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of <h1>SIM Cards and Lease Line Charges Exempt from Entry Tax and VAT</h1> <h3>Reliance Telecom Ltd. Versus Commercial Tax Department</h3> Reliance Telecom Ltd. Versus Commercial Tax Department - TMI Issues Involved:1. Whether the applicant is a dealer in regard to SIM Cards under Sec. 3(1) of the Entry Tax Act, 1976.2. Whether the SIM Cards entered by the applicant in the local areas are goods eligible for entry tax under Sec. 3(1) of the Entry Tax Act.3. Whether the plant and machinery entered by the applicant in the local areas are for consumption, use, or sale in the course of business.Issue-wise Detailed Analysis:1. Dealer Status of the Applicant Regarding SIM Cards:The court examined whether the applicant qualifies as a dealer under Sec. 3(1) of the Entry Tax Act, 1976. The court referred to the Division Bench judgment in M/s. Idea Cellular Ltd. v. The Asstt. Commissioner of Commercial Tax, where it was held that SIM Cards are part of the services rendered by the service provider and not sold separately. The Supreme Court in Bharat Sanchar Nigam Ltd. v. Union of India emphasized that if SIM Cards are incidental to services and not intended as separate objects of sale, they are not subject to sales tax. The court concluded that the applicant is not a dealer for SIM Cards as they are part of the telecommunication services and not sold independently.2. SIM Cards as Goods Eligible for Entry Tax:The court addressed whether SIM Cards are considered goods under Sec. 3(1) of the Entry Tax Act. Referring to the Supreme Court's decision in Idea Mobile Communication Ltd. v. Commissioner of Central Excise & Customs, the court noted that SIM Cards are integral to the service provided and lack intrinsic value as standalone goods. The court reiterated that SIM Cards are part of the service and their value is included in the service charges, thus not qualifying as goods for entry tax purposes.3. Plant and Machinery Entered by the Applicant:The court considered whether the plant and machinery entered by the applicant in local areas are for consumption, use, or sale in the course of business. The court referred to the judgment in Bharti Infratel Ltd. v. State of Madhya Pradesh, which held that infrastructure charges for mobile towers are service charges and not subject to VAT as there is no transfer of possession or control. Applying the same principle, the court concluded that lease line charges are also service charges with no element of sale, thus not liable for VAT.Conclusion:The court concluded that SIM Cards are not goods under the Entry Tax Act and the applicant is not a dealer for SIM Cards. The impugned orders imposing VAT on SIM Cards and lease line charges were quashed. The court held that SIM Cards and lease line charges are part of telecommunication services and not subject to entry tax or VAT. The reference was answered in favor of the assessee, affirming that the imposition of entry tax on SIM Cards does not arise.
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