Allahabad High Court
Bharat Sanchar Nigam Limited vs Commissioner Trade Tax U.P. Lucknow on 5 November, 2019
Author: Saumitra Dayal Singh
Bench: Saumitra Dayal Singh
HIGH COURT OF JUDICATURE AT ALLAHABAD ?Court No. - 59 Case :- SALES/TRADE TAX REVISION No. - 421 of 2009 Revisionist :- Bharat Sanchar Nigam Limited Opposite Party :- Commissioner Trade Tax U.P. Lucknow Counsel for Revisionist :- Subodh Kumar Counsel for Opposite Party :- C.S.C. Hon'ble Saumitra Dayal Singh,J.
1. Sales/Trade Tax Revision Nos. 437 of 2009 (A.Y. 2002-03), 438 of 2009 (A.Y.2003-04), 439 of 2009 (A.Y.1995-96), 1088 of 2009 (A.Y. 2004-05), 1057 of 2012 (A.Y. 1996-97), 1058 of 2012 (A.Y.1997-98), 1059 of 2012 (A.Y. 1998-99), 1060 of 2012 (A.Y. 1999-2000), 1061 of 2012 (A.Y. 2000-01), 1062 of 2012 (A.Y. 2001-02), 1063 of 2012 (A.Y.2002-03), 1064 of 2012 (2003-04) and 1065 of 2012 (A.Y. 2004-05) have been filed by the revisionist-Bharat Sanchar Nigam Ltd. to assail the orders passed by the Commercial Tax Tribunal by which the Tribunal has dismissed the appeals filed by the present revisionist-assessee and confirmed the demand of tax on transfer of right to use of telephone instruments provided by the assessee to its subscribers/customers and also for the A.Y. 2004-05 on sale of SIM cards for mobile network service.
2. Since the facts are identical in all the cases and since the order of the Tribunal is also identical in all the revisions, these revisions are being decided by this common order.
3. For the sake of convenience, the facts obtained in Sales/Trade Tax Revision Nos.421 of 2009 for the A.Y. 2004-05 are being noted herein above.
4. Present revision has been filed by the revisionist-assessee against the order of the Commercial Tax Tribunal, Varanasi dated 19.3.2009 passed in Second Appeal No.137 of 2008 for the A.Y. 2004-05. By that order, the Tribunal has dismissed the appeal filed by the assessee and confirmed the demand of tax on transfer of right to use of telephone instruments and sale of SIM cards.
5. Heard Sri Udit Chandra, Advocate holding brief for Sri Subodh Kumar, learned counsel for the assessee and Sri A.C. Tripathi, learned standing counsel for the respondent-revenue.
6. Present revision was admitted without reference to any question of law. At the stage of hearing, learned counsel for the assessee has sought to press the following question of law:
"(i) Whether the orders impugned are bad in the light of decision of Hon'ble Apex Court in the case of Bharat Sanchar Nigam Ltd. and Another Vs. Union of India and Others, reported in JT 2006 (6) page 114?
(ii) Whether in view of law laid down by the Hon'ble Court vide judgment dated 02.03.2006, there is any tax liability of Bharat Sanchar Nigam Ltd. on rental charged by it from its subscribers?
(iii) Whether the authorities below are bound to follow the judgment of Hon'ble Supreme Court in case of Bharat Sanchar Nigam Ltd. Vs. Union of India and others (Writ Petition (civil) 183 of 2003) dated 02.03.2006 duly followed by a division Bench of this Hon'ble Court in case of Union of India and another Vs. State of U.P. and another (Civil Misc. W.P. No. 673 of 1997) vide judgment dated 22.3.2006?
(iv) Whether, the authorities below have misinterpreted the law laid down by the Hon'ble Supreme Court vide decision dated 02.03.2006 regarding liability of tax on rentals?
(v) Whether, there is no transfer of right to use goods while proving landline telecommunication services to the subscribers and the Division Bench decision of this Hon'ble Court in the case of Oriental Bank of Commerce Vs. State of U.P. and others reported in 2008 (3) A.D.J. 1 (D.B.) has a binding effect?"
7. Having heard learned counsel for the parties and having perused the record, it appears that before the Tribunal the assessee had pressed eight grounds of appeal. Amongst others, the assessee had specifically assailed the order passed in first appeal authority whereby the said authority had inferred transfer of right to use with respect to landline telephone sets. It had been specifically submitted (by way of ground of appeal) that the assessee had not charged any amount towards rent to provide such telephone instruments to its subscribers. Further, by way of ground no. 6, the assessee had sought to establish before the Tribunal that none of the conditions of a transfer of right to use landline telephone sets, were present in the facts of the present case. The charges received by the assessee, have been described as service charge received for service rendered. In connection with same, it had been specifically submitted that there was no element of sale involved.
8. Those being the grounds of appeal as have also been noted in the order of the Tribunal, it appears that the Tribunal has recorded a simplistic reasoning and rejected the contention of the assessee. According to the Tribunal since the assessee had charged a fixed amount, there was inherent consideration for transfer of right to use telephone instruments. Also, the Tribunal has recorded that the assessee had itself disclosed its receipts as rental amount. Therefore, it was clear that the amount received by the assessee were chargeable to tax being consideration for transfer of right to use.
9. The aforesaid approach adopted by the Tribunal and the reasoning offered by it, is unacceptable. In the first place, such reasoning and approach does not deal with the specific grounds of challenge raised by the assessee before the Tribunal as have also been referred to above. Once the assessee had raised specific challenge as to absence of any transfer of right to use, it was for the Tribunal to have applied its mind and offered reasoning to meet such challenge. Second, had such exercise been gone into, it would have become necessary for the Tribunal to call for and examine evidence including the agreements entered into by the assessee with its subscribers; the bills raised by the assessee on its subscribers and other materials as may have also been relevant to determine the true nature of the contract entered into between the assessee and its subscribers which gave rise to the disputed receipts at the hands of the assessee.
10. If upon examination of such material the Tribunal had reached the conclusion that there was a transfer of right to use, then in that situation a further question would have arisen as to apportionment and determination of the amount received by the assessee as may be attributed towards consideration for transfer of right to use as only that amount may have been subjected to tax. Admittedly, the activity performed by the assessee also involved providing service. Therefore, unless such bifurcation or apportionment is found to be permissible in law and unless such bifurcation was actually done, the exact assessment of the tax liability of the assessee would remain illusive or undetermined.
11. Similarly, in so far as the liability of SIM cards is concerned, in the case of BSNL Vs. State of U.P. and others (Sales/Trade Tax Revision No.1311 of 2008) after taking into account the decisions of Supreme Court in the Cases of Bharat Sanchar Nigam Ltd. & Anr. Vs. Union of India & Ors., (2006) 3 SCC 1 (para 87) and Idea Mobil Communication Ltd. Vs. C.C.E. & C., Kochin, 2011 UPTC 985, the matter was remitted to the Tribunal to pass a fresh order. Similar treatment is warranted in the present case as well owing to similarity of law situation.
12. Accordingly, the order of the Tribunal is set aside. The matter is remitted to the Tribunal to pass a fresh order after affording limited opportunity to the parties to lead additional evidence as may be necessary in view of the facts noted above. The above exercise may be completed as expeditiously as possible, preferably, within a period of one year from the date of production of certified copy of this order.
13. In view of the above, the questions of law are left unanswered. The revision is disposed of.
Order Date :- 5.11.2019 Meenu