No sales tax on voice, data transfer: HC

A Division Bench headed by Justice N Kumar set aside the order of the single judge who had upheld levying crores of rupees as sales tax on three telecom operators. The court also directed the State to deposit Rs one lakh each as cost to Advocates’ Welfare Funds within a month of the order.

“The light energy (artificially created light energy) is one of the forms of electromagnetic waves and is not classified as goods as defined in Article 366(12) of Constitution of India or under Section 2(m) of the Karnataka Sales Tax Act, 1957 or Section 2(15) of Karnataka Valued Added Tax Act, 2003,” the Bench observed.

The Commercial Tax Department had demanded Rs 6,600 crore from BSNL as sales tax from 2001 to 2009, claiming that transfer of voice and data amounted to sale of goods.
It had contended that transmission of voice and data through optical fibre cable to customers amounted to transportation of goods and hence attracted sales tax.
A single judge upheld the claim and Bharat Sanchar Nigam Limited, Bharti Airtel and Tata Telecom had appealed against the order.

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