Remanded

Tata Sky Limited through Its Authorized Signatory and Chief Financial Officer Mr Sambasivan Genesan v. the State of Jharkhand through Its Secretary Cum Commissioner of Commercial Taxes

Jharkhand HC10 Aug 2021WPC/1506/2020

Case brief

AI extract

What is this about?

The High Court examined writ petitions challenging Commercial Taxes Tribunal orders imposing VAT on Tata Sky Limited. Finding serious factual errors regarding traded goods and ignoring the subscription contract, the Court declined to rectify errors in writ jurisdiction and remanded the matter to the Tribunal for fresh consideration.

What did the court decide?

The impugned judgments of the Tribunal were set aside and the matters remanded to the Tribunal for fresh consideration of the Subscription Contract and factual errors.

Tata Sky Limited through Its Authorized Signatory and… — GST and Indirect Tax | Jharkhand HC (2021)

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IN THE HIGH COURT OF JHARKHAND AT RANCHI

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W.P.(T) No. 1506 of 2020

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Tata Sky Limited, a public limited company registered under the Companies Act, 1956 and having its office at Tata Sky Limited C/o Alexis Global Pvt. Ltd., M/s Sharma Engineering works, Plot No.26, N 27, Industrial Area, Kokar, P.O. & P.S. – Kokar, District – Ranchi, Jharkhand, 834001, through its Authorized Signatory & Chief Financial Officer Mr. Sambasivan Ganesan aged about 50 years, S/o Shri Ganesan Tirunelveli, 3^rd Floor, Unit 301 to 305, Windsor, Off CST Road, Kalina, P.O. & P.S. Santa Cruz East, District Mumbai

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----Petitioner

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Versus

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The State of Jharkhand through its Secretary cum Commissioner of Commercial Taxes, Head Quarter, Jharkhand, having its office at Project Building, HEC, P.O. & P.S. – Dhurwa, District – Ranchi;

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The Joint Commissioner of Commercial Taxes (Administration) Urban Circle, Jamshedpur, having his office at Jamshedpur, at Sakchi, P,O & P.S. Sakchi, Town – Jamshedpur, District – Singhbhum (East)

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The Deputy Commissioner of Commercial Taxes, Jamshedpur Circle, Jamshedpur, having its office at Jamshedpur, at Sakchi, P.O. & P.S. Sakchi, Town – Jamshedpur, District – Singhbhum (East)

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The Assistant Commissioner of Commercial Taxes, Jamshedpur Urban Circle, Jamshedpur, having its office at Jamshedpur, at Sakchi, P.O. & P.S. Sakchi, Town – Jamshedpur, District – Singhbhum (East)

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The Commercial Taxes Officer, Jamshedpur Urban Circle, Jamshedpur, having its office at Sakchi, P.O. & P.S. Sakchi, Town – Jamshedpur, District – Singhbhum (East)

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----- Respondents

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With W.P.(T) No. 1542 of 2020

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Tata Sky Limited, a public limited company registered under the Companies Act, 1956 and having its office at Alexis Global Pvt. Ltd., M/s Sharma Engineering works, Plot No.26, N 27, Industrial Area, Kokar, P.O. & P.S. – Kokar, District – Ranchi, Jharkhand, 834001, through its Authorized Signatory & Chief Financial Officer Mr. Sambasivan Ganesan aged about 50 years, S/o Shri Ganesan Tirunelveli, resident of 3^rd Floor, Unit 301 to 305, Windsor, Off CST Road, Kalina, Santa Cruz (East), Mumbai, P.O. & P.S. Santacruz (East), District Mumbai ----Petitioner

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Versus

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The State of Jharkhand through its Secretary cum Commissioner of Commercial Taxes, Head Quarter, Jharkhand, having its office at Project Building, HEC, P.O. & P.S. – Dhurwa, District – Ranchi;

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The Joint Commissioner of Commercial Taxes (Administration) Urban Circle, Jamshedpur, having his office at Jamshedpur, at Sakchi, P.O & P.S. Sakchi, Town – Jamshedpur, District – Singhbhum (East)

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The Deputy Commissioner of Commercial Taxes, Urban Circle, Jamshedpur, having its office at Jamshedpur, at Sakchi, P.O. & P.S. Sakchi, Town – Jamshedpur, District – Singhbhum (East)

