Account Officer (Cash), Kanpur V. DY. Commissioner of Income Tax (TDS), Kanpur

ITA 31/LKW/2017

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 2809 (ITAT-LUCKNOW)
• Duration Of Justice: 1 year(s) 7 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-08-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 06-08-2018
• Assessment Year: 2010-2011
• Appeal Filed On: 09-01-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: R K VISHWAKARMA
• Assessee Lawyers: NAMAN TIWARI
• Keywords: Principle of natural justice
• Section: 201(1); 56

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH SMC , LUCKNOW BEFORE SHRI. T.S. KAPOOR, ACCOUNTANT MEMBER AND SHRI PARTHA SARATHI CHAUDHURY, JUDICIAL MEMBER ITA NO S . 30, 31 & 56 TO 61/LKW/2017 ASSESSMENT YEAR: 2009 - 10 & 2010 - 11 ACCOUNTS OFFICER ( CASH) BHARAT SANCHAR NIGAM LIMITED MALL ROAD, KANPUR V. DY. CIT (TDS) KANPUR T AN /PAN : KNPBO0309B (APP ELL ANT) (RESPONDENT) APPELLANT BY: SHRI NAMAN TIWARI, C.A. RESPONDENT BY: SHRI R. K. VISHWAKARMA, D.R. DATE OF HEARING: 06 08 201 8 DATE OF PRONOUN CEMENT: 24 08 201 8 O R D E R PER BENCH : THESE APPEALS PREFERRED BY THE ASSESSEE EMANATE S FROM SEPARATE ORDERS OF THE LD. CIT(A) - II, KANPUR AS PER GROUNDS OF APPEAL APPEARING ON RECORD FOR EACH OF THE ASSESSMENT YEARS. 2 . COMMON ISSUE INVOLVED IN THESE APP EALS, WHICH IS ALSO THE CRUX OF GRIEVANCE OF THE ASSESSEE, IS THAT THE ASSESSING OFFICER HAS ERRED IN LAW AND ON FACTS IN HOLDING THE ASSESSEE IN DEFAULT FOR NOT DEDUCTING TAX UNDER SECTION 194F OF THE ACT AND IN CHARGING INTEREST PAYABLE UNDER SECTION 201 (1A) OF THE ACT ON THE COMMISSION PAID TO VARIOUS FRANCHISE, WHICH WAS CONFIRMED BY THE LD. CIT(A). 3 . THESE CASE S WERE HEARD TOGETHER AND SINCE THE FACTS BEING COMMON AND THE ISSUE SIMILAR, THESE ARE BEING DISPOSED OF IN THIS CONSOLIDATED ORDER. FOR THE SAK E OF CONVENIENCE, WE TAKE UP THE FACTS AS APPEARING IN ITA NO.30/LKW/2017. ITA NOS.30, 31 & 56 TO 61/LKW/2017 PAGE 2 OF 12 4 . THE ASSESSING OFFICER VIDE ORDER DATED 15/2/2011 UNDER SECTION 201(1) AND 201(1A) READ WITH SECTION 194H OF THE ACT HAS PASSED SIMILAR ORDERS FOR BOTH THE ASSESSMENT YEARS I.E. 2009 - 10 AND 2010 - 11. THE ASSESSING OFFICER ISSUED NOTICE UNDER SECTION 201(1) READ WITH SECTION 201(1A) OF THE ACT DATED 23/12/2010 TO THE ASSESSEE REQUIRING TO EXPLAIN AS TO WHY ASSESSEE MAY NOT BE DEEMED TO BE AN ASSESSEE IN DEFAULT IN R ESPECT OF SHORT DEDU CTION OF TAX MADE TO FRANCHISES ON ACCOUNT OF COMMISSION ON PREPAID RECHARGE VOUCHERS AND PREPAID C - TOP - UP. AS PER ASSESSING OFFICER , THE TAX WAS DEDUCTIBLE UNDER SECTION 194H OF THE ACT IN VIEW OF JUDGEMENT OF THE HON'BLE HIGH COURT OF KERALA IN THE CASE OF VODAPHONE ESSA R CELLULAR LTD. IN ITA NO. 1742 OF 2009 AND HON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS. IDEA CELLULAR LTD., 230 CTR 43 [DEL.], WHEREAS NO TAX WHATSOEVER WAS DEDUCTED BY THE ASSESSEE. ASSESSEE