Whether limited access granted can be considered as transfer of right to use, chargeable to VAT?

Indus Towers Ltd. VS. UOI [2014  (35) STR  459 (Dei.)]

 

 

FACTS:

The  petitioners   provide  access  to  telecom  towers,  to telecom operators as well as provide passive infrastructure services and related operations and maintenance services on sharing  basis.  The  active  infrastructures  are owned by  the  telecom  operators.  The  sharing  operator  has a non-extensive   right  of  site  access  availability  on  "use only basis" for installation,  operation and maintenance  of active infrastructure.  Passive infrastructure  provided was considered  to be transfer  of right to use goods  by VAT department.  It was contested that it is leviable to service tax  under business support services and that the order for levying VAT was ultra  vires Article  14, 19(1)(g) and 265 of the Constitution  of India. The decision of Indus Towers ltd. 2012 (285) ELT 3 (Kar) delivered  in its own case by Kamataka  High Court wherein  it was held that providing service   in relation to site access cannot be considered to be  transfer of right to use goods was relied on. However, the respondents   contested   that  the  question   framed before the High Court was erroneous  and therefore,  the  matter should be decided afresh.

 

No right, title, interest or any similar right was created in relation of telecom operator and it was the responsibility of petitioners  to ensure  that the  passive  infrastructure was  functioning   efficiently.   The   limited   access   made available to telecom  operators was inconsistent  with the of "right to use" and it was only a permissive  with  very  limited  purposes  with  very  limited  and  strictly a regulated access. The  substance  of the decision  of the karnataka High Court was thus followed.