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TMI Blog2020 (6) TMI 84X X X X Extracts X X X X X X X X Extracts X X X X ..... emperature (i.e) below 35 degree Celsius as to protect the equipments - Apart from that the petitioner has also offered Uninterrupted Power Supply (UPS) for converting electricity AC current from 220, Volts AC current into (-) 48 DC which is essentially required to run the mobile operators transmission equipments without disruption. This activity is performed by Power Management System of the petitioner. Reliance can be placed in the case of M/S. ASCEND TELECOM INFRASTRUCTURE PVT. LTD., (FORMERLY KNOWN AS M/S. ASTER INFRASTRUCTURE PRIVATE LIMITED) VERSUS THE ASSISTANT COMMISSIONER (CT) , COMMISSIONER OF COMMERCIAL TAXES, THE GOVERNMENT OF TAMIL NADU, SERVICE TAX GROUP I, UNION OF INDIA [ 2020 (6) TMI 57 - MADRAS HIGH COURT ] where it was held that The business model is not based on exclusivity. It is on a shared usage basis of the facility viz., passive infrastructure consisting of temporary shelter, Mast, AC, Genset etc. Therefore, there is no deemed sale within the meaning of Article 366(29-A)(d) of the Constitution of India and Secion 2(33)(iv) of the Act so as to attract a charge under Section 4 of the TNVAT Act, 2006. - the reasoning given in the case is fairly applicab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the petitioner. 6. Thereafter, the petitioner was issued with two notices dated 29.11.2011. It was proposed to determine the taxable turnover and demand tax at 12.5%. Details of the notices issued are as under:- Serial No Assessment Year Notice dated Taxable Turnover Proposed 1 2008-09 29.11.2011 1,315,76,63,346.00 2 2009-10 29.11.2011 5,623,32,88,000.00 7. In the above notices, it was stated that the petitioner had affected transfer of right to use of the space to the mobile service providers as these companies were having access of the equipment, infrastructure and space for their use. According to the 4th respondent, there was transfer of right to use by the petitioner to their clients. 8. The petitioner replied to the respective notices. Meanwhile, the petitioner also filed an application under Section 48-A of the TNVAT Act, 2006 before the State Level Authority For Clarification And Advance Rulings disclosing the nature of business carried out by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ture facilities, the towers are shifted to some other place. Hence, it is evident that both the types of towers with infrastructures are Movable in nature. To the query with regard to functions of dealer's equipments and mobile operator equipments comprised in the shelter with reference to Power Management System (PMS), the dealer explained that it is a microcontroller that governs power functions to ensure that telecom net work is up and running. PMS is responsible for coordinating many functions as mentioned below. a) To convert 220 Volts AC current into -48 DC current (which is required for running mobile operators transmission equipment) b) To inter connect various equipment (like BTS, batteries, DG sets) with power supply; c) Monitoring power connections and battery charging d) Charging batteries when necessary e) Trigger start and switch off of DG and control AC running as per needs. From the above it is evident that, the dealer has not only offered facility to mount the mobile operator's RF antenna at a particular height and direction on the top of the tower and offered required level of temperature (i.e) below 35 degree Celsius as to pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... out the sales tax/VAT chargeable which is extracted below. Clause: 7.1.3 If any VAT /sales tax and and/or services tax is chargeable in respect of the Charges payable by the Sharing Operator hereunder, Indus shall provide the Sharing Operator with a valid invoice that complies with all requirement imposed by the relevant taxation authorities and which specifically states the amount of tax chargeable and meets all further conditions necessary to allow the Sharing Operator to obtain relief from such tax if a relief procedure is available. The Sharing Operator shall, upon receipt of such valid invoice, pay to Indus the applicable VAT/sales tax and/or services tax at the rate for the time being and from time to time properly chargeable, in respect of the relevant supply of goods or services by Indus . Clause:7.1.4 For the avoidance of doubt except as provided in Clause 7.1.2 above, any liability for Taxes in relation to any agreement Between Indus and any third party pursuant to Clause 4.1.2 or otherwise shall not be borne by the Sharing Operator . Further as per Schedule 15 of the audited balance sheet for the year 2008-2009 provide the Lease rental re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dealer that they are providing only service and the receipts represent service charges is not acceptable. Therefore, the turnover of ₹ 637,01,41,587.00 is assessed at 12.5% under section 4 of the TNVAT Act, 2006. In fine, the dealers are reassessed under section 27 of the TNVAT Act, 2006 on the following turnover in addition to the turnover already assessed based on the returns for the year 2009-2010 as detailed below:- Details Turnover Tax due 1.Turnover and Tax originally reported Rs. Nil Rs. Nil 2. Levy of tax on lease rental receipts at 12.5% ₹ 637,01,41,587.00 ₹ 79,62,67,698.00 Total and Taxable redetermined ₹ 637,01,41,587.00 ₹ 79,62,67,698.00 Note:- Last paragraph is vary in both impugned orders based on the respective Assessment Years. * For the Assessment Year 2008-09. ** For the Assessment Year 2009-10. 12. Pursuant to the adjudication, in the impugned orders, following tax were demanded by the 4th respo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... v. Idea Mobile Communication Limited Vs. Commissioner of Central Excise and Customs, Cochin , (2011) 12 SCC 608. vi. Vodafone Mobile Services Limited Vs. Commissioner of Service Tax, Delhi , 2018 SCC OnLine Del 12302. vii. Commissioner of Central Excise, Ahmedabad Vs. Solid and Correct Engineering Works and Others , (2010) 5 SCC 122. viii. Sirpur Paper Mills Limited Vs. Collector of Central Excise, Hyderabad , (1998) 1 SCC 400. ix. Federation of Hotel and Restaurant Association of India, Etc Vs. Union of India and Others , (1989) 3 SCC 634. x. Commissioner of Income Tax Vs. Arvind Investments Ltd., 1990 SCC OnLine Cal 376. xi. Bhagirath Ram Chand Vs. State of Punjab and Others , AIR 1954 PH 167. xii. Union of India and Others Vs. Bombay Tyre International Ltd. and Others , (1984) 1 SCC 467. 