M/S INDUS TOWERS LTD vs. THE DEPUTY COMMISSIONER OF COMMERCIAL TAXES

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BANGALORE•560O29 (RE2PRESTNEL) BY STU K M ASHWIN KUMAR DGM4LINANCE) APPELLANT (By SRI N VEiATARAMAN. SENIOR ADV FOR SRFiLIEIS\ IAKSHMI KLMARV\ ‘. SRIL)IL\RA\ •SH1VADASS. .I-LA.RISI1 R & SYED PEERAN. ADVS) AND I. ThE DEPUIY COMMISSIONER OF COMMERCIAL TAXES ENFORCEMENT I 501 FH ZONE KORAMANGALA BANGALORE560 047. 5. THE COMMISSIONER COMMERCIAL TAXES IN KARNATAKA, ‘ Y\I J’i \ IHLRIGE KXR\ NLX’1 GANI)H1NAC 1 AR BANGALORE560 009. 2... ST/FlE OF KARNATAKA THROUGH ITS PRINCIPAL SECRETARY, FINANCE DEPARTMENT, \‘]DHANA SOUDFLA BANGALOREL 560 001. [[/FfliJ ‘F INDIA 1 1RU Ii I’S Th\A\( i SEC RE 5TLIM (V IAC DL EM F NEW DELHF 110 001. 5. THE ASSISTANT COMMISSIONER OF SERVICE TAX DIVISION III. HS3IDC VANIJYA NIKUNJ

UDYOG VIHAR, PHASE V, GURGAONI22 OC.2. (By SRI NR BHASKAR SCGC FOR R45, SRI ASHCK HARANAHALLI, SENIOR ADV. & SPECIAL COUNSEL FOR SRI K M SHIVAYOGI SWAMY HCGP FOR RU3) THESE WRIT APPEALS ARE FILED U/S 4 OF THE KARNATAKA HIGH COURT ACT PRAYING TO SET ASIDE THE ORDER PASSE•D IN ThE WR1.T PElT] ION 150/il & i2693 727/il DATED 11/4/11. 33733396 2011 M/S ATC TELECOM TOWER CORPORATION PVT LTD (FOMERLY M/S ESSAR TELECOM INFRASTRUCTURE PRIVATE LIMITED) NOTE2, 3RD CROSS, 4TH BLOCK, HBR LAYOUT. BANGALOR156OO43 (REP, BY ANIL SOOD, REGIONAL HEAD, SOUTh REGION) (By SRI N VENKATA RAMANA, SR. COUNSEL FOR SRI B G CHIDANANDA URS, ADV,) 1. UNION OF INDIA REPRESENTED BY ITS SECRETARY MINISTRY OF FINANCE DEPARTMENT OF REVENUE •GO T EREMIAJT OF INDIA, NORTH BLOCK NEW DELHLI 10 001.

4 2. THE STATE OF KARNATAKA REF.. BY ITS FINANCE SE•CRETARY 3. V1DE-TANA SOUDIIA BANGALORE-560 00 1. 4. DEPUTY COMMISSIONER OF COMMERCIAL TAXES (AUDIT-52) DVO-5. BANGALORE. . RESPONDENTS (By SRI N.R BHASKAR. SCOC FOR Ri. SRI ASHOK HARANAHALL1, SPL. ADV. & SRI KM SHIVAYOGI SWAMY HCGP FOR R2 & R3) THESE WRIT APPEALS ARE FILED U/S 4 OF THE K RN TK HIC H C OF RI AC2 PRAYING P0 Sf71 SIi) F TIIL ORDER PASSED IN THE WRIT PETITION NO,24592482/20 11 DATED 07/04/2011. X\ANo,348/L2u1IWANoS. 349o350c’QjI M/s. WIRELESS TI’ INFO SERVICES LTD IPkE’’L\TL,i K2O\\ N —S \ 1DM ‘ERORi S ETIT 5TH FLOOR.SJR PRIMUS, I T’/T ‘ ‘“)1 Ir.rrrm U . Ot jJ Sl1’U iA 7 ‘ BLOCK KOROM NGAI BANGALORE 560095, REPRESENTED BY ITS L’ H3E -FG— SHRI GAUTI-TAM V S. (Py SRIYIJTHS V LAX2SHM1 KLIMARAN, \i SRIDHARAN SHIVAI)ASS i-’&RISH R SYED PEERAN. ADVEI

STATE OF KARNATAKA I HROUGH I PS PRIN( IPAL SECRETARY FINANCE DEPARTMENT VIDHANA SOUDHA BANGALORE 560 001. 2. THE COMMISSIONER OF COMMERCIAL TAXES IN KARNATAKA ‘VANIJYA THERIGE KARYALAYA” GANDHINAGAR. BANGALORE 560 009. 3. THE ASSISTANT COMMISSIONER OF COMMERCLNL TAXES (AUDITJ-4 1, DVO-4, 4TH FLOOR, ROOM No,403 , VTK2, NEAR NATIONAL \ ILl AGE G\MES COMPLEX RAJET)R? NAGAR, KOROMANGALA BANGALORE 560 047. 4. CNION OF INDIA THROUGH ITS FINANCE SECRETARY MTNTSTP OF FP\j\(E DEPJ PME\ P O’ RF T \LJZ NEW DELHI 110 001. 5. THE COMMISSIONER OF SERVICES. TAX t) A \J’’ T “ 5Th FLOOR,S P COMPLEX, NC. 16. LAL BAGEl ROAD. BANGALORE 560 027. (By SRI ASHOK HARANAHALLI. SPL. ADV.. AND SRI K NI SHTVAYOGI SWAMY, H COP FOR R 1 -3. 326 3 717 171 . f65

0 THESE WRIT APPEALS ARE FiLED li/S 4 OF THE KARNATAKA HIGH COURT ACT PRA ING TO SET ASIDE THE ORDER P\S5fD P’ HIP WEll Pt LITTON ‘v 2276 7 ‘201’ DATED 11/04/2011 WL348820i1 T ANos350235i221l BETWEEN M/S WIRELESS TI’ INFO SERVICES LTD IPRESF i\TL\ KNOWN \S \ IOM NEThORK LiD) 5TH FLOORSJR PRIMUS, NO 1 KORAMANGALA INDUSTRIAL LAYOUT 7TH BLOCK, KORAMANGALA. BYNGALORE 560095, REPRESENTED BY ITS ASSISTANT MANAGERAEGAL SHRI GAUTHAM M S ASSISTANT MANAGERLEGAL. (By SEJYLiTHS V LAKSHMI KUMARAN, V SRIDHARAN, SHIV.ADASS, I 1ARISH R & SYED PEERAN. ADV5I STATE OF KARNATAKA THRULGT- R\CTF ‘4 sL(PETR\ FINANCE DEPARTMENT VIDHANA SOUDHA BANGALORE 560 001 2. THE CGMfvIISSiONER COMMERCIAL TAXES IN KARNATAKA ‘N A 9 F- T FRIGE liIcli ‘.Z-U GANDHINAGARA BANGALO1/E 560 009.

COMMERC [AL TAXES (A1DIFJ41 D\O4 4IHILC)OR ROOM NO 403 VTID2 NEAR NATIONAl \ iLLACE C ‘AlES COMPI LX RAJ ENDRA NAGAR, IDRAMANGALA BANGALORE 560 047. 4. UNION OF INDIA THROUGH ITS FINANCE SECRETARY MINISTRY OF FINANCE DEPARTMENT OF REVEN FE NEW DELHI 110 001. 5. THE COMMISSIONER OF SERVICE TAX BANGALORE, 5TH FLOOR,S P COMPLEX, NO 16, LAL BACH-I ROAD. BANGALORE 560 027 RESPONDENTS (By SRI ASHOK HARANAHALLI, SR. ADV, AND SPL. ADV. FOR SRI KM SHIVAYOGJ SWAMY, HCGP FOR Ri-3 SRI NR BHASKAR. SCGC FOR R4-5) TRESTI WRIT APPEALS ARE FILED U/S 4 OF 41 IF R\P\fM 1-itOH’ GLEA -C T Sri -TDE j ORDER PASSES) IN THE WRIT PETITION 22864422875/.10 DATED 1. 1/4/11 WANos./H612JJi M /S ATC TELEC.OM TOWER CORPORATION PRIVATE .LTD (FORMERLY M/S ESSIVR SEE LECU)v] iYRNEFRUOTIS RE PVT LTD) N0 432. 3 CROSS 4TH BLOCK HER LAYOLS B.ANCALORE - 560 043

(REP. BY MR. ANIL SOOD. REGIONAL HEAD. SOUTH REGION) ..APPELLANT (By SRI N VENKATA RAMAN, SENIOR COUNSEL FOR SRI B 0 CHIDANANDA URS., ADV.) AND I. UNION OF INDIA REP. BY ITS SECRETARY, MINISTRY OP FINANCE. DEPARTMENT OF REVENUE. GOVERNEMENT OF INDIA, NORTh BLOCK, NEW DELHI - 110 001. 2. THE STATE OF KARNATK, REF. BY ITS FINANCE SECRETARY, VIDHANA SOUDHA, BANGALORE 560 001 DEPUTY COMMISSION ER OP COMMERC L\L TAXES (AUDIL52), DVO5, BANCD LORE ..RESPONDENTS (By SRI N R BHASKAR. SCGC FOR RI, SRI ASHOK HARiNAi1ALLI SPECIAL COUNSEL & SRI KM SHIVYOGISWAMY, HCGP FOR 172 & 3) THESE Vk/fJ APPEALS ARE FILED 14/5 4 OF T’H]4 KARNATAFIA HIGH COURT A( PRAYING TO 5E2. ASIDE THE. ORDER PASSED IN TEE XRIT PETITON NO 11361 11372/2.011 DATED 1/04/201 1

BET’A’EEN TIlE STATE OF KARNATAKA B\ Ff5 FP’A\CE SLCt<EI VIDHANA SOUDHA, BANGALORE - 560 001. 2. DEPUTY COMMISSIONER OF COMMERCIAL TAXES. AUDIT52, DVO5, BANGALOPE. ...APPELLANTS (BY SRI ASHOK HARANAHALLI, SPECIAL COUNSEL & SRI K.M SHEVAYOGJSWAMY. HCGP) MiS ESSAR TELECOM INFRASTRUCTURE PVT. LTD., t 1.04, 1ST MAIN ROAI). EAST OF NGEF LAYOUT, KASTURINAGAR BANGALORE — 560 016. BY NAGARAJU NARA FINANCE N. ACCOUNTS EXECUTIVE. 2.. UNION OF EDIA BY ITS SEC..RETARY. MTNTSTR )J- ‘\ ‘‘ ( 17 DEPARTMENT OF REVENUE, OR\MENT r i NEW DELFII 110 001 (BY SRI N VENKATA RAM. SEN [OR ANY. & SRI .21.0. CHIDANAND URS. ADV.) TEl ES 11€:. WRE f2J u / S KARNATAKA HIGH COURT ACT PRAYING TO SET ASIDE THE ORDER DATED 07 1U i WP. NOs 2459-2 / 20

10 RES). PASSED BY fl-fE LEARNEI) SINGLE .JLDGE IN SO F R AS IT PERtMNS TO QUASHING OF TIlE LEVY OF PENAl TV ANI) INTEREST AM) ALSo N HESI’E(’T OF DIRECTION TO ‘filE STATE GOVLRNMEN I’ FOR RECOVERY OF 111K lAX AMOL’NI FROM TIlE SECOND RESPONDENT UNION OF INDIA VA No.4455/2011 & WAN0s 5813 5871/2011 BFTWFEN I DEPUTY COMMISSIONER OF COMMERCIAL TAXES ENFORCEMENT- 1. souni /ONE. KORAMANGALA BANGALORE. THE COMMISSIONER OF OMMERC IAI LAXFS IN KARN4 IKA XMJ’ IHFRT6I’ K4RS 4 G4NI)I 1I’TAGAI BANGAU)RF-9. - II ST EC KU 41 4 ‘ s I R FT. V%( I DEl R I dfl NT VIDIIANA SOt PTIA BAMt ORI’ 360 01)1 V C O (‘OMMERC AL IAXE’ •A: iii’, Il ‘%i1ak!’’N.’rI(’ l ‘.‘.a1L’,’iII’JsI- t S -I I’jV’

11 RAJENDRA G\R KORAMANGALA I3AN GAL ORE 560 047 \PPF LL V’J PS BY SRI \S1 10K 1 1AR\AH \LL I SPL( IAI ( 01 ‘S1 I Sz SRi K M T1JVAYOG1SWkMY H( CP) M/S INDUS I0V ERS I ID # 12, POWERD 7’’FLOOR SUBRAMANYA ARCADE BANNERGI IA’FIA ROAD BANGAL ORE 560 029 BY SRI K M SWINI KUMAR DGM FINAN( K L NION OF INI)IA ThROUGh IFS 1 INAN( I SI (RE I kR MINIS1RY 01 1 INANC 1 DEPAR I MEN I 01 RF I N I 1 OVLRNMI NI OF INI) FVDLIHI 10001

12 COMMISSIONFR OF SERVICE lAX BANCALORE. TI1 FLOOR SI) ( )MPLEX. 16. LALBAGH ROAD BAN. ;ALORE 27 . RESP( )\F)E\ ES I3v SRIYUTiIS \ LAKSFIMI KI iARAN, V SRIDILARAN, SIJIVADASS. HARISII. SRI SYEI) PEERAN.AL)V,. FOR Ri SRI N.R EHASKAR, CCC FOR R2 & R3) PHESF WRI I APPEALS ARE FILLD 1. /5 4 OF PHE KARNAPAKA HIGH C OUR I’ ACT PRAYING IX) SET ASIDE THF ORDER DATEI) 07/04/2011 IN WRH PETITION NOs 11508/2011 ANI) 12693 12727/2011 C/W 22876 )887/2010 ANI) 22861 22875/2010 (P RES) PASSED BY PHF I EARNED SINGI F JUDGE IN SO FAR AS IT PERTAINS P0 QUASHING OF I HF LEVY OF PENALlY VND INTEREST AND ALSO IN PESPEC 1 OF DiRECTION TO THE S]AIF GOVERNMENT FOR RECOVERY OF THE TAX AMOI NT FROM IHE SECOND RESLONDENJ UNION OF INDIA

13 INF RAS FRI TC 111RE PV’I I ID NO. 104, 1ST MAIN ROAD, FAS1 OF NOFF IAYOt 1 KAST[ T RINAGAR. BANGALORE 16 REP, BY NAGARMU NARA, F]NANCE & AC( OUNTS EXECUTIVE. STA Tb OF KARNATAKA REP. BY ITS FINANCE SECRETARY VIDHANA SOUDI LA BANGAI ORE 560 001 3 DEPUTY COMMISSIONFR OF COMMERCIAL FAXES (ATIDIF 92) DVO BANGALORE RESPONDENTS (By SRI B C CHIDANANDA URS ADV FOR Ri SRI K M SIIIVAYOGI SWAMY HCGP FOR R2 & 3) IHFSF WRIT APPEALS \RE FILED U/S 4 01 IIIF KARNATAKA HIGH COUR’I A( I PRAYING 10 SET ASIDF IRE ORDER PASSI I IN FBI WRIT I FJIIION \ 2 19 82 DVIFD 4

14 M/S ATC TELECOM TOWER CoRPORATION PRIVATE LIMITED (FORMERLY M /5, ESSAR TELECOM INFRASTRUCTURE PRIVATE LIMiTED) NO, 432, 3RD CROSS, 4TH BLOCK, HBR LAYOUT. BANGALORE 560 001. REP BY MR ANIL SOOD. REG IONAL HEAD. SOUTH REGION. 2. STATE OF KARNATAKA REPRESENTED BY ITS FINANCE SECRETARY. VIDHANA SOUDHA BANGALORE 560 001. DEPUTY COMMMISSIONER OF COMMERCIAL TAXES(AUL)1T 52) DVO BANGALORE RESPONDENTS (By SRI B C CHIDANANDA URS. ADV. FOR RI, SRI K M SHIVAYOGI SWAMY, HCGP FOR R2. & 3) THESE WRIT APPEALS ARE FILED U/S 4• OF THE KARNAIAK’\ HIGH COURT AO PRAYING TO SFT \SIDE THF C)RDER 1- ‘SSEG “ ‘-iF” ‘[i ‘-E ‘T’ L Ii TDA_TTG] I /4/11 UNION OF INDIA IRO 4 44’ ‘ ‘C ‘\rrY’ ‘—‘1— T)T’’X ‘‘ — i L

15 .NEWDELH.I i10 001. 2. THE COMMISSIONER OF SERVICE TAX BANGALORE, 5TH FLOOR. S P COMPLEX, No.16, LALBAGH ROAD, BANGALORE 560 027 , ,APPELLANTS (By SRI N R BH•.ASKAR., SCGC) AND M/S. WIRELESS YF INFO SERVICES LTD, (PRESENTLY KNOWN AS VIOM NETWORKS LTD) 5TH FLOOR, SIR PRIMUS, No, 1, KOROMANGALA INDUSTRIAL LAYOUT, 7TH BLOCK, KOROMANGALA, BANGALORE 560095 REP. BY ITS ASST. MANAGER LEGAL SHRL GAUTHAM M S. 2. STATE OF KARNATAKA THROUGH ITS PRINCIPAL SECRETARY FINANCE DEPARTMENT V]DHANA SOUDHA BANGALORE - 560 001. 3. THE COMMISSIONER, COMMERCIAL TAXES IN KARNiV1AKA, AZANIJYA THERIGE KATYALAYK GANDHINAGARA BANGALORE -560009. 4 THE ASSISTANT COMMISSIONER OF COMMERCIAL TAXES (AUDITL4i

16 DVO4. 4 •• FLOOR ROOM No 403 V12 NEAR NATIONAL VILLAGE GAMES COMPLEX, RAJENDRA NAGAR KORAMAN GALA BANGALORE 560 047 RESPONDENTS (SRIYUTHS V. LAKSHMIKUMARAN, SREEDHARAN, SIII\AD\SS H\RISHR AD\s FORRI SRI KM. SHIVAYOGIS\VAMY. HCGP.. FOR R2 TO R4) ThESE WRIT APPEALS ARE FILED U/S 4 OF THE KARNATAKA I uGH COURT ACT PRAYING P0 SET ASIDE THE ORDER PASSED IN THE WRIT PETITION 2286475,’10 DATED 11/4/11, ANos,I5259i5292 2011 BETWEEN UNION OF INDIA T9 fmrr r’ ii TmC’ r’TT . ‘Tf’ r’ c””r F’ Fji\kJ ‘JFI ii ri L’ I L,LiE’C, -\iY MINISTRY OF FINANCE DEPARTMENT OF REVENUE, NEW DELHI- 110 001. 2. THE ASSISTANT COMMISSIONER OF SERVICE TAX DIVISION III, HSIDE VANIJYA NIB UNJ UDYOG 10 NR PHASE \ GUR.GAON 122 002. A.PPEL.LANTS Lv SRI N B I3HASKAR 3(2CC) M/S INDUS TOWERS LTD NO 12, TOWER-D. 7TH FLOOR. SUBRAMANYA ARCADE BANNERGHL [TA ROAD BANGALORE-560 029

17 (REPIESENTED BY SRI K M ASHWIN KUMAR DGM FINANCE) 2. THE DEPUTY COMMISSIONER OF COMMERICAL TAXES ENI ORCEMENT I , SOUTH ZONE, KORAMANGALA BANGALORE 560 047. 3. THE COMMISSIONER COMMERCIAL TAXES IN KARNATAKA VANIJYA ThERIGE KARYALAYA” GANDHINAGAR, BANGALORE - 560 009. 4. STATE OF KARNATAKA THROUGH ITS PRINCIPAL SECRETARY, FINANCE DEPARTMENT, VIDHANA SOUDHA, BANGALORK 560 001 (By SRIYUTHS V LAKSHMI KUMARAN. V SPIDHARAN, ADVS, FOR Ri SRI KM SHIVYOGI SWAMY. HCGP FCR R2 TO 4) ThESE WRIT APFEALS ARE FILED /5 4 OF THE HIGH COURT ACT PRA . YING TO SET ASIDE THE ORDER PASS.ED IN THE WRIT PETITION 1150.8/11 & i2693 727,’l.IDATED 11/4/11. 57O I. THE STATE OF KARNATAKA B ITS FINANCE SECREIARY VIDHANA SOUDHA,

