Case Law Details
FIS Payment Solutions And Services India Private Limited Vs State of Karnataka (Karnataka High Court)
Karnataka High Court held that deployment of ATM and other assets, without transfer of possession and effective control, for provision of ATM management service to banks is outside the purview of Value Added Tax.
Facts- The common issue for consideration in the writ petitions is whether the respondents have jurisdiction to levy Value Added Tax (“VAT “) under the provisions of the Karnataka Value Added Tax Act, 2005 (“KVAT Act”) KVAT Act on ATM Management Services provided by the petitioner to various Banks across the State of Karnataka on which the petitioner has already paid Service Tax as per the Finance Act 1994.
Conclusion- Held that it is nowhere evident that the ATMs and equipment at any stage are transferred/delivered to the banks, and neither does the possession get transferred to the bank. The petitioners all through out the tenure of the agreement continue to provide ATM Management services to the banks deploying/using the ATMs and equipment. Delivery/transfer is sine qua non to the levy of VAT. However, no delivery, but only deployment, takes place. The petitioners not only have possession but are also in effective control of the ATMs and equipment. If it were neither in possession nor in effective control over the ATMs and equipment, the petitioners would have been unable to provide the services.
Held that the transaction is a pure service transaction not entailing any transfer of property of goods or effective control of the goods the recipient. The various terms of the agreements with the Banks discloses that the primary intent of the contract is only provision of ATM management service for which the Petitioner deploys ATMs and other assets at various sites across India. The Petitioner uses the ATMs and other assets merely as a means for providing ATM management services to banks.
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