HAS SUBMITTED BEFORE ASSESSING OFFICER WR ITTEN REPLY ALONG WITH THE COPY OF FRANCHISEE AGREEMENT AND RELEVANT PART OF THE SUBMISSION IS AS UNDER: - (I) M/S AARKAY AGENCIES DATED 15.12.2006 IT WAS CANDIDLY ADMITTED BEFORE AO THAT THOUGH AS PER BSNL SALES AND DISTRIBUTION POLICY, 2006, THE FRA NCHISEES HAS TO SIGN THE TWO AGREEMENTS WITH THE BSNL SAME WAS NOT DONE HERE IN THE YEARS UNDER CONSIDERATION. THE FIRST AGREEMENT IS THAT OF PRINCIPAL TO AGENT FOR MARKETING AND DISTRIBUTION OF PRE PAID SIM AND INCOME TAX U/S 194H WAS DEDUCTED AND DEPOSIT ED ON COMMISSION PAID FOR SALE OF PREPAID SIM. THE SECOND AGREEMENT WITH THE FRANCHISEES IS THAT OF PRINCIPAL TO PRINCIPAL BASIS FOR SALE OF THE RECHARGE VOUCHERS AND C - TOP - UP BY THE FRANCHISEES TO THE CUSTOMERS. THUS, IT HAS BEEN ARGUED THAT THE FRANCHISE ES ARE PURCHASING RECHARGE VOUCHERS AND C - TOP - UP IN BULK AND THEREFORE TRADE DISCOUNT IS ALLOWED TO THEM BY THE BSNL. IT HAS BEEN FURTHER SUBMITTED THAT NO WORDS SUCH AS COMMISSION IS INVOLVED IN THIS TRANSACTION AND THEREFORE, THERE IS NO LIABILITY U/S 19 4H OF THE INCOME TAX ACT, 1961. IT HAS BEEN ALSO SUBMITTED THAT THIS IS AN ALL INDIA POLICY ITA NOS.30, 31 & 56 TO 61/LKW/2017 PAGE 3 OF 12 AND TAXATION MATTER OF BSNL AND THE DECISION TAKEN BY THE CORPORATE OFFICE OF THE BSNL, NEW DELHI HAS TO BE ACTED UPON. AO AFTER CAREFULLY CONSIDERING THE SUBMISSIO N MADE BY THE ASSESSEE DID NOT FIND FORCE IN THE CONTENTION MADE BY THE APPELLANT, IN VIEW OF THE REASONS GIVEN BY AO WHO ON PERUSAL OF THE COPY OF FRANCHISE AGREEMENT SUBMITTED BY THE ASSESSEE, NOTICED THAT THERE WAS ONLY ONE AGREEMENT WITH THE FRANCHISEE HOLDERS GOVERNING THE TERMS AND CONDITIONS FOR SALE OF SIM CARD AS WELL AS RECHARGE COUPONS AND IT CANNOT BE DISTINGUISHED THAT SALE OF SIM CARD IS PRINCIPAL TO AGENT BASES AND THAT THE RECHARGE COUPON IS ON PRINCIPAL TO PRINCIPAL BASES. IN VIEW OF THESE FACTS AND CIRCUMSTANCES, AO HELD THAT THE BSNL AND THE FRANCHISES HOLDERS ARE NOT ACTING AS PRINCIPAL TO PRINCIPAL BASIS IN SO FOR AS THE SALE OF RECHARGE COUPON AND C - TOP - UP ARE CONCERNED. THEY ARE SIMPLY FRANCHISEE HOLDERS RECEIVING COMMISSION, TERMED AS DISCOUNT IN THE AGREEMENT. THEREFORE, EVEN IF, THE ASSESSEE TERMED IT AN AGREEMENT BETWEEN PRINCIPAL TO PRINCIPAL, DEFACTO IT REMAINS TO BE AN AGREEMENT BETWEEN THE PRINCIPAL AND THE AGENT. THE WORD USED AS DISCOUNT IN CASE OF COMMISSION MAKES NO MATERIAL DIFFERENCE AND THE TRANSACTION IS ACTUALLY IN THE NATURE OF COMMISSION PAID TO THE FRANCHISES HOLDERS. AO REJECTED THE ASSESSEE'S CONTENTION THAT THERE WAS OUTRIGHT SALE OF PREPAID RECHARGE COUPONS AND C - TOP UP, IN VIEW OF THE FACT THAT THE FRANCHISE HOLD ER MERELY ACT AS AGENT AND CONDUIT BETWEEN BSNL AND THE CONSUMER TO ENABLE THE CONSUMER TO UTILIZE THE NETWORK OF BSNL FOR MAKING THE CALLS IN LIEU OF THE PAYMENTS MADE BY THE CONSUMER. AO RELIED UPON THE LD. CIT(A), GHAZIABAD BY HIS