18 DEPUTY COMMISSIONER OF COMMURCI ‘1L fAXES AUDIT52, DVO-5. BANGALORE .APPELLANTS (By SRI ASHOK HARANAHALLI, SPECIAL COUNSEL & SRI K. M SHIVAVOGI SWAMY. HCGP FOR STATE) AND M/S ATC TELECOM TOWER CORPORATION PVT LTD.. (FORMERLY M/S EASSAR TELECOM INFRASTRUCTURE PVT. LTD.) #432, 3RD CROSS. 4 BLOCK, HBR LAYOUT, BANGALORE 560 043. BY MR. ANIL SOOD, REGIONAL HEAD. SOUTH REGION. 2, UNION C)F INDIA BY ITS SECRETARY, MINISTRY OF FINANCE, DEPARTMENT OF REVENUE, GOVERNMENT OF INDIA, NORTH BLOCK, NEW DELHI - 110 001 RESPONDENTS By SRI N. \. AL-k RAM, SENIOR CDV SRI B.C. CHIDANANDA URS. DV. FOR RI S.RI NR BHASK 1YR, j\fl\J,, FOR FL) THESE WRIT APPEALS ARE FILED U/S 4 OF ThE 1L-P\AF-KA TCC COLR P\C PG RAT 5iT)R HT GRUFF- FO i U I - NDS n 3’2A UL CAFSr_) ‘0 tC. F-C \IL-i SN( F JT C -A C TERN 1 R5 LC Q\SHIC OP LiE AG OP Fi AND INTEREST AND ALSO IN RESPECT OF DIRECTION TO

19 THE. STATE GoVERNMENT FOR RECOVERY OF THE TAX AMOUNT FROM. THE. SECO1ND RESPONDENT UNION OF INDIA. THESE APPEALS COMING ON FOR HEARING - I\TERLOCUTOR\ \PPLIO JIO’\ THIS D N KUMAR J DELIVEREI) THE FOLLOWING: JUDGMENT All these writ appeals are preferred against the common ordtr passed by the learned single Judge. None of the parties are happy with the order, Therefore, everyone has preferred appeal aainsl the said order to the exwnt they are atiLrieved of such order. Therethrc, these appeals are taken up for consideration, together and disposed of by this common order. For the purpose of convenience, the part...ies are referred •to as they are arrayed to in writ appeal No,34O33439/2Ol I arising c.jut of W,P. NbA 1508/2011 and i2693i2727 of 2011, FACTUAL MATRIX 2. The arsessee — V/s. Indus Towers Limi.teci is a Company incorp.orated under the Compani.es Act. 1956, having its registered office in New Delhi. and engaged in providinf. h

r 20 Passive Infrastructure and related operations and maintenance services to various telecommunication operators in India on a shared basis. The assessee is registered with the Department of Telecommunications (DoT) for providing Passive Infrastructure Services to mobile phone operators. The nature of services provided by the assessee was envisaged by Government of India initiative “MOST” (Mobile Operators Shared Towers). The DoT in a bid to create a high quality. low- cost, rapid. wide coverage mobile telecommunication network in India sought to propose. through the project “MOST”, a system of sharing of passive infrastructure by the various telecom service providers. 3. The main object of sharing the infrastructure Is for ensuring economy by avoiding multiple Telecom sites for different Mobile Service Providers in the same area. This concept was mooted and promoted by the Ministry of Telecommunications, Government of India, under the project nick-named as M05’r, with an objective of reducing the number of towers and thus. optimizing the capital and

21 operational epciidIitue of tile Mobile Scivice Prt n Idcr%. I ndei thl’ project the sonrepi of pn’&sibili;v of multi technology IGSM and (‘DMA) and multi operatois (up to six )perators) shanng a single tower with a view to bnng down cost and enhance spread 01 affordable %erVIees continued to be carried out successfully by the Industry. 4 The assessee has been registered iidth DoT for providing suc h sinred Passive Infrastructure Services to various telecommunication operators in India. For the said purpose the assessee owns ui acquires md iiocsses or will ctu c o ss c. tam ck.c.ommu i thor site .fras r t i-v ard wiupm i I .n n tin s licenser welts India. F r pin’ iding the said -en 1’ e’. tht a”-e’sef- 1ia entered Into ickarlc al Ma%ter Sefl ire. Agrterritni’ with tile’ in pete cli i ci 1 k S I-a odd ia Ni ni Tan 1i— eii 1 a;i1 .1 ..h qni “p ci psi) i’Ic ‘ — .i’ itatit ii •k’ ii: I&’j %rt ft C ‘2L’ th’ A’’ ‘ .4 iii .bi 1 i .‘ 1’ tii’° clii ‘ —‘ r . 1- s. ni it. cc 1.

22 possssed 1w thc assessee and for the ielatcd operation and m iintenn eii s offer d by the issessec loi the fleetive and eflicieni tie of the passix c infrastructure these charg s are in the naltire of serviu- ehartes and are nor in the nature of coii’4deratioii received for iransler of properly or for tran’ftr of right to use any goods. The passive infrasi ructure is nol just tower as erroneously understood in the notice hut also other equipments such as DG sets, air conditioners, power managrncni svsftnis batteiies and otliei electrical works The assessee provides recjuired ser\ ices along with the sharin of passive inlrastructure i.e.. tower ‘ates and shelter rOOlflS foi installation and salt keeping ol equipments (like antenna I 1 Ba 1 e ‘ “it tni BT9 n t 0 0 C at ii tlr i its itC i air cour ICI po\ g Id 0011 B B 0! 11ZJflu(’1J1ta Lti0S TTrl. 1t’iTT1 Ii ‘‘I InC eu uc ‘Ii;C rvr! 0 Its \( en er to 4c BC rri ci i q al mi i i 0 1

23 inside the shelter room for smooth running of BTS. The assessee is also responsb1e for saictv of ihe operator eciuiprnents at fts site. For all these services (site access. power supply, power conversion, air conditioning and safe keeping), the assessee receives a consolidated service revenue froni its customers. 5. The right, title, possession and control in the passive infrastructure located at the.: telecommunication site including and not limited to the tower, shelter, diesel penerator sets. batteries, air conditioners and e’ect neal arid civil works including any enhancement carried out by the assessee vest solely with the assessee. f]w sharing ope’rator Le.. We ide-coin service priyuiders on execul ion of a service corn rnt.t, nas the right to install equipments such as BTh e.qulpment, a.ssoeiat.c:ci antennae and active infra network equipm.ents and other ‘ctusitr cci ulpments rectuireci to provide t.eiecommunicat.ion serLce.s them. .0 the.ir customers:, right, title and

24 Interest In all such equipments Installed on the site by the Sharing Operators would remain with such operator& only. 7. Prior to placing the service order, the Sharing Operator should provide Its requirements and technical specifications to the assessee for passive Infrastructure. The assessee will, within the time frame as prescribed In the agreement. respond to such service requests with Its comments, suggestions and Its plans for meeting the requirements of the operators. The requirements may be met either through the existing sites of the assessee or by the creation of new sites. The Sharing Operator will subsequently deliver a Site Request Indicating Its site options In order of priority. The assessee upon receiving such Site Request sends the Site Proposal Indicating an outline of Its Implementation plan along with service fees. Only upon receiving the Site Proposal, will the Sharing Operator Issue a Service Order within the time frame as prescribed In the agreement, setting out the details of site required along with technical requirements for the Installation and setting up of the Sharing

25 Operatods eqtupments. The assessee would confirm the order and further, in accordance with the •terms of the agreement, issue a “Read For Active Installation” (RFAI) Notice eonlirmtng the Site Acces Atailahilitx to the Sharing Operator. Prior to coniirnnng the site access availability, the assessee should ensure arnong other things that the Sharing Operator is able to move his. equipments into the site for installation and that the site is capable of accommodating Sharing Operator s ec uipmeuts in accordance with the standard configuration set out in the agree.ment. It is thereafter, that the asse.ssee and the Sharing Operator will execute a Sen’iee Contract, which will include the terms as speeiiled in the agreement. The said contract provides for Site Access Availability and Operation and Maintenance Services of the Site: in reiation to wheh the e.ontmaet is exe.euted. Site Ae..eess Availability mean.s that the Sharing Operators are granted access on nonexeinsive basis t.o tile itss’e nrrastruei Ire cavued. eontrei led and operated by the asses•see and loe/ated (at th e sit.e, Authorized emplovees/ sniarontraet.ors of the Sharing Operator snail h.a,ve access to Ijie Sfiarinj ().Pt iter s itguipni€: ills. assesses aid

26 also pIo idc for the Opetaflon and Maintenance SerncC m i-datjn to each .Iw. UI the kifrastnicture 1 vd equipnlents inc luding passive inirastiucture located at thc site is controlled managed and owned by the assessee However, the Sharing Operator he respoiMble br the operatIon and maintenance of then equipments. for which purpose. access will be pro’ ided to the authorized employees / sub-contractors of the Sharing Operator The assessee retains the iigbt to provide access to the ‘4w including any inlrastructure to other tekcoin senice pnnldcrs. for any purpose at. its discretion. the Sharing Operators also retain the fight 1. seek passne inira’tnictui e servir c’s from oihei Pasi e infrasinwl un’ e i tnid ii .-cee re 1 ,r_c4jeI hI3 ncre,’-pfl ‘‘earance’ / pcrmisic.n” approriN t’rcnn k ru / it (‘lilt lint, painitsFcurrkir tti t)i t4r -ft ‘St’ sit i ig c’taa N. ‘n”L tthit’.% $‘flls,, fSib% I c ft r’ h1j ij ‘let’-’ )fl1rfC Pa c1” ‘.r’l.r• il.— Ta ‘r n r ie a t C at ii I ‘itt . 1 S1 fl% t c Jairilt :n i;. !,zn,lrt t er’ ‘a I I’• ‘;.._. . II I

S 27 Access Availability. The assessee is also assessed under the Finance Act. 1994 and Is paying service tax. 8. The assessee was served with a notice under Section 39(1) of the Karnat.aka Value Added Tax, 2003. (hereinafter referred to as the KVAT Act). wherein It was proposed to re-assess the tax liability for the period from April 2008 to May 2010. The said notice proposed to demand VAT I amounting to Rs. 119.82 Crores leviable on the consideration received as “passive Infrastructure fee” from the telecom operators for the passive telecom Infrastructure services provided to them during the assessment period from Apr11 2008 to May 2010. The notice also sought to demand Interest and penalty. This notice sought to categorize the activity of leasing the telecoxnrfiunlcatlon towers to various mobile telephone operators, as a deemed sale within the meaning of Section 2(29)(d) of the KVAT Act. 2003. The assessee filed a reply contending that their activity does not Involve any sale or any transfer of right to use and therefore. the same cannot be subjected to VAT. They also ified additional statement of

28 objections pointing out thc enors in thc computation of turnovet for dii re1e ant periods Ovenuling their objection the first respondcnt passed the ic assessment ordet and issued demand notice dated 11 03 2001 under SectIon 39(1) oi the K’’AI Act confirnung the proposals made in the proposition notice. However, the respondents accepted the correction of calculation error Aggneved b the said ordei, the assessee preferred writ petition before this Court in w P No 11508/1011 and 12693 1t2!/2011 on the ground that the orders an bad in laui and c.ontian to thc. provisions of the K 41 Act 1w Sin file Ii titnr ni ibj 0, nir hcWn t ( di t. Ic.. s s i idi Ic c hr c c I C e

0 C OfliolOditIC S .et Oh t Ill paia 6 ul the ‘4ateiiient of oh 1 eutions. tht a esset Iio, constructed i.nd sernbled he qui nnts and has provided theni on lease io the different relecom con1panie br their use on renial basis as per the agreenient entered mb between ihe e-sesee an(l tile other telecom companies. Respondent has verified the a2reernenl entered into between thc pailies. On rerificatiori of the agreement the\ noned th it the cellulat operator shall maintain on all tin actire infrasn uclure equipmenl identification inii to show that ihe equipment is the Provert UI the cellular operaton Under tin terms and conditions i the lease aree1HeHt, ii Is e idn If lie nirastri tur( pr ider ras gi n then iight to ese h C ii r cc x s n JI JI aosinovible ooDcrl like iaiid 1 uildiin his be 11 u’ rnieI tIle I till ) i( aII\ ri1Y OVOt t)iUf) cry [ij Oct ii Ih71..fT,t e ‘ St hf- iii Ouecu lj- bCPii I t C I a I Ii II C C II a It If u a [f-S( ii ) LI) cd ai , j c1 tt jj 1 1 II U - U - UI

paid by the ellular company and the equipments tic mciniained on behalf I cllular mpariv and onir hit possession and rfft’ctiv control lies xtith the cellular operator Any changes of securilt or any other factors have to he ntimaled in adaTwe to the r’ellular operator and hence the efteet lye control always with the cellular operator. When the cellular operator is hat ing eIteetve control anti paving lease rentals to lire assessee, the assessee is liable to pay the tax under the provisions of tire Act Therefore, the activities of the assessee cud the turnover of lease rentals received is exigible to tax under the plovNions of Section 4(1)(b) of th Act Th rave not leried any tax on the scrric ransaction a sak it o d In \ t e’ fed a i h ;ai’fer )[ riqN In use o d ‘h t [ it vi i1 xi thc sse s e, niss aac ha enled th oft NirlichEir in i ea I o he uecn Ion c pee tirt i iii ccndo c i he aiieo hoc ci ci c ‘r tioi ()t Ion a’ iion : fhc o tet s( I it( (ci I nirosi p ;pj tp r,et o in’ uI’iIn l s(err C I f) 111, ‘ii I if ci -ry r’ r I

4) ‘p hired from iarioub pntatc. parties who otin the land in question The assese under an agretnit nt hut qfls for specific pc.nod and lot spec lilt’ rents the assessee fixes thL cellular telephony networking towers on these hired sites. The trims and conditions ot will be agreed between the aqessee and the site provider. Therefore. the assessee do not have their own sites. Ii any dispute arises between the assessee and the site owner, in such circumstances the tower along with the equipments will be shifted to sonic other sites s the investments br each tower require’; mon. than 15 to 20 lakhs, the 1.sqessee will always hat t to construct these towcrs nabling he as’*ssee dismantle and o shift the same t )nc 1tw’r pl ‘c • .rc -fri d ke Jiflerc L ‘ne Jh flfI(% ‘1 qni. ii the ?hitx,raphs ‘file (PACTS ire pioi’se.l r nit,aI cf thc ‘sad plir4’grapl shc’n tha. hi’ juipme;its rioLdt I iluih.. ii Ii t fl luwt-i amc J.C ,øs. ‘si t’,rnstI’,ri—’is ac • ur,ig.n k’i’i’ ttt’I .he ir(p’ ‘C’: ‘fhit If ‘ DC iaie iii’ I’ i ‘Ie in . 9 iff Ji 1!t lii iii h’ C ir )i)J%i)(% ip• qs’ 1 s’r i’’.i( •I iii • Ii’ “iann.er’, ‘ — i;• it ‘-‘‘;‘er . I ii1t• ‘z’i’ .1 ‘1 ti•t C I. a ‘ . j )j% r

32 nuts and it can be casib mo cci to any othex plaa flit’ temporar> sheltet ‘wthcre lx) uid othcr equ ph er s ut kept can also be mm ed to die required place From the perusal ol the photograph%. It is also seen that all the cable wires are outside and not talc! into the earth or not embedded to any clvii structure and these eables are movable. From the above facts and narration of the transactions ot the as.se%sec and the activities carded on b- the assessee. the telecom towers are movable propeit’ and the ieasmg of these towers b collectmg rentals a decmc ci to be a ‘ale cxigible to tax tinder tlit orovisions of the KVA 4c t 2003 C’ 1rSta “i,’ ‘d 8 ’ a t a L 1.’i’ 1 1 ft. pcttiov ib Ii ‘ c p idui Id T ft n wit. I it rcr ral’ -‘1. ra cciii ‘unpu n ci n cit r ci si osi i 01 ‘ci th. Ant 1 fl4 1L1U11% ‘‘— r• wtrrg ti L’lt- ICat’ cci sric’t udtc ii ilJti h%S Ihi. jr1frg c am j iji’ Lv tilts a •%t%S’ a. f—’J. •j.rfr: .11 ti’ .tt)t) It’, ‘tidi ‘tie ( nn’iri_t.Ohi j5 ). 1

33 lanous decisions renck red anti rejerred to by thc petitioners counsel are in hit conict what Is niot’able and inunorabk’. 4’; a matter of tact finding the veassessinq cuithuriti; hcu’lny regard to the nature qf the equipment used and Its fIxation to the earth i.e.. civil foundation or on thc toof qf dic bulldlngJor proper ftuzctionlng and the nature of the activity that Is being transferred to the customers viz. telecom companies to use the equipment La, the tower raised and ut c”onsldeailon petitioner receives some amount which are In the form 4 rents has proposed tar under the provision of VAF Act treating it as least of movable Further having reqcurl to the nature of the agreement entered Into and the nature qt transaction, the effective control is with Ott petitioner and. OiL component of delivery is cdv’ ‘n ‘oWe’! (J1c 1 ic ‘nc.ujcna ice zr.I c.’c ‘ill c.orrl Is alo viii if’ pettlontr. i ould b ‘pecifinillq said that ii c right te t sc Cit gxJs I as 1 cc n tT(fllstPrrPC 1 hc the rjt.’lngoflg” I) tj tt’lP”W?L onq’nn n on 1 that ,.Ycr!. “Wr,t lab ‘r’ttun a?t’t. itt’ t ‘SAl 4 ‘ tu. (on.h,t’lkw.. L t (’ ;ics’c 3)1 nLj s ci ‘ ‘•J’Sc II IIl’Ij 31 “itt • t r.f, 4 C’ St ‘4’” ‘(J ‘‘ fl 111 1 LIII f4’1( J.s. fl.) r.

