IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE C.N.RAMACHANDRAN NAIR & THE HONOURABLE MR. JUSTICE K.SURENDRA MOHAN FRIDAY, THE 13TH FEBRUARY 2009 / 24TH MAGHA 1930 WP(C).No. 27445 of 2005(P) -------------------------- PETITIONER(S): --------------- TATA TELESERVICES LTD., REGD. OFFICE JEEVAN BHARATI, TOWER 1, 10TH FLOOR, 124, CONNAUGHT CIRCUS, NEW DELHI, REPRESENTED BY ITS ASST.MANAGER (LEGAL) MR.MADHU.T., S.L.PLAZA, PALARIVATTOM, KOCHI-682025. BY ADV. SRI.A.KUMAR RESPONDENT(S): --------------- 1. THE STATE OF KERALA, REPRESENTED BY THE SECRETARY TO MINISTRY OF FINANCE, GOVERNMENT SECRETARIAT, THIRUVANANTHA- PURAM. 2. ASSISTANT COMMISSIONER (AUDIT ASSESS- MENT), KVAT SPECIAL CIRCLE II, ERNAKULAM. 3. ASSISTANT COMMISSIONER (ASSESSMENT), KVAT SPECIAL CIRCLE II, ERNAKULAM. 4. THE DEPUTY COMMISSIONER (AUDIT ASSESS- MENT), KVAT, ERNAKULAM. 5. THE UNION OF INDIA, REPRESENTED BY ITS SECRETARY, MINISTRY OF FINANCE, GOVERNMENT OF INDIA, NEW DELHI. ADDL. RESPONDENT: 6. SUPERINTENDENT OF CENTRAL EXCISE (SERVICE TAX CELL), OFFICE OF THE COMMISSIONER OF CENTRAL EXCISE, MUMBAI-1, NEW CENTRAL EXCISE BUILDING, 115, M.K.ROAD, CHURCH GATE, MUMBAI-20 (SERVICE TAX CELL). (ADDL. RESPONDENT IS IMPLEADED AS PER ORDER DT.27.10.2005 IN I.A. 15549/2005.) ADV. SRI.S.R.AJITH, ADDL.CGSC FOR R5 G.P. SRI.V.K.SHAMSUDEEN FOR R1TOR4 THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 13/02/2009, ALONG WITH WPC NO. 29418 OF 2005 & CONN. CASES, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: APPENDIX (WPC 27445/2005) PETITIONER'S EXHIBITS: P1: TRUE COPY OF ORDER PASSED BY HON'BLE SUPREME COURT IN W.P. NO.183/2003 DT.16.12.2003. P2: .DO. DT.25.9.2003. P3: LICENCE AGREEMENT ISSUED TO 2ND PETITIONER FOR THE KERALA CIRCLE DT.28.9.2001. P4: STARTER KIT TO PRE PAID MOBILE(TRUE PAID). P4A:TERMS & CONDITIONS FOR THE PREPAID MOBILE SERVICE(TRUE PAID). P4B: RECHARGE CARD/VOUCHER FOR THE PREPAID MOBILE SERVICE(TRUE PAID). P5: TERMS & CONDITIONS IN RESPECT OF FWP SERVICE (TRUE PAID). P5A: RECHARGE CARD FOR FWP SERVICE "WALKY" P6: THE RECHARGE CARD FOR PCOS (SMART PCO) P7: CIRCULAR NO.46/9/2002/ST DT.8.8.2002 OF THE MINISTRY OF FINANCE IN RESPECT OF SERVICE TAX. P8: TRUE COPY OF ORDER DT.9.4.2003 IN CMP NO.16457/2003 IN O.P. NO.9457/2003. P9: COPY OF THE REGISTRATION CERTIFICATE DT.1.3.2004 ISSUED BY THE SUPERINTENDENT, CENTRAL EXCISE, (SERVICE TAX CELL), MUMBAI COMMISSIONERATE. P10: TRUE COPY OF LETTER DT.17.3.04 ISSUED BY THE COMMISSIONERATE, CENTRAL EXCISE, (SERVICE TAX CELL) CHURCHGATE, MUMBAI. P11: THE BREAK UP OF SERVICE TAX PAYMENT FOR THE MONTH OF APRIL, 2005. P12: .DO. MAY, 2005. P13: .DO. JUNE, 2005. P14: .DO. JULY, 2005. P15: .DO. AUGUST, 2005. P16: .DO. SEPTEMBER, 2005. P17: TRUE COPY OF NOTICE DT.30.9.2005 ISSUED BY 3RD PROPOSING TO REJECT THE RETURNS FOR THE MONTH APRIL TO JULY. P18: TRUE COPY OF NOTICE REPLY DT.19.10.2005 OF THE PETITIONERS TO R3. P19: TRUE COPY OF INTERIM ORDER DT.26.9.05 IN WP(CIVIL) NO.468/2005 OF THE HON'BLE SUPREME COURT. P20: TRUE COPY OF INTERIM ORDER PASSED BY THE MADRAS HIGH COURT IN W.P. (MISCELLANEOUS) NO.5689 AND 5690 OF 2005 IN W.P.5165 AND 5166 OF 2005 DT.7.2.2005. TRUE COPY PA TO JUDGE C.N.RAMACHANDRAN NAIR & K.SURENDRA MOHAN, JJ. .................................................................... W.P.