issuing a direction to the State to collect the said tax from the Union of India. Similarly, the learned Single Judge was not justified in setting aside imposition of interest and penalty as no tax is paid under the Act at all. That portion of the order is illegal and requires to be set aside. He also contended, under the statute, a statutory appeal is provided to the Appellate Commissioner against the order passed by the Assessing Authority whose order can be challenged before the Karnataka Appellate Tribunal and therefore there is no justification for the assessees to bypass a statutory remedy and approach this Court under Article 226 of the Constitution of India, as the appellants have an alternative and efficacious remedy of an appeal. Hence, these writ appeals are not maintainable. Point for Consideration 16. In the light of the aforesaid facts and the rival contentions, the point that arise for our consideration in these appeals is, Whether activity carried on and the service provided by the assessees to its custom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mobile signals. This right of use is acquired legally by means of a contract called "Service Contract" read with M.S.A. Though the nomenclature of the contract is termed as "service contract", the reading of the terms of M.S.A. clearly indicates that there is a contract for "Transfer of Right to use passive infrastructure" which is "goods". 22. Neither under Article 366(29A)(d) nor under Section 2(29)(d) of KVAT Act, is there a clear prohibition for permitting multiple use of goods like mobile towers. What is important is that the legal right transferred to use the goods in favour of a person should not get affected during the period of contract by permitting another person for similar use. In case of Telecom Towers, two or more mobile operators can be permitted to use, by clearly demarcating the space in the towers without affecting each other rights. Here as per the requirement of mobile operator, a fixed space on the tower at a particular height/direction is allotted along with other infrastructure. By means of a contract, Indus (Transferer) transfers the right to use passive infrastructure in favour of (transferee) mobile operator, by which the transferee gets the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he argues that the condition of 'non-executive' clause is not met. For the same reason, the condition of prohibition of owner transferring the same right to others is also not satisfied. 27. The examination of terms and condition of the MSA relating to providing access to the passive infrastructure or execution of "service contract" reveals that to start with, sharing operator indents requirement of access to the tower through "forecast". In response to the above request, Indus gives suggestions, comments and its plans for meeting the operator's requirement either with the existing sites or a new site. Then the operator sends a "site request" for which Indus will issue "site proposal indicating its place to implement site request along with applicable charges either at an existing site or creation of new site. If the 'site proposal' is acceptable to the sharing operator, he will issue a "service Order" in the prescribed form setting out the details of site required along with the technical requirement for installation of sharing operators equipment. Then, Indus would confirm the order by issuing "Ready for Installation Notice". After receipt of the above notice; the sha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ugh the contract subject to the conditions of M.S.A. 30. On the other hand, Indus does not have the effective control over the manner, time and nature of use of a specified access to passive infrastructure allotted to a particular operator. Once contract is executed with specified access to the passive infrastructure, Indus is not free to either self use or to allot the same to any other operator. However, only on termination of the contract. Indus re-acquires the allotted access and is free to allot the same to any other operator if it is suitable for him. Though Indus can allot use of passive infrastructure to more than one operator, he is not free to change specified allotted use to a particular mobile operator. Hence, it is not true that Indus has got right to transfer the specified use of the passive infrastructure to more than one operator, though he may allow sharing of entire passive infrastructure by two or more operators at a particular site. For the same reason specified use or access granted to an operator cannot be treated as on "non-exclusive basis". Conclusions : 31. In other words clauses (d) and (e) are satisfied in the present facts and circumstances ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Taxes, Board of Revenue, Madras and Another [(1967) 20 STC 115]. it was held as under : "The question that we have to examine is whether the grant of the lease for exploiting the film by distribution for purposes of exhibition to the public amounts, in what are claimed to be special circumstances of the case by the department, to a sale of