34 d his bofl(t(dCS cttnng ret5tE’ 1 1 nder the ‘ice iczX For jhe eercs il P 0 i 4 eR is paid hi qw?sttOW The aiflojmt d it tsfor nient ,ears resp00i a so paid as&CSS hJ the the 1 ‘ of the arnotthl the 5tate 10 for recov 1 ident a o the 1 reSP 0 reiidet y the proC edtfl9 based on for th pe1it0T tO the proVt5t01 Qi s3 heret jithe itt fntW file reI’ $seSSm under cuid 4 (1121 of the VAT ACL 2 OOt3 thit C mde ‘vcd b i,ahh ol \i1 Ie U’, ti c ii jfl part uihtle uph0kt the petili0fl 5 Te paS5 1 50 jar as rcc0Vti f the to the 5iaW the State assessmetut ordeVS to rcCO 1 from the I aIfl0thtt iclliChl is te9a due ‘e 0fl very Welt hat aTn0ui r31l tespoem d be aju5t md if there is he pat if ed hb the the cilreb deP0 1t Cifl ant) refUfld to the pCttt0 1 WI it , o 1 C

35 inirtsti ucture to the Sharing Operatot constitute deemed sale. ilie %econd hatch of ippenl ‘ire by tin. iii critic State nf Karnataka chaflenng the finding of the learned %ingle Judge that they have to recover the Value Mded ‘1k’ (VAT) due to them ft om the first respondent - tTnlon of india. in addttlon to that. the are also challenging the order passed by the learned Single Judge ho has set aside the mterest and penalt3 levied The Union of India has filed thhd batch of writ appeals where. if the oidcr of thc learned Single Judge i gtvtn effect to. the hate to return the sen-ic e tax olin led from these assessees under the prouslons of thc I manu Act 1994 RWAL CONTENTIONS 2 li le r c cr’c ns 5n C ktarrrn )p se ssse. i%hig I irpgr-c OCti it h ‘ ac C S, 151 us a t ‘s 1 g liltol Jt I i: 1: itt I, tr t’ ‘ if I i ) a

3(3 combiners Iranscen ers, alarm xtensioris buses, control svst cia ci ( The aiiie j% opera ted tml nmintainc I by ‘he assessees under the areenie’nl eiiiered mb briweeri the assessee and the shared operators l’hey give restricted access of their infrastructure to the service providers on non exclusive terms. All rithis. iitle, interest and ownership of the passive infrastructure always remains with the assessees exclusively. No portion of the tower or any oth r infrastruetur is handed over to the service providers either pIvsicalIv. lrotlonall\ or symbolically. The assessees tontinues to have possession and ontrol of its infrastructure at all timt s of the tontrat with the s rx a e prox ide and tht u fore, the trairsac lion purely a se 1 j e traIIv n rn i rich an ri t tr\ ice ‘a aN per Finance A t I 94 a tn’a oe cr ‘ of the nIse aclz in’ i1rt—nto he n.irie’ he iih t—i !‘or tilt r-tp c L lit Ir’ 3 0 Ia 3 10 )( 1

37 transaction entered Into between the assessees and the shared operators constitutes a deemed sale so as to fall within the Article 366 (29-A)(l)(d) of the Constitution of India. He also submitted that it is settled law that on the same aspect both the State Legislature and the Parliament cannot Impose tax. Once It Is covered by a parliamentary legislation exclusively, the power of the State to levy any tax in respect to the same aspect Is totally lacking and therefore, no sales tax or value added tax could be Imposed on the same aspect. The agreement between the assessee and the service providers is for providing access. The right to use, If It Is to be construed as a deemed sale, then, It requires transfer of possession of goods along with the effective control of the goods which Is not there in the Instant case. The terms of the agreement makes it abundantly clear that 24 x 7 x 365 days the assessee has to operate and maintain the Infrastructure to render the requisite servIce to the shared operators and therefore, at no point of time, the shared operators either get the possession of the passive Infrastructure or control much less effective control over the passive Infrastructure. The terms of the agreement

38 makes it ‘vezy c leat thai the shared ojw rator has no obligation P. op’ tate md ntiiniair the infrastructure AJ1a3s. at all pnml of tune. it u the dun of the assessee to maintain infraqtrun.ure. to be eligible for the consideration mentioned in the agreement. They have to operate and maintain the lnfrastntciure at 99.98°c’ for efficiency, as otherwise they would not be entitled to consideration at all. Therefore. he submits that having regard to the nature and the terms of the contract the activity carried on b3 the assessee the purpose br which the shared operators haie ac eccs to passite Infrastructure it a ontrac.t I pure service and to element of sale i’ miolw.d ‘It r fore mc Ic ama Single J idg ‘1thout rcpe pheati ii I dilt. . r 0 atot ‘i_ it d ld ia tiaIa%h(i Ui 1 qtietwn fall’ whir he nw. Iue of A. ft Ic 4(6 9_W! )cil i the C aa’—diution A Ir 1 dia. L I “ii \ It Hhit U’i’ le uLi(( C •nb.•f I cti9V.aiiflL. lot un c.n , ‘tdt. c’ .r_t”r..e ci, •hai tf.aa “a 1 ;“t of aaf j; r•n c 1t.1t. i’e’,.—, 1 r ii jj,tjrjq’. .1. C’is a did 1.. ‘II’ ‘ L .‘ 1 1 1 tS

39 have rightly registered themsehes as service providers under tht finance A 1 1994 nd they hive been paying the srce tax, Ther is no element of sale involved It is a pure case of extending service and therefore, the question of imposing VAT on the same aspect would not arise, The learned Single Judge has not properly appreciated this aspect and committed an error in holding that the nature of the activity amount to deemed sale and the State Go ernmnt has fn recover the VA1 from the service providers paid by the assessec to Union of India The said order is illegal and requires to be set aside 1, Per contra the leaincd Senior Counsel for thc c; enu Sri Ashok H iranalh Spt cml Counsel engaged b th tile of Kain Atak n ended ha the erms of th ip eme 1 I p € eade e es C(5 0 ft r A tt t d I C (LI

40 site preferred by the shared operators and it is installed in the manner the shared operators requires it and after installation, he Is provided site access upon which the shared operators install their machinery which is known “as active Infrastructur& in the very same site and in fact, on the tower in the very same site. Keys of the site are handed over to the shared operators. The capacity is increased according to the requirements and specification of the shared operators and therefore when all these aspects are taken together, it shows that there is a transfer of right to use the passive infrastructure to the shared operators. It is settled law that to constitute a sale, actual delivery is not required. When once the right to use is granted to the shared operators, it presupposes the transfer of that right to use, as held by the Constitution Bench of the Apex Court in the 20th Century’s case. Therefore. he submits that the tax Is imposed on this aspect of transfer. The very purpose of the 46th amendment to the Constitution Is to tax these types of transactions which directly do not fall within the definition of sale of goods but nonetheless the effect of such transaction is the transfer of right to use the goods. It is in

$ 41 order to avoid evasion of payment of tax by entering Into such transaction, that the Constitution was amended and Clause (d) of Article 366 (29-A) was Inserted. Keeping In mind the object with which these provision is inserted, the Courts have to Interpret this provision In such a manner to advance the cause of the Constitutional amendment and therefore, he subnfl that the authority was justified In treatIng it as a deemed sale and levying of tax. It Is In accordance with law and therefore no case for Interference is made out. However, he contends that the learned Single Judge was not justified In Issuing a direction to the State to collect the said tax from the Union of India. Similarly, the learned Single Judge was not justified In setting aside imposition of Interest and penalty as no tax Is paid under the Act at all. That portion of the order Is illegal and requires to be set aside. He also contended, under the statute, a statutory appeal Is provided to the Appellate Commissioner against the• order passed by the Assessing Authority whose order can be challenged before the Karnataka Appellate Tribunal and therefore there is no justification for the assessees to bypass a statutory remedy and approach this

42 (otft uudt i Article 226 ci the Cunstitution of India. as the ippellants ha e an titer ii itive itid fit acious u inc dv of an appeal. Fienue. these writ appeals are not inaintaiiiable, POINT FOR CONSIDERATION 16. in the light of the aloresaid facts and the rival contentions, the point that arise for our consideration in these appeals is, Whether activity carried on and the service provided by the assessees to its customers constitute a deemed sate as defined under Article 366 (29A) (1)(d) of the Co,tctituttnn nJ 1dki mid threfnrc’ liabt to value added tax. IINDING OF THE ASSESSING OFFICER I t \‘s “ar UI

13 “ 1 A7tethei allowing the mobile operators lo use teleorn tower amounts to transler of right to use th 18 ihe Assessing Queer referred to clause (29AJ of Ai tu Ic 366 of the Coiistitu tion of [ndia and then referred to the Judttnient of the Apex Court in 2Ot Century Finance corporatioth, case as xe11 as Modern Decorators ase and the judgment of the Andhra Pradesl high Court in the ease ol Jasper Acqua Exports ‘Pvt) Ltd., and held as under: 19. The abo r decisions of die iionh1e High Courts and Supreme (0tIIi has c]carlv h1d that the physical dclix ely ( g ( H i r r I PS i1 11 ir s t I I ru fl tel Pigflt ii) ‘lt cocos \Viiat is 1l-i-x int 1r \riiC i 36E129r\) (ii) if ‘in Con L uOoi s dic c iiw u lNh i kgal right o usc I o iii d or I r tIa n’cI radii. nra l,—r r} ir; sir—e ru d- rid- ; arc i nt a 1: ‘ Hi h\ 1 o s a. a-c I tin

44 ransferce has the ircedom and cnoicc of seIectinL 5 the manner. time and nature of use of the toods, 20. Working of the telecommunication network. involves the process of receiving, ampliring and transmitting the signals. The set of instruments dealing with the above process is termed as “Active Infrastructure” belonging to the mobile operators. For functioning of’ Active infrastructure maintenance of a particular temperature. hu miditv, safety and alSo positioning of the Radio/MW antennae at a particular height is required. These requirements are achieved by using the “passive infrastructure”, ic., Tower and oilier equipments. 21. How the mobile operator is permitted to use the passive infrastructure is described in ScheduIe 1 of M.S,A. in t.he present case. That means the mobmi e. operators are per.mit.tc.d t.o moo it their Radio /MW .antennae at desired heights and direction cot led with e use of eiinezmi.s prcwi.dn.g other eeehni.eai requirements B iq this passive ix rastrlIcmxrp iht rrio[)jle ooerators comm m.i.eate wflfl the mobile signals. Thurhih x f xx se is acquired f me.ans

4 45 of a contract called “Service Contraët” read with M.S.A. Though the nomenclature of the contract Is termed as ‘service contract”, the reading of the terms of M.S.A. clearly Indicates that there is a contract for “Transfer of Right to use passive Infrastructure” which Is agoods. 22. Neither under Article 366 (29A)(d) nor under Sectlon.2 (29)(d) of KVAT Act, Is there a clear prohibition for permitting multiple use of goods like mobile towers. What Is Important is that the legal right transferred to use the goods In favour of a person should not get affected during the period of contract by permitting another person for similar use. In case of Telecom Towers, two or more mobile operators can be permitted to use, by clearly dernarcating the space In the towers without affecting each other rights. Here as per the requirement of mobile operator, a fixed space on the tower at a particular height/direction Is allotted along with other Infrastructure. By means of a contract, Indus (Transferer) transfers the right to use passive Infrastructure In favour of

16 (transferee) mobile operator. by which the transleree gets the legal right io access/use the passive infrastructure, 23. it is the argument of the assessee that since he is maintainini the passive infrastructure, the eflbctive control is retained by him. This is Hot correct, because as per the terms of the agreement (M.S,A,) it is the duty of Indus to maintain 24 hours/7 days/365 days required temperature, humidity, power etc., for allowing use of telecom tower. Only with these requirements mobile operators have sought. ri lit to use towers. Accordi rigiv they have beeH permitted through. a contract. It is mobile operators who have the freedom. to select th.e type of tower, height/direction in the tower, temperature, humidity, 24 hour pon r and so on. hdus cannot decide on behalf of anymore once. contract is cxecuted Therefore. there is effective control exercised by the mobile erators not by Ty 24, In the. decision of BSNL case, the Hon’b.ie Supreme Court has pre.sc.r.i.bed certain. attributes for a t..ransaction to conslitute a “Transibr of Right to. usc goocI C

47 ‘(a) thc re must be goods avallabk for delivery ,) iliac tnu hr a ennsenu ad iden, ‘va tn the identity of thc toods. Ic) the iranqieree qhould have a legal right to use the izoods consequently all legal consequences of such use Iriducling any permissions or licenses required therefore should be a allable to the I ransferee. Id) for the period during which the transferec has suck legal righi It lia’ to bt exclusion to the transferor this is the netearv cojicomitant of the plain language ‘1 the statrtt. ‘iz. a ‘transLer ‘4 the right to use and nnt flit re—lv a Ia en,t to uM’ the a’)OLl. (ci !,v1flgj titui fcnc. I l’t t uk t c. “ t. o cl’ 1 ups jxi cd oi tl u ‘ v u L’r Lr-i’ ‘re—a, t ilt V “e ir:fl jtW’P ! ft,tjfe. - t’i’• at a ‘ijat ‘u !je. ‘3 1 ii (‘1 1 (it lit’ ci i i

entered in to c’orirract with the mobile operators authorizinit them with a legal right to use the pt.ssive infrastructure subject to the conditions of Master Service Areement. Hence, first three conditions are satisfied. 26. It is the submission of the assessee that last two conditions are not satisfied in the present case. Since the assessee is authorizing the use of same ‘passive infrastructure’ to multiple operators (up to 4 operators) he argues that the condition of ‘non-executive’ clause is not met For the same reason, the condition of prohibition of owner transfirring the same right to others is also not satisfied. 27, The examination of terms and. condition of the i.’iSA relatin.g to roviding acc.ess t..o the passive infrastnictu.re or exeeu..tion of “service contract” reveals that to start with, shari nti aerator indents recuirement at access to the tower through “i.oreca.st”. in response to the above request, in.ius gives su.tg.estioi ..s, commeirits and its plans for meeting the ‘n— ‘

49 ‘itt. Then the operator scuds a bite request’ for which Indus will issue “site propo%al indlntlng its p1 n.e tc Implement sitc request along with applicable charges either at an existing site or rreation oi new site. If the ‘site proposal is act eptable to the sharing operator. he ;1ll issue a “scn’ice Order’ in the prescribed form setting out the details of ie required along with the technical requirement for Installation of sharing operators equipment. Then. Indu’ would confirm the order by issuing ‘Ready for Installation Notice”. Alter receipt of thit above notice, the sharing operator will mspect and approe the. site if it is acceptable. for all his technie al icquirements. After appioial of the site as ibu’c the shanng operator and Indus ‘it ‘t” a lire1 lid Scrvit ‘ atta’i. j.hith pin (dat ‘hc harlru cperator igtt 1’ use? c e’ I issv mu wrurt.u;c tnac’d’a ‘qt ir U by Ii din Ion’ iUt ii ci ii C L’titIlt”flL L’i ‘4,’ ii’ n’ sir! ii’i’r&trtkn’te ,i the site i lit tue it’ . 1 It Hi ‘ n:dn llis tat_tt U’s r’,’il’ik Jr idli)’ I! I j% frtjtsfl ‘fl.’ ,I..’ ‘‘ : r.,..:ll ni &1 11 • • S;.. “‘.lst!’ t I

50 iithastrut lure Marling from the time ol entering Into the rontract of ourse subject to the Willis tnd condftlori of lSA. the custonicr has also the freedom to increase the power of acees by increasing the number ol anwnnae, weight on the tower. power consuniptioti etc.. over and above the standard conflguiation specified In clause 1 of Schedule I subject to the payment of extra charges specified In clauses 3,4,5,6,7.8 and 9 of Schedule-3. lie also has the freedom to use ally type of passive infrastructure located at anous types of sites such as premium sltc s strategic sites In building solutIons, P1cc and micro sites. Built to suit sites sublet to payment of extra ehargcs specified in 2 1. 2.2 and 2.3 of Schedule-S. Once a ‘P2b gpfjJtoT i ptxmittecl t . .ç ,a$’ nI,t’ruçjur a jyr tjis_j_yjiejpçpt with rc%gg.cLt Uqnpnt ji g saacejnshi town at a jtitic’uiai hngj Jjrnjcq ‘jj Itt S - t Li sI’] A_ LictilLl ‘s ‘iii j tgpjfle’sju M - iJar i ‘i% op r4LOt iL. Lilt c.tflt nsçr th’ :i” 9e’aLc:r 114 B’ SI Ii (1 ‘.te c;iht r flti$M .t S ‘( ‘ivir ‘Pt •f 1 t’t. tt ,‘ ‘1 1’ ‘ 1 J t

51 requirement of one operator Indus cannot entertain new operator unless existIng equipments/Infrastructure is upgraded. In case for any reason. indus ceases to operate any site. then such site has to be transferred to the customers for operation, in case of multiple customers operation has to be given in the chronological order of their contracts as per Clause 3 of Schedule 6. 29. ThIs clearly establishes that the customer has the effective control over the manner tIme and nature of use of the passive infrastructure by the virtue of his “right to use” acquired through the contract subject to the conditions of M.S.A. 30. On the other hand. Indus does not have the effective control over the manner, time and nature of use of a specified access to passive infrastnicture allotted to a particular operator. Once contract is executed with specified access to the passive Infrastructure. Indus Is not free to either self use or to allot the same to any other operator. However,

52 only on termination of the contract, Indus re-acquires the allotted access and is free to allot the same to any other operator if it is suitable for him. Though Indus can allot use of passive infrastructure to more than one operator, he Is not free to change specified allotted use to a particular mobile operator. Hence, it Is not true that Indus has got right to transfer the specified use of the passive Infrastructure to more than one operator, though he may allow sharing of entire passive Infrastructure by two or more operators at a particular site. For the same reason specified use or access granted to an operator cannot be treated as on6 nonclusive basiC. Conclusions: 31. In other words clauses (d) and (e) are satisfied In the present facts and circumstances of the case. Thus there is a transfer of right to use specified passive infrastructure from Indus to the mobile operator. which comes within the ainbit of Article 366(29-A)(d) of the constitution of India. There Is a possession and effective control of the specified access of the passive infrastructure by the transferee I.e.. mobile operators

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54 “a tax on the transfer cif the right to use any goods for any purpose (whether or riot for a specified period)for cask deferred payment or other valuable conslderazlon;’ 33. This provision was Introduced by the 46th1 Constitutional Amendment. The objects and reasons appended to the Constitutional (Forty-sixth Amendment) BIll. 1981 Insofar as this provision Is concerned gives an Insight Into the reasons for enacting the provision. “Device by way of lease offilms has also been resulting in avoidance of Sales Thx. The main right In regard to a film relates to Its exploitation and after exploitationfor a certain period of time. In most cases, thefilm ceases to have any value. It Is, therefore, seen that Instead of resorting to the outr1ght sale of a filnt only a leased or transfer the right to exploitation Is made.” 34. The cause for such amendment is the judgment rendered by the Madras High Court in the case of A.V.ME1YAPPAN vs COMMISSIONER OF COMMERCIAL

55 TAXES. BOARD OF REVEXlE. MADRAS AND ANOTHER (19671 021) 0115). tI x a held a uridu: The question thai we have to exanune is whether the yrant 0/the it’a.se Jr explouuzg the fihiti by distribution. jbr purposes of exhibition to the public amounts, in what are claimed to be special circumstances of the case by the department. to a sale oj goods. I3ejorc adverting to these special circilrrzstances relied upon by the department, we may turn. to the terms of the agreement. What purports to be qranted by wcuj of lease are thc £nttre world neqatwe rights of the film and those nyhis re deJIrted ui the rell cacti Laus 4d) 1 the corttntct in this mcLnner’ in hi tT1i, iq (hi. q n 11 t t ml’ t I’C(iLlll c(;rtn’117p1(zu-u i n a hue a nçjh( m I by 1 at a 1 z y ii t J(![i(’Fj. 1 y’iiii.td - fJ’p0 a ,Y1)QTt . Ti (Ifl ]‘‘au d ‘he c&7MI tTtc I ) s ri s it i’ t’l t it ( c Lv ri’- ‘Ic’ II’( uj (itt it( ti-1vt jiy [( (!IP

V 56 that ‘thc ralnc of a film Is completely wiped out bt exIilJAu.on in (he course uJ ten years or scr The irnpuqneci order says that the normal lc oJ ajUm Is less than three yews. If the film as an cçplultabk’ commodIty has no value bt’yuncl a period qf three years. the apparent tenor of the transaction as a lease to e’plolt the right of the owner qf the copyright is In substance only an outright salt of all such ncjhts qf the nu’ner so It is argued in support of this argument reliance is placed upon thefact that wider the Income-tax law. deprenatton of the value qi thc jdrn as an income earning asset Ic allowed out r a period of thrt e ycars only and thereafter the Inrome-tav department trea’its thc hook value of tie czsat as ¼i’tii b-c plctely xa sk tj ,ü. depreciation, it ‘crms (a i’s that t’it 9rc,cg3dure (icOptLd his hit ir.t o,nc un rlcpriruneru ftt i xtzirurj .zn)qr “LUU’V 1.4 .Ji,_. j%; c ‘ iion l.eu GIL u_’ ic’,S;, citLd 11W’ Lfl%i t Oil the. utaN” ii-Le ii i tqitally 1 3 i 0 1, ir C I Ci Li e - 1 it CT r SEs i LqlL)L’w(. i r j csjjnqiz ‘C crs •. !s.rfg z;.’efleWJ ,ccj’j a. •‘‘ t ’.C “ ;v;,i..fl.’s f,)r 1 . S 1(1’ (1., fl( I

