No tax sop for cell phone battery charger: SC

New Delhi, December 18

The Supreme Court today ruled that cell phone battery charger is an accessory and not part of the handset and as such manufacturers in Punjab and other states would have to pay a higher tax.

Punjab had come to the SC challenging the Punjab and Haryana High Court verdict holding that the charger was part of the handset. The HC had delivered the verdict in November 2010 on an appeal filed by Nokia India Pvt Ltd registered in Mohali under the Punjab Value Added Tax Act 2005.

In 2005-06, the company had paid 4 per cent tax on 1.02 million chargers sold along with the handsets, claiming tax sops applicable to the handsets. But the tax authorities claimed tax at 12.5 per cent along with interest and penalty totalling to Rs 2.15 crore.

In the appeal filed through standing counsel JS Chhabra, the state contended that the company had paid 12.5% tax on the battery chargers sold separately. Further, it was argued that chargers were not covered under Entry 60(6)(g) in Schedule B of the 2005 Act meant for concessional tax.

A Bench comprising Justices SJ Mukhopadhaya and MB Lokur ruled that the assessing and appellate authorities and the tribunal had rightly held that the charger was an accessory to the handset.

“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 HC failed to appreciate the aforesaid fact and wrongly held that the battery charger is part of the cell phone,” the SC said. — TNS