The Supreme Court has said that since a mobile phone battery charger was not a composite part of the cellphone but an independent product that could be sold separately, it could come under a tax rate different from the cellphone.
The Bench of Justice SJ Mukhopadhaya and Justice Madan B Lokur passed the order on Wednesday on a petition concerning Nokia India Private Limited.
The assessing authority had asked Nokia to pay an additional amount of Rs 2.16 crore for the assessment year 2005-06 and Rs 3.1 crore for the assessment year 2006-07, including interest and penalty, on the grounds that the battery charger was an accessory chargeable to tax at the rate of 12.5 percent.
In India, a concessional rate of tax at 4 percent applies to cellphones and parts. Accessories are considered a separate item liable to be taxed at the general rate of 12.5 percent and not at the concessional rate applicable to the cell phones.
Nokia argued that so long as no separate amount for battery charger was being claimed from the customers when they were being sold with the phone, they should be taxed at 4 percent.
The petitioner claimed that a charger was an integral part of the cellphone since the phone could not operate without the charger and when any person came to buy a cell phone, he automatically took the charger for which no separate money was charged.
While setting aside the penalties,
The Value Added Tax Tribunal at Chandigarh rejected the petition filed by Nokia. The Tribunal, however, set aside the penalties imposed on the mobile giant.
Nokia challenged the judgment before the Punjab and Haryana high Court, which held that the battery charger was a part of the composite package of a cellphone.
The top court of the country set aside the High Court order and upheld the verdict delivered by the tribunal in the matter.
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