57 claim that the value qf the property becv.rnws rail at the end of a much lecser period. t Irturilly this argunwnt qi the department troulci equate the right q, the owner of the copyright to thc actual material that Is produced by him. What Is coruernplated by the arrangement between the parties is only the supply of certain material to the lessee In order to sen,e the exploitation of the right oJ the owner hi the copyright qf the film. 4f the argument of the department as accepted. any lease transorlIon such as mere’ hire “ten for aq short a period, as say five years. nuist be regarded cis a sale, solely for the reason that period as In excess qi the period qf thrce years, which the. department alleges Is the normal life of afllm. It is also easy to see that the mere sale ‘4 a film rego.rclecl as material to another mt rsc b me c U ran a, the opyrayhi a ould c. uraz jar nothznq at all unless thcrt is the cotjjk’rment oJ a right to apwl1 the film In a rransac.tlon qt this kaatf’lzt-rJhLahasrTa a! aid I’ ‘,zq.qly o U ‘ JUn s c flu ag u tic ‘v’ ‘h’iZ right. itt’ a,.’ IF.t.rtIr.r.. mauollumn iq Jcçt U ‘zpncn ad zpr’ trvucl’ prx d’’e ‘ CWUL vu ‘ ciila & S ) % liar ‘t fl( n’.: • c r psrjgfl.. u •jile z (C. wil.z ;v., ti

58 lrduls(tcllOIaS ill CjtLCstiOhl do oni conhlo(C sales al a IL 35 This constitutional provision has been the subject maner of iilterpretatioii by various Courts. F’irstlv, Andhra Pradesh High Court in the case of RASIITRIYA ISPAT NIGAM LIT) Vs COMMERCIAL FAX OFFICER, COMPANY CIRCLF, VISAM-LAPATNAM ((1990) 077 STC 0 1 82t dealing with the taxable event under the provisions of the Andhra Pradesh Gneral Sales TaxAt (6 of 1957) held as under: Elie taxable e’’enl inder section 3 F is the transfer of the right tO rise ani.j cjoods What does f ICLSt iiiflHO1X Fhis ‘. L) Lh tic,, i, C (znsJer )f fur rrjltt I se thr joods io ((SiO [It lCrt’rt(J (i\ T’S S (I ftszLitt 1 ri’ttiC t i i!1i”) 1 I’E, °I1( aI 1 (J()()(J ri)1 rCTi a run US Lila dSX IS lit (iO ( 1ll’ d 1111151 a I I I - :1 • .L1i : :- :- I - I 11 1- 1 1(S I ( 11 1

IS 59 11w vesiltive Jizcl. 14 considered u’ltlt rçjerence 10 11w transItive is a clerlvculre title. u’hlk’ from the point qi vIew of the lmnsIeror It Is ‘in allenatltt fin l&dmond on Jurlspru.dt net 1’wc lift Edlition at pages 332 and 333.1 In Corpus Jurls Seeundunt transJer” Is defined: ‘17w common use at 11w word iransfer’ Is to denote the passing of title ut properly. or an nteicst therein from onc person to another. and In this sense 11w term means thus. the owner of puiperty cLeIlLvrs IL to another person with the tti ufpas’nnqthe ight wiwn C ‘Lads t v ‘c. Lanes. cctiuz .8 I Ihc LSSf •t. n fl utslt t pzs’.atic of.’ ,ntrql ‘C ht E’o’iu l’nflt ‘ )J)11 r I sills Zr’ ‘ui’ i....;ncj ‘i’jl:l% in.: e;ihti Ic lvUkfll— . U’ ii si a. 1, ‘tIc ‘ii slit ‘‘‘L ‘(ft ‘i’Iit A

60 had to (he thing to be transferred. A transfer qf the right to use the goods necessarily involves delivery of possession by the transferor to the transferee. Deliveni of possession of ci thin must be distinnished from its custody. ii is not uncommon to find the transferee of goods in possession while rranstêror is havinq custody. Vhen a taxi cab is hired tinder “rentaicar scheme, and a cab is provided, usually driver accompanies the cab: there the driver will have the custody of the car though the hirer will have the possession and effective control of the cab. This mat! be contrasted with the case when ci taxi car is hired for qoirtq from one place to another. There the driver will have both the custody as well as the possesston: what is provided is service on hire. In the former case, there was effective control. of the hirer (transferee) on the cab whereas in the latter case it is lacking. We matj have many examples to Whether there is a transfer of the right to use 1.5 U qUestLOri Of jcL Wtli.c 1.1 determined in each. case having regard to the terms of the contract under which there is saId to be a transfer f the right to is.e”.

61 The Apex Court in appeal against the said judgment in STATE OF ANDHRA PRADESH vs RASHTR1YA ISPAT NIGAM LTD. ((2002) [2.6 STC 114) upholding thai view held as under: “3,The respondent is owning Visukhcipatnam Steel Project. For the purpose of steel project. it allotted dfferent works to con tractors, The respondent undertook to supplii sophisticate mczchirtery to the contractors for the purpose of being used in execution of the conracred works and received charges for the same. The appellant Here itulicised. Made provisional assessment levying tax on hire charges under section 5-F of the Act. The respondent filed writ peuhen seekin.q declara.tiort that the tax: levied, exercising power under section 5-F oi’ the Act. OH the hire charrie collected during the period 1988-89, was lUcqol arid unconshtwionat The apeetiurit filed a counter-affidavit in the writ petition contendinq that the resvondcnt u ‘as ie zd.ino highly sophistica d and vainahl.e imported machir ip 1O the contractors engoqe in ti e (\.(trn of the oroject: u..ork on specified

62 hire charges: the machiierzj was qiven in the possesston of the contractor and he was responsible JOr any loss or damage to it and in clew of the terms and conditions contained in the agreernent, there was lransler of property in goods for use and on the amounts collected by the respondent as charges fOr lending machinery attrczcied tax liability under section 5 -E yf the Act. 4. The 1-ugh Court after scruiinij and close examination of the clauses contained in. the agreement and loolcinq to the agreement as a whole, in order to determine (he nature of the transaction. concluded that the transactions between the respondent and contractors; did not involve transfer of right to use the machinery in tavour of the contractors and in the cthse zce of satisfqinq the essential requirement cf’ section 5-E of the Act, i. a, trans/dr of right to use machinery, the hire charges cOileCtea. 01] LOS rC5/Jofldent j?om the contracts were not exigthle to sales tax. On a careful reading and analysi of the vanous clauses contai.neci in the ac.ireement and, in. partict..dar, lookin.g to clans 1,5, 7,13 and 14, it becomes ____. ___.i, _-3_--, ..,______,_-_1. e 1(

riqlai to use the inachineul tnjarour 01 contraCtors. The lliqhi Court was rkjht iii arrii’inq at such a coiiclusioii, [Ti the irnpll(Ined order. ii iS qi(ued (111(1 rkjhthi so iii our opinion, that the c’ttectii’e control ot the IltciChjnCrLj ecen while ihe IllaChiIlerij’icTlS iii use ol the coiltracz’or was that of the respondent corrij)anij. (1w’ contractor was not free to make use of the mczchinery fOr the works other than the price! work of the respondent or riioz’e it out during the period the machinery was in his use: the condition that 11 me contractor i could be respom isible tor the (‘ustodq of the machinery mehile it was on (lie site did not militate aqatnst respondents possession and ontrol of th rnachmenj ReIiar 1 R ciiu on a ( in 201 CENIURY FINANCE CORPORATION LIT) & ANOTHER vs SIAIE OF MAHARASHTRA ((2000) 119 SiC 0182) wIieien

64 (29A) qf article 366 are not actual sales within the meaning of sale” but are deemed sales by legal fiction created therein, The situs of sale can only be fixed either by the qppropriate Legislature or by judge made law, and there is no settled principles for determining thc situs of sale. There arc corflicting views on this question. One of the principles pmviding situs of sale was erigrafted in Explanation to clause (l)(q) of article 286, as it existed prior to the Constitution (Sixth Amendment) Act, which provided that the sims of sale would be where the goods are delivered for consumption. The second view is situs of sale would be the place uherE the contract is concluded. The third view is that the place where the goods are sold or delivE red would he the suits of sale The fourth i ten is that where thi ssential ingredients which compk Ic i sale are found in majonty would be tht situ f sale Therc ii ould be no hfjiculttj it ft it z it f ii he e I I a lxc ot toed ej ft Lot t hi pp pri ti cqt Ia ir Al L UC’(t I U i win a ft on fix I i ctlo; f ci qi E

65 26. “Phe nevi quesuoii (hut arises /or considerahoz is, ii’hew iS the taxable of the riqht to use awj (joods. Article :66 i2SiA) (dl enzpou’ers the State Legislature to ena I law imposing sales Lax on the transfer of the riqht to use goods. Tlu l’unOlIS subcIaitses of clause (291] of article 366 permit the anlposition oJ tax thus: sub clause (a) on transfer of property in goods: sub ClaUSE’ (h) on transfer of property in qoods sub clause (ci oil deliveru of goods: sub clausc Id) on transfer of the riqht to use goods: sub clause tel on supply oJ cjoocls: and sub clause (fl oil supply of services The words and such transfEr delivery or supply. “Iii the latter portion of clause t29A}. therefore. refer iv the zi’ords traisJer delivery and supply as hcahk a. ed th luu, . the tTaizS fei of yocis 1LIII b (1 (jeemea suk’ ui the USEs sub LuHs (it] niat b; lie de1uri of )O 1’ C fi i if 1” ( )f 3 Sc;, ti supoly rif ‘J axis nz’J crL’lccs r,j ecLmi: I’Iil di nc d (lii hi ‘ c r S 0 itl laus c C I I (1 Ii )f Y 3 1 1 se riij q ( rr( d ‘,‘LlL i’ 5Cc 14 Sj ( 20 ‘1 3(1 ‘1

66 is to he irgposecl not on the transfer qf the right to use goods hut on the deliverzj of the goods for use Nor in our view can a transfer of th right to use goods in sub clause (d) qf clause (29A) lx equated with the third sort qf bailment rçferred to in ‘i3ailrnent’ by Palmer, 1979 edition, page 88 The third sort referred to there is when goods are lçft with the bailee to be used by him for hire, which implies the transfer of the goods to the bailee, In the case of sub clause (d). the goods are riot required to be left with the transferee, All that is required is that there is a transfer of the right to use the qoods, In our view, therefore on a plain construction of sub clause (d) of clause (29A) the taxable event is the transfer of the right to use the goods reqardless of when nr “bether hc qoods arc deluered for usc What is required is that thc goods should hc in c xisiencc so that theg may be u ed And further ontrac n a spc ct thereof is a )ClilreotZ ci eta lx c ned I i E Inc I c 11 iql 0 nea, iru r a n goods rc h Is qh sc he i an fccrci f a Ia a ,le k Is c d r 30d

67 right to use them, though It may be thai In the case oJ an oral or Implied transJk r qt the right to use goods Ills effected by the dellvenj of the goods 27. ArtIcle 366(29/i) (ci) (lather shows that levy qi tax Is not on use of goods but on the transfer of the right to use goods. The right to use goods accrues only on account of the transfer oJ right. In other words, right to use arises only on the transfer ofsuch a right and unless there Is transfer qi right, the right to use does not arise. Therefore. It Is thetransfer whkhls since qua non forthe tight to use any goods ft the goods are available. the lransJer qf the right to use takes place when the contract In respect rhereoJ Is executed. As soon as the contract I’, e’.ecutecl, the right is rested In &.j ,stt. I’ws. 1 ?ic stats ul tc cable ctcnt q ,tah a at’ add bE ihc transJc T a Inch legally translE rs ‘l)e ria’jht 10 USC (JOOd%. It. other words. if flu gnb art araflable- rvresp..ruxv’ 7! thc t&t where ‘he S are 1 aieci and a u’nIL ; ront ‘ 1% tied enc ticztc akmecl EU lclk ce.uson IE’ f)r.ir,u I b’r “C ;r,ir,..tr ‘‘( r”,h, ! Inc tj,nji,, i3z’t • •.,e’ S.! 1r r’” .; ;ry I’m 4 fr’j;q•’’w .4 fls ,;rj

w,e goods it rnarj he effected hg the delivery of thE goods 28 1 Vo authoritq of this court has been shown on behaU of respondents that there would be no completed transfer oJ right to use goods unless the goods are delivered. Thus, the delivery qJ goods cannot constitute a basis for levy of tax on the transfer of right to use any goods We are, therefore, of the view that where the goods are in evistence, the taxable event on the transfer of the right to use goods occurs when a contract is executed between thE lessor and the lessee and stus qf sale of such a deemed sale would be the placr where thc contract in respe t thercof is cxc tried Thus wh re goods to be transf rred are z thc’ cat cc1Ltc hr TurtlE it hit [ )in it f cc ab c ‘n n r J u yc od o cdt oni n i

6) instruiinnt/apparaus arid appliances to subscribers held as under: “26. R was tin a uiged that in providing telephone Service hij T)ot. installation of ins Irume! ii/apparatus at id appliai ices is iiisiqinttcurit and in rnaruj cases subscribers themselves hare their own instruments: the more important part is access to the area exchange and the u hiok’ systern corn tected thereto a ‘uhoi it a ‘hich the installation is of no consequence and the same remains under the posse ssion and full control of DoT so there was no transfer of the right to use tinri goods so as to attract liability under th U P Act We are not persuaded tu accept this submission, It is true that under the Rules rfdncd to abort’, as servicE i mit zbcr allotted ii nIstrulnent/apparatus and otiit’ ajhiaiccs axe installeci at c a r rse J z 1 sent er I t e clri’ v’ ccu cUd cn ca a ha rj w IEU ‘Ic Li1! Lu i’c’e met ‘‘n wtuic 1 tcw. u 0 cc ci ( , in’ S JcIter ‘ici a’h n k ci ;I cnfnr Ut vs )f )u v isl ice c USE ; 1 c ‘105 ITIW ryan Ui a c. ‘ 1a r.Jr ‘ -i f(. [.( ) T,’’’-’ 1

70 eArIzcutgc and Lhai was provtdt’d by DoT, JnsoJar as tlu content ion of qhing posscsstoiz or control of the ir’hok’ SUSICI11 01 ‘xchaiiqe zS (oi erried it’hirh is said to comprise mos fly of imnlovable property, it needs to be borne iii mind that handing ot’er Of the pOSSCSS1Ofl 15 1101 since qua non oJ completing the transfer of the right to use any goods. It was so held by a coIlsLiluliort I3erich of this Court in 2O” Ceruury Finance Corpri Ltd r State of Mctharashtra, A ‘transfer at the right to use anti goodS 1L’ill be’ complc’tc’ according to the law laid down by the majority in that case on ompletton qf the contract to rrctnsfer oJ the’ right to USC the goods The contention that the area telephone erhanges md other sljsa nis would r main under the control of DoT is irreteranl to coiplc’te such a I lcf( r i pr fl r n ta1lci1 ,i J tj sriior aria ur,ir aJJp11ailes. uncc [301 o iw Is rh lelq hone hr of h C sig d unb i o, i-’ ib ibr I’, u a ca ‘ch rtq mc ss i ot.c’ T (7j3Jnies :s ‘S1(tl)ftSh(CJ Tfuc 7Jio! 1 jc )fl[i1 I (tLe ii fl’f-r nI iriC rL031 1!ir (joO(Ls.

71 Cuziri ill State of • Raslztruia ispai \tqam Ltd. It is unnecessary to deal with these cases in arty detail. suffice it to cai, in that case there was a Iuiduuj of fact drat the transaclThn did rini iru’olve transfer oJ the right to use the machinery in favour of (oniractors and that determined the issue. 27 It may be mentioned that during the relevant period (1988) no service tax was erijorced. It was in 1994 that service tax was levied fbr the first tune as per Chapter V of the F’irtance Act, 199-4. Section 66 thereof created charge of service tax in regard to taxable services. Service Lax’ is defined in clause (34) of Set lion 65 to mean tax chargeable under the provLsioi is of that napler. 7’axable ceri’icc is dejrnea Iunder sub ‘‘larcsc’ Ib) 1 ½usc 4 1 [ 5j 0 n ° mc a an, srvkc provided tu. znrcr cilia, a -jihsenher by the telegraph (inthority vi ciwiori t a rc1ephottt )rt ho r v s r I I H- i( H i-’rnczr I Hh-4 yr ic C - ‘HSij!Ui;OT f JrsL,- i blat ht I ,lc intic to $o iat r rlul olle U a q f i Itc su nt hOt S I €( I ‘i\ a rs aoH wHior °tc .F ‘t Wt’nit i’ caoc - I H- S it ‘- by ‘r’t ic’ I NH- ‘NE ‘id H’. ii o of o-j

72 subsc ilber. Is no ground to hold (licil the state (annot levi, tax under the 1.1’. Act. 28. For the ciJbremenutoned reasons we hold that providing telephone service by DoT which comprises cillOtmrn( qi number Installation qf an Instrument/apparatus and other appliances at the premises of a subscriber, which are connected with a telephone line to the area exchange to enable him to have access to the whole system, to dial and to receive calls. In efJectfalls within the meaning 01 the extended definition of ‘sale” viz. Within the neaning of - the transfer 01 the right to use any qoods and the fact that It Is described as service zznde, the ifA. 1885 and the Rules made theteunder or under the Ftrtancc Act 1994 would it ‘viiiat’ rJalnst t’lE s.qrnc I ‘trig .z “ale t ‘rthvz nit rnauiqoftht 1. I’ 4cr 31) ‘ Isit t iii z’ ty vt t, udert .ic’’ct’t’ ,stiiirPcrn clnohi u Inian ncr ti ol ii. .rew t nail teki,u, ‘n ‘Ii.ag.et itii dir p i.J.’i’’. )3 ‘lie i n’ 1 ua’ “ 13t’ii(’i. ‘.flit’ht ti’. if ii’j ..! I tic 4 CU’ ‘a U • iTs,.’ . II’ 1)’ j. ‘a (1” Ii’ ‘A ii.

saul quesi on was referred to a iartcr Bcneh coiisit in of Three Judcs in the eac of BIIARAT SA\C1lAR \I(AM LTI) & AXOT1IER xs LNIOI\ OF 1DLA & OFHFRS ((2006)3 5CC 1) In the said ease, after referrim to the aforesaid points in controversy, the Supreme Court held that the said iew is not correct and laid down as under: “72 In. State of U P. v Union of india it was also held: (SCC p258, para 261 handing over of possession is not sine qua non of completing the transfer oj the nqht 10 us ami goods as was held hij a Constitution l3cncli ol this Conil iii 201’ Centirnj Finuncc Corpii LId. t. SrutE’ of ;Uaiiurczsiitra. Once Dol connects the rclephnno ftne of Lh assigned ntirrth€’r nI Ilie suI)s rther to the ama ecIacznqc. ucccs 1 otn.r tek’pinrtc i s1hIiitd iherc atinoi It denial , TItE lac’ t!fli gihrtq sot h wt uc( t”s [LouLd (,TN;i( 0 roe rcrrc101 ol th rqiU to ‘‘so TIC fIVtic . ‘I ‘ Sr;(( Tt’ (It iO(’tt - O’5i LL I I TO ICP s r, !-‘ (, C--

