Bharti Airtel Limited Vs Union of India (Kerala High Court)
The Kerala High Court allowed a writ appeal challenging an assessment order under the Kerala Value Added Tax Act, 2003 (KVAT Act), holding that amounts received towards SIM cards, rechargeable coupons, fixed monthly charges, and value-added services such as SMS, ringtones, and downloaded music are not “goods” liable to VAT.
The dispute arose from an assessment for the year 2013-14. The assessee initially challenged the assessment order before a Single Judge, primarily on the ground of limitation under Section 25(1) of the KVAT Act, with an alternate challenge on merits. The Single Judge allowed the writ petition solely on limitation and did not examine the merits. On appeal by the State, a Division Bench reversed that finding, holding that the notice issued on 16.01.2019 was within the six-year limitation period applicable after the 2017 amendment. While dismissing the writ petition, the Division Bench granted liberty to the assessee to pursue a statutory appeal on merits.
Subsequently, several writ petitions involving identical issues for other assessment years were decided by a Single Judge in June 2024. In those cases, relying on the judgment of the Andhra Pradesh High Court in State of Andhra Pradesh v. Bharat Sanchar Nigam Ltd. and the Supreme Court’s order dismissing SLPs against that decision, the Single Judge held that SIM cards, recharge coupons, fixed monthly charges, and value-added services could not be treated as “goods” under the KVAT Act. The assessment orders were quashed to the extent they levied VAT on such receipts. The State did not file any appeal against that judgment.
