SIM cards supplied with telecom services are not taxable goods under VAT law; they are part of the service.

SIM cards supplied in the course of mobile telecommunication services do not have an independent sale character and are integrally connected with the service rendered. Earlier binding authorities treating SIM cards, activation charges and allied receipts as part of telecommunication services, rather than a taxable sale of goods under sales tax or VAT law, govern the issue. On that basis, VAT cannot be levied on SIM cards allotted to subscribers, and the assessment order was set aside.

---

---

Issues: Whether SIM cards allotted to subscribers are liable to tax under the VAT Act.

Analysis: The controlling principle is that a SIM card supplied in the course of providing mobile telecommunication services does not have an independent sale character and is integrally connected with the service rendered. The earlier binding authorities treating SIM cards, activation charges and allied receipts as part of services, and not as a taxable sale of goods under sales tax/VAT law, govern the issue.

Conclusion: SIM cards are not liable to tax under the VAT Act.

Final Conclusion: The writ petition succeeds and the assessment order is set aside, with no order as to costs.

Ratio Decidendi: Where a SIM card is supplied as an incidental component of telecom service, the transaction is one of service and not a sale of goods, and therefore VAT cannot be levied on it.

---