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2011 (9) TMI 216 - HC - Service TaxLevy of VAT - Goods - Article 366(12) of the Constitution of India and Section 2(16) of the Act. - 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. - Held that:- 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 A.P. VAT Act, 2005. 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. - 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. - 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. 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. - If, on the other hand, the non-refundable deposit is received against supply of telephone instruments, batteries, accumulators etc., and it is established that the said deposit is a disguised form of consideration either for the sale or for the transfer of right to use such goods, then these deposits would form part of the sale consideration and be subject to tax under the provisions of the Act. - Likewise, if refundable deposits are collected from post paid subscribers as security for payment of dues towards STD or ISTD facilities provided by the service provider, then such deposits, not being "goods", cannot be brought to tax under the Act. - If, however, the refundable deposits are for supply of telephone instrument, hand set etc., which are "goods" and it is established that the deposits are a disguised form of sale consideration, then these refundable deposits may also form part of the sale consideration under Section 2(29)(b) of the Act, and would be chargeable to tax under Section 4 thereof.
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