74 proposition that delivery Qf posSCssiOfl qf the goods is tint a necessary concomitant for completing a transaction qi sale for the purposes oj Anicle 366 (29 MId) qf the ConstitutiorL In that decision the Court had to detertriine where the taxable eventfor the purposes of sales tax took place in the context of sub-clause Id) qf Article 366 (29-A). Some States had levied tax on the traiufer of the right to use goods on the location yr goods at the time qf their use irrespeettve of the place where the agreement for such transfer of right to use such goods was made. Other States levied tax upon delivery of the goods in the State pursuant to agreements yf transfer while some other States levied tax on deemed sales on the premise that the aQreelneri( for anler of the right to use had been executed within that State (ride para 2 of the judgment as reportcdf $his (ourt upheld the thtrd vi a. ia;ncly merely that the transfer yf the right to use took place where the cigreerflefliS were cxuLed 10 these cia umstanc the (o ir c id lha: H C 4$ o 2f) 28 ‘mth;rihj o ihi- om her Ii t hi ‘n oi I choif f the , pidcntc thel Ia rc ocfr ‘ no o’J IL ri ‘cu Oj rigtn

75 10 USe tjoods Unless the qoocis are clelirerecL Thus, the delivery of goods cannot constitute a basis for levy of tax on the transfer of riqht to use any goods. We are, therefore. of the view that where tlte goods are in existence. the taxable event on the trans/br of the right to use goods occurs when a con ti-act is executed between the lessor and the lessee and sims of sale of such a deemed sale would be the place where the contract in respect thereof is executed, Thus, where goods to he ransferred are available and a written contract is executed between the parties, it is w that point suns of taxable event on the transfer of right to use goods would occur and situs of sale of such a transaction would be the place where the contract is executed. 34. in determinina the sit us of the transfer o.f the right to use the goods, the Cou.rt did not say that de1irerri of the qoods was inessen tial fbi’ the purposes qf completing the (sans Jbr of (lie right to use. Th.e emph.asised onions in the quoted passaye evi.dences Lha.t (b.c goods must be cux.dio .:he uftp the trans/br of the riqht ti) 11.se the

76 goods takes place. The Court also recognised that for oral contracts the silas of the transfer may be where the goods arc delivered see para 26 of the udqmen t). 75. In our opinion, the essence of the riqht under Article 366 (29-A) (ci) is that ii relates to user of goods. It may be that the acw cii delivery of the goods is not necessary for effecting the transfer of the right to use the goods but the goods must be available at the time of transIr, must he deliverable and delivered at some stage. It is asswned, at the time of execution of ann agreement to transfer the riqhi to use, that the goods are availcthle and deliverable. If the goods. or what is claimed to be goods by the respondents are not deiiverc..hle at all by the service providers to the subscribers, the question of the right to use those goods, would not arise. 76. in Stare of AP Rashrriqa !saz Ntqam Ltd. it was claimed bu the Sales Tax Auttorities that the trcusacrion td which the owner t.f certain rnacliinenj had made th.ern available to the contractors was a sakr The Court ixlected the submission saying that: (SCC p. 315, para 4)

/ / Thc transaction did not ITZL’olre (muster of right to use the rncichinery in dvoi ir of con tractors, the effective control of the machinenj even while the machinery was in use of the contractor was that of the respondent Company; the contractor was not free to make use of the machi, iery for the works other than the project work of the respondent or....” 77. But in Aggarwcil Bros. v. State qf Haryana when the assessee had hired shattering in favour of contractors to use it in Ute course of construction of buildings ii was feund that possession of the shattering materials was transferred by the assessee to the enstorners for their use and thE...refOre, the,.•re was a deemed sale within the meaning of sufeclause (d o.f clause (2th A) of Article 366. What is noteworthy is that in both the cases there were goods in existence which were delivered to the cool actors fIr their use. ifl one case there ens no intention to transfer the riht to use wove in the other there was. 78. Hut if there are no delhercthie aoodstn existence notn tT is case. there i.s no trans’r 0)

ib user at alL Providing access or telephone connection does not put the subscaber in possession ol tlte electromagnetic waves anij more than a roll collector puts a road or bridge into tle possession of the toll paljer by ifting a toll gate. Of course the toll payer will use the road or bridge in one sense, But the distinction with a sale of goods is that the user would be of the thing or goods delivered. The delivenj may not be simultaneous with the transfer of the right to use. But the goods must be in existence and deliverable when the right is sought to be transferred. 79. Therefore whether goods are incorporeal or corporeal. tangible or intangiblethey must be deliverable, To the extent that the decision is State of UP. v. Union of India held otherwise, it was, in our humbIc opinion erroneous. 96. The entire infrastructure! instruments a c cnle e Im ‘ controL and possession of the petitioner at nil ises and there is neither any physical transfer of such goods nor any transfer of right to use such equtpmen,t or apparatuses.

79 97. To consliluic, a tTanso.c’tton for the rnuqfev qf the right to usc.’ the qoocis, 11w transaction must have the lollowung amibutes (a) there must be goods available for delbery. (b) there must be a consensus act ldern as to the identity of the goods: (ci Ott transferee should have a legal tight to use the goods consequently all legal consequences ofsuth use including any permissions or licenses required Iherejor should bc available to the transfetcc (11 , r Iho perl& .aang tlurh th vrirufrree has su”h leqcd riQhI. Ii ha ic’ £ 1w lusiw o h raisJcr r It is Ow ‘Oh, nPziTarlh “ the Ar a zravu,i qf in . cii it. ii . a ironsii if tiLe tvohi u zsC tad tic .r’t;elij c€. Licence . “st the !vwda j nnrir. ‘711511’— . 1 .d ‘)il ) L : tie .4 1

80 to be t1(msferrccl, the owner cannot again tin sfer the same rights to o1iLL-rs. 40. The Apex Court in the case of AGARWAL BROTHERS VS STATE OF HARYANA & ANOTHER REPORTED IN 1999 j’9? SCC 182, has held as under: Iii the aforescud case. “the asscssee’s ueti lure shwtering lo builders aitd contractors who use it in the course of construction of buildings. It is on the hire charqes, sales tax was lenied, Challenging the said imposition of (ax, zLnit petitton was filed before the Pugjab and Hanjaiza high Court, The argument WQS that the satd irnposliion U’aS unconstuultonaL, The high Court found as a matter of fact, the poSsesSoO 01 file hntterino rncth-rzui u’is arts]c ed bu hic issessee o thel ct for er for use during rile rstrutthr I I,tifrbti Ihe ii Ia ci uc re i jJ u’ ira i lie I 4cr nj ‘ft.niiçf ‘lie pcriocis IL 0 ?tiriIlic(r ‘a a ,,tcudcf tc1 aLic ‘f ei rz’oo sue to do a c Os

Clicrileriyirig the sad finding before the jv C oiirt it was contended har’inq regard to thu Erttrti 54 of Part II 01 ‘* liedule ‘dl the transfer couu’rnplaied bq Sub clause d) of clause (99 1) of Article 366 is a Legal transfer of the right iii the ioods IT haS to he a transjer ojgoocls. It has to be perrifanent. Ii has to be something 111cc a lease. The gü’ing q goods oil Ilire is not such a trcin.fer and. therefore. fills outside the ambU of sub clause (d) of clause (29 Al of Article 366.” hi the case ol DHAMPUR SUGAR MILLS LTTh, vs COMMISSIONER OF TRADE TAX UP. REPORTED IN (2006) 5 5CC 624, the Apex Court held as under. In the said cas, ‘xect ’d bij tlv ‘‘onpany ThereaJter thu rssc sse jurirwvec to usure perj( ‘TCCTL( C dated 3 9 1 98? utjr TilL. t 4 e ft’r r;’as evri wcd i’leteirt if ‘‘as fnjvc0 fi f a ra rirt a dee I of licence u‘as z i faz’ur 3 thu assess, rc Wed a pcrforrnanct mancc f Ire surd dEed j (ii (criirs j thu ,azd 3° 1 )7 J)/0T?flaTi(( tjH ilt (zppe’lfrLni iierciiZ !fl r, and hcru’ccrt rli I t I ( !(( Ii 11 frI )

82 qi the consideranon jar the right to use the said sugar mill Le., the licence jèe. flu appellant uvis required to hand over molasses in the said company jör an amotuiL equivalent to the licence fee and such a transaction would not constitute a sale qf molasses so as to attract the provisions of the Act. In the saRi case. as a matter offact, it was found that the assessee carried on the business of manifacture ofsugar and molasses. It does not use the molasses ilse(f The stock qf molasses has not been transferred by the assessee. The stock qi molasses. indisputably, used to be transJerred to the Company. ‘l’he Company was the owner qf the mill The premises of thc. mill had been taken on lease, although, termed as a licence for a period qi Q,qrc, By rEason 4 11w purpxlcd cked of in i-nec lht assessee has been allowed exclusive s of the ugai Till along sztf its plan ‘unchineri,, IL’cunvs and Irninp . te. rile CLSse’SSt’ aculal”t ‘ ‘z h’c. a till k crpArJ ZCL’. lgot 7t.taiilPd (‘.lI flflflflt .iI’tT tIet ‘4K icuInti C)g z’ said ill Jr ‘c n.c ‘jilt siideeci I .ss%ei.%eL .77% ‘t’ filiAl ‘1 ,Ii.’ I 1?’. ifl “zkI’, ,t e iir’,i’i,inllc ‘j p”1 .1 a 1 i ,qa a tU ),.q)s’ 11 r. a . I,r 7’?( ‘r ‘

I 83 the said licence, the ultimate c.oratml over the cjfjalrs of the sugar mill veoted with iii.. assc ssec (lausc 1 1 provIdes that rue lic.viicee’ u’ac qrarned Jull libErty to repair/replace the plant replace (1w plant and machinery. (1 necessary. Jbr the proper rwtning of the sugar mill and to carry our the civil constntctIon work. wherever considered necessary. In renns of Clause 18 of the purported dcccl of licence, the licensee was required to execute a pedbrmanee guarantee In favour qf the owner to ensure peifonnance on Ito part and the Company was required to assure the appellant that It would not an any manner put any hindrance to the runnmq t the mill during the period of the licence and the Company i.ould also c noun that none of its creditors us art claw Including its bankeis. take any I hssfq 1 C “CFIQPSJ )!t1a btll ft 1- b kro d I 1.’ U p* is .1 uah r / 4 nt .1 ir no I to i’s •fl I ( 1(1% (or ‘tray ‘)U’Th’SV c1”wi 1iU as- ,r de lerrud JJcsunhc fly r jlj lvi Ac U sac rc ni k V gflg,,fl “a ‘Pfl1•7’ r rk’ira;’:’;n ‘4 ‘fl Li V if it c j ir (:‘.‘;.t... •..k.•I • ‘. • ‘. ‘ ‘4% . e I . (‘ 7 g• 11

84 title to the goods. although. may remain with the transferee, a transfer of right to use the goods would also be a sale. Even a lease of goods would be a sale. Thus, bzj reason of the said definition, though an essential ingredient of a sale as defined in the Sale of Goods Act, 1930, inay be absent, the transaction may amount to a sale for the purpose ot levy of sales tax under the Act, What has not been altered by reason of the said provision is the meaning of the word “goods”. In this case, the concept of goods is not in dispute. Molasses is indisputably goods. It can be transferred for a definite price. x Molasses manufdctured in the sugar mills. was the property of the appellant and it answers the description of “goods”. In view of the terms and conditions of the deed of licence, the appetlam was the owner thereof The Company was to use the molasses jOr the purpose of manuldcti ire at suaar in its fricmory. Transfer yf such molasses by the appellant to the Company;, would riot be a transfer hr.’ wa of transfer of stock. It.. is transfer of t.he or..t.nership in goods wherefor the Cornpa.ny was’ to pcu.J tl.e price to the appellant. The transaction., thenJOre, beyond any 1—

85 doubt. answers the descripton of sale within the meaning of the provisions of the UP. Trade lax Act. 1918. For each supply of molasses the appellant would be entitled to the price thereqf The amount towards the price of the goods could be paid either by way of cash or deferred payment. Instead of cash, the price qf molasses was to be adjusted from the amount payable by the appellant to the owner by way of consideration jor use of the mill. Such a mutual arrangement is merely one for the purpose of adjusttncj the accounts. The transactions between the parties are in effect and substance involve passinq of monetary consideration. It would. thus, come within the purview of the expression “arty other valuable consideration”. which t.apression would take colour from deferred payment being a moneranj payment. hut does not: lose its character of some other monetary naument by way of mutual a.rranement, The parties are not bcutertn.. or exchanging any goods so that the element of rnonetun consideration is absent. Money is a legal tender. Cash E.s, howet.’er. narrower th.nn inones. The L.vords “deferred payment” and “other valuable Co sic.iercthon:’ erthux.,e the arrthit of consideration

86 beyond rash only. Entry . I qi list II of the Seventh &Izedule to the ConstItution 0! IndIa provides (or sale 01 govac Once a stile of goods takes place, the State heroines entitled to impose tax on sale or purchase qfgoods. For ronstruction qf the words sale ofgoods’. now the Court is not necesscu’liy required tofall upon the definition of sale of goods. as contained in the Sale of Goods Act. 1930. It has to be governed by Its enlarged definition wider Clause (29 A) to Article 366 qf the Constitution of India. Once an essential component of sale takes place. Sales rat u’oukl. Indisputably, be payable. By reason of stick an arrangerncnt by the parties. the Stoic ts not creatlnq a new taxable event nor Imposing a new tax which uns unknown In law. - r ii a c I STATE OF ORISSPs AND ANOTHER VS A&A7ICCASESLrD, oricdm(2OO7)bSCC766 ‘hrrcrn Ii p” C nirt bcld a. r ‘1141 ) 1 aIafJ I ec nd a I rat u Jispi ft tha. _n It. thi )13 l I t S V I ,,si’n .e.,l • it. g It d’r £ to s t I 77’ fl h ‘. ‘ • p’,. ‘ —l

loriii was jree horn paijinent of any charges. However, thereafter a fixed amount was levied by the crssessee as a charge Jbr overrelention. According to the impugned judgment the safe! charge Jor overretention was in (he nature of penalty imposed on the customer in order to dissuade he customerfrom retaining the cylinders. The assessee required empty cylinders to be returned so that the said cylinders could he refilled rind sold/transjrred by way of loan, In our view when the said goods (cylinder containing medical oxygen) were given on loan to the customer the transfer of the right to use the said goods came into existence. It may he that ror the first 14 days the said loan is free from payment of any chwpes. However, exemption from paqmnent would not militate against the concept qf transfer of the right (.o use the goods.” Atain, the Apex Court in the case of ASSOCIATION OF LEASING AND FINANCIAL SERVICE COMPANIES VS. UNION OF IJDIA AND OTHERS reported in. (201.1) 2 13CC 352, at “35-: Accoratno Ic- Chirtu on Contract, a hire pu.rch.ase reement is a vehicle of instalment credit. It is o:n. aqreemerlt wider .L.vfraI a.n owner isis

88 chattels ow ott hire cuidJizrilwr agrees thai the hirer may either return rhc goods and wnnlnare the hiring or elm t to purchase the goods when the payments fir hire have reached a sum equal to the amount oj the purchase price stated In the agreement or upon payment of a stated sum. The essence of 11w transaction Is bailment ofgoods by the ounr to the hirer and the agreement by which the hirer has the option to return the goods at some time or the other (See paras 36.242.36.2431. Furlher In the bathnent termed hlre” the bczllee receives both possessIOn of the chattel and the right to use It In return for remuneration to be paid to the ballor lSee jnra 32.045j Further. under the head 23 equlpnent leasing . U is ckplazned that itis aform of long term tinanrlng In a Imata Wasc. i is the. lessee who U’ fltt’ equlpmtnt o In uppliesi by the dealer thc nnnufactwc t. but the ltssor ffutancc rqnnj pic idcs ala tird tcqwres It tI& I ttc cuzpuenandalb thclse’ ‘ejr expev’c’d Lie Dcrncjthe.jcncxlqj Cit It. Cci’ P and rc u’wds vi OLL’nLssluI are’ trwL’,ierrL’cL “ thc Lecsa u’hc’ bca the risks c fr,ss Jestnsc tznn orid Jcj r villa ri ill’. nI’ ‘n’zp 17w fr,üi.i. n; Itiil ii “iitliill’ % f’rruics 1 ”lst’Vj ‘iitZ a Ct • h.t it’ j’ini’6C’ 1’:e 1 .‘ rice S t ‘.nr, :• 4 , j.• ;, •(‘tj -

89 reversionary right). fl’ Ow lease is Lcrniinawcl prematurely, the lessor Is entitled to recoup us capital Investment (less the realisable value of rite equipment at the Lime) and Its expected finance charges hess an allowance to reflect the return qf the capital) hpara 32057). In the case 03 hIre purchase agreement the periodical payments made by the hirer Is made up of: (a) considerationfor hire (b) payment on account oj purchase. 51. Thus. reliance placed by the appellant(s) on thc expression spliWng up in K.L.Johar rasc Is misconcelved because the splztdnq up refcrrcd ti in K L.Johczr case was. is stated above. In regard to valuation cutcl nor In cgarI fri ‘opetw ‘c at ifc .. r hffcrc qpss cf fncnc al Wase’.% nnrncljj. n ro frvec-i livirinrir,’ lease a i. iq ‘cas cd x t cm ‘rc’S1Lr fl%. ,hvre Is •n azltsrdtrziurt ‘ii the. matter iic ip; ‘hauls cjpp’c zctt d ti •b qtt ‘cit ic I viII”a ix ;e. nji,idp- u_inn vu r1 nimi; It fl: tat si ,j i d( IL It Wi ‘ ‘1 t 99 l “ 1 1 lit I ‘11.1’ 4 • ‘. , r’.r ?w1 a, ,

90 finai ice! interest cliurges. adjudicatzoi i. under the Aci inns u’arrantcd which has nor been done. One must also bern ui mind thai 4riide 3AH(29 .U is essentially sales lax specijic It was brought in to expand the tax base ut’htclu stood narrozt’ed down because of certain judgments of this Court. That is the reason jor bringing in the concept q/ “deemed sale under 1L’hLcll tax could he imposed on mere delivery on hire purchase [see clause (cJ/ which eApression is (tlS() there in the second liiuth f the said article, From ihe aforesaid judgments, it is clear that law on the point is fairly well settled (r e’ c s in’ id J traIft jse’ h nitrasii ut tun Hiwm et, xvhih uiii irib astructui e

91 possession of the infrastructure Except having access to the facility which the sen ice provider is providing by virtue of possessing su(h infrastiucture, no such right either in the infrastructure or in the other property of the transferor is transferred to thc transferee, Providing access does not amount to right to use goods. Providing a facility involves the use of goods. A right to use the goods is not enough. There must he a transfer of that right The transfer of right to use the goods necessarily involves delivery of possession by the transferor to the transfeiee Delivery of possession of a thing must be distinguished flom its custody Ihe right to usc goods acciues only on ac ount of the transfer of right In other words, right t usc arises only on the transfer of sw Ii a nht and unless there i i ansfer of ight thc i ight to usc does tot rrisc I f r f r 1 f t ic p1 zC 1’v I I ‘. a 1 ii

92 of gouds (annot onstitut a basis for Icv of tax on the transfer of right to use any goods 42 The essence of right to use under Article 366 (29A)(d) is, that it relates to user of goods It rna b that the actual delivery of the goods is not necessar for effecting the transfer of the right to use the goods but the goods must be available at the time of transfer, must be deliverable and delivered at some stage It is assumed at the time of execution of any agreement to transfer the right to use th goods. that th toods are axailable and delicrabk It the goods or what is liimd to Ix goods by thc respondents are rot idixrable rt t1l by tlit r 1 it id r ft the si [sriber hc u stio it r ght e hose goo Is v Id r I ai isc I rovi fir p