ORDER DATED 29.11.2010 IN APPEAL NO. 55/2009 - 10/GZB WHO UPHELD THE ORDER OF THE AO LEVYING TAX U/S 194H ON THE AMOUNT OF COMMISSION'/DISCOUNT PAID ON RECHARGE COUPON AND C - TOP - UP IN THE CASE OF BSNL, GHAZIABAD FOR A.Y. 2009 - 10. THE LD. CIT(A) HAS OBSERVED THAT THE ASSESSEE'S C ASE IS COVERED AGAINST IT BY THE DECISIONS OF HON'BLE KERALA HIGH COURT IN THE CASE OF VODA PHONE ITA NOS.30, 31 & 56 TO 61/LKW/2017 PAGE 4 OF 12 ESSAR CELLULAR LTD., IT A NO. 1742 OF 2009 AND HON'BLE DELHI HIGH COURT IN CASE OF CIT VS. IDEA CELLULAR LTD. 230 CTR 43 DELHI. IN VIEW OF FOREGOING REASONS T HE AMOUNT OF SHORT DEDUCTION TAX AT SOURCE AND INTEREST U/S 201(1 A) IS COMPUTED AND AO ISSUED NOTICE OF DEMAND AND CHALLAN FOR RS.8,17,247 / - & RS. 19,39,467/ - FOR F.Y. 2008 - 09 & 2009 - 10 RESPECTIVELY . 5 . THE ASSESSEE DURING THE APPELLATE PROCEEDINGS RELIED UPON THE JUDGMENT IN THE CASE OF INCOME TAX OFFICER (TDS - 2), TIRUPATI VS GENERAL MANAGER, BHARAT SANCHAR NIGAM LTD, TELECOM, TIRUPATI DECIDED BY ITAT HYDERABAD BENCH 'A' (SMC), HYDERABAD VIDE ORDER DATED 05.06.2015 . ASSESSEE FURTHER RELIED ON THE JUDGMENT OF HON'BLE KARNATAKA HIGH COURT IN THE CASE OF BHARTI AIRTEL LTD. VS DY. CIT OF INCOME TAX & OTHERS, 372 ITR 33 . THE LD. CIT(A) AFTER CONSIDERING THE ASSESSMENT ORDER, SUBMISSIONS OF THE ASSESSEE AND THE FACTS OF THE CASE, OBSERVED AND HELD AS UNDER: - T HE APPELLANT IS ACCOUNTS OFFICER (CASH), OFFI CE OF BHARAT SANCHAR NIGAM LTD. (BSNL), A GOVT. OF INDIA ENTERPRISE, DEALING IN TELECOMMUNICATIONS GOVERNED BY THE GOVT. OF INDIA, MINISTRY OF COMMUNICATION, NEW DELHI. I HAVE PERUSED THE ORDER OF THE AO AND AVA ILABLE DOCUMENTS ON RECORD. IT WAS SUBMITTED BEFORE THE AQ THAT AS PER BSNL SALES AND DISTRIBUTION POLICY, 2006, THE FRANCHISEES HAS TO SIGN THE TWO AGREEMENTS WITH THE BSNL. AR HAS NOT BEEN ABLE TO FILE COPIES OF TWO TYPES OF AGREEMENTS BEFORE AO OR BEFOR E THE UNDERSIGNED. THE FIRST AGREEMENT IS THAT OF PRINCIPAL TO AGENT FOR MARKETING AND DISTRIBUTION OF PRE PAID SIM AND INCOME TAX U/S 194H WAS DEDUCTED AND DEPOSITED ON COMMISSION PAID TO PREPAID SIM. SECOND AGREEMENT WITH THE FRANCHISEES IS THAT OF PRINC IPAL TO PRINCIPAL BASIS FOR BEING AUTHORISED DISTRIBUTER TO PROVIDE THE RECHARGE VOUCHERS AND C - TOP - UP BY THE FRANCHISES TO THE CUSTOMERS. THUS, IT HAS BEEN ARGUED THAT THE FRANCHISES ARE PURCHASING RECHARGE VOUCHERS AND C - TOP - UP IN BULK AND THEREFORE ITA NOS.30, 31 & 56 TO 61/LKW/2017 PAGE 5 OF 12 TRAD E DISCOUNT IS ALLOWED TO THEM BY THE BSNL. IT HAS BEEN FURTHER SUBMITTED THAT NO WORDS SUCH AS COMMISSION IS INVOLVED IN THIS TRANSACTION AND THEREFORE, THERE IS NO LIABILITY U/S 194H OF THE INCOME TAX ACT, 1961. IT HAS BEEN ALSO SUBMITTED THAT THIS IS AN ALL INDIA POLICY AND TAXATION MATTER OF BSNL AND THE DECISION TAKEN BY THE CORPORATE OFFICE OF THE BSNL, NEW DELHI HAS TO BE ACTED UPON. AO HOWEVER FOUND THAT THERE WAS ONLY ONE TYPE OF AGREEMENT WITH THE FRANCHISEE. APPELLANT HAS PLACED BEFORE ME THE COPI ES OF TWO DIFFERENT TYPES OF THE AGREEMENTS ENTERED WITH DIFFERENT FRANCHISEES - ONE IS PRINCIPAL TO PRINCIPAL BASIS AND OTHER ONE IS PRINCIPAL TO AGENT BASIS. A PERUSAL OF THE FACTS ABOVE SHOWS THAT THE AO RELIED UPON THE JUDGEMENT OF THE LD. CIT(A), GHAZ IABAD WHO BY HIS ORDER DATED 29.11.2010 IN APPEAL NO. 55/2009 - 10/GZB HAD UPHELD THE ORDER OF THE AO LEVYING TAX U/S 194H ON THE AMOUNT OF COMMISSION/DISCOUNT PAID ON RECHARGE COUPON AND C - TOP - .UP IN THE CASE OF BSNL, GHAZIABAD FOR A.Y. 2009 - 10 AFTER RELYI NG UPON THE DECISIONS OF HON'BLE KERALA HIGH COURT IN THE CASE OF VODA PHONE ESSAR CELLULAR LTD., IT A NO. 1742 OF 2009 AND HON'BLE DELHI HIGH COURT IN CASE OF CIT VS. IDEA CELLULAR LTD. 230 CTR 43 DELHI. WHEREAS, APPELLANT HAS MAINLY RELIED UPON THE JUDGM ENT IN THE CASE OF INCOME TAX OFFICER (TDS - 2), TIRUPATI VS GENERAL MANAGER, BHARAT SANCHAR NIGAM LTD, TELECOM, TIRUPATI. ITAT HYDERABAD BENCH 'A' (SMC), HYDERABAD ORDER DATED 05.06.2015 AND THE JUDGMENT DATED 14.08.2014 OF HON'BLE KARNATAKA HIGH COURT, IN THE CASE OF BHARTI AIRTEL LTD. VS DY. CIT OF INCOME TAX & OTHERS (372 ITR 33), IN HIS FAVOUR. I HAVE PERUSED THE JUDGMENT IN THE CASE OF INCOME TAX OFFICER (TDS - 2), TIRUPATI VS GENERAL MANAGER, BHARAT SANCHAR NIGAM LTD, TELECOM, TIRUPATI. ITAT HYDERABAD BE NCH 'A' (SMC), HYDERABAD ORDER DATED 05.06.2015 PLACED ON RECORD BY APPELLANT. IN THE OPERATIVE PART IN PARA 9 HON'BLE ITAT (SMC) BENCH GAVE THE FOLLOWING RULING: ITA NOS.30, 31 & 56 TO 61/LKW/2017 PAGE 6 OF 12 '9. IT IS NOT A DISPUTE THAT THE ASSESSEE HAS NOT DEDUCTED TAX AT SOURCE. AS PER THIRD PROVIS O TO S.194H WHICH IS INSERTED BY THE FINANCE ACT, 2007, NO DEDUCTION NEED TO BE MADE ON ANY COMMISSION OR BROKERAGE PAID BY BSNL TO ITS PUBLIC CALL OFFICE FRANCHISEE, AND THIS PROVISO WAS HELD TO BE CLARIFICATORY IN NATURE BY THE HON'BLE PUNJAB AND HARYANA HIGH COURT IN THE CASE OF CIT V/S. BHARAT SANCHAR NIGAM LTD. (265 CTR 212). HAVING REGARD TO THE CIRCUMSTANCES OF THE CASE, I NOTICE THAT THE ASSESSEE BEING PUBLIC SECTOR UNDERTAKING STANDS ON A DIFFERENT FOOTING AND THE VIEW TAKEN IN THE CASE OF IDEA C ELLULAR (SUPRA) CANNOT BE APPLIED, SINCE THE RELATIONSHIP BETWEEN THE BSNL AND THE FRANCHISEE STANDS ON A DIFFERENT FOOTING AND THE SAME WAS RECOGNIZED BY THE CBDT, IN FACT, THE DECISION OF HON'BLE DELHI HIGH COURT AND OTHER HIGH COURTS, ON THIS POINT WERE CONSIDERED BY HON'BLE KARNATAKA HIGH COURT IN THE CASE BHARTI AIRTEL LTD. V/S. DY. CIT AND OTHERS (372 ITR 33) WHILE HOLDING THAT SECTION 194H IS NOT APPLICABLE. SINCE NO JURISDICTIONAL HIGH COURT DECISION IS AVAILABLE AS ON DATE, THE LATEST DECISION OF K ARNATAKA HIGH COURT, WHICH CONSIDERED AND DISTINGUISHED EARLIER RULINGS OF OTHER HIGH COURTS, DESERVES TO BE FOLLOWED.' A PERUSAL OF THE ABOVE PARA 9 SHOWS THAT HON'BLE ITAT GAVE THE RULING ON THE BASIS OF