The Andhra Pradesh High Court has said that VAT cannot be imposed on SIM cards, recharge coupons and other value added services provided by operators, as they do not qualify as products.
A division Bench comprising Justice V.V.S. Rao and Justice Ramesh Ranganathan, clarified, however, that the sale of instruments such as modems and handsets, which do not include service elements, are taxable.
The Bench also said that the messages carried by electro-magnetic waves do not qualify as products. It also rejected the imposition of sales tax on sharing of infrastructure, on grounds that the sharing was incidental and hence, it should not be taxed.
It added that the services offered by them are not in a physical form, before being marketed.
Prior to this, Bharti airtel, Tata Teleservices Limited, Idea Cellular and Bharat Sanchar Nigam Limited had appealed to the High Court, after the state’s Commercial Tax Department issued notices to them seeking tax on the services.
