Battery charger cannot be held to be a composite part of the cell phone for levying tax but is an independent product which can be sold separately, the Supreme Court has ruled.
The apex court disagreed with the findings of Punjab and Haryana High Court that accepted the contention of Nokia India Pvt Ltd that cell phone battery charger is sold as composite package along with cell phone and charger cannot be excluded from the entry for concessional rate of tax which applies to cell phones and parts thereof.
While setting aside the order of the High Court, a bench, comprising Justices S J Mukhopadhaya and M B Lokur, held as correct the outcome of the verdict of Value Added Tax Tribunal which concurred with the decision of tax authority to deal the two components—handset and charger—as separate entity for levying tax.
“We find that the Assessing Authority, Appellate Authority and the Tribunal rightly held that the mobile/cell phone charger is an accessory to cell phone and is not a part of the cell phone.
“We further hold that the battery charger cannot be held to be a composite part of the cell phone but is an independent product which can be sold separately, without selling the cell phone. The High Court failed to appreciate the aforesaid fact and wrongly held that the battery charger is a part of the cell phone,” the apex court bench said in the tax related matter for assessment years 2005 to 2006 and 2006 to 2007.
The bench, in its judgment, noted the findings of the Tribunal that the battery charger is not a part of the mobile/ cell phone and if the charger was a part of cell phone, then cell phone could not have been operated without using the battery charger.
“But in reality, it is not required at the time of operation. Further, the battery in the cell phone can be charged directly from the other means also like laptop without employing the battery charger, implying thereby, that it is nothing but an accessory to the mobile phone,” it quoted the observation of the Tribunal.
The bench said the Tribunal noticed that as per the information available on the website of Nokia, the company has invariably put the mobile battery charger in the category of an accessory, which means that in the common parlance also, the mobile battery charger is understood as an accessory.