No move to levy separate tax on mobile chargers: High Court

Bengaluru: The Karnataka High Court has ruled that chargers cannot be taxed separately from mobile phone sets.

A division bench comprising Justice PS Dinesh Kumar and Justice TG Sivashankar Gowda held that a mobile charger can be classified as a ‘mobile phone’ as per the notification issued under the Karnataka Value Added Tax (KVAT) Act. The order passed while dismissing the revision petition filed by the Karnataka Commercial Tax Department against the order of the Karnataka Appellate Tribunal.

This will be a big relief for the customers and telecom equipment companies like Airtel, Samsung, Sony and many others. On March 10, 2021, the Commercial Tax Department approached the High Court challenging the earlier order passed by the tribunal in their favour.

On September 6, 2008, the Commissioner of Commercial Taxes issued a clarification that under Section 59(4) of the Act, mobile charges attract a tax of 12.5 per cent. The telecom companies challenged this before the tribunal.

‘Mobile phone chargers’ sold along with phones in packs attract tax at the same rate applicable to ‘mobile phones’ alone. The Tribunal held that goods specified under Section 4(1) cannot be taxed at a higher rate.

Upholding the jurisdictional stand, the High Court held that there was no doubt that the main purpose of the buyer/seller while buying or selling a ‘mobile set’ is to buy/sell a mobile phone and not just a charger. Charger, headset and ejection pin supplied incidental to sale. Therefore, the dominant motive test is applicable to the present case. Therefore, the court added that the charger cannot be taxed differently.



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