Indian Supreme Court says telecom services no taxable

The Supreme Court of India has ruled in a statement that States could not levy sales tax on telecom services. The judgment was given by a bench of judges comprising Justice Ruma Pal, Justice A. R. Lakshmanan, and Justice Dalveer Bhandari.

They held that the sales tax on any facility provided by telecom service operators was legally untenable. They further added that electromagnetic waves and radio frequencies could not be termed as goods. This makes them non-taxable in a way other goods are taxed.

The bench said: “It is clear; electromagnetic waves are neither abstracted nor consumed in the sense that they are not extinguished by the user. They are not delivered, stored, or possessed. Nor are they marketable…No part of the telegraph itself is transferable or deliverable to the subscribers.”

The ruling also said that the state governments could tax the handset, the only sale element. Whether to tax the sale of the sim card is left to the governments. This ruling was done on a petition filed by the Bharat Sanchar Nigam Ltd, a state owned telecom company operating around the country providing mobile services.