9911796707
TMI BlogLevy of Tax on the transaction of artificially created light energy consequent upon the provision of Broadband connections to subscribersX X X X Extracts X X X X X X X X Extracts X X X X ..... T Act, 2004 , seeking clarification/ruling u/s 85 of the DVAT Act, 2004 on the following two points:- a. Whether sale of artificially created light energy in connection with the provision of broadband connectivity to subscribers for a fixed sum is liable to levy of VAT under the DVAT Act, 2004 ? b. If yes, then under which entry does the item figure and as to what is the rate of tax in respect of the transaction of sale of artificially created light energy involved in the provision of broadband connection to subscribers? The said application has been filed for the purpose of notifying the exact legal position in respect of tax ability on the sale of artificially created light energy consequent upon the provision of Broadband c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... collected from them an ascertained sum of money towards it. This activity of the appellant-company involved transfer of property in goods, viz., the artificially created light energy" (other than by way of mortgage, hypothecation, charge or pledge) by the appellant-company to its subscribers in the course of business for ascertained sum of money (consideration) payable to it by its subscribers and the giving of the right by the appellant company to its subscribers to use the optic fibre cable network and also to use and consume artificially created light energy. Thus, though this activity of the appellant-company had been held as "service" under the provisions of the Finance Act, 1994 , it fully answered the definition of "sale" as given ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to sales tax under the provisions of the KVAT Act on its activity of providing broadband connectivity to subscribers although, it had been assessed to service tax under the provisions of the Finance Act, 1994 ." The Hon'ble Karnataka High Court has thus held that "light energy" generated by the broadband providers is goods and the transaction of providing broadband connections by a telecom company and receipt of payment thereof is liable to levy of VAT, under the Karnataka Value Added Tax Act, 2003. While arriving at the above said conclusions, the Hon'ble Court had examined as to whether creation supply, possession, use, transmission and delivery of artificially created light energy was goods in the light of the provision of Article 36 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 2(29) of the KVAT Act, 2003, reads as under:- "Sale" with all its grammatical variation and cognate expressions means every transfer of the property in good (other than by way of a mortgage, hypothecation, charge or pledge by one person to another in the course of trade or business for cash or for deferred payment or other valuable consideration and includes, - (a) ………………………………… (b) ………………………………… (c) ………………………………… (d) a 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. 5. It is also worthwhile to refer to the definition of the term "goods" as defined in section 2(1)(m) of the DVAT Act , which reads as under:- (m) " ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er / modalities of sale of artificially created light energy in connection with the provision of broadband connectivity to subscribers for fixed sum is similar to the products mentioned in the said entry, hence, is covered by the aforesaid entry. It is also relevant to refer to the judgment of the Hon'ble Supreme Court in the case of Tata Consultancy Services Vs. State of Andhra Pradesh wherein, it was, interalia, held that:- "A "goods" may be tangible property or an intangible one. It would become goods provided it has the attributes thereof having regard to (a) its utility; (b) capable of being bought and sold and (c) capable of being transmitted, transferred, delivered, stored and possessed. If a software whether customized or non-cu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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