goods. Before adverting to these special circumstances relied upon by the department, we may turn to the terms of the agreement. What purports to be granted by way of lease are "the entire world negative rights" of the film and those rights are defined in the relevant clause 4(d) of the contract in this manner" "In buttressing this argument that what is really contemplated is not a lease of a right to exploit but an outright sale of the copyright in the production regarded as incorporeal movable property, reliance is placed by the department upon its assertion that what may be called the marketable value of the film becomes nil at the end of three years. In the counter-affidavit, it is said that "the value of a film is completely wiped out by exhibition in the course of ten years or so" The impugned order says that the normal life of a film i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctions in question do not connote sales at all." 35. This constitutional provision has been the subject matter of interpretation by various Courts. Firstly, Andhra Pradesh High Court in the case of Rashtriya Ispat Nigam Ltd v. Commercial Tax Officer, Company circle, Visakhapatnam [(1990) 77 STC 182] dealing with the taxable event under the provisions of the Andhra Pradesh General Sales Tax Act (6 of 1957) held as under : "The taxable event under section 5-E is the transfer of the right to use any goods. What does this phrase connote? This means that unless there is a transfer of the right to use the goods, no occasion for levying tax arises; providing a facility which involves the use of goods nor even a right to use the goods in not enough, there must be a transfer of that right. "The Transfer of a right is an event which has a double aspect. It is the acquisition of a right by the transferee, and loss of it by the transferor. The vestitive fact, if considered with reference to the transferee is a derivative title, while from the point of view of the transferor it is an alienative fact." (Salmond on Jurisprudence - Twelth Edition at pages 332 and 333.) In Corpus Ju ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e appellant here italicised. Made provisional assessment levying tax on hire charges under section 5-E of the Act. The respondent filed writ petition seeking declaration that the tax levied, exercising power under section 5-E of the Act on the hire charge collected during the period 1988-89, was illegal and unconstitutional. The appellant filed a counter-affidavit in the writ petition contending that the respondent was lending highly sophisticated and valuable imported machinery to the contractors engaged in the execution of the project work on specified hire charges; the machinery was given in the possession of the contractor and he was responsible for any loss or damage to it and in view of the terms and conditions contained in the agreement, there was transfer of property in goods for use and on the amounts collected by the respondent as charges for lending machinery attracted tax liability under section 5-E of the Act. 4. The High Court after scrutiny and close examination of the clauses contained in the agreement and looking to the agreement as a whole, in order to determine the nature of the transaction, concluded that the transactions between the respondent and c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h view is, that where the essential ingredients, which complete a sale, are found in majority would be the situs of sale. There would be no difficulty in finding out situs of sale where it has been provided by legal fiction by the appropriate Legislature. In the present case, we do not find Parliament has, by creating any fiction, fixed the location of sale in case of the transfer of right to use goods. We, therefore, have to look into the decisional law." "26. The next question that arises for consideration is, where is the taxable of the right to use any goods. Article 366 (29A)(d) empowers the State Legislature to enact law imposing sales tax on the transfer of the right to use goods. The various sub-clauses of clause (29A) of Article 366 permit the imposition of tax thus: sub-clause (a) on transfer of property in goods; sub-clause (b) on transfer of property in goods; sub-clause (c) on delivery of goods; sub-clause (d) on transfer of the right to use goods : sub-clause (e) on supply of goods : and sub-clause (f) on supply of services. The words "and such transfer, delivery or supply... "in the latter portion of clause (29A), therefore, refer to the words transfer, deliver ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or the right to use any goods. If the goods are available, the transfer of the right to use takes place when the contract in respect thereof is executed. As soon as the contract is executed, the right is vested in the lessee, Thus, the situs of taxable event of such a tax would be the transfer which legally transfers the right to use goods. In other words, if the goods are available irrespective of the fact where the goods are located and a written contract is entered into between the parties, the taxable event on such a deemed sale would be execution of the contract for the transfer of right to use goods. But in case of an oral or implied transfer of the right to use goods it may be effected by the delivery of the goods. 