Allahabad High Court distinguishes Nokia Judgement and says, ‘Charger’ in singular retail ‘mobile’ package not taxable separately

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Allahabad HC quashes levy of VAT on mobile phone chargers sold in composite retail package along with such mobile phones, under U.P. VAT Act; Holds that SC judgment in Nokia India Pvt. Ltd. is not a precedent on the question of composite contract being subjected to tax, inasmuch as Apex Court did not record any finding nor did it declare the law to be that sale of mobile phone and charger in single retail package does not constitute composite contract;

Taking note of assessee’s plea to apply dominant intention test, HC peruses the legislative background of
amendments to Constitution and observes that Article 366(29A) is not a general essay or provision which empowers authorities to tax all kinds of composite contracts; States that in present case, the primary intent of contract appears to be sale of mobile phone and supply of charger is at best, collateral and connected thereto, since the composite package bears single MRP and charger is not invoiced separately;

Observes that U.P. VAT Act does not put in place or engraft any provision which may empower the Assessing Authority to severe or bifurcate assessable value of articles comprised in composite package bearing a singular MRP and “Such an exercise, if undertaken, would also fall foul of the principles enunciated by the Supreme Court in Commissioner of Commercial Tax vs. Larsen & Toubro and CIT vs. BC Srinivasa Shetty”,while rejecting disjunctive reading of Entry 28 by Revenue.

Citation: [TS-12-HC-2018(ALL)-VAT]