Madhya Pradesh High Court
Reliance Telecom Ltd. vs Commissioner Of Commercial Tax on 19 September, 2007
Author: A.K. Shrivastava
Bench: A.K. Shrivastava
ORDER S.K. Kulshrestha, J.
1. The above appeals under Section 53(2) of the M.P. VAT Act, 2002 assail the judgment of the M.P. Commercial Tax Appellate Board dated 30.3.2007 by which the claim of the appellant Company that the hand set and the substituted Sim Card issued by it to the subscribers are not exigible to commercial tax has been turned down. Though the appeals are for different years, since they have been disposed of by a common order Annexure A/8 passed by the Board, they are being disposed of by this common order.
2. Learned Counsel for the appellant does not dispute that during the period pertaining to the Assessment Year 1998-1999 and 1999-2000, the appellant had floated a Scheme for rendering Telecom service to the subscribers in which hand sets were made available to the subscribers on non returnable basis along with the Sim Cards. The Department, levied tax on the value of the hand set and also the value of the Sim Cards which substituted the original Sim Cards on account of damage etc. for which extra charge was made. It was this levy of commercial tax which was assailed by the appellant.
3. Learned Counsel submits that insofar as the supply of hand set to the subscribers was concerned, it was not the main business of the appellant who was liable to pay only service tax under the provisions of Finance Act, 1994 with the result the appellant was not required to get itself registered as a 'Dealer' under the Commercial Tax Act, 1994 but on account of some mis-conception, application was made to the Department and a registration as 'Dealer' was obtained. Learned Counsel has referred to the decision in State of Tamil Nadu and Anr. v. Board of Trustees of the Port of Madras STC Vol. 114 1999 Page 520 and the decision in Bharat Sanchar Nigam Ltd. and Anr. v. Union of India and Ors. STC Vol. 145 2006 Page 91. It is on the strength of the above authorities that the learned Counsel contends that once the hand set forms a negligible part of the service and is not a sale, the commercial tax could not have been claimed by the respondents on the said Cellular hand sets.
4. The Board, in considering the said contention, has referred to the decision of the Supreme Court in Anand Commercial Agencies v. Commercial Tax Officer STC Vol. 107 1997 Page 586.
5. Apropos the first contention of the learned Counsel that supplying of the hand set to the subscribers was only an ancillary activity and not the main activity, suffice would be to say that service rendered by the appellant Company would be meaningless unless the receivers are available with the subscribers. The fact that the Company did not insist the subscribers to purchase a receiver from outside and use its Sim Card and proposed to supply the receiver along with the Sim Card clearly indicates the intention of the Company to pass on to the customer the Cellular phone as part of the deal which constituted sale. It cannot be denied that the Cellular phone had a market value and they were supplied to the customer, apparently not free of charge but the charge with constituted part of the package. In Anand Commercial Agencies (supra) the Apex Court considered a situation where bottles were supplied free of charge on understanding that they would be returned to the 'Dealer' with a stipulation that the amount of advance deposited would stand forfeited if the bottles were not returned within the prescribed period. This amount was treated as forming sale price and charged appropriately to tax. The decisions relied upon by the learned Counsel for the appellant however, deal with the matter in different field. In Bharat Sanchar Nigam Limited Their Lordships were considering whether the Sim Card sold to the subscribers were dealing with a situation where the Sim Card not sold to the subscribers but forming part of the services rendered were held as not chargeable to sales tax. In that decision also it was clarified that if the parties contended that the Sim Card would be a separate subject of sale, it would be open to the Sales-Tax Authorities to levy sales tax thereon.
6. From the orders passed by the Sales-Tax Authorities we find that the Authorities have been discerning enough between the Sim Card supplied free of charge and the Sim Card substituted on payment of charges. It is only the Sim Card which is substituted on account of damage etc. and for which extra charge is made that the Authorities are charging commercial tax. However, the situation with regard to the supply of hand set is entirely different from the one present before Their Lordships and, therefore, we do not find that the contention of the appellant is substantiated by the ratio of the said decision. Reference has also been made to 114 STC Page 520. The said case was dealing with the incidental transaction of unservicable goods. The case of the appellant obviously is that it is not an unserviceable item which has been supplied to the subscriber but very much a hand set which is an essential component for receiving the service. Under these circumstances, the decision in Board of Trustees (supra) also does not further the case of the appellant.
7. In view of the above discussion, we do not find that these appeals give rise to any question of law, much less substantial, for decision in the appeal under Section 53(2) of the VAT Act.
8. The appeals are, therefore, dismissed summarily.