28. No authority of this court has been shown on behalf of respondents that there would be no completed transfer of right to use goods unless the goods are delivered. Thus, the delivery of goods cannot constitute a basis for levy of tax on the transfer of right to use any goods. We are, therefore, of the view that where the goods are in existence, the taxable event on the transfer of the right to use goods occurs when a contract is executed between the lesso ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ransfer of the right to use the goods. The contention that the area telephone exchanges and other systems would remain under the control of DoT, is irrelevant to complete such a transfer. Even otherwise, after installation of the instrument and other appliances, once DoT connects the telephone line of the assigned number of the subscriber to the area exchange, access to other telephones is established. There cannot be denial of the fact that giving such an access would complete the transfer of the right to use the goods. However, reliance is placed on the decision of the High Court of Andhra Pradesh in Rashtriya Ispat Nigam Ltd. v. CTO which was affirmed by this Court in State of A.P. v. Rashtriya Ispat Nigam Ltd. It is unnecessary to deal with these cases in any detail : suffice it to say, in that case there was a finding of fact that the transaction did not involve transfer of the right to use the machinery in favour of contractors and that determined the issue. 27. It may be mentioned that during the relevant period (1988) no service tax was enforced. It was in 1994 that service tax was levied for the first time as per Chapter V of the Finance Act 1994. Section 66 th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a Constitution Bench of this Court in 20th Century Finance Corpn. Ltd. v. State of Maharashtra. Once DoT connects the telephone line of the assigned number of the subscriber to the area exchange, access to other telephones is established. There cannot be denial of the fact that giving such an access would complete the transfer of the right to use the goods. 73. With respect, the decision in 20th Century Finance Corpn. Ltd. v. State of Maharashtra cannot be cited as authority for the proposition that delivery of possession of the goods is not a necessary concomitant for completing a transaction of scale for the purpose of Article 366 (29-A(d) of the Constitution. In that decision the Court had to determine where the taxable event for the purpose of sales tax took place in the context of sub-clause (d) of Article 366(28-A). Some States had levied tax on the transfer of the right to use goods on the location of goods at the time of their use irrespective of the place where the agreement for such transfer of right to use such goods was made. Other States levied tax upon delivery of the goods in the State pursuant to agreements of transfer while some other States levied tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t to use those goods, would not arise. 76. In State of A.P. v. Rashtriya Ispat Nigam Ltd. it was claimed by the Sales Tax Authorities that the transaction by which the owner of certain machinery had made them available to the contractors was a sale. The Court rejected the submission saying that: (SCC p. 315, para 4) "The transaction did not involve transfer of right to use the machinery in favour of contractors. ... the effective control of the machinery even while the machinery was in use of the contractor was that of the respondent Company: the contractor was not free to make use of the machinery for the works other than the project work of the respondent or...." 77. But in Aggarwal Bros. v. State of Haryana when the assessee had hired shuttering in favour of contractors to use it in the course of construction of buildings it was found that possession of the shuttering materials was transferred by the assessee to the customers for their use and therefore, there was a deemed sale within the meaning of sub-clause (d) of clause (29-A) of Article 366. What is noteworthy is that in both the cases there were goods in existence which were delivered to the contractors for th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed in 1999 (9) SCC 182, has held as under :- In the aforesaid case, "the assessee's were hire shuttering to builders and contractors who use it in the course of construction of buildings. It is on the hire charges, sales tax was levied. Challenging the said imposition of tax, writ petition was filed before the Punjab and Haryana High Court. The argument was that the said imposition was unconstitutional. The High Court found as a matter of fact, the possession of the shuttering material was transferred by the assessee to their customers for use during the construction of buildings. The customers were in effective control of the shuttering during the periods it remained in their possession. Therefore, it held, the transactions fell within the amended definition of the word 'sale' as there was a transfer of the right to use the shuttering. Challenging the said finding before the Apex Court, it was contended having regard to the Entry 54 of Part II of Schedule VII, the transfer contemplated by Sub-clause (d) of clause (29-A) of Article 366 is a legal transfer of the right in the goods. It has to be a transfer of goods. It has to be permanent. It has to be something like a lease. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essary. In terms of Clause 18 of the purported deed of licence, the licensee was required to execute a performance guarantee in favour of the owner to ensure performance on its part and the Company was required to assure the appellant that it would not in any manner put any hindrance to the running of the mill during the period of the licence and the Company would also ensure that none of its creditors as on date including its bankers, take any steps to hinder the working of the mill." In the background of these facts, the Apex Court held as under :- "A transfer of the right to use any goods for any purpose either for cash or deferred payment or other valuable consideration, would come within the purview of definition of sale. By reason of Clause 29-A of Article 366, the ratio in Gannon Dunkerley & Co. has been overcome, as title to the goods, although, may remain with the transferee, a transfer of right to use the goods would also be a sale. Even a lease of goods would be a sale. Thus, by reason of the said definition, though an essential ingredient of a sale as defined in the Sale of Goods Act, 1930, may be absent, the transaction may amount to a sale for the purpose of levy of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s Act 1930. It has to be governed by its enlarged definition under Clause (29-A) to Article 366 of the Constitution of India. Once an essential component of sale takes place, Sales tax would, indisputably, be payable. By reason of such an arrangement by the parties, the State is not creating a new taxable event nor imposing a new tax which was unknown in law." In the case of State of Orissa and Another v. Asiatic Gases Ltd., reported in (2007) 5 SCC 766, wherein the Apex Court held at para 6 as under :- "6. Secondly, it is not in dispute that under the contract in the present case it was open to the customer to buy the gas cylinder or to borrow it on loan from the assessee. For the first 14 days the loan was free from payment of any charges. However, thereafter a fixed amount was levied by the assessee as a charge for overretention. According to the impugned Judgment the said charge for overretention was in the nature of penalty imposed on the customer in order to dissuade the customer from retaining the cylinders. The assessee required empty cylinders to be returned so that the said cylinders could be refilled and sold/transferred by way of loan. In our view when the said g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s made by the hirer is made up of : (a) consideration for hire (b) payment on account of purchase. 51. Thus, reliance placed by the appellant(s) on the expression "splitting up" in K.L. Johar case is misconceived because the "splitting up" referred to in K.L. Johar case was, as stated above, in regard to valuation and not in regard to legislative competence. 54. There are different types of financial leases, namely, a tax-based financial lease, a leverage lease and an operating lease. In the present case, there is no adjudication of the matter. The appellant(s) approached the High Court directly without proper adjudication by the competent authority under the Finance Act, 1994. Even in the matter of allocation between the principal and finance/interest charges, adjudication under the Act was warranted which has not been done. One must also bear in mind that Article 366(29-A) is essentially sales tax specific. It was brought in to expand the tax base which stood narrowed down because of certain Judgments of this Court. That is the reason for bringing in the concept of "deemed sale" under which tax could be imposed o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of execution of any agreement to transfer the right to use the goods, that the goods are available and deliverable. If the goods, or what is claimed to be goods by the respondents are not deliverable at all by the service providers to the subscribers, the question of the right to use those goods would not arise. Providing access or telephone connection does not put the subscriber in possession of the electromagnetic waves any more than a toll collector puts a road or bridge into the possession of the toll payer by lifting a toll gate. Of course the toll payer will use the road or bridge in one sense. But the distinction from a sale of goods is that the user would be in possession of the things or goods delivered. The delivery may not be simultaneous with the transfer of the right to use. But the goods must be in existence and deliverable when the right is sought to be transferred. Whether goods are incorporeal or corporeal, tangible or intangible, they must be deliverable. 