The bench of judges N Paul Vasanthakumar and P Devadass dismissed the appeal of Aircel and its arm, Dishnet Wireless, against the department, and upheld last month's order of a single judge on the issue.
"The appellants have to approach the appellate authority under Section 51 of the Tamil Nadu Value Added Tax Act, 2006. Both writ appeals are dismissed. The common order of the learned single judge dated November 28, 2013 is confirmed," the division bench said in its order.
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An email sent to Aircel Ltd, seeking its comment on the order did not elicit a response.
In 2010, Aircel and Dishnet Wireless Ltd entered into an agreement with Chennai Network Infrastructure Limited to sell their tower assets for a consideration of Rs 2,329 crore, according to the order of the Madras High Court. The shared passive telecom infrastructure major GTL Infrastructure acquired the tower assets in an all-cash deal worth over Rs 8,000 crore through Chennai Network Infrastructure Ltd and merged it into the company later. The commercial tax officer had issued a show cause notice to the sellers in July 2013, as to why the entire sale value of the assets should not be assessed at 12.50 per cent for the assessment year 2010-2011. The companies contended that by the business transfer agreement, they had only transferred the passive infrastructure to the transferee company and there was no contract for the sale of goods.
After hearing the companies, the assessing officer in September ordered a total of Rs 603 crore from the companies (Aircel and Dishnet Wireless). The amount included Rs 241.55 crore as tax and Rs 362.14 crore as penalty.
This order was challenged in the writ petitions by the companies with a single judge at the Madras High Court. The companies argued that the department had no jurisdiction to initiate the proceedings insofar as the appellant's transaction was concerned, as the whole transaction had taken place outside Tamil Nadu.
Opposing the writ petition, the advocate general who appeared for the department and the Tamil Nadu government, argued that the very same issue had been pending before the appellate deputy commissioner at the instance of Aircel Cellular Limited on similar grounds and the orders challenged before the single judge were appealable before the very same appellate authority.
The single judge, accepting the submission of the advocate general, ordered that the transaction in question should be considered by the appellate authority before whom the very same issues were pending and there could not be any piecemeal consideration of the matter by the appellate authority as well as by the court.