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2015 (10) TMI 2783 - HC - VAT and Sales TaxTransfer of right to use - Levy of KVAT - Deemed sale - treatment by respondents of the petitioners as dealers for the purposes of the KVAT Act - HELD THAT:- It will be apparent from a consideration of the various clauses in the Master Services Agreement that, what is contemplated therein is the provision of certain infrastructural facilities by the petitioner, which could be tapped into by various mobile services operators, who have entered into an agreement with the petitioners, on payment of a fee as consideration. What is evident from a perusal of the various clauses is that the ownership of the infrastructural facility continues to be with the petitioners. The obligation to maintain and control the passive infrastructure is also retained with the petitioners. The risk attached to the maintenance of the infrastructural facility continues to lie with the petitioners and for this reason, the obligation to take out an insurance in respect of the passive infrastructure is also with the petitioners. The mobile service operators are given only a limited permission to use the infrastructural facility in accordance with the terms and conditions in the agreement. Applying the said test, a Division Bench of Karnataka High Court in the case of INDUS TOWERS LTD. VERSUS DEPUTY COMMR. OF COMMERCIAL TAXES, BANGALORE [2013 (6) TMI 81 - KARNATAKA HIGH COURT], considered the scope and ambit of a Master Services Agreement, identical to the agreements entered into in the instant writ petitions, and found that the terms of the said agreement could not be construed as having transferred a right to use passive infrastructure to the mobile service operators. The Master Services Agreement was found to have merely permitted access to the sharing telecom operators to the passive infrastructure to the extent it was necessary for the proper functioning of the active infrastructure - The possession of the passive infrastructure was found to have always remained with the provider of the passive infrastructural services and therefore, the sharing telecom operators did not have any right to use the passive infrastructure. There is no transfer of the right to use the passive infrastructure, that is made available by the petitioner to the various mobile service operators. As already noted above, the petitioners retained control over the passive infrastructure that was maintained by them and this degree of control, that was exercised by the petitioners over the passive infrastructure, ensured that the mobile service operators, who were given permission to use the infrastructural facility, obtained only a licence to access the infrastructural facilities offered by the petitioner, and did not get a right to use the goods transferred to them in the process - there is no transfer of the right to use the infrastructural facilities, from the petitioners to the mobile services operators, that could be brought to tax under the KVAT Act. Petition allowed.
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