The disputes over the chargeability of Service Tax or Vat on the sale of SIM Cards have come to an end by virtue of the judgment by “Honor...
The disputes over the chargeability of Service Tax or Vat on the sale of SIM Cards have come to an end by virtue of the judgment by “Honorable Supreme court in case of Idea Mobile Communication Ltd. versus C.C.E & C., Cochin”.
Earlier, the Department of Sales Tax, State of Kerala, claims the activation charges as part of the sale consideration of SIM cards on the grounds that activation is nothing but a value addition to the goods and thus levied sales tax on activation charges. However, the Department of Central Excise, Ernakulum observed that a mere SIM Card without the activation is of no use and held that the appellant is liable to pay service tax on the value of SIM cards also.
Later on, the Honorable Kerala High Court in its judgment concluded that, Service Tax shall be payable on the value of SIM Cards in as much SIM cards has no intrinsic sale value and it is supplied to the customer for providing mobile services. Further, on remanding back the matter by the Honorable Supreme Court, the Assessing Authorities under the Kerala General Sales Tax also dropped the proceeding after conceding the position that SIM cards has no intrinsic sale value an it is supplied to the customer for providing the telephone services which finally & practically put an end to the matter and signifies the conclusion of the matter under dispute.
The position in law is therefore clear that the amount received by the Cellular Telephone Company from its subscriber towards SIM Cards will form part of the Taxable Value for the levy of Service Tax in as much SIM Cards are never sold as goods independent from service provided and considered as part & parcel of the services provided and dominant position is not to sell the material.
Finally, the “Honorable Supreme Court” affirmed the finding and reasoning in the judgment and order passed by the “Honorable Kerala High Court regarding the leviability of service tax on the value of SIM Cards sold by the Service provider”.
Further, it is also established that payment of Sales Tax whether wrongly or in order would not absolve assessee from the responsibility of the payment of Service Tax.
Hence, Service Tax shall be levied on the value of SIM cards.