THIRD PROVISO TO S. 194H AND ON THE BASIS OF HON'B LE KARNATAKA HC'S JUDGEMENT BEING THE LATEST JUDGEMENT ON THIS ISSUE AS NO JURISDICTIONAL HIGH COURT DECISION IS AVAILABLE AS ON DATE, HENCE THE LATEST DECISION OF HON'BLE KARNATAKA HIGH COURT, WHICH CONSIDERED AND DISTINGUISHED EARLIER RULINGS OF OTHER HI GH COURTS, DESERVES TO BE FOLLOWED. HOWEVER IT IS SEEN THAT NOW IN A SUBSEQUENT FURTHER DECISION BY HON'BLE KOLKATA HC THAT IN ITA 347 OF 2006 IN THE CASE OF HUTCHISON TELECOM EAST LTD. VERSUS COMMISSIONER OF INCOME TAX, TDS KOLKATA DATE: 12TH MAY, 2015, A FTER CONSIDERING THE VERY JUDGMENT OF HON'BLE KARNATAKA HIGH COURT, IN THE CASE OF BHARTI AIRTEL LTD. VS DY. CIT OF INCOME TAX & OTHERS (2015) ITA NOS.30, 31 & 56 TO 61/LKW/2017 PAGE 7 OF 12 372 ITR 33 (KAR), OVER RULED THE IMPUGNED JUDGMENT WITH FOLLOWING REMARKS: 'LASTLY, THE JUDGMENT CITED IN THE CAS E OF BHARTI AIRTEL (SUPRA) IS OF NO ASSISTANCE BECAUSE WE HAVE NOT BEEN ABLE TO PERSUADE OURSELVES THAT THE DEALINGS AND TRANSACTIONS BETWEEN THE ASSESSEE AND SERVICE PROVIDER WERE ON THE PRINCIPAL TO PRINCIPAL BASIS. THE KARNATAKA HIGH COURT HELD IN FAVOU R OF THE ASSESSEE ONLY ON THAT BASIS. 'SUCH A FULL - FLEDGED HEARING COULD HAVE BEEN AVOIDED BECAUSE THE POINT IN SUBSTANCE IS ALREADY COVERED BY AN EARLIER JUDGMENT OF THIS COURT IN THE CASE OF BHARAT CELLULAR LIMITED VS. ASSISTANT COMMISSIONER OF INCOME - TA X & ANR. (SUPRA). BUT CONSIDERING THE STRENUOUS EFFORT OF LEARNED ADVOCATES ON EITHER SIDE WE THOUGHT IT PROPER TO DEVOTE TIME TO EXAMINE THE ISSUE. 'FOR THE AFORESAID REASON, THE FIRST QUESTION FORMULATED HAS TO BE ANSWERED IN THE AFFIRMATIVE AND IN FAVOU R OF THE REVENUE. IN SO FAR AS THE SECOND QUESTION IS CONCERNED, WE HOLD THAT THE APPELLANT WAS A PERSON RESPONSIBLE FOR PAYING COMMISSION AND, THEREFORE, THE PROVISIONS OF SECTION 194H WERE ATTRACTED AND THE TRIBUNAL WAS JUSTIFIED IN TAKING THE VIEW AS TH EY DID. THE QUESTION IS, ACCORDINGLY, ANSWERED. THE APPEAL IS DISMISSED.' FOLLOWING THE SAME VIEW GIVEN BY THE HON'BLE SMC BENCH ITAT IN THE CASE OF INCOME TAX OFFICER (TDS - 2), TIRUPATI VS GENERAL MANAGER, BHARAT SANCHAR NIGAM LTD, TELECOM, TIRUPATI, WE NE ED TO FOLLOW THE SUBSEQUENT DECISION BY HON'BLE KOLKATA HC THAT IN ITA 347 OF 2006 IN THE CASE OF HUTCHISON TELECOM EAST LTD. VERSUS COMMISSIONER OF INCOME TAX, TDS KOLKATA WHO AFTER CONSIDERING THE HON'BLE KARNATAKA HC JUDGEMENT RELIED UPON BY THE AR OF T HE APPELLANT WAS, DULY CONSIDERED BY HON'BLE KOLKATA HC, AND ITA NOS.30, 31 & 56 TO 61/LKW/2017 PAGE 8 OF 12 WAS OVERRULED AND DECIDED THE ISSUE UNDER,CONSIDERATION IN FAVOUR OF THE REVENUE. IT IS NOTEWORTHY TO SEE THAT HON'BLE KERALA HIGH COURT IN THE CASE OF VODAPHONE ESSAR CELLULAR LTD. RELIED UPON B Y AO, GAVE FOLLOWING OBSERVATIONS IN PARA 2 & 5: '2. BEFORE PROCEEDING TO CONSIDER THE VARIOUS ARGUMENTS RAISED BY THE APPELLANT - ASSESSEE, WE ARE CONSTRAINED TO REFER TO THE DIVISION BENCH JUDGMENT OF THIS COURT RENDERED IN A SALES TAX CASE FILED BY BPL MO BILE CELLULAR LTD., WHOSE BUSINESS IN KERALA IS ULTIMATELY TAKEN OVER BY THE ASSESSEE - COMPANY. IN THE JUDGMENT IN THE SAID CASE I.E. W.P.