93 goods delivered lire delivery may not he simultaneous with the transfer ol the right to use But the goods must he in existen c and dehrerahie when the iagh is sought to he ii ansferred. \Vherher tt()Ods are Ifl(’Orporeal 1w corporeal. tat igible in intangible. they imist be deliverable. 43 In the case of lease, there is a transfer of interest Though no absolute interest is transferred, partial interest in tire properly is transferred and therefore by virtue of the eoiitrae t. tHe transleree gets right to use the property. It presupposes that there is transfer 01 such right to use. s noirited out by thc pex Court in RASIIPRIY 1SF 11 IG 1W LTD a c rhithr U r is a ransfer of right tL i or i is the quc 1011 ot Ihi t hich has to c dci crniini I ni —aJ Os ilaxina ra!u d th- a vms 1 th rclilra(1 hiiIi r is sud u ais1v 1 th n[it • Tiicr 1’ the uesti n lietta r U is iransU i igitl o a’

94 ol the terms ol the cont met. ml enl Intl ol the J)arties and their attendant cireuin’tances. 45. In this background it is necessari to look into the teuns 01 the eon1ra t untered into berveeii the parties, which is not in dispute. 36. On record we have several contracts Though most of the terms are common, there are some variations, Therefore, it is necessary to look into the terms of the contract to understand the nature of the activity the assessees is carrvin on arid whit is the subject matter of these agreements. TERMS OF THE CONTRACT 1-7. First of the nntra’ts daiud O7.O:52oO is entered into between M/’.Tndis litfratel Limited -1il1 Biarfl Arte! Linjtc Clan ) of said cnier tfjne fi( ar ciSC 1 ( I I tic fI1iiti’ii’ l 11 15 b rOll’ (I iT-( I i’ Jo Jflr(ç.rJ( UT( iO luth Ijns ‘ ‘‘‘,? L F’ ‘i U

an LenTzas, haclchaul connectivity to the Sharinq Operators network and other requisite equipment and associated civil and electrical works required to provide telecommunications sen ‘ices by the Sharing Operator at a telecommunications site other than Passice Infrastnicrure. (2) “Good industry Practice” means the exercise of that degree of skill, care, diligence, pnidence, foresight and judgment which would reasonably be expected from a skilled and experienced operator engaged in the provision of services similar to the passive in frastructere services to be provided by Indus: t3) Passive Infrastructure means at any Site. anti iii[}clsructure located cii such size which is permitted by Law to be shared by t.he Parties, including but not limited to the tower, she..her, diesel generator sets, air conditioners and electrical and civ 1.1 u’orks: Clause (2): She Access 3’ s “ / u

96 2. 1 1 lndns shall provide Site Access Availabilittj to the SI iciririg Operator in accordance with the terms and conditions of this Agreement. 2,1 ,2 Throughout the Term o this An’ement. the Sharing Operator shrill be entitled to provide notice to lucius of those Sites in relation to which it wishes to he granted Site Access Availability (a “Service Order”1. The process for issuing a Service Order shall be as specified in Schedule 1 (Site Access Availability) 2. 1.3 Indus shall ensure that each Site is capable of accommodating Sharing Operator Equipment in accordance with the standard configuration set out in paragraph I of Schedule I (Site Access Araulabiar). Am.j additional requirements shall he specified by the Sharing Operator in the Service Order. 2. 1.4 in the event that the Service 0rders ci Site(s) mean. that the cwaduble Pcrssicc .injrastructu.re as 51 nc. Site(s) are over

97 suhscrthed an applicant whose Service Order was received by ladus prior to another & i vicc Ord r shall be given priority by lndus while allocating such Passive Irtfrastructure to the relevant applicarits 2, 1 .5 With respect to each Site in relation to which Indus is able to grant Site Access Availability, the parties shall execute a Service Contract in accordance with the procedure set out in Schedule 1 (Site Access Availability) and the provisions of each Service contract shall include the standard terms set our in Schedule 6 (Standard Site Accc ss Terms) Each S rvicc Contract shall be duly stamped md thc appltciblc cOrrp duty shill b I I e I nag Opc a

98 [urns shall provide to the Sharing Operator the necessctnj means 01 success jór the purpose of Ingress and egress from each such Site in accordance with the terms of the Service Contract. Provided, however, that on ltj anthorised emplotjees of the Sharing Operator or its properly authorised suh contractors shall he allowed such access to the Sites, 2. 1 .7 The right, title and interest in and to the Passive Infrastrucwre. including any enhancements carried out by fndus, shall vest with Indus and all such enhancements thereto shall be at the sole cost and expenses of ladus. Enhancements in this context means the auameritutton in capacity earned our bu indus to acrueve increased sharing. Clause 3 Operation and Maintenance Services: 3. 1 ProvLsion of Operation, and Maintenance Services: lucius shalL procida Operation and .Mai.ntenacice Servks:s in retavon to eac.

99 Site and the India, hIrastniclure at each cite in aixorilcuice with the terms set out in Schedule 2 (Oprators and Maintenance Services) 3.1.2 The Shczrinq Operator shall be responsible for the operation and maintenance €4’ all SharingOperator Equipment In order to conduct such operation and maintenance activities, the Sharing Operator shall have the right to replace, repair. acid or othenL’Ise modify the Sharing Operator Equipment or any portion rhereoJ and the ,frequencles over is’hich such Sharing Operator Equipment operates fl-re Sharing Operator shall & provided uc ens to tht Silt’s in ci ‘cordance with paragraph 2.9 qi &hedult 2 Iflperatzon aid Warera c Scaics) inlcss nbc a”sc. spc’cac’I 1 i a ‘i art SPIt,. C C’,niract. icr the l)1’lPk%t ‘1 ta july itt aLit” flpt ullu Us vn t’nc c ‘i’a W wit lv pro’ ‘de it, sin Slicu’rtu Orw”vo, ,h’ I’t “it L hf Ca S I

10) purpose QJ ingress and egress Jrom c’cLcll Site. Piorided !iou’ercr, (hat oriltj alLtllorLsed eritpLoqee’ of the Sharing Operator or Us properlti atahorised sub contractors shall be allowed such (PSS to the SUes, 3.2 Standat d of Operation and Maintenance Sen’tces: 32. I indus shall ensure that the Operation cit id Mainteiicince Services are provided: (I) in accordance with Good Industry Practice; (irJ in vompitance with ill Laws and by an (uleclucite ntmzbcr of viiaLit i qi tahfic d. skilk d or d tj)cflerU ((J P(’!SOTTIL( I 3. 2 iiO11r sI1ul! T15tlfl 3nt iIi (Joc ra1t Iazritii on ii ‘ci V’C (I -Ii ‘)pT;zrir ‘ito! ‘dOo 1oi’’’ ci c 4 i sr ‘, 3 Ii : , -rn, ‘;o S

I0I 3 2 3 indus shall ensurt that it puts In place processes and procedures to monitor its perftrmarwe czyrtins! the Operation (LI id Maintenance Sen ‘ice Levels cii zd shah report such irforrnation to the Sharinq Operator art a monthly basis 33 Operculon and Maintenance Servic’e Levels 33 1 J iridus fails to provide the Operation ai td Waii liencince Services in accordance zn’tih the Operation and Maintenance 5cr vtce Levels heti Operation and Maintenance Sen’k e Credits shall becointe payable in ciecordatice with Schedule 2 iOperauon and ]‘ Iczuiu ‘ii ance Serr U csL rj Shrinu QoL ator man on quart nly ha. is wid with a noticc 01 30 dazs. deduct uiqj such (JperduioH 011(1 1ICL1t11P1Vi1U€ Scr( ( iit frar, thu 111011 TC(()1C 1u ()ru’’w ofli

102 :3.3.2 The Ikzrtles agree that the Operation and Matnienance Service Credits are an estimate of the adjustment to 11w Charges to reflect thc. value cpJ’ services and are not a penalty. and art; at the amounts stated in this Agreement. reasonable. J I Service Failures jf Indus falls to pefonn the Operation and Maintenance Services In accordance with this AgreemenL then. without prejudice to any other rights or remedies It may have under this agreement or otherwise, the Sharing Operator may require Indus by notice In writing to carry OUt i, nvectaqatlor ‘nto rhc causes qI such adurc mdv shall carry out such an nvetiqatbrt a its )UT COSt ird shall prot ide a .epn’l of that tru’ectlgazkn to ‘he Shaiui.q Operut n. I Indv RvjI.ts I. %)‘t ii Ill I j

103 1. 1 I it’Iic’rc the Sharinq Operator, any Approved Contractor or any other third party requires access in any Sire Jor any reason, to require that surh (recess is supervised by Inthis or its nurninev: and 4. 1.2 to use rind grant access to any Site. in icluding arty ladus injmstructure, br the provision of such other services to any party or for such other purposes as Iridus may in its discretion decide to support mm time to time, (. Charges 6.1 Payment oJ C harges Indtis shall charyc (tad invoice the Sharing Opcate br tht 1 htrq s LI aco,dane wnh Schedule 3 (Clrarqes). The Charges ci 0 1. Sc&dzik (3 ‘harg s) hail be on e• itcti hosts nfltn7ieflez HQ 00 Pnn’frlt’d. oirrez’t’r ti.Ul SucIz ririr:uai r ns or’ J 11 Cf arqcs in ito ijicU 11 ‘Lilt ;ffj ;[

104 (5.2 lkzynwnt Terms 6.2.1 Su4ieci to clause 6.4. cdl invoices submitted htj Inthis in accordance with the Schedule 3frhaipes) shall be paid by the Sharing Operator wIthin 15 clays uj receipt. 6.2.2 All Charges. Taxes. costs and expenses clue under this Agreement must be l,uolced by Inclus as pan qf the Charges within 5k (6) months of the date Indus is first entitled to Invoice such sums B S Late Payment If cz,her Partij hua not pewl any uavats ‘4j the ir diw date all such unpaid sums u’lll accrue lntcresr cit a ;ate equal to t.hc. thin pn’rniltnq uae Bank ‘.4 IndIa PnmL Let‘ding RaIL ft . tic s!1cixznq Up”(zrorfi1d’. ic pa c. y nw ir i • ii ot c c h i h i. i)cputcd liuu ( kit td C x ) l’c’l•’ 1 .11 X Cl(.VjS aaLa’tcju •‘ j r. LC Ij” ‘; •fl ‘rr”n fr r f• 4’ :‘ fl r’a’uAi ‘hut ‘J If J(iVC Sr ‘_.. 1

105 he ( ircic to ii’tiich S[it! i1lfliCe relateS shall cease to apply until such (line (AS the relevnizt invoice is paid in lulL In aridition. upon i/ic expini n/ the 00 days r)enod. Indus my, at any time, choose to terminate (lie relevwzt Service Contracts and the relevant Exit Amowiis shall be payable by the Sharing Operator in accordance with the relevant Service Contracts. 6. 1 Disputed Items if thc’ Sliariizq Operator or liidus reasonably and in qonci Jcuth disputes: (ii tin obliqatiori iv pau port yr all ol ciii invoice submited by indus under this i.qrceinent: Ill part r U I Of Sii s Sei vice ( redn or )p 1110 ird Mo lit fl( Sc c lie n iii an i Ui rfrP. ‘j1t’ r;ft.r

06 b.4. I the Party cflspntinq tLie invoice or Site Access Service Credit or Operation and Main Len cmce Service Credit. as the case may be, must notify the other party in wrUinq of the amount of the invoice or Site Access Service Credit or Operation and Maintenance Service Credit which it disputestihe Disputeci ArnounC) together with detailed reasons why it considers ii is not obligated to pay the Disputed arnoun t. 6,4.2 Such party’s failure to pay the Disputed Amotmt will be deemed not w he a breach of this Agreement. 643 Such Party must pay the undisputed balance of the irwoice or Site Access Service Credit or Operation and Servtcc Credit zn accordance with this Agreement; isa The Parties must as soon as reasonably ctrscuss and ctive reczsoniabie ertdeavours to acrree how

107 much yf the Disputc d Amourn is payable: and 6.4.3 IJ the Parties arc unable to reach agreement pursuant to clause 6 4.4 within 10 Business Days. then either party may refer the matter to dispute resolution in accordane with the Dispute Resolution Procedure, 6.5 Other Costs Ihe Parties agree that the Shanng Operator is not liable to pay any amount under this Agreement unless evpressly stated in the Agreement 0 Right to Advertise on Passivi. Infrastructurc 10 1 Phird Partu Adverttscment ndu hail i arn eczsc icen r. )r r n parc r oil Stfr .r A

108 I 02 impact nrt die Sharing (iperarur [richis shall use its beSt eiideavours (0 ensure that the Lease or licence o/ space on a She or Passive Infrastructure on a Site [or (zdverusing does not adversely aJjëct the coIl! iectwtty. network or Active Injrastructure of the Sharirig Operator Indus shall proniptlq remove or relocate any advertLsement Jrom a Site or PassIve Infrastructure on ci Site if such advertisement causes a material adverse cjjct to the conrtectu’ilz.J. ,ietu’orlc or Active 1rJrastructu.re of the Sharing Operator 48. Flie 2r areemeiil is eritci ccl between Essar TeIe’iv IpIvastni °‘v vriate Limited rd odafon Lssi Linured arid \• odatona Essar \io,ie Ser\ ‘cc- Limiuea and rc, n hich is ri led a \Tai e-r SLrace , Ai cnint on 2d i Power uppit 4. 1 for ead SIt( I HOLL(T cUflpiTI ol1 be orUu;I j’rsLij cutn± hf 4 Ic Ld r)lt(J(IC It ii!! H 11001 1”0 !!!iii1H1)H

C 109 battery back up shall bc designed to provide 4 hrs back up Ibr sinqk’ 13Th DC’ local qi 4/4,’4 con7juratbn. 4.2.2 The lrgJrastructzzre Provider shall take cant to utilize the cheaper source of power source like SEB power over DG set j’oiL’er as ci measure to reducefuel cost. Allfuel reimbursement bill shall be accompanied by sire wise DG running log sheet and Cellular operator shall have the right to carry out random fuel reconcillalion audit at Cellular Operator’s own discretion. 42.3 The poum consumption betwecn sharing operalorc shall be divided based on the DC’ c un-cat ‘nsumption ..EpJ’ ‘he rc specwc wstems and Utc Irgrasrructure Provider shall install s uabk mcastsrnq lEcharrsw ncasure and 1)111 axcnrdiriqly All ;xnrer rc in. us ‘n nt hills iall & nrc’s qwiniccl ly s’rc u’t alc ulailo L lu-c is curd Cc iliaci flpc nutor shall hat , ujht to C.9j our random p ‘C c’cnlit L C E £ ‘ ,‘cr 1 g’;r— r’ 4i’ rstin.

110 3. ServIce Level Agn’enzern lnfrasiruciurt Provider shall provide thc jbllou,lnq services: n.1 Infrastructure Provider shall provldc’ supen’lsion. operation and control oJ the Services relating to all lnfrastnwture equipments provided by Infraslrucwre Provider at the sites. , 2 To cartj out perloclk servicing!ovethoiding (Ft Diesel Generator sets based on actual running hours. Air Conditioners & other Infrastructure Items. 3.’? fliwne: Infrastructure Provider shall ensure the mnnthlz, spHw .4 J1 .tfra,lracAJrc’ cc,ulpnnt’ius. p1ondccl bu IT!!;cLslruc ‘flAir Inovider 1 IflS’. sa frEd 1 ir ataaqc ‘Tl CU” cUtr(tcJC (vrs).cs “1’ MIt’s take;’ ,rf’nn rh.’ l’c isPr kci .zsn ‘ ‘c”z ‘IlL Slit’ II1’L dcaj ‘ tl’je’l&irUt. .flflTfl. .‘1 “‘C Yt

‘1 HI 5.13 Iqirasiructure Provider zulU ensuie power supply at: 24/48 Volt DC Ibwer supply. Surge and lighting protcnlon at the Input ofAC power cupply. 5.16 infrastructure Provider shall ensure proper access to ShelteT/Room and Tower in terms of lighting, access lndders, 24K? The third agreement Is entered into between Bharat So.nehw Niqam Limted and Wireless IT Iqfo Services Lid.. which is styled as Infiasiruciure Sharing Agrecment. which Is dated 1 8 ‘ctober ‘0EV’ I7)c rrlevant clauses it ‘his aqrt C meld arc r, fnllow% & OIt QI LR1K1 S 1 0 IVJROltIO Flits 1a. ‘went . v,rwwis the ,crhzucal cp ItTV t. b t £ K It_frost . u • i or ‘t the i-’S.NL 2 ,

S I. 112 2.) The Ittfrasinwture prnvider has the capczbilliy to acquire. build. operate and maintain telecom In!rasirueture. 2.2 ThIs document lays down the qeneric requirements qf I3SNL. which Is a broad scope qfactivity. All acth’ItIes/sub actirities to meet the KPL/SL4 are assumed to be under Irjfrastructure Provider Scope. 2.3 Infrastructure Provider shall be responsible for complete site development starting from site acquisition to site RPL 0 & M. warranty support, preventive & routine maintenance. AMC services and availability of equipment/facility as per SM Jo, all passive Infrastructure elements. 2 4 Infrastructure Provider ts responsible for all statutory .mpllancc. icqular haicrIng u tilt rnuniclpal/Got‘ernmc; ii bodies. pcujmcnt qt clatiltory evies. monthly consumptlnr. harqtsfpoze 1 1 Ic ‘ ‘limmeic mbiqtuti ‘hc.’ passu’r ,.nlrnsrn,rtiirc c lt’mc rfl.% ir luck bin. are ncd Inca 1 est lcd c tlic oWn ci e C wa.. In (h ci;,’ I’S. k ‘ fl1j’ Pt’,,’! Ii’ii,. nj gpq 4 hr ( i.J’jinr, r t L’L’ 1,

113 • Tower • Shelter/Room • Bcutenj Sets • Power P1Wit • Diesel Generation set • Servo stabilizers, static stabilizer, line conditioning equipment. • Air Conditioners • Incoming EB connection • Site electrical system • Site earthing system • Lightning protection system • Civil Construction • Fire Alarm System 77w Injraslruc ture Provider u’dl provide space Jor installation. ic’ SLA shall l-t. aplwabk or act of he lqfrastructurr elements. funerlons as tell us or tic nqplctc sq icr 2.; BS.VL %hall ranq ‘air Tnalnicn’uvv upqnvle M pla ‘it ia-cl r’ qf va a inc ui n rc quzfl’(I rit1vri tI’r nllntreJ r- jrt • lur•,g ar O11U’Yl It i44 I . a Ct scicr . di .. ij n I J;! 3* fl’1’’( ;.s.,r f(i vrs:

114 utilities bills and staflztoqj payments In tune. siacdl be to the Infrastructure Providers account. 2.9 The Infrastructure Provider shall ensure qood housekeeping of site and BSNL or Its authorized representative shall have 24 hours 365 days access to the site. 2.10 The Infrastructure Provider shall have necessary skilled manpower at the cluster level to administer the operation and maintenance. The organization chart detailing the fault monitoring arrangement clearly showing own employees and oulsourced resources shall be macfe available to BSNL. 2 11 The Jrrastructure Provider will nrzstnwt/prnnitdc the Envy r for aiahlinq BSNL to install Cellular ‘mcI Microwave antenna of required cite ‘mc! quantity. l’he nsers itch bc jr ozdtd ‘Ith uft.zblc blc la4der lot I zc iitaunci BSVI, ,o inctrz I “tic! a HF ‘viblrs cdorzi Lowert. up ru shelter. !hc ucproiv,loruiqfcc houtdinc icR ua1iqo nit ecu .ini (a 11% It r .iet.’r .“ul ,o., ‘,i c,Sit flt,j7)J•.ft •fl flj’ LVT I ) 1(Z lift .4 bE r’ ‘I C. 11

