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JUDGMENT

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REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NOS. 11486-11487 OF 2014

(Arising out of SLP (C) Nos.30398-30399 of 2011)

STATE OF PUNJAB & ORS.

... APPELLANTS

VERSUS

NOKIA INDIA PVT. LTD.

... RESPONDENT

J U D G M E N T

Sudhansu Jyoti Mukhopadhaya, J.

Leave granted.

2.

These appeals have been preferred by the appellants-

State of Punjab and others against the impugned orders dated 17^th

November, 2010 passed by the High Court of Punjab and Haryana at

Chandigarh. By the impugned orders the Division Bench of the

High court allowed the appeals preferred by the respondent-

assessee, and held that cell phone battery charger is sold as

composite package along with cell phone, and hence said charger

cannot be excluded from the Entry for concessional rate of tax

which applies to cell phones and parts thereof.

3.

The factual matrix of the case is as follows:

The respondent-M/s. Nokia India Pvt. Ltd. (hereinafter

referred to as the “Company”) is a dealer registered under the

Punjab Value Added Tax Act, 2005 (hereinafter referred to as the

“Act”) in the District Mohali and is doing business of sale of

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cell phones and their accessories. During the year 2005-06, the

Company had made sales of 1,07,2679 pieces of cell phones with

battery chargers and had paid tax at the rate of 4% on the sale

value of battery chargers, the rate at which the tax on the sale

of cell phone was paid. The value of the each of the battery

charger if separately taken was to be Rs.120/- per piece as

quoted by the respondent-Company itself. It comes to

Rs.12,87,21,480/-. The scrutiny proceedings were initiated under

Section 26 of the Act, 2005 read with Rules 36 and 43 of the

Punjab Value Added Tax Rules, 2005 by issuing notice to the

respondent separately for the Assessment Years 2005-06 and 2006-

07. The Assessing Authority had held that the battery charger

was an accessory chargeable to tax at the rate of 12.5%. The

difference of 8.5% was calculated and it came to

Rs.1,09,41,325/-. Interest under Section 32(1) was charged on

the said amount amounting to Rs.21,25,491/-. Further penalty

under Section 53 of the Act at the rate of 2% per month was

imposed amounting to Rs.85,01,964/- The total demand for the

assessment year 2005-06 was raised to Rs.2,15,68,780/-.

4.

For the year 2006-07, the number of battery chargers sold

were taken to be 1807725 pieces, the value at the rate of

Rs.120/- per piece came to Rs.21,69,27,000/-. Differential

amount of tax at the rate of Rs.8.5% was calculated to be

Rs.1,84,38,795/-. Interest as per Section 32(1) of the Act was

charged which came to Rs.25,24,175/-. Further, penalty under

Section 53 of the Act at the rate of 2% per month was calculated

which came to Rs.1,00,96,750/- and total demand raised vide

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order of Assessing Authority for that year had been

Rs.3,10,59,720/-.

5.

Respondent-Company filed reply on 26^th November, 2008, 24^th

December, 2008 and 9^th January, 2009, inter alia, stating that

the product was being sold as mobile/cellular phone under a

single solo pack unit and was covered under Entry No.60 of

Schedule ‘B’ of the Act and that no separate amount for battery

charger was being claimed from the customers, and that only

amount charged was for handsets. It was also stated by the

respondent that for subsequent sale of the battery charger and

the battery in the State of Punjab, Tax/VAT at the rate of 12.5%

was being deposited. The respondent stated that the battery

charger is an accessory to the main product that is mobile

phone.

6.

The Assessing Authority vide detailed common order dated

2^nd March 2009 held that the battery charger being a separate

item was liable to be