1)Assessing Authority collected VAT from assessee pursuant to assessment orders on premise that activation of SIM cards was a sale.
2)Assessee approached State of Haryana for refund of amount of VAT on ground that activation of SIM card was a service and not a sale.
3)The Assessing Authority dismissed the assessee's representation for refund of the amount of VAT on the grounds that the assessee did not challenge its liability before the Assessing Authority, it did not file any appeal against the assessment orders, and as the assessee had charged VAT from its customers, the amount could not be refunded.
High Court held in favour of assessee as under:
a)Supreme Court in Bharat Sanchar Nigam Ltd. v. Union of India (2006) 3 STT 245 held that activation of SIM cards is a 'service' and not a 'sale'. The assessee is, therefore, liable to pay service tax on the activation of SIM cards and not VAT.
b)Since Supreme Court had clearly held that VAT could not be collected on activation of SIM cards, levy and collection of VAT was without authority of law and violative of article 265 of Constitution.
c)The Union of India has raised a demand for service tax for the period for which the State of Haryana has levied and collected VAT. If the assessee is called upon to pay VAT and service tax, it would be the case of double taxation.
d)In view of the aforesaid, the revenue was to be directed to transfer the amount of VAT collected from the assessee to the Service Tax department of the Union of India - Idea Cellular Ltd. v. Union of India (2015) 57 taxmann.com 293 (Punjab & Haryana).