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Shanthi Traders, Rep. by its Proprietor, J. Anand Jain Versus The Deputy Commercial Tax Officer, The State of Tamil Nadu, Union of India

2017 (8) TMI 602 - MADRAS HIGH COURT

Sale or service - value of SIM cards sold - Whether the value of sim card sold attracts service tax or sale tax under the sales tax act - Held that: - the issue has been settled in the case of IDEA MOBILE COMMUNICATION LTD. Versus CCE. & C., COCHIN [2011 (8) TMI 3 - SUPREME COURT OF INDIA], where it was held that it is established from the records and facts of this case that the value of SIM cards forms part of the activation charges as no activation is possible without a valid functioning of SI .....

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or the Petitioner : Mr. M. Hariharan For the Respondents : Mr. K. Venkatesh ORDER Heard Mr.M.Hariharan, the learned counsel appearing for the petitioner and Mr.K.Venkatesh, the learned Government Advocate for the respondents. 2. The legal issue, which arises for consideration, in these Writ Petitions has been settled by a decision of this Court, in the case of (BSNL Vs. Union of India) reported in (2006) 143 STC 91, which was later considered by the Hon'ble Supreme Court, in the case of (Ide .....

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SCC 1. The Supreme Court has framed the principal question to be decided in those appeals as to the nature of transaction by which mobile phone connections are enjoyed. The question framed was, is it a sale or is it a service or is it both. In paragraphs 86 and 87 of the Judgment the Supreme Court has held thus: - 86. In that case Escotel was admittedly engaged in selling cellular telephone instruments, SIM cards and other accessories and was also paying Central sales tax and sales tax under th .....

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phones. As far as SIM cards were concerned, it was submitted that they had no sale value. A SIM card merely represented a means of the access and identified the subscribers. This was part of the service of a telephone connection. The Court rejected this submission finding that the SIM card was "goods" within the definition of the word in the State Sales Tax Act. 87. It is not possible for this Court to opine finally on the issue. What a SIM card represents is ultimately a question of f .....

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ould be open to the Sales Tax Authorities to levy sales tax thereon. There is insufficient material on the basis of which we can reach a decision. However we emphasise that if the sale of a SIM card is merely incidental to the service being provided and only facilitates the identification of the subscribers, their credit and other details, it would not be assessable to sales tax. In our opinion the High Court ought not to have finally determined the issue. In any event, the High Court erred in i .....

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* * * There might be overlapping; but the overlapping must be in law. The same transaction may involve two or more taxable events in its different aspects. But the fact that there is overlapping does not detract from the distinctiveness of the aspects." 19. There cannot be any dispute to the aforesaid position as the appellant itself subsequently has been paying service tax for the entire collection as processing charges for activating cellular phone and paying the service tax on the activa .....

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