The Bench of Karnataka High Court has held that the Chargers which are sold with Mobile phone is taxable at the rate of 5%. In the matter of The State of Karnataka Versus Index Technologies India Ltd, the bench headed by Justice P.S. Dinesh Kumar and Justice T.G. Shivashankare Gowda has observed that the main purpose of the customer/seller to buy the Mobile Phone and not the Charger The supply of chargers, headsets, and ejection pins is incidental to the sale. Therefore, the dominant intention test would apply, and hence, the charger cannot be differently taxed.

In this matter, the respondents who are registered as dealers under the Karnataka Value Added Tax Act, 2003 engage in the trading of Mobile phones and various other accessories. The Accessing Officer passed an order under Section 39(1) of the KVAT Act subjecting the sales turnover of mobile chargers to tax at a rate of 13.5% to 14.5%. The assessee filed an application for rectification, and the AO passed orders under Section 69 of the KVAT Act, rectifying the order by dropping the estimated turnover as per the return and books of accounts.

The Court, while allowing the appeal of the assessee held that a charger sold along with a mobile phone in a composite pack attracts the same tax as that of a mobile phone. The Court said that the mobile charger is not an integral part of the mobile phone and should not be treated as composite goods. Merely making a composite package of a cell phone and charger shall not make it eligible as one of the composite goods for the purpose of interpretation of the provisions. Chargers, though sold with mobile phones, are independent gadgets and therefore cannot be taxed at the same rate as a mobile phone.

The court held that the mobile phone finds its place in Schedule III and is taxable at 5%, and therefore, the charger, which is also sold along with the mobile phone in ‘one set," is also chargeable at 5%.

Jeevan J. Neeralgi was the main Counsel for the Petitioner and Adv. S. Ganesh represents the Respondent