TMI Blog2017 (10) TMI 88X X X X Extracts X X X X X X X X Extracts X X X X ..... cannot be said that by downloading e-recharge through internet, e-recharge is brought into limits of a Municipal Corporation. Hence, LBT cannot be recovered on e-recharge. Now, coming back to SIM cards and recharge coupons/cards, as held earlier, the same will be covered by the definition of goods under subsection 25 of section 2 of the said Act. Charging section for LBT under the said Act is section 152P. LBT is leviable on the entry of goods into the limits of city for consumption, use or sale. Hence, the first respondent was well within its powers to levy LBT on SIM cards and recharge voucher in physical form. Hence, the petition must succeed in part and we pass the following order: (I) We hold that e-recharge is not covered by the Item No.133 of the Government Notification dated 28th March 2013 and that in any event, LBT cannot be levied on e-recharge; (II) We reject the contention of the petitioner that the LBT is not payable on the SIM cards and recharge vouchers/coupons brought into the limits of the first respondent-Municipal Corporation; - Writ Petition No. 2532 of 2013 - - - Dated:- 26-9-2017 - A. S. Oka And Smt. Vibha Kankanwadi, JJ. Mr. Surel S. Sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the petitioner provides either prepaid or post paid services. In case of prepaid services, the prepaid subscriber can renew the services through the recharge coupon/card or e-recharge. 4 By incorporating clause (aaa) in Sub-Section 2 of Section 127 of the said Act by the Bombay Provincial Municipal Corporation and Bombay Village Panchayat Amendment Act,2009, a provision was made for levy of LBT in lieu of cess or octroi. The State Government by a notification dated 25th March 2010 notified the Bombay Provincial Municipal Corporations (Local Body Tax) Rules, 2010 (for short LBT Rules ). The LBT Rules provide a mechanism for levy and collection of LBT and rates of LBT. In exercise of the power under clause (aaa) of SubSection 2 of Section 127 of the said Act, the State Government directed various Municipal Corporations in the State including the first Respondent Corporation to levy LBT on the entry of the goods into the limits of the city for consumption, use or sale in lieu of octroi or cess with effect from 1st April 2010. On 18th February 2011, another notification was issued by the State Government in exercise of the powers under section 99B read with section 152B and 152C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ependently of a cell phone. He invited our attention to the decision of the Apex Court in the case of Idea Mobile Communication Limited Vs. Commissioner of Central Excise, Cochin (2011) 12 SCC 608. He submitted that the petitioner is registered and assessed for service tax and has been paying service tax. He submitted that the charges paid by the subscribers for procuring SIM cards are general processing charges for activating the cellular phone. He submitted that the cellular telephone service is recognised as a service for the purpose of service tax. He submitted that recharge vouchers are not goods and in fact it is a bill for receiving the telecommunication services of the petitioner. He submitted that by no stretch of imagination, e-recharge which is an electronic download can be included in the goods on which LBT could be levied. The learned counsel for the first respondent invited our attention to the definition of LBT under clause 31A of Section 2 of the said Act. Inviting our attention to clause (aaa) of SubSection 2 of Section 127 of the said Act, he submitted that once the goods are brought into limits of a city for consumption, use or sale, LBT is payable thereon. He su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or Vehicles Act,1958.] (3) The municipal taxes shall be assessed and levied in accordance with the provisions of this Act and the rules. (4) Nothing in this section shall authorise the imposition of any tax which the [State] Legislature has no power to impose in the [State] under the [Constitution]. (emphasis added) 11 Section 152P of the said Act confers a power on the Municipal Corporation of levying LBT. Section 152P reads thus: 152P Levy of Local Body Tax 152P. Subject to the provisions of this Chapter and the rules, the Corporation, to which the provisions of clause (aaa) of subsection (2) of section 127 apply, may, for the purposes of this Act, levy and collect Local Body Tax on the entry of goods specified by the State Government by notification in the Official Gazette, into the limits of the City, for consumption, use or sale therein, at the rates specified in such notification. (emphasis added) 12 Section 149 of the said Act confers rule making power for incorporating the procedure to be followed for levy of taxes such as LBT. 13 Thus, a Municipal Corporation under the said Act is empowered to levy LBT on the entry of goods into th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... x may be intangible or incorporeal need not detain us. In Associated Cement Companies Ltd. v. Commr. of Customs the value of drawings was added to their cost since they contained and formed part of the technical knowhow which was part of a technical collaboration between the importer of the drawings and their exporter. It was recognised that knowledge in the abstract may not (sic) come within the definition of goods in Section 2 (22) of the Customs Act. 56 This view was adopted in Tata Consultancy Services V. State of A.P. for the purpose of levy of sales tax on computer software. It was held : (SCC p.342, para 81) A `goods' may be a tangible property or an intangible one. It would become goods provided it has the attributes thereof having regard to (a) its utility; (b) capable of being bought and sold: and(c)capable of being transmitted, transferred, delivered, stored and possessed. If a software whether customised or noncustomised satisfies these attributes, the same would be goods. 57 This in our opinion, is the correct approach to the question as to what are goods for the purpose of sales tax. We respectfully adopt the same. (emphasis added) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... service under section 65 (105) (zzzx) of the Finance Act,1994 which provides for levy of service tax on communication service. Another issue before the Apex Court was whether the sale of SIM cards is taxable as sale of goods under the Sales Tax Act. In paragraph 11, Apex Court considered the nature of the SIM cards. Paragraph 11 reads thus: 11 A SIM card or Subscriber Identity Module is a portable memory chip used in cellular telephones. It is a tiny encoded circuit board which is fitted into the cell phones at the time of signing on as a subscriber. The SIM card holds the details of the subscriber, security data and memory to store personal numbers and it stores information which helps the network service provider to recognise the caller. (emphasis added) 19 The SIM cards are normally made of plastic or paper. The SIM cards are capable of being bought and sold. The SIM cards have utility value. The SIM cards are capable of being transferred, stored and possessed. The concept of Sales Tax and LBT are not the same. LBT can be levied on the goods brought within the limits of a Municipal Corporation even if the same are not sold, but the same are brought either for c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cannot be subject to levy of LBT. E-recharge is capable of being used. But it cannot be said that by downloading e-recharge through internet, e-recharge is brought into limits of a Municipal Corporation. Hence, LBT cannot be recovered on e-recharge. 22 Now, coming back to SIM cards and recharge coupons/cards, as held earlier, the same will be covered by the definition of goods under subsection 25 of section 2 of the said Act. Charging section for LBT under the said Act is section 152P. LBT is leviable on the entry of goods into the limits of city for consumption, use or sale. Hence, the first respondent was well within its powers to levy LBT on SIM cards and recharge voucher in physical form. 23 Hence, the petition must succeed in part and we pass the following order: (I) We hold that e-recharge is not covered by the Item No.133 of the Government Notification dated 28th March 2013 and that in any event, LBT cannot be levied on e-recharge; (II) We reject the contention of the petitioner that the LBT is not payable on the SIM cards and recharge vouchers/coupons brought into the limits of the first respondentMunicipal Corporation; (III) Writ petition to the above extent ..... 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