Decided on January 05,2021

Sun Direct Tv. Pvt. Ltd. Appellant


Akil Kureshi, J. - (1.) Petitioner is a company registered under Companies Act and is engaged in the business of providing Direct to Home broadcasting services (DTH service, for short). It has operations in the State of Tripura. In order to provide such services to the customers, the petitioner provides free of cost certain equipments such as, Set Top Box, Smart Card, Low Noise Booster, Antenna, Cable, Connector, Clip & tie etc. described under one umbrella expression of 'Customer Premises Equipments' (CPE, for short). Petitioner contends that for providing such equipments no charge is collected from the subscriber. The petitioner continues to be the owner of the goods. Under the circumstances, according to the petitioner, the State authorities cannot collect value added tax on such equipments.
(2.) The State authorities, however, hold a different belief. According to the VAT authorities of the State Government the petitioner is liable to pay VAT at the prescribed rates. On such basis, the Assessing Officer issued notice to the petitioner for collecting unpaid VAT for the period of years 2009-10 to 2013-14. After receiving response from the petitioner, the Assessing Officer passed a common order of assessment on 23.03.2015 for the entire period noted above. He was of the opinion that the dealer was liable to pay VAT at the appropriate rates of 4% or 6%, as the case may be on the value of such goods. He also imposed penalty to the extent of 10% of the duty which remained unpaid. The said order eventually became the subject matter of a revision petition before the Commissioner of Taxes as a revisional authority. By the impugned order dated 07.03.2019 the revision petitions were dismissed. The revisional authority also confirmed the imposition of penalty on the petitioner. He was of the opinion that though there may not be sale of goods in question from the petitioner to the subscribers, nevertheless right to use the goods was transferred in favour of the subscribers. The revisional authority heavily relied on the decision of this Court in case of Bharti Telemedia Ltd. v. The State of Tripura and another dated 19.02.2015 in WP(C) No.563 of 2010 and connected petitions. For confirming the penalty the revisional authority recorded that the penalty was imposed after affording reasonable opportunity to the petitioner.
(3.) We have heard learned counsel for the parties. We notice that the issues involved in the present petition are squarely covered by the decision of Division Bench of this Court in case of Bharti Telemedia Ltd. (supra). The question involved in the said petition was with respect to inviting value added tax on the goods provided by a DTH provider to its customer so that the customer could enjoy such service. It is also a case where concededly there was no sale of goods. Nevertheless the High Court referring to the decision of Supreme Court in case of Bharat Sanchar Nigam Ltd. and another v. Union of India and others reported in (2006) 3 SCC 1 invoked the principle of transfer of right to use the goods. In a detailed judgment it was observed as under: '[28] True it is that the petitioner companies have not sold the STBs to the customers. There can however be no manner of doubt that the right to use these goods i.e. the STBs has been transferred to the customers. In today's world, nothing is given free of cost. The cost of the STB is obviously included in the activation charges and/or the monthly subscription. Under the TVAT Act even where payment of the goods is made by way of deferred payment the goods can be subjected to tax. The main issue is whether the contract can be easily divided and the value of the goods can be ascertained with exactitude. [29] One of the most important elements of determining whether the right to use goods has been transferred or not is by ascertaining who has effective control over the goods. As far as STBs are concerned they are in total control of the customer. Under his effective control the STBs are installed in the house of the customer. He can use the STB when he wants to. He can use the STB to view whichever channel he wants to view. He may or may not use the STB. The company does not even have the power of entering the premises of the customer. Most importantly as per the terms of the agreement, the companies are responsible for the functioning of the STBs only for a period of 6(six) months. The warranty is valid only for six months and thereafter there is no warranty. Therefore, if STB of a customer is spoiled after six months he will have to pay for repair or replacement of the same. We are of the considered view that this amounts to transfer of the right to use goods.' ;

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