9911796707
TMI Blog2000 (11) TMI 1190X X X X Extracts X X X X X X X X Extracts X X X X ..... n relation to the assessment year 1983-84 was dismissed on November 14, 1985 on the ground of availability of alternative remedy. The S.L.P. filed by the petitioners was allowed by the Supreme Court on August 25, 1998 in the following terms: "Having heard learned counsel for the parties at length, we are of the view that these are the matters which should not have been dismissed by the respective High Courts in suggesting an alternative remedy. The question raised was pristinely legal which requires determination as to whether provision of telephone connections and instruments amounted to sale and even so why was the Union of India not exempt from payment of sales tax under the respective statutes. The respondents counter such stance. We think the question raised was fundamental in character and need not have been put through the mill of statutory appeals in the hierarchy. For this reason alone, we set aside the respective impugned orders of the High Courts and remit the writ petitions back to them for decision in accordance with law. The recovery of tax would stand stayed till the disposal of the writ petitions. Ordered accordingly. No costs." 4.. In view of the order passed b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... truments which enable the subscriber to receive calls and to make calls cannot be looked at in isolation of the fixed telephone lines and the exchange to which the instrument is permanently connected. Under the 1951 Rules, a subscriber is not allowed to shift the telephone from where it is originally fixed without prior approval/permission of the department. It is the total system which enables the subscriber to avail of the telecommunication facility and the entire telecommunication system with the exchange cannot be described as goods since the items constituting the system are not chattels. According to the petitioners, the orders of assessment passed by respondent No. 2 and the demand notices issued by him are without jurisdiction being ultra vires to the provisions of the 1973 Act. 7.. In their written statements the respondents have averred that the petitioners are carrying on business of sale and supply of goods within the meaning of the terms as defined in the Constitution of India and in the 1973 Act. According to them, the telecommunication service is not a sovereign function of the State but is a purely commercial activity because the right to use the tele-equipment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt and, therefore, it falls within the meaning and expression "sale of goods". He contended that once it is established that the petitioner is a dealer and has given the exclusive right to use the instrument and the communication system, and that providing of the instrument is a commercial activity, then the over all turnover comes under the definition of "sale " and the assessment is to be made under the 1973 Act on the value of the work and that Union of India and its departments are liable to pay the sales tax. 10.. We have given serious thought to the respective submissions. For the purpose of deciding the issues raised by the petitioners, it would be useful to notice the relevant provision of the 1973 Act. The same are as under: 1973 Act: "2(c) 'dealer' means any person including a department of Government who carries on, whether regularly or otherwise, trade, whether with or without a profit-motive, directly or otherwise, whether for cash, deferred payment, commission, remuneration or other valuable consideration, of purchasing, selling, supplying or distributing any goods in the State, or importing into, or exporting out of the State, any goods, irrespective of the f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 414.. Applications for connections.-(1) Applications for the provision of telephone and other similar service or for alteration to any existing service shall be made in writing and in such form and manner as may from time to time be prescribed by the Telegraph authority. 434.. Schedule of fee and charges.-The charges for various services under these rules shall be as under specified: SECTION I FEES. I. Installation fees: (a) for each telephone connection (excluding casual connection from a departmental exchange), internal or external extension, private exchange connection, private branch exchange connection, junction lines to private branch exchanges and for each end of a private wire or non-exchange lines: Rs. (i) in an exchange system of less than 500 lines 300 (ii) in an exchange, system of 500 lines and above 800 (b) for a casual connection from a departmental exchange 150 (c) for loudspeaking telephones 100 (d) for the following additional facilities: (i) extra bell 150 (ii) extension bell with switch 200 (iii) (1) for a plug and socket arrangement comprising one plug for terminating the telephone instruments and two sockets. 300 (2) for each add ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ernment of India was destroying the subject which it was taxing. The subject was torn out of context. It is a cardinal principle that tax is an incidence and may be extracted but not destroy the subject. The State of U.P. is not a superior sovereign power more so in the context of the Constitution of India where the delicate balance has clearly been separated on who may tax whom and with what immunity, including exemptions. The Supreme Court, in re: New Delhi Municipal Committee AIR 1997 SC 2847, in no uncertain terms, has held that the Union of India enjoys immunity from State taxation. The States of the Union are protected by exemptions referred to in article 289 of the Constitution of India." 13.. We respectfully agree with the views expressed by the Andhra Pradesh and Allahabad High Courts and add that what the petitioners are charging is the rent for connecting instrument placed in the premises of the subscriber with the telephone exchange by way of telegraphic lines. Till the instrument is connected with the telegraph lines to the telephone exchange, the instrument placed in the premises of the subscriber is useless. Through the telegraph lines, the apparatus receives the t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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