TATA CELLULAR LTD Vs. GOVERNMENT OF ANDHRA PRADESH

JUDGEMENT

(1.) The petitioners in these three writ petitions are Cellular Phone Service Providers in the State. They are aggrieved by actions of the respective Inspectors of Legal Metrology (Weights and Measures) Department at various places. They seek Mandamusin these writ petitions declaring that sale of Freedom cards and recharge coupons by TATA Cellular Limited and sale of AIRTEL prepaid cards and recharge cards/coupons as well as post-paid cards and kits by Bharti Cellular Limited for providing Cellular Mobile telephone services to the respective subscribers do not require compliance of provisions of Standards of Weights and Measures Act, 1976 (in short, the 1976 Act), Standards of Weights and Measures (Enforcement) Act, 1985 (in short, the 1985 Act) and the Standards of Weights and Measures (Packaged Commodities) Rules, 1977 (in short, the Rules) and consequently to quash seizures of such cards and coupons by the respective Inspectors of Legal Metrology (Weights and Measures) for the alleged violation of the said Acts and Rules. It is the petitioner's contention that the said SIM (Subscriber Identity Module) cards and recharge coupons are not of 'pre-packed commodities' within the meaning of the said Acts and Rules. The petitioner's are holders of licence and are permitted to carry on operations of providing mobile cellular telephone services within the Andhra Pradesh Circle and are governed by the provisions of Indian Telegraphic Act, 1885 and Indian Wireless Telegraphy Act, 1933. It is stated that the petitioners instal and run applicable systems and the services provided by them to the subscribers are at the rates fixed by the Telecom Regulatory Authority of India (TRAI) and that the petitioners are obliged to provide and implement such services as decided by the authority confirming to the Global System for Mobile Communications (GSM) standards issued by European Telecom Institute and that for effectively marketing their services, the petitioners had appointed various dealers besides opening various service points across the State. It is contended that the petitioners are offering the above cards and coupons which contain necessary software packages at various commercial establishments, dealer outlet shops etc. at various denominations. According to the petitioners, there is a sale of neither product nor commodity, but it is only a charge for the service to be provided, collected in advance from the subscriber and that the amounts paid for prepaid cards and recharge coupons are paid in advance for the services offered by the petitioners in future. On behalf of the respondents, counters are filed in two out of three writ petitions. It is contended by the petitioners that prepaid and post paid cards and recharge coupons contain necessary software packages and that the package contains SIM card, which is computer software generated chip inserted in the hand set the cellular or mobile phone to activate the card or services of the phone's net work. It is contended by the Assistant Government Pleader that SIM card is a pre-packed commodity or article within the meaning of Rule 2(l) of the Rules and that the chip has definite predetermined value in terms of air time used for conversation based on which the charges are levied and that since SIM card is a pre-packed commodity, or article, it is liable to comply with the requirements of Rule 6(1) and Rule 2( r) of the Rules and that by adding administration fee of Rs.50/-to MRP declared on the package which is inclusive of all taxes, the petitioners have violated those Rules. The respondents justify the actions of the respective Inspectors of Legal Metrology (Weights and Measures) of various places in making inspections and effecting seizures of SIM card packets. The petitioners' counsel in these three writ petitions placed reliance on Bharati Airtel Limited v State of Karnataka, 2010 ILR(Kar) 1968of the Karnataka High Court and Aircel Limited v Govt.of NCT of Delhi, 2011 10 AD(Del) 10of the Delhi High Court and contended that SIM cards and recharge coupons are not commodities within the meaning of the 1976 Act, the 1985 Act and the Rules.

(2.) On the other hand, Assistant Government Pleader for the respondents placed reliance on Tata Consultancy Services v State of Andhra Pradesh, 2005 1 SCC 308and Idea Mobile Communication Limited v C.C.E. and C, Cochin, 2011 8 Scale 227of the Supreme Court and contended that though SIM card contains software to provide access to the net work of the service providers, the said software is in a tangible property and therefore a commodity or goods. Both the petitioners' counsel as well as the Assistant Government Pleader equally placed reliance on various observations made by the Supreme Court in Bharat Sanchar Nigam Limitedv Union of India, 2006 3 SCC 1, wherein the Supreme Court considered whether telephone service (mobile or fixed) is a transaction which attracts definition of 'goods'.

(3.) According to the respondents, the chip known as SIM card is pre-packed commodity or article and is liable to comply with requirements of Rule 6(1) and Rule 2(r) of the Rules. Either in the 1976 Act or in the 1985 Act, or in the Rules there is no definition of 'commodity'. Rule 2(l) of the Rules defines 'pre-packed commodity' in the following terms: