Page 185 - GSTL_14th May 2020_Vol 36_Part 2

2020 ] IN RE : NEW SPACE INDIA LTD. 287
tion from (i) to (vii) pertain to issues not related to the application. The entry at
serial (viii) is a residual entry and applies to the applicant. Therefore the services
provided by the applicant are aptly covered under Serial Number 17, sub-serial
(viii) of the said Notification. In so far as the rate of tax applicable to the said ser-
vice is concerned the Notification provides that the rate shall be as mentioned in
Column (4) against the description of the service. The entry in Column (4) of the
Notification against Serial No. 17(viii) reads as follows :
Same rate of integrated tax as applicable on supply of like goods involving
transfer of title of goods.
In the instant case satellite transponders had been leased out. Therefore the rate
of tax applicable on the service of leasing of the satellite transponders shall be the
same as the rate of tax as applicable on the supply of the satellite transponders.
This brings us to the question of determination of the rate of tax on supply of
service of leasing of satellite transponders which in turn requires us to determine
the classification of the said goods.
6.7 Before proceeding to examine the entries in the Tariff, we shall ex-
amine the nature and characteristics of a satellite transponder to understand its
features, characteristics etc. to correctly determine its classification.
6.8 A Transponder is an automatic electronic monitoring or control de-
vice that receives, cross-examines, amplifies and retransmits the arriving signal
and is primarily implemented in wireless communication (as ascertained from
independent sources). The word ‘Transponder’ itself is a combination of two
words : i.e. Transmitter and responder. A transponder works by receiving a defi-
nite signal from a specific source (up link) on a component called “interrogator”,
then it amplifies the signal, converts the signal to a dissimilar frequency, through
“frequency converter”, than that of the one received and automatically transmits
the signal (downlink). Therefore the input and output signals can be sensed con-
currently. The device on board the satellite that performs the amplification and
frequency conversion and also the main/key payload of any communication sat-
ellite is the “Transponder”.
In view of the above, the transponder essentially is a repeater which re-
ceives the signal transmitted from earth station on the uplink, amplifies the sig-
nal, converts to a dissimilar frequency and retransmits the same on the down-
link. Therefore the essential/significant features of amplification and frequency
conversion are done by the key payload of the communication satellite i.e. the
transponder. Therefore the transponder becomes an integral part of the commu-
nication satellite, without which the communication satellite becomes defunct.
6.9 The Applicant contends that the said transponders merit classifica-
tion under Tariff Heading 8803 as part of Spacecraft (including satellites), falling
under Tariff Heading 8802. The alternate classification is under Tariff Heading
8525 as “Other Satellite Communication Equipment”. We proceed to examine the
two Tariff Headings.
6.10 In respect of Tariff Headings and determination of Classification,
Explanations (iii) and (iv) appended to the Notification No. 1/2017-Central Tax
(Rate), dated 28-6-2017 are relevant. The said explanations are reproduced below
for ease of reference.
(iii) “Tariff item”, “sub-heading” “heading” and “Chapter” shall mean
respectively a tariff item, sub-heading, heading and chapter as speci-
fied in the First Schedule to the Customs Tariff Act, 1975 (51 of
1975).
GST LAW TIMES  14th May 2020  185