M/S Bharat Sanchar Nigam Ltd. vs Commissioner Trade Tax ...
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HIGH COURT OF JUDICATURE AT ALLAHABAD
 
 

?Court No. - 1
 

 
Case :- SALES/TRADE TAX REVISION No. - 383 of 2016
 

 
Revisionist :- M/S Bharat Sanchar Nigam Ltd.
 
Opposite Party :- Commissioner Trade Tax Commercial Govt. Of U.P.
 
Counsel for Revisionist :- B.K.Singh Raghuvanshi
 
Counsel for Opposite Party :- C.S.C.
 

 
Hon'ble Piyush Agrawal,J.

Heard Sri B.K.S. Raghuvansi, learned counsel for the revisionist and Sri A.C.Tripathi, learned Standing Counsel for opposite party.

The present revision has en filed challenging the order passed by the Tribunal dated 17.3.2016 in Second Appeal Nos. 377 of 2015 (A.Y. 199-00), 378 of 2015 (2000-01), 379 of 2015 (2003-04) and 380 of 2015 (2004-05) under Section 10 (B)) of Trade Tax Act, by which demand of tax on transfer of right to use of telephone handset by the customers of the assessee in the aforesaid assessment year, were raised.

The following questions of law have been raised in the aforesaid revisions:-

"(i) Whether, the assessment order passed by the Deputy Commissioner, Trade Tax Pilibhit is wholly illegal in view of the judgement of Bharat Sanchar Nigam Limited Vs. Union of India reported in 2006 NTN (Vol. 29) 307 ?

(ii) Whether, the assessing authority having even followed the direction of Hon'ble Supreme Court 2003 UPTC 404, as such the determination of turnover and tax under the assessment order is wholly illegal, un judicial and bad in law and on the facts both ?

(iii) Whether, after the decision of the Hon'ble Supreme Court in case of Bharat Sanchar Nigam Limited Vs. Union of India reported in 2006 NTN (Vol. 29) 307, the orders passed by the Assessing Authority / Trade Tax Tribunal are liable to set aside?

(iv) Whether, the tax liability imposed by the State is sustainable in the eye of law, when neither the tax had ever been admitted by the revisionist nor the goods in question is under the ambit of transfer of right to use?

(v) Whether the Tribunal was justified in passing the different order for different assessment year on same issue?"

Learned counsel for the revisionist submits that the issue involved in all the aforesaid revisions has already been decided by another Bench of this Court in S.T.T.R. No. 421 of 2009 (Bharat Sanchar Nigam Limited Vs. Commissioner Trade Tax UP, Lucknow) vide order dated 5.11.2019, in which the matter was remanded to the Tribunal for fresh decision within a period of one year after affording opportunity of hearing to the parties concerned. He further submits that on the same set of facts, the present revisions may also be remanded to the court below for fresh consideration.

The said contention has not been disputed by the learned Standing Counsel.

The relevant part of the order dated 5.11.2019 passed in S.T.T.R. No. 421 of 2009 is quoted below:-

"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."

In view of above, the present revision is allowed on the same terms as enumerated in the order dated 5.11.2019 passed in S.T.T.R. No. 421 of 2009.

The matter is remanded to the Tribunal to pass a fresh order, after affording opportunity of hearing to the concerned parties, within a period of one year from the date of receipt of a copy of this order before the authority concerned.

The questions of law are answered accordingly.

Order Date :- 4.4.2022

Rahul Dwivedi/-