Holding that the Subscriber Identity Module (SIM) card has no intrinsic sale value, the Supreme Court has ruled that it does not attract a sales tax.
A division bench of justice Mukundakam Sharma and justice Anil R Dave said: “SIM cards, without the service would have hardly any value at all,” while hearing an appeal filed by the service provider IDEA Mobile Communications Ltd this year, against an order passed by the Kerala high court.
The appeal raised the issue of whether the value of the SIM card sold by the telecom company to a mobile subscriber should be charged as service tax, levied on the telecommunication service provided, or whether it is taxable as the sale of a good, under the Sales Tax Act.
The grievance raised by the company was that they had paid both sales as well as service tax during the assessment years 1997-98. They further said that at a later date, the sales tax authorities conceded that the card does not attract sales tax and hence, the company should be absolved from paying service tax, to make up for the wrongfully paid sales tax.
The apex court observed that at the time when the case was remanded to them, in 2009, the sales tax authorities had dropped the proceedings against the company, after conceding that the SIM cards have no sale value.
However, dismissing the appeal, the Supreme Court held that the even though the sales tax was wrongly paid, the company would not be absolved from the responsibility of paying service tax.