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The Assistant Commissioner of Commercial Taxes, Urban Circle, Jamshedpur, having its office at Jamshedpur, at Sakchi, P.O. & P.S. Sakchi, Town – Jamshedpur, District – Singhbhum (East)

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The Commercial Taxes Officer, Jamshedpur Urban Circle, Jamshedpur, having its office at Sakchi, P.O. & P.S. Sakchi, Town – Jamshedpur, District – Singhbhum (East)

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----- Respondents

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With

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W.P.(T) No. 2268 of 2020

----Petitioner

Versus

The State of Jharkhand through its Secretary cum Commissioner of Commercial Taxes, Head Quarter, Jharkhand, having its office at Project Building, HEC, P.O. & P.S. – Dhurwa, District – Ranchi;

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The Joint Commissioner of Commercial Taxes (Administration) Urban Circle, Jamshedpur, having his office at Jamshedpur, at Sakchi, P.O & P.S. Sakchi, Town – Jamshedpur, District – Singhbhum (East)

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The Deputy Commissioner of Commercial Taxes, Jamshedpur Circle, Jamshedpur, having its office at Jamshedpur, at Sakchi, P.O. & P.S. Sakchi, Town – Jamshedpur, District – Singhbhum (East)

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The Assistant Commissioner of Commercial Taxes, Jamshedpur Urban Circle, Jamshedpur, having its office at Jamshedpur, at Sakchi, P.O. & P.S. Sakchi, Town – Jamshedpur, District – Singhbhum (East)

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The Commercial Taxes Officer, Jamshedpur Urban Circle, Jamshedpur, having its office at Sakchi, P.O. & P.S. Sakchi, Town – Jamshedpur, District – Singhbhum (East)

----- Respondents

With

W.P.(T) No. 2281 of 2020

----Petitioner

Versus

The State of Jharkhand through its Secretary cum Commissioner of Commercial Taxes, Head Quarter, Jharkhand, having its office at Project Building, HEC, P.O. & P.S. – Dhurwa, District – Ranchi;

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The Joint Commissioner of Commercial Taxes (Administration) Urban Circle, Jamshedpur, having his office at Jamshedpur, at Sakchi, P.O & P.S. Sakchi, Town – Jamshedpur, District – Singhbhum (East)

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The Deputy Commissioner of Commercial Taxes, Jamshedpur Circle, Jamshedpur, having its office at Jamshedpur, at Sakchi, P.O. & P.S. Sakchi, Town – Jamshedpur, District – Singhbhum (East)

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The Assistant Commissioner of Commercial Taxes, Jamshedpur Urban Circle, Jamshedpur, having its office at Jamshedpur, at Sakchi, P.O. & P.S. Sakchi, Town – Jamshedpur, District – Singhbhum (East)

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The Commercial Taxes Officer, Jamshedpur Urban Circle, Jamshedpur, having its office at Sakchi, P.O. & P.S. Sakchi, Town – Jamshedpur, District – Singhbhum (East)

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----- Respondents

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With

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W.P.(T) No. 2284 of 2020

Versus

The State of Jharkhand through its Secretary cum Commissioner of Commercial Taxes, Head Quarter, Jharkhand, having its office at Project Building, HEC, P.O. & P.S. – Dhurwa, District – Ranchi;

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The Joint Commissioner of Commercial Taxes (Administration) Urban Circle, Jamshedpur, having his office at Jamshedpur, at Sakchi, P.O & P.S. Sakchi, Town – Jamshedpur, District – Singhbhum (East)

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The Deputy Commissioner of Commercial Taxes, Jamshedpur Circle, Jamshedpur, having its office at Jamshedpur, at Sakchi, P.O. & P.S. Sakchi, Town – Jamshedpur, District – Singhbhum (East)

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The Assistant Commissioner of Commercial Taxes, Jamshedpur Urban Circle, Jamshedpur, having its office at Jamshedpur, at Sakchi, P.O. & P.S. Sakchi, Town – Jamshedpur, District – Singhbhum (East)

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The Commercial Taxes Officer, Jamshedpur Urban Circle, Jamshedpur, having its office at Sakchi, P.O. & P.S. Sakchi, Town – Jamshedpur, District – Singhbhum (East) ----- Respondents

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CORAM: Hon’ble Mr. Justice Aparesh Kumar Singh Hon’ble Mrs. Justice Anubha Rawat Choudhary Through : Video Conferencing

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--For the Petitioner (s) : Mr. M.S. Mittal, Senior Advocate, Mr. Rahul Lamba, Advocate Mr. Salona Mittal, Advocate For the State : Mr. Rajiv Ranjan, A.G. Mr. P.A.S. Pati, S.C. – IV Mr. Piyush Chitresh, A.C. to A.G.

