TMI Blog2010 (3) TMI 764X X X X Extracts X X X X X X X X Extracts X X X X ..... P. Nos. 168 to 175 (Coch.) of 2009 - - - Dated:- 12-3-2010 - N. Vijayakumaran, Sanjay Arora, JJ. S.E. Dastur and N. Sheth for the Appellant. Dr. Babu Joseph for the Respondent. ORDER Sanjay Arora, Accountant Member. The present set of Miscellaneous Petitions by the assessee under section 254(2) of the Income-tax Act, 1961 ( the Act hereinafter) is qua the consolidated order dated 30-4-2009 by the Appellate Tribunal under section 254(1) of the Act, adjudicating the assessee s appeals for the assessment years (AYs) 2005-06 to 2008-09, i.e., in ITA Nos. 106 to 113/Coch/2009; there being two appeals for each year, contesting the separate orders under section 201 and 201(1A) of the Act therefor, even as the question in issue before it, and thus decided by it, was only one; the liability to interest under section 201(1A) of the Act being only consequential to the assessee being deemed to be in default under section 201 respecting tax qua which there has been ostensibly a failure on its part to deduct and pay under section 194H. 2.1 The applicant-company, Vodafone Essar Cellular Ltd., formerly Hutchison Essar Cellular Ltd., formerly BPL Mobile Cellular Ltd., is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court, stood cited by and on behalf of the assessee-appellant (refer paras 4 to 12 21 of the Tribunal s Order). 2.2 The Revenue s case, on the other hand, was that the SIM cards, and other service products provided to the customers by the distributors, are not mere physical commodities or goods in that sense, but only devices for access to the telephony services provided by the assessee, without or apart from which these are of no use. That is, the SIM cards (or other coupons, tickets etc.) have no value of their own, so that there is no question of any property in them passing to the distributors and, in turn, to the customers, and there is no de facto purchase or sale. The said access, in respect of each user, whether falling in the prepaid or post-paid category, is only by the service-provider, who allows the same after satisfaction of all the terms and conditions of the sale of such instruments of service, including those relating to proper documentation, registration, etc. - the industry being subject to extensive external regulation, i.e., by the Telephone Regulatory Authority as well as Government of India - the same having security implications, as well as those inter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the agreements. 8. Incorrectly stating that the Applicant is holding ownership of the distributors. 9. Incorrect recording of the scope of work done under the prepaid and postpaid systems. 10. Incorrectly distinguishing the Applicant s case from the case of Stamp Vendors and Lottery Ticket Agents. 11. Reliance on the unreported decision of Kerala High Court on which even the Department did not place reliance. 4.1 Before us, the matter stood argued vehemently and extensively by the ld. Counsel, Sh. S.E. Dastur, pointing several infirmities in the impugned order. The Tribunal, after correctly determining the point in issue, i.e., whether the margin of the distributor is a commission or brokerage (vide para 29 of its Order), failed to address the same in deciding its appeals. It has relied, in deciding the present appeals, on a decision dated 13-2-2009 by the jurisdictional High Court in the case of BPL Mobile Cellular Ltd. v. Union of India [in W.P.(C) 29202 of 2005 (B)], which had, at the time of hearing (17-3-2009) not even seen the light of the day, being unreported at the relevant time, and even as the same stood delivered in the context of a dif ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sible under, or outside the ambit of, section 254(2) of the Act (vide: CIT v. ITAT [1992] 196 ITR 683. As such, in our view the assessee s applications are liable to be rejected at the threshold in view of the issue being under appeal so that the impugned order would get merged with the appellate order by the High Court. We would, nevertheless, and without prejudice, also consider the assessee s objections on merits, as follows. 5.1 As would be apparent, the assessee s objections to the impugned order could be classified into live broad categories, which though would be without, in any manner, detracting from the relative merits of each of them individually - the classification being relevant only for the purpose of organization of the present order, as: (a) the incorrect understanding of facts (grounds 1, 2, 6, 7, 8 9); (b) no-consideration of the decision in the case of Gordon Woodroffe Co. (supra) (ground 3); (c) non-disclosure of the basis in distinguishing the decision in M.S. Hameed s case (grounds 4, 10); (d) non-adjudication of the Ground III(2) by the Tribunal (ground 5); and (e) reliance on an unreported decision by the jurisdictional H ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly as gathered on a reading of the Tribunal s Order. The same, we find, is in agreement with that as explained by the first appellate authority as well as per the two cases by the Tribunal deciding the same issue, one each in favour of the assessee Idea Cellular Ltd. v. Dy. CIT [2009] 121 TTJ (Delhi) 352 and the revenue [Asstt. CIT v. Bharti Cellular Ltd. [2007] 105 ITD 129 (Kol.)], cited and relied upon by them in advancement of their respective cases before it. The same, thus, exhibits three things. Firstly, the reliance itself shows that there is essentially no difference between the details and scope of the transactions or activities undertaken by