43. In the case of lease, there is a transfer of interest. Though no absolute interest is transferred, partial interest in the property is transferred and therefore by virtue of the contract, the transfere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s (2.1) Provision of Passive Infrastructure 2.1.1 Indus shall provide Site Access Availability to the Sharing Operator in accordance with the terms and conditions of this Agreement. 2.1.2 Throughout the Term of this Agreement, the Sharing Operator shall be entitled to provide notice to Indus of those Sites in relation to which it wishes to be granted Site Access Availability (a "Service Order"). The process for issuing a Service Order shall be as specified in Schedule 1 (Site Access Availability). 2.1.3 Indus shall ensure that each Site is capable of accommodating Sharing Operator Equipment in accordance with the standard configuration set out in paragraph 1 of Schedule 1 (Site Access Availability). Any additional requirements shall be specified by the Sharing Operator in the Service Order. 2.1.4 In the event that the Service Orders received by Indus in respect of any Site(s) mean that the available Passive Infrastructure at such Site(s) are over subscribed, an applicant whose Service Order was received by Indus prior to another Service Order shall be given priority by Indus while allocating such Passive Infrastructure to the relevant applicants. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the relevant Service Contract, for the purpose of carrying out such operation and maintenance activities and Indus shall provide to the Sharing Operator the necessary means of access for the purpose of ingress and egress from each Site. Provided, however, that only authorised employees of the Sharing Operator or its properly authorised sub-contractors shall be allowed such access to the Sites. 3.2 Standard of Operation and Maintenance Services : 3.2.1 Indus shall ensure that the Operation and Maintenance Services are provided : (i) In accordance with Good Industry Practice : (ii) In compliance with all Laws : and (iii) By an adequate number of suitable qualified, skilled and experienced Personnel. 3.2.2 Indus shall ensure that the Operation and Maintenance Services meet or exceed the Operation and Maintenance Service Levels specified in Schedule 2 (Operation and Maintenance Services). 3.2.3 Indus shall ensure that it puts in place processes and procedures to monitor its performance against the Operation and Maintenance Service Levels and shall report such inform ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e (3) (Charges) shall be revised on an annual basis, commencing on the first anniversary of the Effective Date. Provided, however, that such annual revision of the Charges shall not affect any other provision of a Service Contract existing at the time of such annual revision. 6.2 Payment Terms 6.2.1 Subject to clause 6.4, all invoices submitted by Indus in accordance with the Schedule 3(charges) shall be paid by the Sharing Operator within 15 days of receipt. 6.2.2 All Charges, Taxes, costs and expenses due under this Agreement must be invoiced by Indus as part of the Charges within six (6) months of the date Indus is first entitled to invoice such sums. 6.3 Late Payment If either Party has not paid any invoices by their due date, all such unpaid sums will accrue interest at a rate equal to the then prevailing State Bank of India Prime Lending Rate. If the Sharing Operator fails to pay any amount in an invoice, other than Disputed Amounts (as defined below) for a period of 90 days subsequent to receipt of the invoice from Indus, the Operation and Maintenance Servi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sp; Indus shall have the exclusive right to lease, licence or grant space on each Site or Passive Infrastructure on a Site to any third party for the purpose of placing hoardings, banners and other advertisements. Indus shall be solely responsible for complying with all Laws in relation to such lease, licence or grant 10.2 Impact on the Sharing Operator Indus shall use its best endeavours to ensure that the lease or licence of space on a Site or Passive Infrastructure on a Site for advertising does not adversely affect the connectivity, network or Active Infrastructure of the Sharing Operator. Indus shall promptly remove or relocate any advertisement from a Site or Passive Infrastructure on a Site if such advertisement causes a material adverse effect to the connectivity, network or Active Infrastructure of the Sharing Operator. 