[Cites 11, Cited by 0]
Kerala High Court
M/S. Bharti Airtel Limited vs Union Of India on 15 December, 2025
Author: A.K.Jayasankaran Nambiar
Bench: A.K.Jayasankaran Nambiar
2025:KER:96454
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE DR. JUSTICE A.K.JAYASANKARAN NAMBIAR
&
THE HONOURABLE MR.JUSTICE JOBIN SEBASTIAN
MONDAY, THE 15TH DAY OF DECEMBER 2025 / 24TH AGRAHAYANA, 1947
WA NO. 1745 OF 2025
AGAINST THE JUDGMENT DATED 29.09.2020 IN WP(C) NO.
12941 OF 2020 OF HIGH COURT OF KERALA
APPELLANT/PETITIONER:
M/S. BHARTI AIRTEL LIMITED
SL AVENUE, N.H. BYPASS, KUNDANOOR, MARADU, COCHIN,
REPRESENTED BY ITS AUTHORISED SIGNATORY, MRS.
SHEENA SAMUEL., PIN - 682304
BY ADVS.
SMTG.MINI(1748)
SHRI.A.KUMAR (SR.)
SHRI.P.J.ANILKUMAR
SRI.P.S.SREE PRASAD
RESPONDENTS/RESPONDENTS:
1 UNION OF INDIA,
THROUGH SECRETARY, MINISTRY OF FINANCE,
DEPARTMENT OF REVENUE, NORTH BLOCK, NEW DELHI,
PIN - 110001
2 STATE OF KERALA,
REPRESENTED BY ITS SECRETARY, MINISTRY OF FINANCE,
THIRUVANANTHAPURAM-695001.
3 ASSISTANT COMMISSIONER,
SPECIAL CIRCLE-III, STATE GOODS AND SERVICES TAX
DEPARTMENT, ERNAKULAM-682015.
4 SUPERINTENDENT OF CENTRAL EXCISE,
BHARTI AIRTEL RANGE, RANGE V, OURGAON,
HARYANA, PIN - 122001
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BY ADVS.
SRI.MOHAMMED RQFIQ, SPECIAL G.P. FOR R2 & R3
SHRI.V.GIRISHKUMAR, SC, CENTRAL BOARD OF INDIRECT
TAXES AND CUSTOMS
THIS WRIT APPEAL HAVING BEEN FINALLY HEARD ON
15.12.2025, THE COURT ON THE SAME DAY DELIVERED THE
FOLLOWING:
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JUDGMENT
Dr.A.K.Jayasankaran Nambiar, J.
This writ appeal is preferred against the judgment dated
29.09.2020 in WP(C).No.12941 of 2020 to the extent the said judgment
did not deal with the arguments of the petitioners regarding the merits
of an assessment order that was impugned in the writ petition. The
circumstances under which this appeal came to be filed before this
Court are as follows;
2. The appellant herein had approached this Court through
WP(C).No.12941 of 2020 impugning an assessment order that was
passed against it, inter alia on the ground that the said assessment
order was barred by limitation. The essence of the contention raised
before the writ court was that Section 25(1) of the Kerala Value Added
Tax Act, 2003 (hereinafter referred to as the "KVAT" Act) had provided
for a period of six years for completion of assessment and since the
assessment in question was for the assessment year 2013-14, the notice
issued to the appellant in the instant case was beyond the period of
limitation prescribed under Section 25(1) of the KVAT Act and
consequently, the assessment order that was impugned in the writ
petition had also to be seen as one passed without jurisdiction. There
was also an alternate challenge to the merits of the assessment order.
3. The learned Single Judge by the impugned judgment, found
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in favour of the appellant on the ground of limitation and therefore
allowed the writ petition by setting aside the impugned order of
assessment. The contention of the petitioner with regard to the merits
of the assessment was not gone into by the learned Single Judge.
4. The Revenue, being aggrieved by the finding of the learned
Single Judge on limitation had approached this Court through a writ
appeal (W.A.No.1748 of 2020) contending inter alia that it was an
erroneous appreciation of facts that had led the learned Single Judge
to allow the writ petition in favour of the appellant herein. It was
pointed out that the notice under Section 25(1) of the KVAT Act in the
instant case was issued within a period of six years, on 16.01.2019, and
inasmuch the notice pertained to the assessment year 2013-14, it could
not be said to be belated going by the amended provisions of the KVAT
Act. On a consideration of the said submission on behalf of the
appellant/State, the Division Bench found that the amendment to
Section 25(1) of the KVAT Act had come about in 2017 itself when the
time limit for issuance of notice was enlarged from five years to six
years, and the notice issued to the appellant herein was within the six
year period of limitation that was operative for the assessment year
2013-14. The Division Bench therefore found that the impugned
judgment of the learned Single Judge suffered from an erroneous
appreciation of facts and therefore, proceeded to allow the writ appeal
by dismissing the writ petition preferred by the appellant herein on the
ground of limitation. While dismissing the writ petition and allowing
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the writ appeal preferred by the State, the Division Bench also made it
clear that it would be open to the appellant herein to approach the first
appellate authority under the KVAT Act in a challenge against Ext.P6
assessment order on merits by filing a statutory appeal within a month
from the date of receipt of a copy of the judgment in the writ appeal.
