Mobile Charger is an accessory to Mobile Phone thus liable to general/Higher rate of VAT: SC

Supreme Court has deliv­ered a land­mark ver­dict in the mat­ter of STATE OF PUNJAB & ORS. v. NOKIA INDIA PVT. LTD. (CIVIL APPEAL NOS. 11486–11487 OF 2014) & pro­nounced that the mobile/cell phone charg­er is an acces­so­ry to cell phone and is not a part of the cell phone thus, liable to VAT at gen­er­al rate of 12.5 %.

Facts of the case: The mat­ter per­tains to the Pun­jab VAT Act, 2005 where­in the assesse is a reg­is­tered deal­er under the Pun­jab VAT Act. It had sold mobile phones along­with bat­tery charg­ers. cel­lu­lar phones are taxed at a con­ces­sion­al rate of 4%. M/s Nokia India Pvt. Ltd. deals in sell­ing of mobile phones and mobile charg­ers in the same pack­age & It paid con­ces­sion­al tax on charg­ers as well.

The Assess­ing Author­i­ty held that the mobile charg­ers are the acces­sories, hence full rate of tax was sup­posed to be levied there­upon. The mat­ter went to appeal. The Deputy Commissioner(Appeals) as well as Tri­bunal upheld the stand tak­en by the assess­ing author­i­ty. How­ev­er, the P&H High Court took the con­tra­dic­to­ry view stat­ing that bat­tery charg­er is a part of the com­pos­ite pack­age of cell phone.

The Supreme Court held that: Bat­tery charg­er was not a part of the mobile phone. If the charg­er was a part of mobile phone, then it could not have been oper­at­ed with­out using the bat­tery charg­er. But it was not required at the time of operation.

The bat­tery in the mobile phone could be charged direct­ly from the oth­er means also like lap­top with­out employ­ing the bat­tery charg­er, imply­ing there­by, that it was noth­ing but an acces­so­ry to the mobile phone.

The Tri­bunal noticed that as per the infor­ma­tion avail­able on the web­site of the assessee, it had invari­ably put the mobile bat­tery charg­er in the cat­e­go­ry of an acces­so­ry, which meant that in the com­mon par­lance also the mobile bat­tery charg­er would have to be under­stood as an accessory.

It has also been noticed by the Tri­bunal that a Nokia make bat­tery charg­er is com­pat­i­ble to many mod­els of Nokia mobile phones and also many mod­els of Nokia make bat­tery charg­ers which are com­pat­i­ble to a par­tic­u­lar mod­el of Nokia mobile phone, impart­ing var­i­ous lev­els of effec­tive­ness and con­ve­nience to the users.

Thus, the author­i­ties had right­ly held that the mobile phone charg­er was an acces­so­ry to mobile phone and was not a part of mobile phone. Bat­tery charg­er can­not be held to be a com­pos­ite part of the cell phone but is an inde­pen­dent prod­uct which can be sold sep­a­rate­ly, with­out sell­ing the cell phone. Thus, bat­tery charg­er was liable to be taxed at gen­er­al rate, i.e., at 12.5% and not at con­ces­sion­al rate applic­a­ble to the mobile phones (i.e., at 4%).

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