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Appellant providing infrastructure services of erection and construction of towers to cellular telephone companies — Inclusive of operating and maintenance — Registered with service tax authority for the payment of service tax — Amounted to transfer of right to use the erected telecom network towers and other related equipments — VAT authority opined — The appellant liable to pay VAT as there is transfer of right to use the said goods — Mere fact that equipments are attached to earth in order to enable it to function does not detract the applicability of VAT — Treated as movable — Held appellant bona fide believed activity to be service — Paid service tax regularly — State directed to recover it through separate proceeding — VAT payable for subsequent period — No liability to pay penalty and interest.
Facts:
The petitioner was engaged in erecting and constructing tower sites and leased the same to various telecom operators such as BSNL, Airtel, and Vodafone, etc. According to the petitioner, the said structure was considered as immovable, as they are embedded in the earth and cannot be shifted without damage. Further, the act of dismantling the structure from the site would render them non-saleable. However, after the study of the agreement entered by them with various operators, the Revenue opined that there was a transfer of right to use the leased capacity and the consideration received by them was in the nature of monthly lease rentals.
Held:
It was held that the structure erected by the appellant was movable for the reason that on the expiry of the agreement or the termination of it, the same could be detached and fixed somewhere else. Having concluded that, it was held to attract VAT. However, the petitioner bona fide believed impugned activity to be service and paid service tax regularly on the same. In para 22 of the judgment, the Court held to the effect that upon the determination of VAT liability, the amount previously paid as service tax would be adjusted and it is for the State to seek recovery of the amount paid by the petitioner to the Central Government through a separate proceeding based on this judgment. However. No penalty or interest would be imposed.
