K. V. Hari Babu, ACMA, CS
M/s. Indus Tower Limited V/s. The Deputy Commissioner of Commercial taxes (Karnataka High Court)
Division Bench of the Karnataka High Court held that tower sharing by Telecom Infrastructure companies with telecom service providers is not liable for levy of VAT, as there is no transfer of right to use.
What the Mobile operator wants from the assessee is permission to install their antennae in the tower erected by the assessee, uninterrupted supply of electrical energy at a particular temperature, permission to keep the active infrastructure in the pre-fabricated shelter, right of ingress and egress to operate the equipments so that he can utilise his active infrastructure for rendering service to his customers. Therefore, a harmonious reading of these provisions make it very clear that there is no transfer of right to use goods conferred on the mobile operator under the contract.
That permission to have access to passive infrastructure is loosely termed a right to use the passive infrastructure. There is no intention to right to use. Even after the contract, after providing access, the right, title and interest of the passive infrastructure continues to remain with the assessee. No portion of the infrastructure is delivered to the mobile operator. He is not put in possession of the any portion of the passive infrastructure. No right as such in the passive infrastructure is transferred to the mobile operator. No goods is delivered to the mobile operator. At no point of time the assessee looses right, control, possession and custody of the passive infrastructure.
The right that is conferred on the mobile operator is a permission to have access to the passive infrastructure, a permission to keep the active infrastructure in the site belonging to the assessee, a permission to mount the antennae on the tower erected by the assessee and to have the benefit of a particular temperature so as to operate the equipments belonging to the mobile operator. No sale of goods or transfer is involved in the transaction in question. Therefore, it does not fall within the mischief of Article 366 (29A) (d) of the Constitution as held by the learned single judge as well as the assessing authority. Therefore, the impugned order passed by the learned single judge as well as the assessing authority cannot be sustained.
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