The Advance Ruling Authority ( AAR ), Haryana has clarified that the mobile phone batteries would attract 12 percent tax on supplying the same to manufacturers and a higher tax rate of 28 is applicable when the same is sold to the end-consumers.
The applicant has made an additional investment in the manufacturing of batteries for mobile phones and started the production or the said mobile phone batteries and are supplying the same to domestic handset manufacturers.
The applicants sought for a clarification on the tax rates applicable to ‘Battery for Mobile Handset’ separable or non-separable, detachable or non-detachable, when sold to the mobile handset manufacturers who uses the same to make it form part of the mobile handset. They also sought for tax rate applicable on the same product when sold to the customers.
The authority noted that accepted the contentions raised by the applicant that a mobile phone cannot function or cannot be operated without a battery, whether the same is detachable/separable or not. Hence, mobile phone batteries qualify as part of the mobile phone.
It was, therefore, clarified that the product ‘Battery for Mobile Handset’ whether it be separable or non-separable i.e. whether it be detachable or non-detachable when sold to the mobile handset manufacturers who use the same to make it form part of the mobile handset will be taxed at 12 per cent.
However, it was held that 28 per cent tax will be levied if the said product is sold to the customers other than mobile handset manufacturers who do not use the same- in the manufacture of the mobile handset.
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