115 antennae and Microwave antennae each of 0.6 meter diameter and 1.2 meter diameter rates mail be quoted separately. 2. 12 The Infrastructure Provider will maintain fuel levels in DC sets and maintain DC in working condition. 2. 13 [P shall provide fioorspace Jr installation yf telecom equipment to the BSNL. 2. 1 4The Infrastructure Provider shall provide space on rooftop/ground based tower for enabling BSNL to put GSAI and Microwave antenna, 3.0 BUILD, OPERATE AND MAIN1AIN TELECOM SITES Ii is cssumned that while acquiring and constructing new sites the Infrastn.tcture Provider shall be responsible [or: a.) Right of way hI Agreement with tILe Icindlrds ci TbthnixA & en.vtronmeata) suit.abtiity, including availability of SEE pou.’er with si f1iciertt connected load. ,io ciisturbance from nteiqhborhood etc.,

116 40 317E DLVELOPMEArI PROCESS SHALL BE AS FOLLOWS a) In case of a new Site + BSNI will provide Infrastructure Provider with a list f towns (in order of priority)for potential coverage. + Irifrastructw-e Provider will conduct their field surveys and revert to BSNL within 10 working days with the nominals of the proposed sites •: BSNL will revert to Infrastructure Provider with a confirmation on the nominals within 3 working days of receiving the nominals, + Infrastructure Provider u’ill qive report of site ready to be handed over to BSNI within a stipulated number of days (from thc datr of confirmation of nominals) All RIT ‘tie 0 daqc All OF I site , dcii • i thi iii “cithj k c 13 A. x e epuc i re cu e bij BSNI PM I Ii LIJO Ia

‘S 117 3 working days to Infrastructure Provider. b) In case ofan existing Site fj’ Ws an existing site of the Infrastructure Provider, It will be offered In lOdays 5.0 POWER PLAN1’ (NOT APPLICABLE iN CASE OF OLT1DOOR DES) IPL shall provide SAWS power plant with weather proof enclosure (IP-55) of appropriate capacity with spare modules. 6.0 BAT1ERY SET (NOT APPLICABLE iN CASE OF OUTDOOR DES) IPL shall provide 2 sets ofMaintenance- free Batteries of appropriate capacity with a power backup of6-8 hours. 7.0 POWER REQUIREMEM’ ) II’ shall be provide AC-Mains/DG Supply as per SM. ) The Infrastructure Provider shall provide 2 nos 50 Amps DC MCD for connecting the HiS along LOith the Power Plant

118 Lip to 4 rios iöAinps MCBs lbr Radio eqwprnenls AC power Jrorn SEB grid. with suitable connected Load at ACDB. Power hack up from a Diesel Generator qf suitable capacity. Neulrai to Earth voltage should he less than 2 volts ‘ Class B & C surge Protection. should be provtded in the Power lines in parallel for non lightening prone areas, However in lightening prone areas, surge Jilter should be provided in power line hJre entering into shelter. 8.0 AIR CONDITIONING (IN CASE OF INDOOR 13Th) Room Temperature 2:5±/2 deg C • Sensible cooling capacitg oJ A/C. Above 90% Relative Humidity 40 to 85% Rech mdancy should be avcrilcthic Jbr tar A/C awLs Condertsati.on and hot spots should not be generated inside the Sheltcr/Room. Major fault resolution time: jOt 1ft uttUiH (ILl hrnis 2 hrs L

119 9. () EAI?TI lL\( S STEM Eurthing system with multiple eartli pits. Which eon jinTi to iiidiwi Si0i1(lurd IS: 3043: 198? arid IEEE: 11(N): 1999. It should con irm to 101100 ‘ing. The earth reszstwwe t’alue should be less thaii 05 ohmS. Internal Earth Distributor Bar (IEI)13) iiiade of electrolytic grade copper u’ith 24 holes l mismanagement thu. (staggered) to be prot’ided inside i/ic shelter. The IEDI3 should be directhj connected to an earth pit. The direct connection should be using 35 sqrnin ( u ablc and th conrte 1d urtlz pit should be a Cu Plate Earth Ptt Evt run! nrth 1)istrth7ltlnn Rur IWDB ame as that f IEDB shall he rr indt d tear o are qutdc it nj plait 3U side te sleltu o jro din J he RE ott ioicr t a arm r a founts and tC I I 0 s f

120 Equhpotential bonding: All earth pits should be inteaconnected at ground level. All metallic paris as site and also in the vicinity (i.e, with in 5 meters of site zncludzng fencing) should be connected to site earthincj, External and internal cable trays shall be interconnected at joints arid eartheci at ends. > Earth pits: All earth pits shall confirm to 18:3043:1987, All Earth pits should give an earth resistance less than 05 ohms. if required earth enhancement compound may he used to get the requtred earth resistance. 10.0 LIGHTENING PROTECTION Lightening arrester provider on the tower shall be connected to the earth pits using dowic conductor. Down. conctuctor should qo directly to the earth-pu rind it should also he connected to the (Owed b0C1U at the base Oj the tcwer. The down cond..uctor should be 35 sqmm. Cu cable, and. to be routed through the tower leg au:ay from the cable ladder. In areas which experience heavy lightning,

121 active/specialized lightning protection based on advanced technologies riced to be provided. The iou’er legs should he earthed with an earth ring. ILO FIREALW,TEM The Fire Alarm system should have following fratures: A digital teniperature sensor with seLlable high temperature alarm independent of air conditioner alarms shall be provided Potential free contacts of the below mentioned alarms shall be wired to the alarm termination box through shields/armoured cabic Irifrastruc tuft Provider for their fault managc merit. ntrc mny usc snmc nthrms Input poucr au Trrc Sy Icr [cut

122 Independently checked and ccriffled by Institutes like SERC. + rower material sourcing faL rt.catIon, and erection shall be dont’ as per relerant IS (‘odes and standard detailing practices. • Tower erection shall be done as per accepted Industry practices. Foundation base assembly shall be leveled within tolerance given in IS-5613. All bolts shall be properly tightened to wrrect torque There shall be any open holes and bend members in tower. • Tower shall be complete with all accessories like Antennae mounts. Access ladder. Cable ladder. resting platforms. twrklng platfonns, l(ghtenlng arrester, and Aviation lamp as per 1(140 rules, Vertical and Flonzontcd cablc trays and carthinq arrangement Antenna mounts as per Customers loading requirenwnts should ne provided on rhe cower as çjii c’rL belou a’ (xSM A ucnna taint “6mm ha ‘C 3(XOrnn. bi 1111’ 4 ntrnna mourn I4llIflL 111(1 V 2000nwn Iowcr It *11 Ix paitisl a. pin )cr ( jj) J, 4 I ‘ Ii a’ s I ‘i a r iLa S’3 4 A 1. r n,.p : i. •i.o• abs ‘ it •‘. ‘p 1c’

123 shall be adhered to when antennas of dUferent operators are loaded on the same tower 13.0 SITE Jrp15TRrCflrRE OPERATION AND IA INTENANCE SERV1CES •:• Iiifras tructure provider will deplol] Field Maintenance teams in each cluster of sites, to monitor health of sites •• Infrastructure provider will carry out housekeeping on daily basis for keeping site clean + Infrastructure provider will regularly procure diesel on behalf of the Customer for jilling up in the DG sets provided hij the Infrastructure provider •:• Infrastnicwre provider will maintain logbook of fuel consumption and bill 1/ic Customer on actual consuipption basis as per schedule 3 • Infrastructure provider will keep the passive Telecom Infrastructure n operating condition •: infrastructure provider rvii get the tfrastructure serviced through periodic routine mainLenarice. On rerorl at tautt br aru 1 01 passive equipment and ir}ctstrucntre. labrastructure provider lechnlcat/enyincer will nisit the sue itLrin arced timelines, attend to the problem artd set ripht.

124 + Infrastructure provider will also ensure marutfacturcrs support for passive Telecom infrastructure maintenance, throuqh Annual Maintenance Contracts + Infrastructure provider will provide for extension yf all the infrastructure alarms on a alarm panel enabltng customer to extend these alarms to their system. 14.0 ELECTRICITY BOARD SUPPLY fEB SUPPLY) Infrastructure provider shall be responsible for providing the electrici4j board connection qf the required rating at the site, However, f the site is ready in all respects including DC set and if the EB connection is not available then I3SNL at its own discretion can start its operations on the site, Fill such time RB connection is not aiaifrihl cite shall un on DC And th expenses for the DC shall he born by thf lIMIt as detailed in Schedule 3 I 0 RPALti FOR INSI4II IOI RI I Nhtk thi afras r I r pra de ck cia thx t’ adu, ILs1lcuc ZII hSi h utc ar cubic mci ii hi u z rn I c luupment lb tala Ii II ISA P1

125 Shelter/I jurpnlent room is fully ready and (ill dcbns arc’ cleared o/j to move the ecjuijmzcllt. + Electrical wiring completed, energized and tested. Air condit loner comm m misslviicd, tested and operational + Tower erection, Earthing. tertical and horizomital cable tray complete. Pat, 1 tim my comp(etc (if not complete. BSNL and Intrastructnrc Provider can take a mutually agreed decision on a case by case basis) + 1)0 set with Acoustic enclosure installed, tested Jor Sound suppression, Vibration elimination arid operational in all respects. Sound suppression is as per CPCR riornis. + SEB power available (Irid extended to cqurpm t om (iJ iot available, I3SAL and the I,t/}izstmucnmrc provider can rake a rnittmutlly uqrcea dectsiort on a case bti case hast’’ Final iipt rta I JT1rfls(r1fi,1c vro mdc, 11)1 oil ltltntt4Illcrl,r i-qztip!Tmenl n ‘r ii md Eart It’1i cntjilcwd and j on i ailabic Jot LISJV audit I ic i Oitj COt (I S riaJ t L t(i TC I)itif Rfnro H

126 16.0 RfT OF INFT?ASTRL’CIVRE PROVIDERS EXISTLVG SITE if I3SXL iclentijies an existing site oJ the l,ifrastructure providerfor their BTS installation and V its being offered for sharing, the infrastructure Provider need to arrange for all the necessary up gradation of existing iijfrastructure to make it suitable for BSNL equipirrnt BS1%Vs standard requirement remains same as listed above, however based on the site conditions and availability of resources. the site specific requirement can be mod(fled on a case by case basis. 17.0 GENERAL POINES 1 1 The hjJiasrruewre Provider shall ensurc that equipnrnl InstallatInn are as i manutuciures ‘itipitiwed quidelincs wad all he teams vorking 4 the tic, follow sqJr nstollation i r.zctzcc s Ii c zrjJrastructun jii.n’id€r IL’oUld lit ic’.pcanszble far s(#e’tL, ol Flit uteri. n,n,trrird.pzibh,r’ipi u”ttc propcrtzj wid ptvpk. 1 51 1 Icttc 1 C HI H or pUn zltst t mr Jn’c c in pal , •:, ir)I!. ..i’ ‘r’ r, ,,). r q.7’. 1.’, e’” L’ I

127 lecirical insl ciorate ‘k’arances etc. uric! all reIced paijmeti(s. .1 7,3 Iifrastructure provider shall he responsible for complaince ot all labour eiiactmerzts, such (IS provideiit hind. rninimunt wages act. workrneii cofllpcnSdnion rid. coalrcidt labor act, gratuity and £51 niles of workmen and their pcujment to workers and respective (jovernlnent agei icies. I 8.0 DOCUMENTATION Infrastructure Provider shall submit one set of tollowinrj documents u Cnsioiiie, along with site RFI cleclai ation/hand over: Site access plan, showing and route map and visible idea flficaaoii iitzi*s ciiicl c0711(Wi deraistor reczvlina the’ site lxatton of lower S11 11 r wid DC in a layou plan Lith as built r ieacurr m itt. of Earih vus & Larthmu oruliicior inijout plan of S c hr oir Ut td ijic ci f (zitr er WC13. pu , , T& tark EDl . EFI )B f,oas ! 1 ‘ 1Lsi)fiie1 nctri e’l !(i LiiiL t - I it I

128 List ol equipment. capricitil. serial numbers. Jutms mid mire Provider imam’. Se’rvicc eriqineers oritact name and telephone riurnber SERX 1CE LEVEL_AGREEIENT This Service Level Acjreernent (SLA) is /br Round the Clock Operation rind Mctinremicmce of Passive irtfrasinieture jbrrninq part of die infrastructure sharing agreement dated 2008. 1.0 SCOPE OF WORK The intrcLstructure Provider shall provide tin’ tOlloiving sen ‘ices: 1 . Supervision. Operator rind control of the Services relating to passi c zntmstructurc equipments as per schedule 1 including their mnaintenancc sen’icc supen’iszon lepairs Ic at the specified ‘ Carry on’ perzocim( s n ‘icinqi over/n imilmy or Diesel Generaior setc brised ‘n it ri tHrii 111 )q,,)y ctSUftt flOIi/,L 1 L (}SlS. Siiji oue’nd n c,)j (III ‘‘c Inros Udi0’’

129 5 Shall ensure that minimum level oj diesel in the fuel lank oJ 1)6 sets is maintained a 25° capacity yf tank 6. Shall endeavour to maintain the temperature inside the shelter at the level of 25+! 2 deg C,(This clause is not applicable in case of Outdoor BTS site1 7, Shall render monthly reports to BSNL specfying consumption of Fuel and Electricity in a format to be mutually agreed between the parties. 8. Shall render mDnthly Fault Analysis Report to BSNL in format to be mutually agreed between the parties. 9 Shall ensure that all the items/equipments which ar under warranty amc handled!attended by authorized dealers only. Ih responsihihtu ot cosuniria the availability ot hc sparc parts tic in. md that lhc ahovc inc ittE nded by thc authonzi d dcalcr sbtll bc hat f InJrastrm Ii rc. prot idcn ta p ndc c i. 11 1w

130 11 In the ci’cizi of aiitj dctcL 7 1 tiiur ci passic intrisiruciure’ cii (VU] ot the sues, BSNL shall report the’ SWJIC to the rtomincift’d re’presentatwe of Irifrastruc(ure provider throng! i SMS, followed by cm email. It is agreed between the parties that Infrastructure Provider shall attend all critical alarms which can lead to outage, within a maximum lime 2.5 hrs plus traveling tirrie of maximum 2 hrs br remote sites between 6 AM and 10P]I amid wiiliiii 3.5 his pius traveling time of maxirmium 2 his for remote sites between 10 PM and 6AM. from the rinie ol receipt qf intimation of such deject by the Infrastructure prot’iders noiTuncired representative. In case there arc niore than one alarm at any sites) falling under same technictan, then the pnonttes to attend the same shall b decided by th BSVI vhosc decision a iii hr final rind buidmg ri this respc Ihe outage shall be air Paled jrnrrm lIe lviii the Is cjviteraie’d tip the lirlic wheii IX is a st’;red Oil the inrcisrnL nile F70L d” 1111 rcislnc1un’ I’rnl’lcler In r’nszire a’amkthziir ;f (iliv (tlels cit ira ‘‘itn, In m’iivs

131 message rtvelreci by irzfrastrurture I’rovicler’s filed engineer. This will he ensured Jhr 99.90”. availability. 11. Iqfrastnzcture Provider Suipe and l(qhIL’ning protection at the input ofAC znztvr supply. is. lqfrastructure Provider to provide 3 phase Eli 50 lIz line voltage 2401 480V (Line to line) and 140 iro 280 V (Line to neutral) 16. lqfrastnzcture Provider to provide Dustfree and clean shelter room. Also periodic Rodent/Pesticide control has to be undertaken by Infrastructure Provider. 17. iqfrastnwture Provider to encurc Leakage free Shelter room. 18. lqfrastructurc Provider t provzdc quality antistatlc flooring 1? lnfrastntctnrE Provid.cr to cn.sun Farth esLstanVLE not rrort than 0 3 Iim uncic iormal otlcondlti.on 4ycarly heck .nthc alueof Earth TesLstan c ic bc condw Lcd ml recessary action be aPt 1 iv I er unc.kr thc knowledgc livia ; E r ito 20 lrgrastruc ture Vn tnck i ovidc uztcsbIc Fire IAlifl$JUL’Iki% (kIt t p t nd.crj u lift porlndr • .e c k ‘nt ;hei, r liii,,. s S

132 21. Injrastructurc Provider to provide Aviation Light & Liqhrcrziny Ariesbr In z th separate Earlhiny) 22. All electric a! equipriicrz t sac! as Microi cave, Antennas, Cables. PItT, BTS, TRX ivill be installed by Cellular Operator and do no fall within the scope of this agreement. 2.0 AIJT)ITIONAL RESPONSIBILITIES OF INFRASTRUCTURE PROVIDER 1. Infrastructure Provtder shall he responsible ftr security, maintenance, operation of the infrcisiructure asSets at sites (including replacements of DGs or air conditioners on their end of liJeJ. 2 InfrastructurE Provider shall ensure that thc Iderzti[Ied Assets (Room/Shelter. Air Coiiclitionei. DC. Electrical XViring. Coninerein! Poweri arc ma in tamed in good a ‘ )rloi iq condition. :3 Injrasrntture Provider s tall be flu single point 01 nlcu t a ith the ttc frzrtdloid (lid ill othe local zuth;urities (LIZ IUh1I1Ip(J1 Lk(tTLcItj I3ocnd ilniverer B5\L tohi he res 1 jnTisavic br ohiairunq S X(E’ clcczrczitc J i Ficqne’n j us oiilij. I I iii

taking the concurrence from the officer of at least JAG level of BS\L. 5. lit case of failure in the site, Ilie lnfrcislrucnirc Provider shall iiltiniale the nominated person 0/ I3SNL thru SMS. In case failure extends beyond 30 minutes, the failure is escalated to the C’FO of the Infrastructure Provider &, BSNL. Once (lie /czilure is resolved, intinlatiori 10 he conr’etjed thru SMS by the infrastructure Provider to BSNL. For critical failures, Root Cause Analysts to be conducted arid shared htj Infrastructure Provider. 6. Placement of GSM/MW Antenna shall he mittuallij on agreed heights between Irijrustractiire Provider & BS]VL. 7 lrfrastructurc Provider shall r nsui e that the Pcrssii ‘e Pelecoiizrnuniccition ins tczllation shall not become a sdzlel hazard and shall nom be in orntrat’cniuni of nrc] sunlute. rule nr rc(luiation i. id publt p011(1 jilt tli’t ci -1 thy OjriVs i

134 permitted 1i applicable laws in India arid subject to the ternis arid con(lition’— ol I his areeinent. As is clear from tire aforesaid words. it is an agretinerll to share equipment and such sharing is by way oF perrnissioir and not by ay of transfer. What is passix e infrastrutur and active infrastructure is defined in the Master Areemeiit. Passive infrastructure means, at any site. any infrastructure located at such site which is perniitted by Law to be shared by the Parties including but not limited to the tower, shelter, diesel generator sets, air conditioners and electrical and civil works. At the site, the service provider will erect a tower. In order to operate and maintain the tower, lie needs diesel generator sets. an onditionrs arid eletrical equipment. All these have to be kept in a room uhi h is tailed a shelter. The at tive miratr ret ut inrludes base termiirtl Niation F’quipmeiil. irJuIiIat’. hackinu rI e’nnt I i\ ii\ lie hjrin ot br’s t h and h i r qir’s equipri 1 and at C t it I V r i iti (Ohm In I on st hx Pu i Jp’lat at a ,iilij [; ‘- i.

