No Sales Tax on SIM cards – pre-paid and post-paid; recharge coupons; value added services – Andhra Pradesh High Court

BHARATI AIRTEL LTD V/S ASST. COMMISSIONER (CT)- II, BEGUMPET DIVISION & OTHERS  (A.P. HIGH COURT)

1. SIM cards, recharge coupon vouchers, mobile telephone rentals on post paid connections, value added services such as ring tones, music down loads, wall papers etc., and proceeds received on sharing of infrastructure cannot be subjected to tax either under Section 4(1) or Section 4(8) of the Act.

2. Telephone instruments, mobile handsets, modems and Caller ID instruments are “goods” both under Article 366(12) of the Constitution of India and Section 2(16) of the Act.

3. In case these goods are sold or supplied to the subscribers by the service providers such “sale” or the “transfer of the right to use these goods” would be liable to tax either under Section 4(1) or Section 4(8) of the Act.

4. However, if, these goods are procured by the subscribers from suppliers, other than the service providers or their distributors/ franchisees, the monthly charges, which the subscriber is called upon to pay by the service provider, would fall within “telecommunication service” and cannot be made liable to tax under the Act.

5. If non-refundable deposits are collected, by the service providers from their distributors, as security deposit for supply of SIM cards, recharge voucher coupons and the like, such deposits would not fall within the ambit of “goods” and cannot be brought to tax under the provisions of the Act.