(C) NO. 29202/2005, THIS COURT NOTICED THAT FOR THE SAME TRANSACTION I.E. SALE OF SIM CARDS AND RECHARGE COUPONS THROUG H DISTRIBUTORS UNDER THE 'PREPAID SCHEME', THE ASSESSEE'S PREDECESSOR NAMELY, BPL CELLULAR LTD. ALONG WITH PUBLIC SECTOR COMPANY BSNL CONTESTED SALES TAX LIABILITY STATING THAT TRANSACTION DOES NOT INVOLVE SALE OF GOODS, BUT IS ONLY RENDERING OF SERVICES. IN FACT, THIS COURT AFTER REFERRING TO JUDGMENT OF THE SUPREME COURT IN BSNL & ANOTHER V. UNION OF INDIA & OTHERS REPORTED IN (2006) 145 STC 91 UPHELD THE ASSESSEE'S CONTENTION HOLDING THAT THERE IS NO SALE INVOLVED IN SIM CARDS OR RECHARGE COUPONS ATTRACT ING SALES TAX AND THE TRANSACTIONS ARE FOR RENDERING MOBILE SERVICES BECAUSE ONLY THROUGH SIM CARDS THE CUSTOMER CAN AVAIL THE MOBILE SERVICES FROM THE ASSESSEE AND RECHARGE COUPONS ARE NOTHING BUT AIR TIME CHARGES PAID BY CUSTOMERS IN ADVANCE FOR AVAILING MOBILE SERVICES FROM THE ASSESSEE.... '5. IN VIEW OF OUR FINDING IN THE BPL CELLULAR'S CASE IN THE CONTEXT OF DEMAND ARISING UNDER THE SALES TAX ACT, THE MOBILE SERVICE PROVIDERS ARE EXONERATED FROM SALES TAX LIABILITY AND ARE LIABLE TO PAY SERVICE TAX TO THE CENTRAL GOVERNMENT UNDER THE FINANCE ACT, 1994. IN VIEW OF THE FINALITY ATTAINED TO THE SALES TAX CASE THROUGH THE ABOVE ITA NOS.30, 31 & 56 TO 61/LKW/2017 PAGE 9 OF 12 JUDGMENT, IT WOULD BE FUTILE FOR THE ASSESSEE OR FOR THAT MATTER ANY MOBILE SERVICE PROVIDER, TO CONTEND THAT THE CHARGES RECEIVED FOR SUPPLY OF SIM CARDS AND RECHARGE COUPONS ARE NOT FOR SERVICES RENDERED BUT AMOUNTS TO SALE OF GOODS ON WHICH ADMITTEDLY ASSESSEE IS NOT PAYING ANY SALES TAX TO THE STATE GOVERNMENT. IT IS STRANGE TO NOTE THAT ASSESSEE TAKES SELF - CONTRADICTORY STAND BE FORE THE SALES TAX AUTHORITIES OF THE STATE AND BEFORE THE CENTRAL INCOME TAX AUTHORITY, BOTH TO RESIST TAX - COMPLIANCE. ' IN LIGHT OF THE ABOVE AND AFTER FURTHER LENGTHY ANALYSIS, HON'BLE KERALA HC DISMISSED ALL THE APPEALS FILED BY THE ASSESSEE. SIMILAR V IEW WAS TAKEN BY HON'BLE DELHI HIGH COURT IN CASE OF - CIT VS. IDEA CELLULAR LTD. 230 CTR 43 (DELHI). SO NOW MAJORITY OF THE TREND IN JUDICIAL PRONOUNCEMENTS IS IN FAVOUR OF REVENUE AND AGAINST THE APPELLANT ON THESE ISSUES ESPECIALLY WHEN HON'BLE APEX COUR T HAS HELD THAT THESE TRANSACTIONS CARRIED OUT BY THE APPELLANT ARE NOT OF SALE. ASSESSEE CANNOT TAKE CONTRADICTORY STAND BEFORE THE SALES TAX AUTHORITIES OF THE STATE AND BEFORE THE CENTRAL INCOME TAX AUTHORITY, BOTH TO RESIST TAX - COMPLIANCE ESPECIALLY WH EN AS ADMITTED THIS IS AN ALL INDIA POLICY AND TAXATION MATTER OF BSNL AND THE DECISION TAKEN BY THE CORPORATE OFFICE OF THE BSNL, NEW DELHI HAS TO BE ACTED UPON. THEREFORE, AS HELD AND FOR THE