TATA COMMUNICATIONS LIMITED Vs. STATE OF ANDHRA PRADESH

JUDGEMENT

(1.) THIS is an appeal filed against the orders of the Appellate Deputy Commissioner (CT), Secunderabad Division (FAC), Hyderabad, in proceedings Appeal No. 542/97 -98, dt. 24.3.1998 upholding the orders of the Commercial Tax Officer, Nampally Circle, Hyderabad, passed provisionally for the months July to December, 1997 under the APGST Act vide his order dated 24.2.1998 in G.I. No. APGST/97 -98, wherein a turnover of Rs. 7,23,70,588.00 ps. was brought to tax. Appellant is aggrieved, because the said turnover relates to Air -time charges received from customers using TATA CELL PHONES and is claimed not taxable as it did not involve any transfer of goods. Appellants under licence from Department of Tele -communications (DOT), to establish, maintain and operate cellular mobile telephone services, established its own Net -work at various places in the State of Andhra Pradesh. The appellant sold hand -sets to its customers and paid tax due thereon. However it is disputing tax on a turnover of Rs. 7,23,70,588/ - relating to Air -Time charges received from its customers for calls made by them, which was taxed under entry 197 of the First Schedule to the APGST Act. The ADC (CT) in a very brief order upheld the CTO's assessment order. Appellant is therefore aggrieved and filed this appeal before us.

(2.) THE point to be considered is, whether the disputed turnover of Rs. 7,23,70,588/ - relating to Air -time charges is taxable under the APGST Act. The appellant objected to the assessment on the following grounds: -

(3.) THE Department's stand is now analysed. According to the C.T.O., it was clear from the exhaustive meanings of the words 'incorporeal tangible goods' used in entry 197 of the First Schedule, that anything which does not have a form, but has commercial value, and through which monetary returns accrue, was exigible to tax. That Air -time was bodyless, incorporeal but being exploited commercially by the assessee to provide Value -Added Cellular Phone Services, it was taxable. The C.T.O., relied on the decisions of the Supreme Court in the case of H. Anraj vs. Government of Tamil Nadu ( : 61 STC 165) and Vikas Sales Corporation and Another vs. Commissioner of Commercial Taxes and Another (23 APSTJ 24) wherein it was respectively held that Lottery tickets and REP licences were goods and their transfer for consideration tantamount to sale of goods. According to him, even Air -time was a manifestation of Human creativity and skill and its tapping as a potent source of wireless communication brings in commercial, monetary benefits to the appellant. That such commercial exploitation part -takes the nature of goods which are intangible and incorporeal and hence liable to tax under entry 197 of the First Schedule to the Act. He thus rejected the contention of the appellant that it was offering 'services' to the subscribers by operating a Radio communication net -work and was not effecting any sale of Air -time. In the very last para of his order, the C.T.O. deals with the appellant's contention that transfer of property, an essential element of sale, was missing in the impugned transactions thus: -