(2006) 3 SCC 1
The service providers who were the writ petitioners before the Kerala High Court in acase
Escotel Mobile Communications Ltd. vs. Union of India, (2002) 126 STC 475(Ker.)
questioned the correctness of the decision of High Court and filed appeal beforeSupreme Court. Further, other Service Providers also approached the Apex Court byway of writ petitions under Article 32 of the Constitution of India. When the CivilAppeals and writ petitions were listed before two learned Judges, the matter wasreferred to a Larger Bench as the
“Nature of the questions raised in appeals/petitionswas important”.
The issue of the nature of transactions by which mobile phone connections areenjoyed – it is a sale or is it a service or is it both – had been coming up for consideration before the High Courts. The High Courts of Allahabad,
and Punjab and Haryana
held that there was no sale of goods justifying thelevy of State sales tax on rentals charged by service provided to its subscribers. All thethree decisions were however overruled by the Supreme Court in the case of
State of UP v. Union of India
However, the Kerala High Court took a different view in the case of
Escotel MobileCommunications Ltd.
Union of India
and held that the transaction of sale of a SIMcard included its activation and thus formed part of State Sales tax. It also held thatselling of SIM cards and the process of activation were services as well and fellwithin the definition of Taxable service as defined in Section 65(72)(b) of the FinanceAct, 1994.
Union of India v. State of Uttar Pradesh, (1999) 114 STC 288 (All)
Union of India v. Secy, Revenue Department, (1999) 113 STC 203 (AP)
Union of India v. State of Haryana, (2001) 123 STC 539 (P&H)
(2003) 3 SCC 239
(2002) 126 STC 475 (Ker)