REASON GIVEN IN THE ABOVE MENTIONED JUDGMENTS IN THE CASE OF V ODA PHONE ESSAR CELLULAR LTD., IT A NO. 1742 OF 2009 AND HON'BLE DELHI HIGH COURT IN CASE OF CIT VS. IDEA CELLULAR LTD. 230 CTR 43 (DELHI) SUPPLY OF C TOP UP CARD AND RECHARGE VOUCHER, WHETHER IT IS TREATED AS SALE BY THE ASSESSEE OR NOT, IS HELD TO BE ONL Y FOR THE PURPOSE OF RENDERING CONTINUED SERVICES BY THE ASSESSEE TO THE SUBSCRIBER OF THE MOBILE PHONE. RECHARGE COUPONS OR C TOP UPS ARE ONLY AIR TIME CHARGES COLLECTED FROM THE SUBSCRIBERS IN ADVANCE. ACCORDINGLY, I CONFIRM THE STAND TAKEN BY AO BASED O N THE OBSERVATIONS OF ITA NOS.30, 31 & 56 TO 61/LKW/2017 PAGE 10 OF 12 THE HON'BLE SUPREME COURT IN BSNL'S OWN CASE IN THE CONTEXT OF SALES TAX, WHICH SQUARELY APPLIES TO THE ASSESSEE. THERE IS NO SALE OF ANY GOODS INVOLVED AS CLAIMED BY THE ASSESSEE AND THE ENTIRE CHARGES COLLECTED BY THE ASSESSEE AT TH E TIME OF DELIVERY OF RECHARGE COUPONS IS ONLY FOR RENDERING SERVICES TO ULTIMATE SUBSCRIBERS AND THE DISTRIBUTOR IS ONLY THE MIDDLEMAN ARRANGING CUSTOMERS OR SUBSCRIBERS FOR THE ASSESSEE. IT IS PERTINENT TO NOTE THAT BESIDES THE DISCOUNT GIVEN AT THE TIME OF SUPPLY OF RECHARGE COUPONS, THE ASSESSEE IS NOT PAYING ANY AMOUNT TO THE DISTRIBUTORS FOR THE SERVICES BEING RENDERED BY THEM RELATING TO GETTING THE SUBSCRIBERS IDENTIFIED, DOING THE DOCUMENTATION WORK AND ENROLLING THEM AS MOBILE SUBSCRIBERS TO THE S ERVICE PROVIDER NAMELY, THE ASSESSEE. EVEN THOUGH THE ASSESSEE HAS CONTENDED THAT THE RELATIONSHIP BETWEEN THE ASSESSEE AND THE DISTRIBUTORS IS PRINCIPAL TO PRINCIPAL BASIS, I AM UNABLE TO ACCEPT THIS CONTENTION BECAUSE THE ROLE OF THE DISTRIBUTORS IS THAT OF A MIDDLEMAN BETWEEN THE SERVICE PROVIDER NAMELY, THE ASSESSEE, AND THE CONSUMERS. THE ESSENCE OF A CONTRACT OF AGENCY IS THE AGENT'S AUTHORITY TO COMMIT THE PRINCIPAL. IN THIS CASE THE DISTRIBUTORS ACTUALLY CANVASS BUSINESS FOR THE ASSESSEE AND ONLY TH ROUGH DISTRIBUTORS AND RETAILERS APPOINTED BY THEM ASSESSEE GETS SUBSCRIBERS FOR THE MOBILE SERVICE. ASSESSEE RENDERS SERVICES TO THE SUBSCRIBERS BA SED ON CONTRACTS ENTERED INTO BETWEEN DISTRIBUTORS AND SUBSCRIBERS. THE TERMINOLOGY USED BY THE ASSESSEE FOR THE PAYMENT TO THE DISTRIBUTORS IS IMMATERIAL AND IN SUBSTANCE THE DISCOUNT GIVEN AT THE TIME OF SALE OF TOP UP CARDS OR RECHARGE COUPONS BY THE ASSESSEE TO THE DISTRIBUTORS IS A PAYMENT RECEIVED OR RECEIVABLE BY THE DISTRIBUTOR FOR THE SERVICES TO BE REN DERED TO THE ASSESSEE AND SO MUCH SO, IT FALLS WITHIN THE DEFINITION OF COMMISSION OR B ROKERAGE UNDER EXPLANATION (I) OF S 194H ITA NOS.30, 31 & 56 TO 61/LKW/2017 PAGE 11 OF 12 OF THE ACT. ALL THE GROUNDS TAKEN ARE REJECTED AND THE ORDER OF AO IS UPHELD FOR BOTH THE YEARS. IN THE RESULT, APPEAL IS DISMIS SED. 6 . WE HAVE PERUSED THE CASE RECORDS, ANALYSED THE FACTS AND CIRCUMSTANCES OF THE CASE AND WE FIND THAT THERE ARE CONTRADICTING JUDICIAL PRONOUNCEMENTS BY VARIOUS HIGH