The intention of the parties and the nature of the transaction determine whether a SIM card can be charged separately to sales tax, and the principles of levying service tax and octroi are distinct.

RAVINDRA V. GHUGE, J.

1. Learned Advocates for the litigating sides submit that, they have no objection if this Court hears this petition.

2. By this petition, the petitioner has put forth its prayers in para No.28(B) and (C) as under :--

(B) The respondent Nos.2 and 3 may kindly be directed to release 5000 SIM Cards by charging levy @ Rs.4% on the Invoice value i.e. on 0.76 ps.

(C) The respondent No.2 may kindly be directed that, the Octroi on all future imports of SIM/ ITC Cards. Rechearge Coupons should be levied @ Rs.4% on the Invoice value of the same i.e. only on 0.76 Paise/ Card.

3. We have considered the submissions of Shri Alok Sharma, learned Advocate for the petitioner, learned A.G.P., on behalf of the State and Shri Narwadkar, learned counsel on behalf of the respondent No.2 Municipal Corporation.

4. The grievance of the petitioner is that, the 5000 SIM cards along with some Recharge coupons that were imported, were actually purchased by the petitioner at the rate of Rs.0=76 ps. per card. The purchase price that the petitioner was required to pay was at the rate of Rs.0=76 ps. per Card/ Recharge voucher. The invoice indicated the number of the cards imported, its purchase price and the total amount which the petitioner had paid as the purchase cost of the said consignment.

5. It is further canvassed that, these SIM Cards are not sold as an item, per se, but are handed over to a service subscriber (customer) as a part of the subscription package while granting him the connection of a cellular phone. The talk time and the package is a matter of policy decision which is taken by the competent authority. Such pricing of the package would vary from State to State and would also be subject to change considering the limits of the area in which they are utilised, keeping in view the taxes levied on the same.

6. It is then submitted that, the SIM card would be the same as may be handed over to the subscriber, who opts for a cellphone connection for monthly charges. With the option of prepaid/ postpaid, the said charges would depend upon the talk time plan which is selected by the consumer. The SIM card would be the same, but the talk time plan and the charges thereof would vary from person to person as per his choice. The grievance, therefore, is that, the octroi which can be levied by the competent authority and admittedly @ 4% on the commodity, would be based on the price at which the commodity has been purchased by the petitioner keeping in view that each SIM card would be subject matter of a varying talk time plan that a consumer may opt for.

7. Learned counsel for the Corporation has submitted that, normally octroi is levied on the receipt of payment indicating the price that is paid by the person who is receiving the consignment on its purchase. However, the Corporation has considered the talk time as one of the components, on the basis of which the octroi has been levied.

8. We find that, a similar issue was subject matter of adjudication at the hands of the Hon'ble Supreme Court (3 Judges Bench) in the matter of Bharat Sanchar Nigam Limited & anr. Vs. Union of India & ors. reported in 2006 AIR SCW 1266. In para No.87 of the judgment, concerning the SIM card, the Hon'ble Apex Court has concluded as under :

“87. It is not possible for this Court to opine finally on the issue. What a SIM card represents is ultimately a question of fact as has been correctly submitted by the States. In determining the issue, however, the Assessing Authorities will have to keep in mind the following principles : If the SIM card is not sold by the assessee to the subscribers but is merely part of the services rendered by the service providers, then a SIM card cannot be charged separately to sales tax. It would depend ultimately upon the intention of the parties. If the parties intended that the SIM card would be a separate object of sale, it would be open to the Sales Tax Authorities to levy sales tax thereon. There is insufficient materia