The Indian Supreme Court has ruled that sales tax cannot be levied on SIM cards, recharge coupon vouchers, and value-added services such as ringtones, wallpapers, and music downloads, as they do not qualify as goods. Upholding a 2011 ruling by the Andhra Pradesh High Court, the bench led by Justice Ravindra Bhatt stated that sales tax cannot be imposed on sharing of infrastructure since it does not come under the category of goods, a stance taken by the High Court.
Read More - 5G Cell on Wheels: Understanding Important Things About it
According to an ET report, in disposing of a batch of over 50 cases involving various telecom companies, including Airtel, Tata, Idea, BSNL, and Vodafone, the Supreme Court rejected the Andhra Pradesh tax department's argument that any intellectual property placed in any media would be classified only as 'goods' and never as services. The department contended that SIM cards can store data of phone calls, contact numbers, games, music, etc., and are capable of being bought and sold. Therefore, they have all the attributes of "goods" and can be subjected to sales tax.
Read More - Britain Aims for Widespread 5G Plus Coverage by 2030
However, the Supreme Court rejected the department's arguments, stating that the nature of the services provided is not based on the form of media through which they are delivered. The court's ruling is expected to have significant implications for the telecom sector.
This ruling will provide relief to the telecom companies involved in the dispute, which have argued that SIM cards and value-added services do not qualify as goods and, therefore, cannot be subjected to sales tax. The decision by the Supreme Court is a positive step towards resolving the issue and providing clarity to the industry. It is also expected to have a significant impact on the taxation of various other services in the future.
