Kerala High Court
Sumam Enterprises vs The State Of Kerala on 8 July, 2009
Author: P.R.Ramachandra Menon
Bench: P.R.Ramachandra Menon
IN THE HIGH COURT OF KERALA AT ERNAKULAM
WP(C).No. 35432 of 2005(R)
1. SUMAM ENTERPRISES,
... Petitioner
Vs
1. THE STATE OF KERALA,
... Respondent
2. THE COMMERCIAL TAX OFFICER, VATAKARA.
For Petitioner :SRI.A.KUMAR
For Respondent : No Appearance
The Hon'ble MR. Justice P.R.RAMACHANDRA MENON
Dated :08/07/2009
O R D E R
P.R. RAMACHANDRA MENON, J.
........................................................................
W.P.(C) Nos. 35432 &
36387 OF 2005, 36525 OF
2007, 770, 1764, 5031,
5269, 12834 & 28873 OF
2008
.........................................................................
Dated this the 8th July, 2009
J U D G M E N T
Whether the sale of SIM cards/Recharge coupons attracts Sales Tax as sale of goods is the common question arising in all these cases.
2. The levy of tax was sought to be justified by the Department, with specific reference to the Entry under Sl.No.117 in the III Schedule to the KVAT Act. The issue had come up for consideration before this Court earlier, when some dealers challenged the proceedings taken by the departmental authorities contending that the 'instance' was attributable to a service and exigible to 'Service Tax' and that no sale was involved at all. At the same time, some other dealers had W.P.(C) Nos. 35432 & 36387 OF 2005, 36525 OF 2007, 770, 1764, 5031, 5269, 12834 & 28873 OF 2008 2 contended that no Service Tax could be imposed as the transaction very much pertained to a sale.
3.. After considering the matter in detail, judgment was passed by a Division Bench of this Court in the Central Excise Appeal No.20 of 2006, whereby it was specifically held that the distribution of SIM Cards and Recharge Coupons would not attract any 'Sale'; whereas it actually involved a 'Service', which is exigible to 'Service Tax' to be imposed by the Central Excise Department. The above decision has already been reported in 2009 (1) KLT 889 (Commissioner of Central Excise vs. Idea Mobile Communication Ltd.) holding that the transaction is very much liable to be included as taxable service under Section 65 (105)zzzx of the Finance Act, 1994.
4. Subsequently, the common issue as projected in the present case as to whether the transaction involved any Sale so as to attract tax liability under KVAT Act had come up for consideration before another Division Bench (one of the learned Judges being the same) in a group of cases which led to the W.P.(C) Nos. 35432 & 36387 OF 2005, 36525 OF 2007, 770, 1764, 5031, 5269, 12834 & 28873 OF 2008 3 judgment dated 13.02.2009 in W.P(C) Nos. 27445 of 2005 and and connected cases. Referring to the decision rendered by the Apex Court in BSNL & Another vs. Union of India and others [(2006)145 STC 91] and the judgment rendered by the Division Bench of this Court earlier (2009(1) KLT 889), it was clearly held that there was no sale of goods involved with regard to the distribution of SIM Cards and Recharge Coupons and that it will only attract 'Service Tax', being a taxable service as made clear already.
5. This being the position, the issue involved in all these cases stands clearly covered by the above verdicts; particularly the decision rendered by the Division Bench in W.P.(C) No. 27445 of 2005 and connected cases, but for the mistake in reference made to the judgment stated as rendered in "S.T.No. 292 of 2004", which presumably is a reference to the judgment dated 04.09.2008 in C.E. Appeal No. 20 of 2008, as reported in 2009 (1) KLT 889.
6. In the above circumstances, the challenge raised in W.P.(C) Nos. 35432 & 36387 OF 2005, 36525 OF 2007, 770, 1764, 5031, 5269, 12834 & 28873 OF 2008 4 all these cases is sustained . The impugned 'notices' in W.P.(C) Nos. 35342 and 36387 of 2005, 5031, 5269 and 28873 of 2008 as well as the impugned 'assessment orders' in W.P.(C) No. 36525 of 2007 and 770 and 12834 of 2008 and also the 'penalty order' in W.P.(C) No.1764 of 2008 are set aside.
The Writ Petitions are allowed in terms of the decision rendered by the Division Bench as referred to above.
P.R. RAMACHANDRA MENON, JUDGE.
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