SIM cards and recharge vouchers linked to telecom services were not separate sales, defeating sales tax and re-sale tax demands.

SIM cards and recharge vouchers supplied by cellular service providers were treated as integral to telecom services, not as independent goods liable to sales tax. Applying the real character of the transaction, the Court noted that when such items are merely incidental to the service and not separately sold, their value forms part of the taxable service. The aspects doctrine could not be used to recast a service transaction as a sale. On that basis, the demand for sales tax and re-sale tax on SIM cards and recharge vouchers was unsustainable.

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Issues: Whether sales tax and re-sale tax could be levied on SIM cards and recharge vouchers supplied by cellular mobile telephone service providers, or whether the transaction was only a service transaction outside the scope of sales tax.

Analysis: The legal position had already been settled by the Supreme Court that the nature of the transaction in mobile telephone connections must be determined by its real character. Where SIM cards are not sold as independent goods but are merely incidental to and integrally connected with the provision of telecom services, they do not acquire a separate sales character. The value received forms part of the taxable service, and the aspects doctrine cannot be used to convert a service transaction into a taxable sale. On the facts, the Court found that there was no element of sale involved in SIM cards or recharge vouchers.

Conclusion: The demand of sales tax and re-sale tax on SIM cards and recharge vouchers was held unsustainable, and the writ petition succeeded.

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