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20/10.08.2021 Heard Mr. M.S. Mittal, learned Senior counsel appearing on behalf of the petitioner along with Mr. Rahul Lamba and Mr. Salona Mittal, Advocates.

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2. Heard Mr. Rajiv Ranjan, learned Advocate General along with Mr. P.A.S. Pati, S.C. – IV and Mr. Piyush Chitresh, Advocate.

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3. These batch of writ petitions relate to different financial years right from the year 2006-2007 to 2010-2011.

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4. In these writ petitions, the petitioner prays for quashing the judgment dated 28.01.2020 passed by the Commercial Taxes Tribunal relating to different financial years. They have also prayed for quashing the corresponding appellate order passed by the Joint Commissioner of Commercial Taxes (Appeals) and also for quashing

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the corresponding assessment orders with respect to different financial years from 2006-2007 to 2010-2011. The petitioner has also challenged the corresponding notices of demand arising out of the orders of assessment for the respective financial years.

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5. The following tabular chart will reflect the financial year and

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corresponding number of revision petition of each writ petition:

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Case Nos.	Financial Year	Revision number
W.P.(T). No.1506 of 2020	2008-2009	J.R 127 of 2013
W.P.(T). No.2284 of 2020	2009-2010	J.R 175 of 2015
W.P.(T). No.2268 of 2020	2010-2011	J.R 101 of 2016
W.P.(T). No.2281 of 2020	2006-2007	J.R 165 of 2016
W.P.(T). No.1542 of 2020	2007-2008	J.R 126 of 2013

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6. The petitioner at the relevant point of time was a registered dealer under the provisions of Jharkhand Value Added Tax Act, 2005 as well as Central Sales Tax Act, 1956. A copy of the registration certificate of the petitioner under Jharkhand Value Added Tax Act, 2005 as well as Central Sales Tax Act, 1956 has been produced by the petitioner before this Court. The Certificate of registration reflects that the petitioner was registered as a wholesale trader, retail trader and works contractor and the list of principle commodities in which the petitioner was dealing, was also reflected in the registration certificates.

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7. The argument has been advanced from the records of W.P.(T) No.1506 of 2020 relating to the financial year 2008-09. For the financial year 2008-2009, the authority under the Jharkhand Value Added Tax Act, 2005 passed order of assessment on 12.03.2011 under Section 35 (5) (b) of the aforesaid Act of 2005 and a demand notice arising out of the order of assessment was issued on 26.03.2011.

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8. The petitioner filed an appeal before the appellate authority. The appellate authority dismissed the appeal and was of the view that the assessing authority had rightly held that Set Top Box is a system and in order to operate it, Dish Antenna fittings and

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Recharge Vouchers are required and upon assembly of the three items, a system gets ready and each item cannot be seen in isolation. The appellate authority was of the view that all the three items i.e., Set Top Box, Dish Antenna and fittings and Recharge Vouchers together constitute one system which enables broadcasting of direct to home broadcasting and all three constitute sale. 9. The appeal was dismissed vide order contained in Memo No.191 dated 26.04.2013. The Petitioner filed revision before the learned Commercial Taxes Tribunal against the appellate order and inter alia challenged the Imposition of tax on loss incurred on sale of Set Top Box and imposition of tax on Tata Sky hardware which was imposed as the Assessing Authority as well as the Appellate Authority refused to accept the contention of the petitioner that Tata Sky hardware was being provided to the customers without consideration and are on entrustment basis. The petitioner also challenged the reversal of input tax credit on account of stock transfer. The petitioner also challenged the findings of the authorities that the Set Top Boxes are sold at a loss, by a predetermined strategy, due to which input VAT is in excess and the petitioner has strategized its business model in such a way that the petitioner may not be required to discharge VAT liability, either on Set Top Boxes or on Dish Antenna/Hardware or on Recharge Vouchers. The learned Tribunal dismissed the revision filed by the petitioner which was a cause of action to file the present case.

