Supreme Court to rule on taxability of Charger & Mobile Phone, Final Hearing on March 27 [Read Order]

Based on its prior ruling in Nokia India Pvt. Ltd. v. State of Punjab, the Supreme Court has granted leave in a petition against Punjab VAT rules. The case was scheduled for a final hearing on March 27, 2025, by the bench of Justices B.V. Nagarathna and Satish Chandra Sharma.

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The final hearing in the matter of M/S Naresh Kumar Gupta v. State of Punjab & Anr. is set for March 27, 2025, and it will now be heard in detail. Whether a cell phone and its charger should be taxed individually, even when offered in a composite box for a single price, is at the center of the controversy over the taxability of bundled products. 

The Supreme Court in the Nokia case ruled that chargers should be taxed separately from mobile phones

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The Court under Sales/Traderevision jurisdiction was considering a challenge to a Tribunal order dated January 12, 2017, which upheld the assessing authority’s conclusion that, despite being sold as part of a composite package, the charger was not subject to the 5% tax rate contemplated under Entry-28 appearing in Part-B of Schedule-II. Instead, it was considered an accessory and would be subject to 14% taxation as an unclassified item.

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The High Court made a distinction between the Nokia case and the current one. In the former, the Apex Court was asked to decide whether the charger was a composite component of the phone, and the Court determined that it was an accessory. 

According to the Court, the argument that is currently being made is that “the sale of the mobile phone along with its charger in a single retail package constitutes a composite contract and requires the application of the dominant intention test was neither urged nor considered by the Supreme Court.” It further noted that Entry No. 28 of Schedule II, Part B clearly states that the MRP indicated on the mobile phone box with the charger serves as the exclusive basis for taxation.  

Read More: Chargers Sold with Cell Phones cannot be Taxed Separately Under UP VAT Act: Supreme Court

A possible change in India's indirect tax jurisprudence is being closely watched by stakeholders in the business and legal communities as the final hearing is scheduled for March 27.  While an affirmation might support the separate taxing of packaged items, a reversal of the Nokia verdict might result in substantial tax relief for corporations.

To Read the full text of the Order CLICK HERE

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