48. The 2nd agreement is entered between Essar Telecom Infrastructure Private Limited and Vodafone Essar Limited and Vodafone Essar Mobile Services Limited and others, which is styled as Master Services Agreement on 23rd November 2007. The relevant claus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sp; - 24/48 Volt DC Power supply. - Surge and lighting protection at the input of AC power supply, xxxxx xxxxx 5.16 Infrastructure Provider shall ensure proper access to Shelter/Room and Tower in terms of lighting, access ladders, 24 x 7. The third agreement is entered into between Bharat Sanchar Nigam Limted and Wireless TT Info Services Ltd., which is styled as Infrastructure Sharing Agreement, which is dated 6th of October 2008. The relevant clauses in this agreement are as follows : Scope of Services 1.0 Introduction This document contains the technical requirements between the Infrastructure Provider & the BSNL. 2.0 Assumptions 2.1 The Infrastructure provider has the capability to acquire, build, operate and maintain telecom infrastructure. 2.2 This document lays down the generic requirements of BSNL. which is a broad scope of activity. All activities/sub- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2.9 The Infrastructure Provider shall ensure good housekeeping of site and BSNL or its authorized representative shall have 24 hours 365 days access to the site. 2.10 The Infrastructure Provider shall have necessary skilled manpower at the cluster level to administer the operation and maintenance. The organization chart detailing the fault monitoring arrangement clearly showing own employees and outsourced resources shall be made available to BSNL. 2.11 The Infrastructure Provider will construct/provide the tower for enabling BSNL to install Cellular and Microwave antenna of required size and quantity. The towers shall be provided with suitable cable- ladders for facilitating BSNL to install and fix up RF cables along towers up to shelter. The site provisioning fee should include hoisting of a microwave antenna of dismeter up to 1.2 meter and 3 nos. of GSM antennae on the tower. For additional 3 numbers of GSM antennae and Microwave antennae each of 0.6 meter diameter and 1.2 meter diameter rates may be quoted separately. 2.12 The Infrastructure Provider will maintain fuel levels in DG sets and maintain DG in working c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sp; IP shall be provide AC-Mains/DG Supply as per SLA. Ø The infrastructure Provider shall provide 2 nos. 50 Amps DC MCB for connecting the BTS along with the Power Plant. Ø Up to 4 nos. 16Amps MCBs for Radio equipments Ø AC power from SEB grid, with suitable connected load atACDB. Ø Power back up from a Diesel Generator of suitable capacity. Ø Neutral to Earth voltage should be less than 2 volts Ø Class B & C surge Protection should be provided in the Power lines in parallel for non-lightening prone areas. However in lightening prone areas, surge filter should be provided in power line before entering into shelter. 8.0 Air conditioning (in case of indoor BTS) ❖ Room Temperature 25+/-2 deg C ❖ Sensible cooling capacity of A/C Above 90% ❖ Relative Humidity 40 to 85% ❖ Redund ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... htning protection based on advanced technologies need to be provided. The tower legs should be earthed with an earth ring. 11.0 Fire Alarm System The Fire Alarm system should have following features : Ø A digital temperature sensor with settable high temperature alarm independent of air conditioner alarms shall be provided. Ø Potential free contacts of the below mentioned alarms shall be wired to the alarm termination box through shields/armoured cable. Infrastructure Provider for their fault management centre may use same alarms. Ø Input power fail Ø Fire Ø System fault Ø High room temperature 12.0 Tower The tower shall be for specified wind zone and antenna loading : tower designs should be independently checked and certified by institutes like SERC. ❖ Tower material sourcing, fabrication, and erection shall be done as per relevant IS codes and standard detailing practices. ❖ &nbs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ufacturer's support for passive Telecom infrastructure maintenance, through Annual Maintenance Contracts. ❖ Infrastructure provider will provide for extension of all the infrastructure alarms on a alarm panel enabling customer to extend these alarms to their system. 14.0 Electricity Board supply (EB supply) Infrastructure provider shall be responsible for providing the electricity board connection of the required rating at the site. However, if the site is ready in all respects including DG set and if the EB connection is not available then BSNL at its own discretion can start its operations on the site. Till such time EB connection is not available, site shall run on DG. And the expenses for the DG shall be born by the BSNL as detailed in Schedule 3 15.0 Ready for Installation (RFI) While the infrastructure provider declares the site Ready for Installation (RFI), BSNL should be able to move in their Communication equipment for Installation. While RFI is communicate to BSNL, following aspects are assumed to be completed. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e clearances etc. and all related payments. 17.3 Infrastructure provider shall be responsible for complaince of all labour enactments, such as provident fund, minimum wages act, workmen compensation act, contract labor act, gratuity and ESI rules of workmen and their payment to workers and respective government agencies. 