Thiruvananathapuram: Hinting at a secret deal between the government and cell phone companies, the Commercial Sales Tax Department’s move to slap a higher 14.5 percent VAT on mobile batteries and mobile chargers, based on a Supreme Court verdict last year, has been put on hold. CST sources say the government is ready with an ordinance to retain the VAT of both mobile batteries and chargers at the lower 5 percent.
Cell phone companies like Nokia, LG and Micromax were selling these two items at a lower rate of VAT for the last ten years, ever since VAT came into force. Now, with the Supreme Court ruling that a charger was a mere accessory of a cell phone and therefore should be taxed higher, the State CST Department had even sent notices to cell phone companies operating in the state to compensate for the short levy. It is estimated that a popular brand sells on an average 8 lakh cell phones yearly.
It was in a petition filed by the tax department of Punjab against Nokia that the Supreme Court ruled in November 2014 that a mobile charger has to be treated separately from a cell phone for the purposes of collecting tax. It held that the battery charger cannot be considered a composite part of the cell phone but is an independent product which can be sold separately.
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