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2010 (2) TMI 1093 - HC - VAT and Sales TaxWhether the first and second respondents were justified in concluding that, the allotment of "space segment capacity" in the transponders and bandwidth of a communication satellite having different frequency would amount to "sale or purchase of goods" within the meaning of article 366(29A)(d) of the Constitution of India as well as section 2(29)(d) of the KVAT Act? Whether the transaction in question does not come within the scope of section 6 of the Karnataka Value Added Tax Act, 2003? Held that:- there is dedicated, effective and general control of the SBAS given to the customers who has the freedom of choice of selecting the manner, time and nature of use of the equipment, though within the frame work of the agreement of lease and hence, the right to use "space segment capacity" falls within the extended definition of "sale", inasmuch as, there is delivery of possession in the said lease and there is a clear identification of the "space segment capacity" being delivered to the customer and the customer is given the right to use it in any manner as he deems fit. Of course, subject to terms of the lease agreement during which period, the appellant herein or the Department of Space has no right to use the "space segment capacity" either for its own or to transfer the same to any other customers. Therefore, the transaction involved in this case is a "deemed sale" coming within the definition of "sale" under section 2(29)(d) of the KVAT Act. Accordingly, point No. 1 is answered against the appellant. Keeping in view the fiction which has been created in section 6 of the KVAT Act and the facts of the present case, since the agreement has been entered into within the State of Karnataka and at the time of agreement, i.e., "transfer of right to use the goods" was concluded, in the instant case, the goods namely, "space segment capacity of the transponder" in a satellite was available for transfer of right, section 6 of the Act does not hit the transaction in question. We reiterate that, the said provision enables different varieties of transaction to be brought within the scope of the KVAT Act and in our view, the same cannot curtail the present transaction from being brought within the purview of the KVAT Act. Accordingly, we answer point No. (ii) also against the appellant.
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