18. I have considered the arguments advanced by the learned counsel for the petitioner and the respondents. 19. Facts are not in dispute. The petitioner is a provider of Passive Infrastructure Service for the Mobile Telecommunication Operators (MTO). The petitioner acquired such facilities from existing Mobile Telecommunication Operators (MTO ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The petitioner no doubt provides passive infrastructure service to be Mobile Telecommunication Operators (MTO.). Under the business model, the petitioner has the real estate namely the lease of land on which it has erected a temporary shelter which is equipped with Air Conditioners and is connected with power supply generators and antenna. In the temporary shelter, the Base Transceivers of Mobile Telecommunication Operators are placed. Next to be temporary shelter the transmission tower/mast is erected. The power generator, which is part of the power management system of the petitioner, is also in the same vicinity to ensure continuous supply of power to BTS etc. Inside the temporary shelter optimal temperature is maintained with the air-conditioners. 35. The shelter can accommodate Base Transceivers (BTS) and exercise of 2 or more Mobile Telecommunication Operators (MTO s). The Base Transceivers are connected to the antenna with the feeder cables which run on the mast/transmission towers of the petitioner. 36. The nature of activity undertaken by the petitioner clearly indicates that no doubt there is a provision of service as there is renting of space within the tempo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion of India, inasmuch as, there was delivery of possession of the goods by transfer (Department of Space) to the transferee (customer) and in law, the transferee had effective control over the goods, i.e., space segment capacity in the transponder of satellite, though its technical operation was handled by the Department of Space. 42. In BSNL Vs. Union of India, (2006) 3 SCC 1, the Hon ble Supreme Court observed that Gannon Dunkerley [ State of Madras Vs. Gannon Dunkerley Co. (Madras) Ltd., (1958) 9 STC 353 : AIR 1958 SC 560 : 1959 SCR 379] survived the Fortysixth Constitutional Amendment in two respects. First with regard to the definition of sale for the purposes of the Constitution in general and for the purposes of Entry 54 of List II in particular except to the extent that the clauses in Article 366(29-A) operate. 43. It further observed that By introducing separate categories of deemed sales , the meaning of the word goods was not altered. Thus, the definitions of the composite elements of a sale such as intention of the parties, goods, delivery, etc. would continue to be defined according to known legal connotations. It further observed that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing, with the payment of fees, consideration does pass from the patient or client to the doctor or lawyer for the documents in both cases. 48. While answering the above illustration, in para 45, the Court observed as under:- 45.The reason why these services do not involve a sale for the purposes of Entry 54 of List II is, as we see it, for reasons ultimately attributable to the principles enunciated in Gannon Dunkerley case [State of Madras v. Gannon Dunkerley Co. (Madras) Ltd., (1958) 9 STC 353 : AIR 1958 SC 560 : 1959 SCR 379] , namely, if there is an instrument of contract which may be composite in form in any case other than the exceptions in Article 366(29-A), unless the transaction in truth represents two distinct and separate contracts and is discernible as such, then the State would not have the power to separate the agreement to sell from the agreement to render service, and impose tax on the sale. The test therefore for composite contracts other than those mentioned in Article 366(29-A) continues to be: Did the parties have in mind or intend separate rights arising out of the sale of goods? If there was no such intention there is no sale even if the cont ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the hirer (transferee) on the cab whereas in the latter case it is lacking We may have many examples to indicate this difference. 51. In Aggarwal Bros. Vs. State of Haryana , (1999) 9 SCC 182, the Hon ble Supreme Court has held that 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 subclause (d) of clause (29-A) of Article 366. 52. The Hon ble Supreme Court in BSNL case supra ultimately while dealing with the issue as to whether electromagnetic waves are not goods or not within the meaning of Article 366(12) of the Constitution of India and whether the telephone instrument given by BSNL to its subscribers amounts to transfer of right to use or not concluded that the constitutional amendment under Article 366(29-A) of the Constitution was not loosely drawn and must proceed on the basis of the parameters of sale were carefully defined. The Court concluded that there is no sale element apart from the obvious one rela ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... goods; (c) the transferee should have a legal right to use the goods-consequently all legal consequences of such use including any permissions or licences required therefor should be available to the transferee; (d) for the period during which the transferee has such legal right, it has to be the exclusion to the transferor-this is the necessary concomitant of the plain language of the statute viz. a transfer of the right to use and not merely a licence to use the goods; (e) having transferred the right to use the goods during the period for which it is to be transferred, the owner cannot again transfer the same rights to others. 55. Thus, it is evident that wherever extended definition of sale in Article 366(29-A) are attracted the transaction can be taxed both under the provisions of TNVAT Act, 2006 and under the provisions of Finance Act, 1994. However, it is for Assessing Officers under the respective enactments to determine the value of the two transactions and collect tax. 56. In the present case, no transfer of right to use goods as contemplated under Article 366(29-A) (d) and Section 2(33)(iv) of the TNVAT Act, 2006 is discernable. Even though th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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