High Court : No ‘sale’ element in telecommunication services, except handsets supplied to subscribers

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HC rules on applicability of sales tax under Bombay Sales Tax Act on voice transmission services rendered by cellular operator; Observes, in order to attract the provisions of enactment imposing tax on sale or purchase of goods, necessary ingredients are – existence of movable property constituting goods (not being newspapers or actionable claims or money, or stocks, or securities), existence of an agreement for transfer of property of such goods, and actual transfer by one person to another; Finds no such ingredients in service being provided by assessee absent transfer of property in goods or transfer of rights to use any goods to subscribers, as contemplated under the Act; In light of law laid down by Apex Court in Bharat Sanchar Nigam Ltd. and Idea Mobile Communication Ltd., HC holds that assessee, indulged in activity of rendering telecommunication services, cannot be held liable for payment of sales tax on these services; However, clarifies that in cases where telephone instruments, mobile hand sets  and modems are either sold or supplied by service provider to subscriber, assessment orders levying tax thereupon must be upheld, provided consideration brought to tax does not include service element of such a composite transaction of sale and service  : Bombay HC

Citation: [TS-181-HC-2018(BOM)-VAT]

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