18.0 Documentation Infrastructure Provider shall submit one set of following documents to Customer along with site RFI declaration/hand over : ❖ Site access plan, showing and route map and visible identification marks and contact details for reaching the site. ❖ Location of Tower, Shelter and DG in a layout plan, with as built measurements. ❖ Location of Earth pits & Earthing conductor layout plan. ❖ Layout of Shelter/room with identification for Customer MCB, space for BTS marked, IEDB & EEDB holes for Customer marked. ❖ Cable tray layout O/D and I/D and area marked for Customer cables. ❖ List of equipment, capacity, ser ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny defect/failure of passive infrastructure at any of the sites, BSNL shall report the same to the nominated representative of Infrastructure provider through SMS, followed by an email It is agreed between the parties that Infrastructure Provider shall attend all critical alarms which can lead to outage, within a maximum time 2.5 hrs plus traveling time of maximum 2 hrs for remote sites between 6 AM and 10 PM and within 3.5 hrs plus traveling time of maximum 2 hrs for remote sites between 10 PM and 6 AM, from the time of receipt of intimation of such defect by the Infrastructure provider's nominated representative. In case there are more than one alarm at any site(s) falling under same technician, then the priorities to attend the same shall be decided by the BSNL, whose decision will be final and binding in this respect. 12. The outage shall be calculated from the time the alarm is generated up to the time when DC power is restored by the Infrastructure Provider. 13. Infrastructure Provider to ensure availability of AC main connection at the Site. In case of mains failure, Infrastructure Provider shall ensure DG power within 2 hour ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nance of PIU/DG/AC/Shelter by the Infrastructure Provider shall be conducted by taking the concurrence from the officer of at least J AG level of BSNL. 5. In case of failure in the site, the Infrastructure Provider shall intimate the nominated person of BSNL thru SMS. In case failure extends beyond 30 minutes, the failure is escalated to the CTO of the Infrastructure Provider & BSNL. Once the failure is resolved, intimation to be conveyed thru SMS by the Infrastructure Provider to BSNL. For critical failures, Root Cause Analysis to be conducted and shared by Infrastructure Provider. 6. Placement of GSM/MW Antenna shall be mutually on agreed heights between Infrastructure Provider & BSNL. 7. Infrastructure Provider shall ensure that the Passive Telecommunication installation shall not become a safety hazard and shall not be in contravention of any statute, rule, or regulation and public policy." 49. The contract entered into between the parties is styled as 'Master Services Agreement. "Under the agreement, the assessee is willing to offer its passive infrastructure an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ervice contract read with MSA. 51. What the assessee provides in the passive infrastructure to the mobile operator is the power connection to the mobile operator. The power rating of the Sharing Operator's equipment of a Site will be determined on the basis of measurement of the actual consumption by the installed equipment on a full load basis. This measurement will be conducted whenever new equipment is installed by the Sharing Operator on the Site. A detailed measurement process shall be agreed between the parties. The power connection at a Site shall be provided in accordance with the following : (a) DC power at 48 volts, or AC power at 200 volts, as required. For the avoidance of doubt, the Sharing Operator shall be responsible for conversion of equipment to 48 volts, if necessary; (b) Two (2) 50 Amp DC MCBs for connecting BTS; and (c) Up to two (2) 16 Amp MCBs for Radio equipment. 52. Space for a maximum of 4 single radios in the case of GBT and 3 single radios for RTT in a 19-inch rack shall be provided by Indus to the Sharing Operator to support the above standard configuration on a shared basis at e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e by providing access to the mobile operator, the assessee has no corresponding responsibility of maintaining the active infrastructure of the mobile operator. It is categorically stated that the Sharing Operator shall be responsible for the operation and maintenance of all Sharing Operator equipment. In order to enable the Sharing Operator to maintain his equipment, the Sharing Operator will be provided access to the Sites in accordance with paragraph 2.9 of Schedule 2. It is further made clear that the assessee shall provide to the Sharing Operator, the necessary means of access for the purpose of ingress and egress from each site. Clause 10 of the agreement reserves in the assessee the right to advertise on passive infrastructure. Further it makes it clear that the assessee shall have the exclusive right to lease, licence or grant space on each Site or passive infrastructure on Site to any third party for the purpose of placing hoardings, banners and other advertisements. The