RELIANCE COMMUNICATION INFRASTRUCTURE LIMITED REP BY ITS CIRCLE COMMERCIAL MANAGER, S MEENAKSHINATHAN AND RELIANCE INFOCOMM LTD REP BY ITS CIRCLE COMMERCIAL MANAGER, SRI S MEENAKSHINATHAN Vs. STATE OF KERALA REP BY THE SECRETARY TO MINISTRY OF FINANCE

JUDGEMENT

(1.) The question arising in all these connected cases is whether SIM Cards attract sales tax as sale of goods. In BSNL's case the matter went up to Supreme Court and the Supreme Court remanded the matter to the Assessing Officer vide judgment in BSNL and Anr. v. Union of India and Ors., 2006 145 STC 91. Special Government Pleader informed that after remand, the department accepted the contention of BSNL. Divergent positions were taken by different mobile operators in the State. While some companies offered service tax on value of SIM Cards and recharge coupons such as BSNL, BPL Cellular Ltd. and contested sales tax liability, some other companies like ESCOTEL/IDEA paid sales tax and contested service tax liability. The issue came up before the Division Bench of this Court. In fact, while considering the liability for service tax on the value of SIM Card collected by service provider, Division Bench of this Court vide judgment in S.T. Rev. No. 292/2004 and W.P.(C) No. 29642/2004 dated 8.1.2009 held that there is no sale of goods involved and it is part of the taxable service rendered by the service provider. In other words, only Central Government can collect service charges on the taxable service covering the value of SIM Cards, activation charges etc. and no sales tax could be levied. Consequently all the Writ Petitions are allowed directing the Assessing Officer to exclude value of SIM Cards and recharge coupons from taxable turnover. However, we make it clear that sales tax, if any, collected on SIM Cards and recharge coupons should be forfeited under Section 72 of the Kerala Value Added Tax Act and refund, if any, should be considered only strictly in terms of Form 21D, if any, furnished by customers in terms of Rules 55 and 56. However, the officer is free to consider tax liability on sale of other gadjets by mobile telecom operators.