Post-delivery service charges excluded from sale price where pager hardware sale and airtime obligations were separate.
Airtime charges and license fees collected under a contract for activated pagers were held not to form part of the sale price under section 2(29) of the Bombay Sales Tax Act, 1959. The pager hardware was sold as a separate transaction, while the additional charges related to post-sale activation and use of the paging service. Because nothing was done to the goods at or before delivery in respect of those charges, and the contract treated hardware and service obligations separately, the service component could not be merged into the taxable sale price. Taxable turnover was therefore confined to the hardware component.
Issues: Whether airtime charges and license fees collected under the contract for sale of activated pagers form part of the sale price within the meaning of section 2(29) of the Bombay Sales Tax Act, 1959.
Analysis: The definition of sale price covers the amount payable as consideration for the sale of goods and includes only sums charged for something done by the dealer in respect of the goods at or before delivery. The pager hardware was sold as a separate transaction, while airtime charges and license fees related to the post-sale activation and use of the paging service. Nothing was done to the pager unit at or before delivery in respect of those charges. The agreement and order form also reflected separate obligations for sale of the hardware and provision of service. The distinction between goods and service was material, and the service component could not be merged into the price of the pager.
Conclusion: Airtime charges and license fees do not form part of the sale price of the pager units, and the reference was answered in favour of the assessee.
Final Conclusion: The taxable turnover is confined to the hardware component, and the service-related charges are excluded from the sale price.
Ratio Decidendi: Amounts collected for post-delivery services that are not charged for anything done in respect of the goods at or before delivery do not form part of the sale price.
TaxTMI 
AI Drafter ✕
TaxTMI 
