Supreme Court Rules: Sales Tax cannot be Levied on SIM Cards, Recharges and Value-Added Services

Supreme Court Rules: Sales Tax cannot be Levied on SIM Cards, Recharges and Value-Added Services

The Supreme Court while hearing the special leave petition filed in the matter of The Assistant Commissioner (Ct)II Vs. M/S Bharti Airtel Ltd has observed that sales tax cannot be levied on SIM cards, recharge coupons, and value-added services that include wallpapers, ringtones and music downloads as they do not count as ‘goods.’

The division bench comprising of Justices S. Ravindra Bhat and Dipankar Datta, upheld the judgment passed by the High Court of Andhra Pradesh, while observing that no sales tax can be imposed on sharing of infrastructure as the same does not fall under the category of goods.

The Apex Court disposed a batch of over 50 cases on the issue involving various telecom firms including Bharti Airtel, Tata, Vodafone, Idea and BSNL.

The Andhra Pradesh tax department had contended that SIM card can store data of Phone Calls, Contact Numbers, Games, Music etc, and is capable of being bought and sold, thus has all the attributes of 'goods', and can be subjected to sale tax, the report mentioned.

Subsequently, the bench outrightly rejected the Andhra Pradesh tax department's contention that any intellectual property put in any media would only get classified as 'goods' and never as services.