5. Brida Roadlines Pvt. Ltd. vs. Union Territory of
Daman & Diu [(2019)
2 GSTL (STC) 38] (Bombay
High Court)
Whether
the Commissioner of VAT is empowered under the law to hear second appeal
FACTS
The
dealer was assessed under the Daman and Diu VAT law. The A.O. imposed maximum
penalty u/s 10(d) r/w/s 10A of the CST Act, 1956. The assessee filed a first appeal
against the same, which was dismissed. The second appeal was filed with the Commissioner of VAT, Daman
& Diu, which was also dismissed. The power of the Commissioner entertaining
the second appeal was thereafter challenged before the Bombay High Court.
HELD
The
Commissioner of VAT had no power to hear the second appeal. The power was with
the Administrative Tribunal, Daman & Diu. The order passed by the
Commissioner in the second appeal was quashed by the Court.
6. Ricoh India Limited vs. State of Maharashtra [(2019)
GSTL (VAT) 120] (Bombay High Court)
Whether
Multi-Functional Printers and their parts and spares were covered by the Entry
No. C-56 of the MVAT Act, 2002 read with the Notification or the Residuary
Entry No. 102 of the said Act
FACTS
The
appellant was an importer and reseller of Multi-Functional Printers and their
parts and spares. They had applied for determination to the Commissioner of
Sales Tax, Maharashtra State. The Commissioner determined the same as falling
under the residuary entry and hence liable to VAT at 12.5%. The same was
challenged before the Tribunal; however, it confirmed the decision of the
Commissioner. The appellant thereafter approached the High Court at Bombay.
HELD
The
Court agreed that the Multi-Functional Printers were covered by the Automatic
Data Processing Machines and Units thereof falling under Entry No. 84.71 of the
Central Excise Tariff Act. However, the Court observed that even though the
Notification Entry under the VAT Act refers to the Central Excise Tariff, the
Notes stated under the said entry under the MVAT Act are not similar. The Court
further observed that the impugned product was covered by Note Nos. 2 and 4.
The printers were imported and assessed to duty under the ‘Others’ category and
the said category was not covered under Notes in the MVAT Act. The decision of
the Tribunal as regards classification was thus upheld. The classification of
the parts and spares done under the residuary entry by the Tribunal was also
upheld.
7. Bharati Airtel Limited
vs. Mira-Bhayander Municipal Corporation & others [(2019)
1 Gstl (Misc.) 138 (Bom.)]
Is
Local Body Tax (LBT) under clause ‘aaa’ of sub-section 2 of section 127 of the
Maharashtra Municipal Corporations Act, 1949 recoverable on SIM cards, recharge
coupons and e-recharge on their entry into the limits of a municipal
corporation?
FACTS
By
a license agreement dated 28th September, 2001 entered into between
the Hon’ble President of India through the Department of Telecommunications,
Ministry of Communication, Government of India on one part, and the petitioner
company on the other part, a licence was granted to the petitioner u/s 4 of the
Indian Telegraph Act, 1885 to set up and operate cellular mobile phone services
in Mumbai and Maharashtra Telegraph Circle on the terms and conditions set out
therein. In accordance with the said agreement, the petitioner is providing telecommunication
services including mobile telephony, text messaging, voice messaging, access to
internet, etc., to the members of the public in Global System for Mobile
communication (GSM) format which involves GSM wireless modem which works with
GSM wireless network. The customers of the petitioner avail of the services by
using mobile handsets.
It
was stated that the SIM (Subscriber Identification Module) card is provided by
the petitioner which is a plastic / paper card encrypted with the unique number
which is known as International Mobile Subscriber Identification (IMSI). The
SIM card enables the subscriber access to the telecommunication service
provided by the petitioner. The contention in the petition was that the SIM
card does not have any utility or intrinsic value by itself. The petitioner
provides either pre-paid or post-paid services. In case of pre-paid services,
the subscriber can renew the services through the recharge coupon / card or
e-recharge.
HELD
By
incorporating clause ‘aaa’ in sub-section 2 of section 127 of the said Act by
the Bombay Provincial Municipal Corporation and Bombay Village Panchayat
Amendment Act, 2009 a provision was made for levy of LBT in lieu of cess
or octroi. The State Government by a notification dated 25th March, 2010
notified the Bombay Provincial Municipal Corporations (Local Body Tax) Rules,
2010 (for short, LBT Rules). The LBT Rules provide a mechanism for the levy and
collection of LBT and the rates of LBT. In exercise of the power under clause ‘aaa’ of sub-section 2 of section
127 of the said Act, the State Government directed various municipal
corporations in the State, including the Corporation, to levy LBT on the entry
of goods into the limits of the city for consumption, use or sale in lieu of
octroi or cess with effect from 1st April, 2010.
