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2019 (1) TMI 766 - HC - VAT and Sales TaxLevy of VAT or service tax - gross receipts of the petitioner from providing the Passive Infrastructure Services in Gujarat - transfer of right - GVAT Act - It is the case on behalf of the petitioners that the transaction in question i.e. the revenue under the MSA is governed completely by Finance Act, 1994 and is liable to service tax. Whether the transactions under reference can be said to be and/or considered as “transfer of right to use goods” as contemplated under Section 2(23)(d) of the GVAT Act or in the nature of “service contract” (as contended on behalf of the petitioner)? Held that:- On perusal of the MSA as amended from time to time it can be seen that the petitioner Company has agreed to provide passive telecommunication infrastructure to the telecom operator so as to facilitate them to install and operate requisite equipments to provide telecommunication services. The said infrastructure would be provided to the telecom operator on “use only basis” for installation, operation and maintenance etc. of the active infrastructure of a telecom operator - It also appears that the petitioner Company grants the right to the telecom operator to enter the concerned site for installing necessary equipments, machineries owned by it at such site as may be required by it as well as also grants the right to operate and maintain the same. It also appears that the petitioner Company grants the right to the telecom operator to enter the concerned site for installing necessary equipments, machineries owned by it at such site as may be required by it as well as also grants the right to operate and maintain the same. The telecom operator can be said to have effective control over the manner, time and nature of use of passive infrastructure by virtue of its “right to use goods” acquired through such contract. Even the telecom operator has right to select the particular height, direction or other equipments. The petitioner Company does not have any freedom to allot the same height, direction on the same tower. Thus, once a particular placed is allotted by way of passive infrastructure, to any telecom operator, the said telecom operator can be said to be in exclusive domain and/or possession and/or use of such passive infrastructure by virtue of its “right to use” acquired through the contract subject to the conditions of MSA as amended from time to time once it is allotted to the petitioner Company does not appear to have the effective control over the manner, time and nature of use of a specified access to passive infrastructure allotted to a particular operator - Therefore, the transaction in question between the petitioner Company and the respective telecom operators pursuant to the respective MSA as amended from time to time cannot be said to be in the nature of “service contract” as contended on behalf of the petitioner. The impugned SCN cannot be said to be wholly without jurisdiction and/or without authority under the law - appeal dismissed.
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