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2017 (10) TMI 88 - HC - Indian LawsLevy of Local Body Tax (LBT) - SIM cards, recharge coupons and e-recharge on its entry into municipal limits of a Municipal Corporation u/s 127(2)(aaa) of the Maharashtra Municipal Corporations Act, 1949 - Held that - SIM cards are normally made of plastic or paper. The SIM cards are capable of being bought and sold. The SIM cards have utility value. The SIM cards are capable of being transferred, stored and possessed. The concept of Sales Tax and LBT are not the same. LBT can be levied on the goods brought within the limits of a Municipal Corporation even if the same are not sold, but the same are brought either for consumption or use. As far as e-recharge is concerned, by no stretch of imagination, it can be said that e-recharge is capable of being brought into limits of a city. In clause 133 quoted above, e-recharge is not specifically included. Assuming that it is included, it is nothing but an electronic download by use of internet. Hence, e-recharge cannot be subject to levy of LBT. E-recharge is capable of being used. But it cannot be said that by downloading e-recharge through internet, e-recharge is brought into limits of a Municipal Corporation. Hence, LBT cannot be recovered on e-recharge. Now, coming back to SIM cards and recharge coupons/cards, as held earlier, the same will be covered by the definition of goods under subsection 25 of section 2 of the said Act. Charging section for LBT under the said Act is section 152P. LBT is leviable on the entry of goods into the limits of city for consumption, use or sale. Hence, the first respondent was well within its powers to levy LBT on SIM cards and recharge voucher in physical form. Hence, the petition must succeed in part and we pass the following order (I) We hold that e-recharge is not covered by the Item No.133 of the Government Notification dated 28th March 2013 and that in any event, LBT cannot be levied on e-recharge; (II) We reject the contention of the petitioner that the LBT is not payable on the SIM cards and recharge vouchers/coupons brought into the limits of the first respondent-Municipal Corporation;
Issues Involved:
1. Whether Local Body Tax (LBT) is recoverable on SIM cards, recharge coupons, and e-recharge upon their entry into municipal limits. 2. Validity of the notification dated 28th March 2013 issued by the State Government fixing the rate of LBT on SIM cards, memory cards, and activation/renewal slips. Issue-wise Detailed Analysis: 1. Recoverability of LBT on SIM Cards, Recharge Coupons, and E-Recharge: The primary question addressed in this writ petition under Article 226 of the Constitution of India was whether LBT under clause (aaa) of Sub-Section (2) of Section 127 of the Maharashtra Municipal Corporations Act, 1949, is recoverable on SIM cards, recharge coupons, and e-recharge upon their entry into the municipal limits of a Municipal Corporation. The petitioner, a telecommunication service provider, argued that SIM cards, recharge coupons, and e-recharge do not constitute goods and hence should not be subjected to LBT. The petitioner referenced the decisions in Bharat Sanchar Nigam Limited vs. Union of India and Idea Mobile Communication Limited vs. Commissioner of Central Excise, Cochin, asserting that such items have no intrinsic value and cannot be used independently of a cell phone. The respondent Municipal Corporation countered by highlighting the definitions under the Maharashtra Municipal Corporations Act. Specifically, LBT is defined under clause 31A of Section 2 as a tax on the entry of goods into the city for consumption, use, or sale. The definition of goods under clause 25 of Section 2 includes tangible and intangible items capable of being bought, sold, transferred, and used. The court examined the nature of SIM cards and recharge coupons, noting that SIM cards are portable memory chips used in cellular phones, holding subscriber details and security data. Despite their minimal intrinsic value, SIM cards and recharge coupons are tangible goods capable of being bought, sold, transferred, stored, and possessed. Therefore, they fall within the definition of goods under the Act and can be subjected to LBT upon entry into municipal limits. 2. Validity of the Notification Dated 28th March 2013: The petitioner challenged the State Government's notification dated 28th March 2013, which fixed the LBT rate at 3.5% on SIM cards, memory cards, and activation/renewal slips, including online recharges. The court noted that the notification was issued under the powers conferred by Section 99B read with Sections 152B and 152C of the Act. Upon reviewing the notification and the relevant statutory provisions, the court held that the notification was valid concerning SIM cards and physical recharge vouchers. However, the court found that e-recharge, being an electronic download, could not be considered as goods brought into the municipal limits and thus could not be subjected to LBT. Judgment Summary: The court concluded that: 1. E-recharge is not covered by Item No. 133 of the Government Notification dated 28th March 2013, and LBT cannot be levied on e-recharge. 2. LBT is payable on SIM cards and physical recharge vouchers/coupons brought into the municipal limits of the respondent Municipal Corporation. The writ petition was partly allowed, with the interim order continuing for six weeks from the date of the judgment.
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