On
18th February, 2011 another notification was issued by the State
Government in exercise of the powers u/s 99B read with sections 152B and 152C
of the said Act by which the rates of LBT to be levied by the Corporation on
entry of various categories of goods into the limits of the city for the
financial year 2011 were notified. One of the items included in Schedule A to
the said notification is SIM cards (Tariff Item No. 8542 10 10).
The
case made out in the petition was that the petitioner and its distributors were
compelled to register themselves under the LBT Rules. They did so under
protest. It was alleged that neither the petitioner nor its distributors paid
any LBT on SIM cards or recharge coupons or e-recharge. The case made out in
the petition is that in October, 2010 the officers of the first respondent
visited the premises of various distributors of the petitioner and called upon
them to pay LBT on SIM cards and recharge coupons on the basis of the amount /
value of talk time mentioned. By a communication dated 30th October,
2010 the petitioner informed the first respondent that the SIM cards, recharge
coupons and e-recharge were not goods which could be subjected to LBT and, in
fact, the petitioners are paying service tax on providing telecommunication services.
On 28th March, 2013 the State Government issued a notification
fixing a rate of 3.5% on ‘SIM cards, memory cards, activation / renewal slips
whether recharged online or otherwise’.
The
challenge in this petition under article 226 of the Constitution of India was
to the action of the first respondent of assessing, levying and recovering LBT
on SIM cards, recharge coupons and e-recharge brought into the limits of the
first respondent. There is a consequential challenge to the notification dated
28th March, 2013 issued by the State Government.
The
SIM cards are normally made of plastic or paper. They are capable of being
bought and sold and have utility value. The SIM cards are also capable of being
transferred, stored and possessed. The concept of sales tax and LBT are not the
same. LBT can be levied on the goods brought within the limits of a municipal
corporation even if the same are not sold but are brought either for
consumption or use. Going by what is held by the Apex Court in paragraph 11 referred
to (paragraph 12 in 10GSTR) of its decision in the case of Idea Mobile
Communication Ltd. [2011] 43 VST 1 (SC); [2011] 10GSTR 12 (SC); [2011] 12 SCC
608, SIM cards are capable of being used by putting the same in a
mobile phone handset. A SIM is a portable memory chip used in cellular
telephones. It is a tiny encoded circuit board which is fitted into the cell
phones at the time of signing on as a subscriber.
Even
assuming that by itself a SIM card has no intrinsic sale value, considering the
nature of its use it has a value in terms of money apart from its value as a
portable memory chip. Even recharge vouchers which are made of paper or plastic
are capable of being bought, sold and used. They can be transferred, stored and
possessed. The recharge vouchers or cards made up of paper or plastic may have
little value by themselves, but the same are capable of being used and their
use has value as the holder thereof can get talk time or internet data which
has a value in terms of money. SIM cards and recharge vouchers are tangible
goods which are capable of being brought into the limits of a city. The same
are capable of being used after they are brought into the limits of a city.
Hence, the same will be goods within the meaning of clause 25 of section 2 of
the said Act.
In
the decision of the Apex Court in the case of Idea Mobile Communication
Ltd. (Supra), the Court had come to the conclusion that a SIM card has
no intrinsic sale value and therefore sales tax is not payable. But the Apex
Court has not considered the question whether SIM cards are capable of being
used which is a relevant consideration for charging LBT.
The
Schedule under the rules framed under the said Act provide for levy of LBT on
the following items:
Group
II: ‘133. All types of mobile phones, pager, I-pad, I-pod, tablet and all sorts
of means of communication and their components, spare parts and accessories.
SIM card, memory card, activation / renewal slips / vouchers whether recharged
online or otherwise’ (emphasis added).
As
far as e-recharge is concerned, by no stretch of imagination can it be said
that e-recharge is capable of being brought into the limits of a city. In
clause 133 quoted above, e-recharge is not specifically included. Assuming that
it is included, it is nothing but an electronic download by use of internet.
Hence, e-recharge cannot be subject to levy of LBT. E-recharge is capable of
being used but it cannot be said that by downloading e-recharge through
internet, e-recharge is brought into the limits of a municipal corporation.
Hence, LBT cannot be recovered on e-recharge.
Coming
back to SIM cards and recharge coupons / cards, as held earlier, the same will
be covered by the definition of ‘goods’ under sub-section 25 of section 2 of
the said Act. The charging section for LBT under the said Act is section 152P.
LBT is leviable on the entry of goods into the limits of a city for
consumption, use or sale. Hence, the corporation was well within its powers to
levy LBT on SIM cards and recharge vouchers in physical form. Thus, the
petition partly succeeded.