COURTS, SOME IN FAVOUR OF THE REVENUE AND SOME IN FAVOUR OF THE ASSESSEE. IT IS THE C ASE OF THE REVENUE , AS COMING OUT FROM THE ORDER OF THE LD. CIT(A) , THAT MAJORITY OF THE JUDICIAL PRONOUNCEMENTS ARE IN FAVOUR OF THE REVENUE AND AGAINST THE ASSESSEE. FURTHERMORE, THE FACT THAT COMES TO LIGHT IS THAT ASSESSEE HAS TAKEN CONTRADICTORY STAN D BEFORE THE SALES TAX AND BEFORE THE INCOME TAX AUTHORITIES. IT IS THE OPINION OF THE LD. CIT(A) THAT TAXATION POLICY OF BSNL HAS TO BE DONE IN UNIFORM SCALE AND ASSESSEE CANNOT TAKE CONTRADICTORY STAND BEFORE DIFFERENT GOVERNMENT AUTHORITIES. WE ARE OF THE VIEW THAT MORE ENQUIRY AND VERIFICATION OF FACTS HAS TO BE DONE BY THE FIRST APPELLATE AUTHORITY TO CONCLUSIVELY COME TO THE CONCLUSION WHETHER THE ASSESSEE AND THE DISTRIBUTOR ARE AT ALL PRINCIPAL TO PRINCIPAL. LD. CIT(A) , IN VIEW OF THE JUDGMENT RE PORTED IN FAVOUR OF THE REVENUE , HAS TAKEN A PARTICULAR VIEW AND HAS UPHELD THE ADDITION MADE BY THE ASSESSING OFFICER, BUT FACTUAL VERIFICATIONS AND DETAILED METHODOLOGY ADOPTED BY THE ASSESSEE NEEDS TO BE EXAMINED AND IN THIS REGARD A SPEAKING ORDER AS R EGARDS THE FACT WHAT IS THE IMPACT ON THE REVENUE FOR PURPOSE OF TAXATION DETERMINING THE CONSEQUENCES THEREAFTER AND ALSO TAKING INTO ACCOUNT COMPARATIVE CASE STUDIES ON THE MATTER IS REQUIRED FROM THE LD. CIT(A). FURTHERMORE, LD. D.R. AT THE TIME OF HEA RING HAS BROUGHT TO OUR NOTICE THE DECISION OF ITA T DELHI BENCH IN THE CASE OF BHARAT SANCHAR NIGAM LTD., NEW DELHI VS. ADDL. CIT IN ITA NO.920/DEL/2017 , IN WHICH IDENTICAL ISSUE WAS INVOLVED, WHEREIN ITAT DELHI BENCH HAS DECIDED THE ISSUE IN FAVOUR OF THE REVENUE AND HAS CATEGORICALLY STATED THAT DISCOUNT OF THE PREPAID OFFERED BY THE ASSESSEE ITA NOS.30, 31 & 56 TO 61/LKW/2017 PAGE 12 OF 12 IS IN THE NATURE OF COMMISSION, THUS ATTRACTING THE PROVISIONS OF SECTION 194H OF THE ACT . AS OBSERVED , WE ARE OF THE VIEW THAT MUCH MORE DETAILED FACTUAL VERIFICAT ION IS REQUIRED BY THE LD. CIT(A) AND, THEREFORE, WE SET ASIDE HIS ORDER AND REMIT THE MATTER BACK TO HIS FILE TO DECIDE THE ISSUE AFRESH AFTER TAKING INTO CONSIDERATION THE JUDGMENT OF THE DELHI ITAT BENCH (SUPRA) AND AFTER PROVIDING REASONABLE OPPORTUNIT Y OF HEARING TO THE ASSESSEE. ACCORDINGLY, THIS APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. 7 . SIMILARLY FACTS AND CIRCUMSTANCES INVOLVED IN ITA NO.31, 56 TO 61/LKW/2017 ARE IDENTICAL , WE SET ASIDE THE ORDERS OF THE LD. CIT(A) AND RESTORE THE MATTER BACK TO HIS FILE TO ADJUDICATE THE ISSUE AFRESH AS INDICATED HEREINABOVE AFTER FOLLOWING THE PRINCIPLES OF NATURAL JUSTICE. 8 . IN THE RESULT, APPEALS OF THE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 24 / 0 8 / 201 8 . SD/ - SD/ - [ T.S. KAPOOR ] [PARTHA SARATHI CHAUDHURY ] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 24 TH AUGUST , 201 8 JJ: 0608 COPY FORWARDED TO: 1 . APPELLANT 2 . RESPONDENT 3 . CIT(A) 4 . CIT 5 . DR