Tata Sky Limited Through Its Authorized Signatory And Chief Financial Officer Mr Sambasivan Ganesan vs. The State Of Jharkhand Through Its Secretary Cum Commissioner Of Commercial Taxes

Held

The Court held that the Jharkhand Tax Tribunal had committed serious errors on material facts, including misclassifying Set Top Boxes sold to customers as non-traded goods, contrary to the petitioner's specific case that they were sold and VAT was paid. The Tribunal also failed to consider the subscription contract, which was the foundational document for the transactions. The Court found that the subscription contract and relevant regulations under the Telecom Regulatory Authority of India Act needed to be scrutinized for a correct finding. Given these factual errors and the need for proper consideration of documentary evidence, the Court was not inclined to rectify the errors itself in writ jurisdiction. Therefore, the impugned judgments of the Tribunal were set aside, and the matters were remanded to the Tribunal for fresh consideration in accordance with law. All questions were left open for the parties to agitate before the Tribunal. The Court directed the parties to appear before the Tribunal on August 23, 2021, and the Tribunal was instructed to decide the cases expeditiously, considering the period from 2006-2007 onwards.

Facts

The petitioner, Tata Sky Limited, filed a batch of writ petitions challenging orders passed by the Jharkhand Tax Tribunal. The disputes primarily concern the levy of VAT on Set Top Boxes (STBs) and remotes, and on non-traded goods brought in via stock transfer. The petitioner argued that STBs were sold and VAT was paid, and that non-traded goods installed on an "entrustment basis" remained the petitioner's property without consideration. The State, represented by the Advocate General, conceded to factual errors in the Tribunal's orders and did not oppose a remand. The Court noted that the Tribunal had made serious errors on material facts, including misclassifying sold STBs as non-traded goods, and had not considered the subscription contract, which was foundational to the transactions. The matters pertain to the period between 2006-2007 and 2010-2011.

Key Issues

1. Whether VAT can be levied on 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 set-up box? (This issue turns on the interpretation of provisions related to the levy of VAT on goods, specifically distinguishing between traded and non-traded items, and the treatment of losses on sale). 2. Whether the VAT Authorities can levy tax on the value of 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, where the property remains with the Petitioner Company? (This issue involves the interpretation of provisions concerning stock transfers, entrustment, and the definition of taxable supply under VAT law). Petitioner's Arguments: The petitioner contended that STBs were sold and VAT was paid, and thus should not be treated as non-traded goods. They also argued that non-traded goods brought in via stock transfer and installed on an entrustment basis, without consideration and with property remaining with them, were not subject to VAT. The petitioner relied on the subscription contract as the foundational document. Revenue's Arguments: The learned Advocate General for the State acknowledged factual errors in the Tribunal's orders and did not oppose a remand for fresh consideration. The State did not present specific arguments on the merits of the issues but agreed that the matters should be re-examined by the Tribunal.