Case Law Details

Case Name : State of Punjab Vs. Nokia India (P.) Ltd
Appeal Number : [(2014) 52 taxmann.com 410 (SC)]
Date of Judgement/Order :
Related Assessment Year :

Battery charger is not a part of the mobile phone but an accessory thereof, hence liable to tax at general rate of 12.5%, even though battery is sold with the mobile handset

Nokia India Pvt. Ltd. (the Assessee) is a dealer registered under the Punjab Value Added Tax Act, 2005 (the Punjab VAT) engaged in selling mobile phones along with battery chargers and charges VAT at concessional rate of 4% on the sale value of battery chargers. The Assessee contended that battery chargers were being sold as mobile phone under a single solo pack unit and was covered under Entry No. 60 of Schedule ‘B’ of the Punjab VAT (Entry No.60).

The Assessing Authority held that the battery charger was an accessory to the mobile phone and was not a part of the mobile phone. Hence, it was liable to be taxed at general rate, i.e.12.5% and not at concessional rate applicable to the mobile phones. He further held that even

according to Entry No. 60, the product included was only the mobile phone and not accessories thereof. The Assessing Authority therefore, levied tax on the sale value of the battery chargers at the rate of 12.5%.

Being aggrieved, the Assessee preferred an appeal before the Value Added Tax, Tribunal, Chandigarh, Punjab (the Tribunal) which was dismissed on the premise that the battery charger is not a part of the mobile phone. Thereafter, on appeal being filed before the Hon’ble High Court of Punjab and Haryana, the Hon’ble High Court allowed the appeal in favour of the Assessee holding that the battery charger is a part of the composite package of mobile phone.

Aggrieved by the order of the Hon’ble High Court, the Department preferred an appeal before the Hon’ble Supreme Court. The Hon’ble Supreme Court relying upon the decision in the case of Annapurna Carbon Industries Co. Vs. State of Andhra Pradesh [(1976) 2 SCC 273] held as under:

  • The battery charger is not covered under Entry No. 60(6)(g) of Schedule ‘B’ of the Punjab VAT and not mentioned in HMS Code 8525.20.17 under the Central Excise Tariff Act, 1985 and therefore, is liable to be taxed at the rate of 12.5%;
  • The battery charger was not a part of the mobile phone as the mobile phone can be operated without using the battery charger. Further, the battery in the mobile phone could be charged directly from the other means also like laptop without employing the battery charger, implying thereby, that it was nothing but an accessory to the mobile phone;
  • In terms of the information available on the website of the Assessee, the battery charger is put in the category of an accessory, which meant that in the common parlance also the battery charger would have to be understood as an accessory;

Therefore, the Hon’ble Supreme Court allowed the appeal in favour of the Department and held that the battery charger was liable to be taxed at general rate of 12.5% and not at concessional rate of 4%, as it is only an accessory to mobile phone and not a part of the mobile phone.

Our Comments: It is quite interesting to wait and watch how Mobile Manufacturers industry reacts to this judgment. There is another view possible from concerned Industry whether charger as standalone accessory is of any use unless used exclusively for charging mobile phones though there are other options available for charging mobile phones.

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(Bimal Jain, FCA, FCS, LLB, B.Com (Hons), Mobile: +91 9810604563, Email: bimaljain@hotmail.com)

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