the different cellular operators, which is even otherwise only understandable, with all of them operating on the basis of licences secured from the Government of India, providing the same set of services. Secondly, it reflects a unanimity in the understanding of those underlying transactions or activities by the different service providers (themselves), the Revenue, and the Tribunal. The different view is in the applicability of the provision of section 194H of the Act, nevertheless, i.e., in spite of the nature of the transactions b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the pricing arrangement or the agreement entered into between the two. The definition of the words commission or brokerage , as appearing in Explanation to the section, may be taken note of at this stage. In fact, it is possible for us to show, qua every objection, that it is not maintainable, being not material in view of this basic position, or as not correct, or even as having been considered by the Tribunal. The same would only encumber this order further and also amount to a review of the impugned order. Besides, and most importantly, none of them impinge on the basic position afore-stated, making them even otherwise of no moment. 5.4 The decision by the Hon ble jurisdictional High Court in the case of M.S. Hameed (supra) stands duly considered by the Tribunal vide paras 39 and 60 of its Order) and, in view of the afore-stated basic position, becomes distinguishable on facts [refer para 5.3 (supra)]. There is no relationship between the final purchaser of the ticket, who is responsible for paying the sale price of ticket to the lottery agent, and the State Government which issues the tickets to the agents for a price calculated to yield a margin thereto, while in the pres ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e s charge of the commission as having been adopted at a notional amount, even as this matter stands specifically discussed by the Tribunal vide paras 59 60 of its Order, including the assessee s contention that distributors are allowed pricing freedom so that they may sell at less than MRP. Besides, prior to May, 2007 - the assessee-company taking over operations with effect from 1-5-2007 - the terms of the distributorship agreement clearly stated that the products are to be sold at the price fixed by the assessee-service provider. As such, to state of the Tribunal s impugned finding as without basis is incorrect. The same position obtains with regard to the other decisions (refer ground 10 above) stated to have been not considered or brushed aside by the Tribunal in passing its Order, each of which we find it to have, leading to it formulating the issue which, in light thereof, would require to be resolved (refer: para 45 of its order), and which it proceeds to address per the ensuing paragraphs. An Order, it may be appreciated, is not to be read as a, or as is a, Statute. It is not the question of the words employed, but what it seeks to convey in substance, that is relevant; ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a sale of goods, exigible to sales tax, or whether the same is only a service rendered by the service-provider and, thus, liable to service tax; the different litigants having taken, as observed by the Hon ble Court, divergent positions, and held it to constitute a service, liable to service tax, i.e., the position adopted by the assessee-petitioner in that case. As such, even though rendered in a different proceedings, were found as squarely applicable by the Tribunal, so that the objection of the same being unreported at the relevant time or having not been pressed by the revenue during hearing are of little import [refer: Art. 141 of the Constitution of India; Asstt. CIT v. Saurashtra Kutch Stock Exchange Ltd. [2008] 305 ITR 2274 (SC)]. We are conscious and regardful of the fact that there could be a propriety issue here; the decision having not been cited during and, consequently, subject to hearing, which the principle of natural justice demands. However, we find no infirmity or disregard of the principle of audi alteram partem, and which would perhaps also explain the non-raising by the applicant, i.e., specifically, of this ground before us. The Writ Petition (C) 29202 of 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nal High Court, but their decisions settle the issue that the transaction involved is quintessential a service, as contended by the revenue in the present case and, further, irrespective of the segment, i.e., post-paid or prepaid, to both of which the service tax would apply, and also irrespective of the manner in which the same is reflected in the accounts. The assessee s case for the post-paid category, wherein it concedes to it being a service, liable to TDS, thus stands brought, per their decisions, in parity with the pre-paid category, as is readily inferable from the Tribunal s Order. Even otherwise, these aspects, as afore-stated, have found due deliberation by the Tribunal, with it upholding the Revenue s stand. To contest the said finding(s) in rectification proceedings is, under the circumstances, wholly unwarranted. 5.6 Next, we discuss the issue of the non-consideration of the decision in the case of Gordon Woodroffe Co. (supra) by the Tribunal in rendering its decision. The applicability of the same, in view of the judgment the Apex Court in the case of BSNL (supra), followed by the decision by the jurisdictional High Court in its own case of BPL Mobile Cellular Lt ..... X X X X Extracts X X X X X X X X Extracts X X X X
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