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sim card

Kapil (CA Practice) (120 Points)

26 March 2010

On Sim cards, wether vat should b levied or service tax? As per supreme court judgement in BSNL case, Service tax should be levied. But other companies are applying both.

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CA Priya (CS Final) (1049 Points)
Replied 27 March 2010

BSNL case (2006) 145 STC 91 Bharat Sanchar Nigam Ltd. and another Vs. Union of India and others (SC)

Goods do not include electromagnetic waves or radio frequencies. The goods in telecommunication are limited to the handsets supplied by the service provider. It may be that the actual delivery of the goods is not necessary for effecting the transfer of the right to use the goods but the goods must be available at the time of transfer, must be deliverable and delivered at some stage. If the goods or what are claimed to be goods are not deliverable at all by the service providers to the subscribers, the question of the right to use those goods would not arise.

If the SIM card is not sold to the subscribers but is merely part of the services rendered by the service providers, the SIM card cannot be charged separately to sales tax. If the parties intended that the SIM card would be a separate object of sale, it would be open to the sales tax authorities to levy sales tax thereon. If the sale of the SIM card is merely incidental to the service being provided and facilitates the identification of the subscribers, their credit and other details, it would not be assessable to sales tax.

Principles applied – Both the taxes cannot be levied on single transaction.

Hope this is the case u r referring to...........

If u notice it closely the judgment itself is not conclusive.......... Only the principle applied is interpretable.......... As u said the companies continue to charge both to be on safe side............