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10. It is not in dispute that similar issues are involved in all the cases except an additional issue which is involved in W.P.(T) No.2281 of 2020 i.e., for the period 2006-2007 where penalty has also been imposed. The facts before this Court have been placed from W.P.(T) No.1506 of 2020 which relates to the period 2008-2009. 11. These matters were heard on various dates and during the course of hearing, it transpired that the learned Tribunal has committed certain errors of fact while passing the impugned judgments and has also not considered certain essential facts and accordingly, serious errors of record on fact and law have been

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committed. It also transpired that the foundational facts which forms the basis of the learned Tribunal’s order having been recorded incorrectly by the learned Tribunal. This Court is not inclined to rectify such errors in writ jurisdiction. It is not in dispute that the factual errors which has been committed by the learned Tribunal goes to the root of the matter.

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12. The learned counsel while referring to the errors committed by the learned Tribunal has specifically pointed out that the Tribunal has committed an error of fact by recording and holding at multiple places that Set Top Boxes that were sold to the customer were a part of non-traded goods, although, it was the specific case throughout that the Set Top Boxes were sold to the customers through channel though at a loss. It has also been submitted that this is a fatal error since Set Top Boxes were admittedly sold by the petitioner on which VAT was paid and does not form a part of non-traded goods, which were given free of cost.

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13. The second error pointed out by the learned Senior counsel is that the learned Tribunal has also refused to refer to the subscription contract at all by mentioning that the same has not been approved by the Central Government and has termed to be a unilateral contract which does not have the force of law. In this regard, the learned Senior counsel submits that when the parties are governed by a contract, then it is essential for the authorities to go into the terms of the contract under which the goods are supplied. He has submitted that this is a patent error of law committed by the learned Tribunal since the contract between two willing parties does not require any statutory approval. However, during course of arguments, it is not in dispute that the petitioner is governed by the Telecom Regulatory Authority of India and the Regulations framed thereunder.

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14. The third error which has been pointed out by the learned Senior counsel is that the learned Tribunal has not properly considered the various judgments relied upon by the petitioner and while referring to the judgment passed by the Hon’ble Supreme

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Court in the case of Bharat Sanchar Nigam Ltd. and Anr. Vs. Union of India and Others reported in (2006) 3 SCC 1 , the learned Tribunal has refused to consider the same by mentioning that the Union of India was not made a party before the Tribunal in the revision application. He submits that another important judgment which was relied upon by the petitioner i.e., Moriroku Ut India (P) Limited Vs. State of Uttar Pradesh and Others reported in (2008) 4 SCC 548 has also not been properly considered. He also submits that numerous other judgments were placed which have not been properly appreciated by the learned Tribunal.

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15. The learned Senior counsel submits that the learned Tribunal in order to justify the assessment order and imposition of Value Added Tax on the petitioner, has erroneously observed that the petitioner is only paying taxes to Union of India and not paying taxes to the State of Jharkhand, therefore, the petitioner is deliberately causing huge losses to the State Exchequer. The learned Senior counsel has submitted that the liability to pay tax has to be seen in the light of the relevant statutes that is the Finance Act 1994 under which Service Tax is levied by the Union of India and the VAT Act of State Government. Such observation cannot be a ground for rejection of the case of the petitioner.

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16. The learned Senior counsel has also submitted that the learned Tribunal has not given any finding in connection with imposition of penalty which is subject matter for the assessment year 2006-2007 corresponding to writ petition being W.P.(T) No.2281 of 2020.

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17. The learned Senior counsel has submitted that the Tribunal order suffers from patent errors and cannot be sustained in the eyes of law.

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18. The learned Senior counsel for the petitioner has also submitted that from perusal of the assessment orders in all these cases which is the foundation of all subsequent proceedings, only the following two issues arise for consideration in the present batch of writ petitions:

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i) “Whether any VAT can be levied on the traded goods (STB and remote) by treating the purchase price as its sale price or by taxing the loss sustained by the Petitioner on sale of the setup box?

