New Delhi: The Supreme Court on Wednesday ruled that a mobile phone battery charger is an accessory to a phone and not a part of the cellphone, thereby subjecting it to a different tax rate.

A bench of justices S.J. Mukhopadhaya and Madan B. Lokur held that a “battery charger cannot be held to be a composite part of the cellphone but is an independent product which can be sold separately, without selling the cell phone."

The judgment came in a dispute involving Nokia India Pvt. Ltd where the assessing authority held that the battery charger was an accessory chargeable to tax at the rate of 12.5%, and after including interest and penalty, demanded an additional 2.16 crore from Nokia for the assessment year 2005-06 and 3.1 crore for the assessment year 2006-07.

While a concessional rate of tax at 4% applies to cellphones and parts, accessories are a separate item liable to be taxed at the general rate of 12.5% and not at the concessional rate applicable to the cell phones.

Nokia argued that so long as no separate amount for battery charger was being claimed from the customers when they were being sold with the phone, they should be taxed at 4%. According to it, a charger is an integral part of the cellphone since the phone cannot be operated without the charger and when any person comes for cell phone, he purchases the cell phone and then automatically takes away the charger for which no separate money is charged.​

While setting aside the penalties, the Value Added Tax Tribunal at Chandigarh dismissed Nokia’s appeals. Nokia further appealed to the Punjab and Haryana high court which held in Nokia’s favour “holding that the battery charger is a part of the composite package of cell phone".

The Supreme Court set aside the high court’s order affirming the decision of the tribunal.

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