The main legal point established is that LBT can be imposed on goods brought into city limits for consumption or use, as defined under the Maharashtra Municipal Corporations Act, 1949.

A.S. Oka, J.

1. The question involved in this writ petition under Article 226 of the Constitution of India is as under:

“Whether Local Body Tax (LBT) under clause (aaa) of Sub-Section (2) of Section 127 of the Maharashtra Municipal Corporations Act, 1949 is recoverable on SIM cards, recharge coupons and e-recharge on its entry into municipal limits of a Municipal Corporation?”

2. With a view to appreciate the submissions made across the bar, a brief reference to few factual aspects of the case will be necessary. The first respondent is a Municipal Corporation constituted under the Maharashtra Municipal Corporations Act, 1949 (for short “the said Act”). The petitioner is engaged in the business of providing telecommunication services including the mobile telephone services.

3. By a License Agreement dated 28th September 2001 entered into between the Hon'ble President of India through the Department of Telecommunications, Ministry of Communication, Government of India on one part and the petitioner company on the other part, a licence was granted to the petitioner under section 4 of the Indian Telegraph Act, 1885 to set up and operate cellular mobile phone services in Mumbai and Maharashtra Telegraph Circle on the terms and conditions set out therein. In accordance with the said agreement, the petitioner is providing telecommunication services including mobile telephony, text messaging, voice messaging, access to internet etc to the members of public in Global System for Mobile communication (GSM) format which involves GSM wireless modem which works with GSM wireless network. The customers of the petitioner avail of the services by using mobile handsets. It is stated that the SIM (Subscriber Identification Module) card is provided by the petitioner which is a plastic/paper card encrypted with the unique number which is known as International Mobile Subscriber Identification (IMSI). It is stated in the petition that the SIM card enables the subscriber access to telecommunication service provided by the petitioner. The contention in the petition is that the SIM card does not have any utility or intrinsic value by itself. It is stated in the petition that the petitioner provides either prepaid or post paid services. In case of prepaid services, the prepaid subscriber can renew the services through the recharge coupon/card or e-recharge.

4. By incorporating clause (aaa) in Sub-Section 2 of Section 127 of the said Act by the Bombay Provincial Municipal Corporation and Bombay Village Panchayat Amendment Act, 2009, a provision was made for levy of LBT in lieu of cess or octroi. The State Government by a notification dated 25th March 2010 notified the Bombay Provincial Municipal Corporations (Local Body Tax) Rules, 2010 (for short “LBT Rules”). The LBT Rules provide a mechanism for levy and collection of LBT and rates of LBT. In exercise of the power under clause (aaa) of Sub-Section 2 of Section 127 of the said Act, the State Government directed various Municipal Corporations in the State including the first Respondent-Corporation to levy LBT on the entry of the goods into the limits of the city for consumption, use or sale in lieu of octroi or cess with effect from 1st April 2010. On 18th February 2011, another notification was issued by the State Government in exercise of the powers under section 99B read with section 152B and 152C of the said Act by which the rates of LBT to be levied by the first Respondent Corporation on entry of various categories of goods into the limits of the city for the financial year 2011 were notified. One of the items included in Schedule A to the said notification is of SIM cards (tariff item No.8542 10 10).

5. The case made out in the petition is that the petitioner and its distributors were compelled to register themselves under the LBT Rules. They registered themselves under protest. It is alleged that neither the petitioner nor its distributors paid any LBT on SIM cards or recharge coupons or e-r