assessee shall be solely responsible for complying with all law in relation to such lease, licence or grant. However, the assessee shall use its best endeavours to ensure that the le ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cable; provision of fuel and filling the same in DG set at the Site as required, maintenance of DG set, security services, provision and maintenance of air conditioning as set out below, i.e., (a) Room temperature to be maintained at 35 +/- 5 degrees Centigrade measured on top of the BTS; and (b) Relative humidity at the Site should be between 40% and 85%. (c) In so far as maintenance of fire-alarm system is concerned, in case of an outdoor BTS, a covered plinth of suitable dimensions; provision of a cable tray inside the shelter; provision of space around the BTS for maintenance; and antistatic flooring and proper earthing; provision and maintenance of fire-alarm system are all to be made available by the assessee. (d) The assessee is also liable to provide lightning protection as set out in the schedule. 57. This is the facility which the assessee provides to a mobile operator. In fact the passive infrastructure consists of the following :- (1) Towers (including antennae mounting, roof top poles, other accessories pole mounts for earthling ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... change are in the physical control and possession of the assessee/service provider at all times and there is neither any physical transfer of such goods nor any transfer of right to use such equipment or apparatus. 59. The assessing authority seems to be under the impression that under the terms of the contract there is a transfer of right to use the aforesaid equipments which constitute the passive infrastructure. The sharing operator has no use for any of those equipments individually. That is the network which the assessee utilises in setting up a passive infrastructure. What the mobile operator wants from the assessee is permission to install their antennae in the tower erected by the assessee, uninterrupted supply of electrical energy at a particular temperature, permission to keep the active infrastructure in the pre-fabricated shelter, right of ingress and egress to operate his equipments so that he can utilize his active infrastructure for rendering service to his customers. In other words, he wants the permission of the assessee to keep the active infrastructure in the Site and permission to have access to the passive infrastructure in particular to the electricity g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under :- 52. "Licence defined". - When one person grants to another or to a definite number of others persons, a right to do or continue to do, in or upon the immovable property of the grantor, something which would, in the absence of such right, be unlawful, and such right does not amount to an easement or an interest in the property, the right is called a licence. 61. A licence is a grant of authority to do a particular thing. It enables a person to do lawfully what he could not otherwise lawfully do. It transfers an interest to a limited extent. A licence does not, in law, confer a right. It only prevents that act from being unlawful which, but for the licence, would be unlawful. A licence gives no more than the right to do the thing actually licensed to be done. Licences may be exclusive, or non-exclusive. A non-exclusive licence is the grant of authority to do a particular thing with no right of exclusion whatsoever. It never conveys, by itself, an interest in property. It merely enables a person to do that which he could not otherwise do, except unlawfully. 62. An exclusive licence is a leave to do a thing, and a contract not to give leave to anybody else to do t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts of the mobile operator in the pre-fabricated shelter with permission to have ingress and egress only to the authorised representatives of the mobile operator. It is because an owner of a property has a bundle of rights, namely right to possess, right to use and enjoy, right to usufruct, right to consume, to destroy, to alienate or transfer, etc.. Therefore, to constitute a deemed sale under Article 366(29A)(d) having regard to the object with the 46th Constitutional Amendment was inserted, it is clear the right that is transferred under a contract should be a bundle of rights minus right to title. It is because of the earlier Constitution Bench judgment of the Apex Court where the right to use the property was transferred by the person who retained the title as only a nominal owner with the benefit of the goods has been passed on to the transferee, without paying taxes to the exchequer, that the Constitution was amended to bring within its fold such transactions which are styled as deemed sales. Therefore, in deciding whether a transaction falls within Article 366(29A)(d) so as to constitute a deemed sale, the purpose of the 46th Amendment, the mischief sought to be remedied and ..... X X X X Extracts X X X X X X X X Extracts X X X X
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