0 135 means, that the sharing operator mounts his antennae on the tower which is a part of passive infrastructure. To operate that antennae at the base. he keeps his equipment and by operating those equipment, he provides telecommunication services to their clients. 50. Working of the telecommunication network, involves the process of receiving, amplifying and transmitting the signals. As Indicated supra the set of instruments dealing with the above process Is termed as ‘active Infrastructure’ belonging to the mobile operators. For functioning of the active Infrastructure maintenance of a particular temperature, humidity, safety and also positioning of the Radio/MW antennae at a particular height Is required. These requirements are achieved by using the passive infrastructure, I.e.. tower and other equipments. The mobile operators are permitted to mount their Radio/MW antennae at desired heights and direction coupled with the use of equipments providing other technical requirements. By using this passive Infrastructure, the mobile operators communicate the mobile I—--

136 signaLs. ‘this right of u’e is acquired legally by means of contract called enice contract read with MSA. 51. What the assessee provides in the passive infrastiucture to the mobile operator is the power connection to the mobile operator. The power rating of the Sharing Operator’s equipment of a Site 1ll be detennined on the basis of measurement of the aetual consumption by the installed equipment on a full load basis. ‘this meaqurement will be conducted whenever new equipment is installed by the Sharing Operaior on the Site. A detailed measurement process shall be agreed between the patties the pociei eonneetlon at a Sitc shall be providc d in accordance with the following ai lX pou’er (u 4% “airs, or .4C power at 200 rails. ‘m required. Few the anndnr,re ‘4 dsubr. f Shat )perc r sh’d’ I pons’bk x rn iczt ‘01 “C ‘.Sflfl. ‘a, J’i’) .‘.d) .1) il’l’ 1k 11( Rs I..” ‘n”u’u’v? I’I’-’n’j 4

t L 137 Ic) Up to two (21 16 Imp %IC’Bs lot Radio equiprrrnt 52 Space for a maximum of I. single tadios in the case of GBT and 3 single radios for RYE’ in a l9•inch rack shall be provided by Indus to the Sharing Operator to support tile above standard configuration on a shared basis at each Site. 53 ‘flits is the service rendered by the assesee through passive infrastructure to the mobile operator to operate as active infrastructure. 54. Clause 2 deals itli Site access. )f the atoresaid nro,ision make’ it clear a sc, & is expected I. provide the mobile at c ½ n ailabih y the Shann )perutor hr tn Ins and ‘ oudni’ 1l i’t tin’., agt eiii in - i the aweellwnt. tlc a%CsCt %hail • iNure sap is. ci a’rtri odati.’t Sinnt Opeidt and’ 3 careful reading that whit the )perator is Siu. cordancc .rtt TiLler the tt’Tfli% that sac-li ‘-4te l cqutj)rncrr ri he’ a lid 4 -I (I

138 Operalor to keep hi equipments i.e.. the permission to keup his eqiiipinei1t in the shelter, provided by 11w assessee On execution ol the service contract, the Sharin Operator shall have the right to install the Sharing Operator’s equipment or any portion thereof at such Site. The Sharing Operator shall have access to each such site for all installation activities and the assessee shall provide to the Sharing Operator the necessary means of access for the purpose of ingress and egress of each site in accordance with the terms of the service contract In other words, possession of the site is riot handed over to tire mobile operator Mobile operator is permitted to keep his installations in the properly belougint to I ht assessee of vltich he is in p ‘s’ission Flie 2ivefl to the rnnhtI operato r isn1u to 1 nres and etr’ss ihai too for the purpose (II OD0(0iiIi his ocix e iiirastrictut ‘. Fufl her ii i made 0iCr l rigress ar d i. ot ax aiiai]c 10 ail iic lnuio\ 1 t lit ninbili ontral’ r. 11 V. avaihtble onh i 1 [i 1i’0V -“ l ‘j1 ‘has Io 1 iporatca 11 er liii 11) C I \ jflr 3 iitt t0fl 1 [)j1: ii

139 that th. right, titk and inten st in and to the passie infrastructure including any enhancements carried out by the assessec shall vest xith the assessee. Fhierefore, the intention of the part es is clear. The intention ws not to transler at any point of hint’. any riQht. title or interest iii tire infrastructure to the mobile operator tinder the terms of the contract. It is also made clear that, while the assessee is responsible for operating the passive infrastructure by providing access to the mobile operator, the asscssee has no corresponding responsibility of maimainilig the active infrastruciure of the mobile operator. It i categorically stated that the Sharing Operator shall he responsible for the opcrai ion ami maintenance of all Sharing Operator equipment In ord r to riable the Sharin Operator to rn in fain his equipment the Sharing Oprator irill be p1 ided 0 ss I nf Sites n C trdance vith pai arapI 2 3 f S tit—il’il 2. it is turth r road’— it-roi thol 1i 11w Sliari’r2 ()wr,i1 or. n-sssait nIeaIi 1 acrt t r l)t1iI))5 0 igz nd cs Ii ‘an t a J[ s2 C lauso u

140 assessee shall haic the exelusise right to lease, liccnce or grant space on each Site or passive infrastructure on Site to any third party br the purpose ol placing hoardings, bannet s and other advertisements. The assescee shall be oleIy rcponcIbIe for complying with afl law in relation to such lease. licence or grant. However, the assessee shall use its best endeavours to ensure that the lease or licence of space on a Site or passive Infrastructure on a Site. for advertising does not adversely affect the connectivity, network or active Infrastructure of the Sharing Operator. 55. Therefote. it Is clear that not only no portion of the rnfrasthuiiirr 1 translerred to the ntnhlk ‘peiatnr alter providing arc css to the mobik ptrator to ba Ix use of the pa ne mlrastr ti c the as c. u ha- rctaired thc right It a—c liven’. rift lis%it I’ilic1rUt titre 0 dfl :idvt rtisIni ageii. 1 ht inli linutalion hnnuj Thai %1 u Ii adveni%int a t ‘,lioi Id iint h’nde (lit ‘iwit ‘ the isiuhik )er itor tO i C Pt’ c the iii’

It 141 56 Scheduk 2 to tilt contract deals ‘Rith opt ration and maintenance services. Ipart from other things mentioned in the Schedule, the operation and maintenance services to be provided by the ascessee in respect of each Site shall include general upkeep of tower and site premises including ensuring that the Sharing Operator has space to access its cables laid in the cable trays at all times: the Sharing Operator has space to access its antennae at all times; mountings are kept tight and rnst free and tower bolts are tight as per torque requirements This is in so far as tower lh concerned. In so far as power supply is concerned. the assessee has to ensure power supply to the Site in accordance witIi paragraph 1 of Schedule I at all times inc luding (lass H and Siirqc Pmtec lion In the pnwc r mes at Sites vherc kC pocr is proiMed The isscssee is also nder in bhgatiois to n imtain canbirç system auth rni’tarir • abie ‘‘I le.’ than 2 ohm— Interiiaj e€utli (llstrlJuticn b.u ot °‘leniolviir craLk opper ‘nih 23 hub IA Snir liancter t be p’c” idcd in%ide tl %hCltcr dir et I I S 1. lilY ‘qdl lii I)

142 copper plate earth pit. Exttrnal earth distribution bat, In accordance ivltIi above, shall he provided near to the wave guide enu plate outside the shelter for grounding of the HF cables and equi potential bonding of all earth pits should be inter-connected at ground level. External and Internal cable trays shall be Interconnected at joints and earthed at ends. In addition to the aforesaid services the assessee is also liable to provide periodic stability checks of the tower: timely payment of electricity bills, as applicable: provision of fuel and filling the same In l)G set at the Site d% required. maintenance of DO set. security services, provision and maintenance of air conditioning as a out below. I.e (a) Roon. temperature I hc maintained at 35 ..: 3 degrc s Ccn;igiade meas ILd on top of the S ‘3 c c it ci dl

143 Ic) In o far as niaintenaiu. e of fire alarm s stem is concerned. in cac ot an outdoor BTS a covered plinth of suitable dimensions: provision of a cable tray inside the shelter: provision of space around i he BTS br maiiii eriance: and anlistal ic 11oorini and proper earthing; provision and maintenance of fire alarm system are all to be made available by the assessee. (d) The assessee is also liable to provide lightning protection as e1 ou in the schedule. 57 This s the lacililv winch the assessee provides to a mobile opei ator iii iaei the nsive tnfraslruuture Consists Ci he following. u a ic of )OlOS E )I e p w (lii Il - jsU IV IV tub! ft c r (

144 4) Seno stabilizers, static stabilizers, line conditioning equipments. 5) Power Managc’mrnl system 6) Air Conditioners. 7) Electrical Panel 81 ElectrIcal DCDI3. ACDB. lights, switches, sockets. cables. clamps. 9) Servers Racks. 10) Cables & Wires. 11) Switch Gear. 12) FraruJormer 13) Surqe protection system 14) Lighting protection systc m. 151 Cable cniry panel. 6) FIre Alas in System. 11 FUc F’llng as& s prot LI ‘n 4k T t) l*utrry Bank. I WI’ ctiJter 201 ‘lriatl. “ Lranp. 1 C k’ a 1: •‘% .lt,,rr, t’”i V

145 23) Flooring! Ceiling panel. 24) J\onconrentiorz.al encrciij sources-Solar power system windmill power generation systems, Fuel Cell. Free Cooling Unit & Possü’e cooling Material, 25) All lBS related iitfra-RF cables. Distributed Antennae system, repeaters, ampltfters. splitters. etc,. 26) All Machinery equipment, parts. spares. components. accessories, consumables & other items for use in telecommunication network or in generation or distribution of electricity. 27) high speed diesel & Lubricant oilfrr use in DO set, 28) Acoustic Material. 29) All types of Transmission cables, 30) All other goods Jdr use in the telecommunication network/generation or dfs trthution. j’ electricity or ann other trm of i3orce. 31) Spare parts, accessories and components of goods mentioned above. ‘Fin entire inlrastructure/ ft trnments/ appliances and. e..xchantic ai.’e in the phvsiccd control and possession of die assessee/seivice provider at.. all. times ant. there is neither any I

136 physical 1 ran-Iei ol such 4 oods nor ari I ransier Of flhI to use sm h equipirierit or apparatus 59. The assessini alrthoriI\’ scents to be tinder the impression that under the terms of the eontracr there is a transfer of right to use the aforesaid equipments which constitute the passive infrastructure. The sharing operalor has rio use for any of those equipments individually Fhat is the network which the assessee utilises in setting up a passive infrastructure. What the mobile operator wants front the assessee is permission to install their antennae in the tower erented by the assessec unini em ipted supply of dcc trical cnerv ji a parn”u1ar lemporati re permission to kee 1 lie tu nifrastru ‘ture in the pre ibneated he1tcr ifir of irii es” aud &‘rec to ici ate !H5 ei upitleni ‘c’ that In rn i ttihI- lit’- Ji in iairasiruoi -:e br 1 eudr 1it SOfVR’P ; (. II ‘-1 ru I ( ‘-• “t in li a nt i1ira’ iH1 10 10 S1t afl(I Ii a ‘-c - ons’ bull ti tO

147 temperature and to mount the antennac on the network at a pail Icular height. Therefore a harmonious reading of these provisions make it ieq clear there Is no transfer of nght to use goods conferred on the mobile operator under thr contract. Under the contract a permission is granted to the moblk operator to have access to the passive infrastructure. That permission to have access to passive Infrastructure Is loosely termed as right to use the passive infrastructure There is no intention to transfer the right to use Even after the contract after providing access. the nght. title and interest of the passive infrastructure continues to remain iih thc assessee. No portion of the infrastructure is delivered to the mobile operator He as not put in possession 4 any portion of the pas%ive iritiatiucture. No right as stink in the passive infrastructme tr ifc.iied U thc ioble per or No NOd% is dehvercd the mnb 1 le ‘.perator •\t no point ‘l tink the a&’esre loo’cs $3 I . C i it i I h ,g “ilre’aj u ti re• Irtvl’ itt i’3ii’.r alter prrp, htn:2 ar I it; • lie 11)1 . r i It it ‘. Ut I pr id I Ii am - i I .t) (‘ I 1 tIi Pitt: i L ‘I

148 a third rnny wili not amount LI) 11w assi-nec loosing control ovei the Infrastrucuire as held 1w the assessing authority As Is clear from the material on recot d. at a times, the asse’øee can provide access of the passive infrastructure to its mobile operators at different heights. As long as there is a contract and he wants to honour the contract certainly during the Period of contract he cannot make available the same facifity to another mobile operator. There is nothing In law which prevents him from putting an end to the contract and providing access to another mobile operator. It is not a case where lie has to go to a Court of law to recoier possession of a properly wIns h is delivercd to the mobile operator. Therefore. none of the tests which are T)rc%erihcd in ronstLtutC- a ‘ale of goods or tin cxtendtd meaning ci the ale I goods in is much as (Ic\’iiiecl ‘salt i’ I” sent a’ the itistant L ase I e H C • itt•t rl1’ 1 nnbit )p 1lj• ir’ sq! —tall’ C eei illitit r 1w It ii Ifle tj 4 jflJfr t ‘ iti” a Ic tti(’ ‘iltUe’ cc I 4..

‘1r 149 52. ‘LIcence defined”. Wizen one person grants to another or to a definite number QJ others persons, a right to tic or continue to do. in or upon the inrnzoz’able property of the grwzroi. something which would. in the absence of such right. be unlctwlid. and cuch right does not amount to an easement or an interest In the property. the right is called a licence. 61 A licence Is a grant of authority to do a particular thing. It enables a person to do lawfully what he could not otherwise lawfully do It transfers an Interest to a limited extent. A licence does not. In law. confer a right. Ii only paunts that act front being unlawful hich bitt foi the iccncc ‘wuld b unlacUul 4 hcc’ c give r note bar The nght o do the thing actually h ‘en cd ta be don arena ny 1k t ‘uit1’4i or :“u eXt 1iz’i’ r . nun e-xrlusnr ncrncr i’. 4rant of iutl,oiitv ‘ tic, a paitvular tliini ‘nil no zich’ ‘)i c lu’,ion iiiaat%t’. ‘e r. It nt-ic i ‘“ntr’s hi ltt f. an initi’ ;i; i p Ii inc. bit a to lo eli he C, .1

150 62 An exclusive licence is a leave to do a thing. awl a contract not to give leave to anybody else to do the same thing It confers no interest, or property in the thing but only makes an action lawful. which. without it. would have been unlawful. A licence is a pennis!4ou to do something that would otherwise be unlawful. 63. The right contèrred by the assessec on the mobile operator is in the nature of a personal right granted to him to do something upon the passive infrastructure belonging to thc assessee It does not amount to creation of an Interest m flit passive inliastructure itself It is pureli penms’ae iieht and is per’nnal to the erantee The licence has no other effect than to innici a iibeit ipoti thc 1 cen’—ee to upwi ti land ‘ili ‘Ii 1 v 1 0 cgal amg. s_i i.e ii aciur ‘ 11w i usre an t’t cnaa a—1L’rpLbIaT’.. a on ;lw •rrn1 tidt Dr.)l’nt% ior :LLL SIIIILDIL I. 111% I fr It. ,. . ni, •—. I f •. .4, ‘4 z

I. ‘I 151 licensee. thc tic ant c. is atwas trcatcd to lx in pennissive po%sescion I-Ic is ulven only am authority to enter into the premises. The possession is always with the hi ensor. Oub entry in the premises jq made legal It does 1101 create any title in tavour cit the license. A licence is a mere s,rani of a twrsonal privilege to do something upon. without conferring an estate In the land. if a document gives only a right to use a property in a particular way under certain terms whIle ft remains In the possession and control of the owner thereof. it will be a licence. Thc legal possession thereof continues to bc in the owner of the propeity but the licence Is permitted to make use of thc premises foi the particular period. l3itt lot the permission his enip itini would hr ‘iii iw.hil md lots i it itt lie iF his favour an3 ‘- tatc or ‘ntcre.t in the piot.ertv ha I’ p. nell ‘—c-lIl”J tfft.i [tilt’ 1 .Ite— .‘ 1i1’n’ ti(q. an’om. ins to tid.nIeI ‘ ntla or ,ot ‘di 31 ix dci.. n.nuni iit1, ft it ha 1 IL e?’(fljf t j_.j ‘. b- .tci •1 4’ It i. fj. t’77!l t tt J.’ •.r— ei

152 the iransler. From a close itading of all the clauses in tile agreement it appears to us that under the terms of the contract there is 110 transfer of right to use the passive Infrastructure conferred on the sharing operator/mobile operator. What is permitted under the contract 18, ci permission in the nature of a licence to have access to the passive infrastructure and iermission to keep the equipnients of the mobile operator in the pre fabricated shelter with permlsston to have ingress and egress only to the authorised representatives of the mobile operator. It is because an ownet of a property has a bundle of rights namely right to possess. right to use and enjoy, right to usufruct. right to constune. to destroy. to alienate or transfer. ftc Therefon to (onstitute a dc emed sale under Article 3ñ6 129A) (di having regard to the object with the 46th Constitutional kmesttmtnt was hmerltd. it 15 (lear the nght U nfr I ndr i ii t iculd bundl nliic rulnuI% imehi U) stilt H s her’au%e of the —arber ( tib ‘it ni cu Iij dc, ter of bc kpc C us wit rt tic wht tci.,tlll)rs ba%tirltrad%ht i’n Ii Ct Ut. ant’ ij h l s .‘,:‘ .rLui “ ii w ;;I •ng ‘,t ønt .,. .r

153 ha been passed on to 11w trali%iercc. without paying taxes to the exchequer that the (ontftutlon was amended to bring within Its fold such transactions hleh are styled as deemed sales. ilierelore. In deciding whether a transaction falls within Article 366(29Affd) so as to constitute a deemed sale, the purpose of the 46(11 Amendment, the mischief sought to be remedied and the object sought to be achieved bv the said provision cannot be lost sight of. In that background, in the facts of this ease. If we look Into the various terms of the agreement it is clear under the contract, the assessee has not transferred any right In the passive Infrastructure to the mobile operators. The righi that is conferred on the mobile operator is i pennission Ic haw ac ss to the passive rnfrastnwtuie pi nni’sioii In keep the active Irifrastrunuw in die ‘4te belongintz to the assc sser. a periniscion to mount the antennar ti ic ‘r cdv. ‘sc ar’th ‘xnl’tl particular tw nips iture ‘.o t’ to .oerale he equipnieiilc ii oiigmL. ) 1’ 1C)tk’ [K Hi ) k)j. xi o rarsic i ‘ii 1’cd tic ‘ ii’ u 1 ‘rttcozc e icc aiJi t 1 g i Izaci ‘tat ..ii’ ‘zc • : Lr (it. 2). ‘ci) I I

154 ( nnsniution as held by the leai ned Judgt as W( 11 as the ssessing authority. Therefore the inipuried order passed by the learned siiule iudie as well as the assessing authorii cannot be sustained, In the result, we pass the following order: (a) The appeals preferred by the assessees cis well as by the Union of India are allowed. fbI The unpucjned orders passed bii the learned stale Judge as well as Lhc assessirty aulhortly are hereby 501 (iS ide, C) IL i declared thOI u,zdr 1110 wIll a L c’nferf’(t juN luer C 1 09 sii 101 ‘‘Ift (herr N Hi) iet’tnci-i ci( tc n 01(0’! i Jr ‘r ak J(J7

155 (ci.) In so far as the State appeals are concerned, the appeals prcterrecl against the Order qf 11w leanzcd single Judge in so far as denying the penalty and interest an’ rejened as we have held there Is no liability to pay tax at all. (ci In so Jbr as the direction Issued by the learned single Judge that the State has to recover the tax from rue Union of India In view qf ourfinding that there is no liability to tax. that portion qf the order of the learned single Juclgc is hereby set aside (II 17w payments mack bi; the assesse-es either in Wrtit, (4 rht. order c4 the as’essmrru urctei o’ 4. tc’ms. cf an, ntcrrn “w frr pzcced ir 1w Ii a itt t rpt’ it E nI rdt ta t urdc I it ,CSSECS to hi tire at infhsjrrm l 1 le Witt )j rç.. i’)I ij •t (g.Jp,j ‘4 tIn’ “dec ;c-IIir.q la’ ‘I 1 L .a ‘:s. ‘is — t ‘ ‘‘IuT.itr’ r :u ci

156 9tnqik’ mwrest at 9’ after the expiry 0190 days LW Ott dak ol payment (g.i ‘io costs. P 6 j