Court No. - 59
Case :- SALES/TRADE TAX REVISION No. - 1311 of 2008 Revisionist :- M/S Bharat Sanchar Nigam Ltd Thru Telecom D.M.
Opposite Party :- State Of U.P. And Others Counsel for Revisionist :- B.K.S. Raghuvanshi Counsel for Opposite Party :- C.S.C. Hon'ble Saumitra Dayal Singh,J.
1. Heard Shri B.K.S. Raghuvanshi, learned counsel for the applicant-assessee and Shri B.K. Pandey, learned Standing Counsel for the State.
2. Present revision has been filed by the assessee against the order of the Commercial Tax Tribunal, Muzaffarnagar dated 14.08.2008 passed in Second Appeal No. 411 of 2007 for A.Y. 2003-04 (U.P.). By that order, the Tribunal has upheld the levy of tax on alleged sale of SIM cards by the applicant-assessee.
3. Undisputedly, during the year in question, the assessee had supplied SIM cards against value Rs. 11,68,200/- to its subscribers. While the assessee never accepted the sale of such SIM cards, the assessing officer charged to tax the entire value of SIM cards at the rate of 8 percent. In the first appeal, the assessee raised a specific ground being ground no. (b) that it had not sold any SIM cards during the year in question. However, the appeal came to be rejected in entirety. Before the Tribunal, the appeal filed by the assessee came to be allowed in part. With respect to the value of alleged sale of SIM cards, the Tribunal has dismissed the appeal filed by the assessee.
4. The present revision has been pressed on the following question of law:
"Whether the assesse being a telecom service provider, could be subjected to tax on value of SIM cards supplied earlier."
5. Mr. Raghuvanshi, in the first place, submitted that specific ground of challenge being raised in the first appeal as also before the Tribunal that there was no sale of SIM cards made by the assessee, that ground of appeal has not been dealt with or decided by either of the appeal authorities, inasmuch as both the appeal authorities have proceeded on a presumption that there was inherent sale.
6. Next, he has relied on the decision of the Supreme Court in the case of Bharat Sanchar Nigam Ltd. & Anr. Vs. Union of India & Ors., (2006) 3 SCC 1 (para 87) and Idea Mobile Communication Ltd. Vs. C.C.E. & C., Kochin, 2011 UPTC 985.
7. On the other hand, learned Standing Counsel would submit that it was the assessee's own case that it had made sale of SIM cards and, therefore, there is no error in the order subjecting sale of SIM cards to tax.
8. Having heard learned counsel for the parties and having perused the record, in the first place, no admission is found to have been made by the assessee of having sold the SIM cards. Also, it is apparent that though, specific ground of appeal had been raised denying the sale of SIM cards, the same has not been clearly dealt with and decided by the appeal authorities.
9. In the case of Bharat Sanchar Nigam Ltd. (supra), in paragraphs 87 and 88, the Supreme Court had observed as under:
"87. It is not possible for this Court to opine finally on the issue. What a SIM card represents is ultimately a question of fact, as has been correctly submitted by the States. In determining the issue, however the assessing authorities will have to keep in mind the following principles: if the SIM card is not sold by the assessee to the subscribers but is merely part of the services rendered by the service providers, then a SIM card cannot be charged separately to sales tax. It would depend ultimately upon the intention of the parties. If the parties intended that the SIM card would be a separate object of sale, it would be open to the Sales Tax Authorities to levy sales tax thereon. There is insufficient material on the basis of which we can reach a decision. However we emphasise that if the sale of a SIM card is merely incidental to the service being provided and only facilitates the identification of the subscribers, their credit and other details, it would not be assessable to sales tax. In our opinion the High Court ought not to have finally determined the issue. In any event, the High Court erred in including the cost of the service in the value of the SIM card by relying on the "aspects" doctrine. That doctrine merely deals with legislative competence. As has been succinctly stated in Federation of Hotel & Restaurant Assn. of India v. Union of India [(1989) 3 SCC 634] : (SCC pp. 652-53, paras 30-31) " '… subjects which in one aspect and for one purpose fall within the power of a particular legislature may in another aspect and for another purpose fall within another legislative power'.
* * * There might be overlapping; but the overlapping must be in law. The same transaction may involve two or more taxable events in its different aspects. But the fact that there is overlapping does not detract from the distinctiveness of the aspects.
88. No one denies the legislative competence of the States to levy sales tax on sales provided that the necessary concomitants of a sale are present in the transaction and the sale is distinctly discernible in the transaction..."
10. The matter has not rested there. In Idea Mobile Communication Ltd. (supra), after the remand made, the taxing authorities (of that assessee) themselves reached a conclusion that there was no intrinsic sale value of SIM cards. Accordingly, after remand, they dropped the proceedings to subject the sale of SIM cards to tax.
11. While no proposition of law has been laid down by the Supreme Court in the case of Idea Mobile Communication Ltd. (supra), no such concession exists in the present case.
12. Accordingly, the order dated 14.08.2008 is set aside. The matter is remitted to the first appeal authority to pass a fresh order. Such exercise may be completed as expeditiously as possible, preferably within a period of three months from the date of production of a certified copy of this order.
13. The revision is disposed of.
Order Date :- 26.9.2019 AHA