5. It would appear that in the meanwhile many writ petitions,
including writ petitions filed by the appellant herein impugning
assessment orders passed by the authorities under the KVAT Act for
different assessment years (other than 2013-14), and involving the
same issue, came up for consideration before a Single Bench of this
Court. Those writ petitions were disposed by the learned Single Judge
vide judgment dated 28.06.2024 in WP(C).No.482 of 2021 and
connected cases by finding in favour of the assessees on the issue of
propriety of assessment under the KVAT Act of turnover relating to
services supplied by the assessees. The learned Single Judge took note
of the judgment of the Andhra Pradesh High Court in State of Andhra
Pradesh v. Bharat Sanchar Nigam Ltd. - [(2012) 49 VST 98] and
the order dated 11.04.2023 in SLP(C).Nos.16551-16555 of 2012
that dismissed the Special Leave Petitions preferred against the
aforementioned judgment of the Andhra Pradesh High Court by giving
detailed reasoning, to hold that the order of the Supreme Court
affirming the judgment of the Andhra Pradesh High Court constituted a
binding precedent for the purposes of Article 141 of the Constitution of
India.
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6. Thereafter, the learned Single Judge proceeded to consider
the arguments advanced by the learned Senior Government Pleader on
the merits of the issue raised in the writ petition, and proceeded to hold
that in view of the clear finding in the order of the Supreme Court that
affirmed the view of the High court of Andhra Pradesh in the judgment
referred above, SIM cards, rechargeable coupons, fixed monthly
charges and value added services (towards SMS, ringtones, download
music etc.) could not be termed as ''goods'' for the purposes of the
KVAT Act. The writ petitions were therefore allowed and the orders
impugned in those writ petitions were quashed to the extent they
demanded tax under the KVAT Act on amounts received by the
assessees towards SIM cards, rechargeable coupons, fixed monthly
charges and value added services (towards SMS, ringtones, download
music etc.) as they were not goods on which any tax under the KVAT
Act could be levied.
7. It is significant that the State has not preferred any writ
appeal against the said judgment dated 28.06.2024 of the learned
Single Judge which concludes the issue involves in the assessment
order in the instant case on merits as far as the appellant herein is
concerned, albeit for other assessment years. Although at the time of
hearing the present writ appeal, the learned Senior Government
Pleader would point out that the State is still in the process of
considering whether an appeal against the aforementioned judgment of
the learned Single Judge should be filed or not, we are not persuaded to
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accept the said submission, since we have not been shown any material
that would suggest that the State has taken any positive action towards
that end, during the last 18 months. We also note that even in the
counter affidavit dated 25.10.2025 filed by the State in these
proceedings there is no such averment. We must therefore proceed on
the assumption that the State has accepted the aforementioned
judgment of the learned single judge.
8. As for the facts in the present appeal, we find that the writ
appeal, to the extent it impugns the judgment of the learned Single
Judge for not considering the contentions of the appellant on the merits
of the assessment order, was in fact filed belatedly. However, the
circumstances under which the challenge to the impugned judgment
arose needs to be noticed. The impugned judgment of the learned
Single Judge had allowed the writ petition preferred by the appellant by
finding solely on the aspect of limitation. Since, the appellant was not
aggrieved by the said judgment that allowed the writ petition, it did not
have to file a writ appeal at that stage. The occasion for filing this writ
appeal arose only when the impugned judgment of the learned Single
Judge, that decided only the issue of limitation, was taken in appeal
before a Division Bench of this Court, and the said Division Bench
allowed the appeal preferred by the State by finding that the learned
Single Judge had erred on facts while considering the issue of limitation
in terms of the statutory provision. It was at that stage, that the
appellant-assessee herein became an aggrieved person for the purposes
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of filing an appeal against the impugned judgment of the learned Single
Judge, to the extent it had not considered the alternate challenge in the
writ petition to the merits of the assessment order.
9. In the counter affidavit filed on behalf of the State, the
principle of merger is highlighted to argue that inasmuch as the
impugned judgment of the learned Single Judge was already carried in
appeal by the State in W.A.No.1748 of 2020, and the Division Bench
that heard the said appeal had, while exercising its appellate
jurisdiction, reserved the liberty of the assessee to pursue his statutory
appellate remedy under the KVAT Act in its challenge against the
assessment order, it would not be proper for this Bench to consider a
belated writ appeal preferred by the appellant challenging the very
same judgment of the learned Single Judge that was impugned earlier
by the State in W.A.No.1748 of 2020. The learned Special Government
Pleader, Sri.Mohammed Rafiq would rely on the judgments in M/s.