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ii) Whether the VAT Authorities can levy tax on value of the non-traded goods brought in by the Petitioner through Form ‘ F’ from other States by way of stock transfer and installed on entrustment basis without any consideration in the customer premises and the property of which at all times remains with the Petitioner Company?”

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19. The learned Advocate General appearing on behalf of the State, on the other hand, has submitted that the factual errors have been rightly pointed out by the learned Senior counsel for the petitioner. There is no dispute that such factual errors go to the root of the matter and rectification of factual errors may not be done in writ jurisdiction under Article 226 of the Constitution of India. In view of the patent errors pointed out in the impugned judgements passed by the learned Tribunal, the learned Advocate General is not averse to matters being remanded to the learned Tribunal for fresh consideration. He also submits that it may be left open to the learned Tribunal to proceed in accordance with law. No further observation may be made and it may be an open remand.

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20. After hearing the learned counsel for the parties and on consideration of the facts and circumstances noted above as are borne out from the records, it appears that the learned Tribunal has committed serious errors on material facts which includes the finding that the Set Top Boxes that were sold to the customers were a part of non-traded goods although, it was the specific case of the petitioner, that it was sold by the petitioner on which VAT was paid and does not form a part of non-trading goods. This Court further finds that the learned Tribunal has not considered the subscription contract which is the foundational document in connection with the transactions involved in the present cases.

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21. The learned Senior counsel for the petitioner during the course of argument has also submitted that these are matters pertaining to the period 2006-2007 to 2010-2011 during which such issues have cropped up and subsequently when there was a change of policy from the side of the petitioner, there has been no further dispute in this regard for subsequent financial years.

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22. This Court is of the view that the subscription contract of the relevant period as well as the Provisions of Telecom Regulatory Authority of India and the regulations framed thereunder, by which the petitioner was governed even at the relevant point of time, are required to be scrutinized and considered by the Tribunal to come to a correct finding in connection with subscription contract of the petitioner with its consumers. This Court is also of the view that if the subscription contract for the relevant period or the aforesaid regulations etc. framed under Telecom Regulatory Authority of India Act in operation at the relevant point of time were not already placed on record before the learned Tribunal, it will be open to the petitioner to put the same on record for better appreciation of the contract which forms the basis of the imposition of tax in the present cases.

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23. This Court is also of the view that the factual errors which have been committed by the learned Tribunal are required to be taken care of by the learned Tribunal at the first instance for arriving at a considered decision. This Court is not inclined to rectify such factual errors, which has been committed by the learned Tribunal, in writ jurisdiction. Accordingly, this Court is of the considered view that these matters are fit for remand before the learned Tribunal for fresh consideration in accordance with law.

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24. Since these matters are being remanded to the learned Tribunal, no further deliberation is required in connection with the merits of the case.

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25. Accordingly, the impugned judgments passed by the learned Tribunal are hereby set aside. These matters are remanded to the Tribunal for fresh consideration in accordance with law. All

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questions are left open for the parties to be agitated before the learned Tribunal. The petitioner as well as the State will appear before the learned Tribunal on 23^rd of August, 2021. Upon their appearance, the learned Tribunal is directed to proceed in accordance with law and decide the case as expeditiously as possible in view of the fact that the matters pertain to the period from 20062007 onwards.

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26. At this stage, the learned Senior counsel for the petitioner has also requested for a physical hearing in the matter before the learned Tribunal. Accordingly, it is observed that the parties may make a request for physical hearing before the learned Tribunal and such request will be considered by the learned Tribunal as per the prevailing instructions and guidelines.

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27. These writ petitions are according disposed of.

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28. Pending interlocutory application, if any, is closed.

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(Aparesh Kumar Singh, J.)

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(Anubha Rawat Choudhary, J.)

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Saurav

Tata Sky Limited through Its Authorized Signatory and Chief Financial Officer Mr Sambasivan Genesan v. the State of Jharkhand through Its Secretary Cum Commissioner of Commercial Taxes

Case brief

What is this about?

What did the court decide?

Tata Sky Limited through Its Authorized Signatory and Chief Financial Officer Mr Sambasivan Genesan v. the State of Jharkhand through Its Secretary Cum Commissioner of Commercial Taxes

Case brief

What is this about?

What did the court decide?

What the court decided

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