(C) Nos.27445, 29731, 27379, 29418,27391, 31080, 29760 & 29202 of 2005, 28215, 19624,31811, 27708, 23809 & 14889 of 2007, & 14324 of 2008 .................................................................... Dated this the 13th day of February, 2009. JUDGMENT Ramachandran Nair, J. The question arising in all these connected cases is whether SIM Cards attract sales tax as sale of goods. In BSNL's case the matter went up to Supreme Court and the Supreme Court remanded the matter to the Assessing Officer vide judgment in BSNL & ANOTHER V. UNION OF INDIA & OTHERS (2006) 145 STC 91. Special Government Pleader informed that after remand, the department accepted the contention of BSNL. Divergent positions were taken by different mobile operators in the State. While some companies offered service tax on value of SIM Cards and recharge coupons such as BSNL, BPL Cellular Ltd. and contested sales tax liability, some other companies like ESCOTEL/IDEA paid sales tax and contested service tax liability. The issue came up before the Division Bench of this 2 Court. In fact, while considering the liability for service tax on the value of SIM Card collected by service provider, Division Bench of this court vide judgment in S.T. Rev. No.292/2004 and W.P.(C) No.29642/2004 dated 8.1.2009 held that there is no sale of goods involved and it is part of the taxable service rendered by the service provider. In other words, only Central Government can collect service charges on the taxable service covering the value of SIM Cards, activation charges etc. and no sales tax could be levied. Consequently all the Writ Petitions are allowed directing the Assessing Officer to exclude value of SIM Cards and recharge coupons from taxable turnover. However, we make it clear that sales tax, if any, collected on SIM Cards and recharge coupons should be forfeited under Section 72 of the Kerala Value Added Tax Act and refund, if any, should be considered only strictly in terms of Form 21D, if any, furnished by 3 customers in terms of Rules 55 and 56. However, the officer is free to consider tax liability on sale of other gadjets by mobile telecom operators. C.N.RAMACHANDRAN NAIR Judge K.SURENDRA MOHAN Judge pms The case numbers "S.T. Rev. No.292/2004 and W.P.(C) 29642/2004" occurring in the 3rd and 4th lines of the 2nd page of the common judgment dated 13/02/2009 in WP(C) 29202/2005 and connected cases are substituted as "Central Excise Appeal No.20 of 2006" as per order dated 12/10/2009 in I.A. 9612/2009". Sd/- Registrar(Judicial)