Gojer Bros. (Pvt.) Ltd. v. Shri Ratan Lal Singh [(1974) 2 SCC 453]
in support of the said contention.
10. It is the further case of the respondent State that the
assessing authority had made a valid distinction between the
telecommunication service rendered by the appellant, and those which
fell outside the purview of sales tax. The learned Special Government
Pleader contends, therefore, that the facts in the case of the appellant
herein are clearly distinguishable. He relies on the judgments in
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Bharat Sanchar Nigam Ltd. v. Union of India (AIR 2006 1383 (SC),
Tata Consultancy Services v. State of A.P. [(2005) 1 SCC 308], CST
v. Quick Heal Technologies Ltd. [(2023) 5 SCC 469], State of
Kerala v. Sathyam Audios [(2024) GSTR 464], State of Kerala v. V.
C. Vinod (2023 SCC OnLine Ker 11394), Samir Kumar Majumder v.
Union of India and others [(2024) 16 SCC 738], M/s. Gojer Bros.
(Pvt.) Ltd. v. Shri Ratan Lal Singh [(1974) 2 SCC 453],
Kunhayammed and others v. State of Kerala and another [(2000) 6
SCCC 359), Experion Developers Private Limited v. Himanshu
Dewan and Sonali Dewan and others [(2023) 12 SCR 1118) and P &
O Nedlloyed BV v/ Arab Metals Co and others [(2006) EWCA Civ
1717).
11. On a consideration of the aforesaid submissions of the
learned Senior Government Pleader, we find that the learned Single
Judge in the judgment in WP(C).No.482 of 2021 and connected cases
referred above, had considered the contention of the learned Senior
Government Pleader that downloaded music cannot be equated with
telecommunication services and therefore would fall outside the scope
of service tax, and had rejected the same while holding inter alia that
downloaded music would not fall within the definition of "goods" on
which tax under the KVAT Act could be levied.
12. We have chosen to highlight the judgment of the learned
Single Judge in WP(C).No.482 of 2021 and connected cases at this
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stage solely because the said judgment, which has not been challenged
by the State in further proceedings, virtually follows the judgment of
the Andhra Pradesh High Court, as affirmed by the Supreme Court,
while deciding the merits of the issue involved in the assessment order.
That apart, the finality conferred on the said judgment of the learned
Single Judge also renders meaningless, any liberty granted to the
assessee herein to pursue a statutory remedy against the assessment
order since the statutory authority cannot ignore the aforementioned
binding judgment of the learned single judge. In our view, when a final
decision on the merits of the issue already holds sway, we would be
perfectly within our jurisdiction to allow this appeal that impugns a
judgment of the single judge to the extent that it did not consider the
challenge to the assessment order on merits, and quash the assessment
order impugned in the writ petition.
13. As for the contention of the State that the principles of
merger would prevent the appellant herein from mounting a belated
challenge against the impugned judgment of the learned Single Judge,
we are of the view that the principles of merger would have no
application in a situation such as the present. As already noticed, the
earlier Division Bench, while disposing the appeal preferred by the
State, had only reserved a liberty in the assessee to pursue his
alternative remedy under the statute. When the issue on merits is now
covered by a binding precedent of the Supreme Court, and the attempt
of the State to distinguish the said precedent did not meet with any
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success before a learned Single Judge of this Court against whose
judgment no appeal was preferred by the State, it would be
meaningless to relegate the appellant-assessee before the statutory
authorities in a challenge to the merits of the assessment order
involving the same issue.
The writ appeal is thus allowed by quashing Ext.P6 assessment
order to the extent it demands tax under the KVAT Act on amounts
received by the appellant towards SIM cards, rechargeable coupons,
fixed monthly charges and value added services (towards SMS,
ringtones, download music etc.) as they are not goods on which any tax
under the KVAT Act can be levied.
Sd/-
DR. A.K.JAYASANKARAN NAMBIAR
JUDGE
Sd/-
JOBIN SEBASTIAN
JUDGE
ANS
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APPENDIX OF WA NO. 1745 OF 2025
PETITIONER ANNEXURES
Annexure A TRUE COPY OF THE JUDGMENT IN W.A.
NO.1748/2020 DATED 27.03.2025 OF THIS
HONOURABLE COURT
Annexure B TRUE COPY OF THE REVIEW PETITION
NO.708/2025 FILED IN W.A. NO. 1748/2020
OF THIS HON'BLE COURT.
Document No.1 Cost receipt issued by the Kerala State
Legal Services Authority dated
07.08.2025
