Separate tax on the chargers sold with mobile phones

A bench of Justices S J Mukhopadhaya and Madan B Lokur of Supreme Court while quashing an order by the Punjab and Haryana High Court held that, making one package of mobile phone and charger will not make it a composite product. Therefore, Supreme Court has held that phone chargers sold with mobile phone should be taxed separately as it is not part of phone but an accessory. Apex court thereby dismissed the plea by Nokia for treating charger and mobile as a composite product.

Apex Court observed that, “If the charger was a part of cell phone, then cell phone could not have been operated without using the battery charger. But in reality, it is not required at the time of operation. Further, the battery in the cell phone can be charged directly from the other means also like laptop without employing the battery charger, implying thereby, that it is nothing but an accessory to the mobile phone.” Court also observed that, Nokia has itself put mobile charger in the category of accessory on its website and upheld the order passed by various authorities including the tax tribunal holding charger as an accessory to be taxed separately.

Upon considering the facts and figures, court opined that, “the Assessing Authority, Appellate Authority and the Tribunal rightly held that the mobile/cell phone charger is an accessory to cell phone and is not a part of the cell phone. Court further hold that the battery charger cannot be held to be a composite part of the cell phone but is an independent product which can be sold separately, without selling the cell phone. Apex Court was of the view that, High Court failed to appreciate the aforesaid fact and wrongly held that the battery charger is a part of the cell phone.”

It was a case from the State of Punjab where, under state Value Added Tax Act, sale of mobile phone is taxed at 4% while charger is taxed at 12.5%.

Restrictions on OnePlus sales up on Micromax Plea

Gurgaon-based consumer electronics manufacturer Micromax Informatics Ltd secured a temporary injunction from the Delhi high court against rival Chinese phone maker Shenzhen OnePlus Technology Co. Ltd from marketing, selling and shipping its OnePlus mobiles in India. However the Court allowed the company, which launched its OnePlus One phones in India through e-commerce website on 2 December, to clear its stock. Court even barred the company from shipping any stock to India bearing the mark Cyanogen from Tuesday.

Micromax Informatics Ltd filed this suit against Shenzhen OnePlus Technology Co. Ltd seeking to restrain OnePlus from infringing Micromax’s exclusive rights which has acquired by an “ambient services and application distributions agreement” with US-based software developing company Cyanogen. Cyanogen specializes in the modification of the Android operating system and through this agreement, Micromax was given an exclusive licence to integrate and distribute Cyanogen’s technology as a part of its devices in India.

It was submitted by Micromax that, they had “incurred major expenses for creation of brand exclusivity for providing to Indian customers mobile phones with Cyanogen operating systems” and “they would suffer irreparable harm and loss if Shenzhen OnePlus Technology Co. Ltd are permitted to continue with their illegal acts in violation of the agreement between Micromax and Cyanogen”.

However, Shenzhen OnePlus Technology Co. Ltd claimed that, they had entered a collaboration agreement and trademark licence agreement with Cyanogen in February to use its trademark and software in the entire world except mainland China. Further, submitted that, Cyanogen informed Shenzhen OnePlus Technology Co. Ltd about the termination of their agreement a fortnight before its launch in India, which resulted in providing an exclusive licence to Micromax for South Asia.

Xiaomi can now sell its phones in India

A division bench of Justice Pradeep Nandrajog and Justice RK Gauba of Delhi High Court allowed Xiaomi Technology India Pvt. Ltd to import and sell its phones in India till January 8. However, Court made it clear that Xiaomi can sell only those devices in India, which use chipsets which are running on Qualcomm processors, a licensee of Ericsson said the Court.

Earlier A Single Bench of Delhi High Court passed an order banning Xiaomi smartphones in India due to patent infringement complaints by Swedish telecom giant Ericsson. The present order of Delhi High Court also extended to e-commerce website Flipkart.com, which had an exclusive arrangement with Xiaomi for flash sales of its handsets in India.

Xiaomi Technology India Pvt. Ltd challenged the order passed by the Single Bench which banned the sale of its handsets here in India, saying it has not infringed Ericsson’s patents as Qualcomm has obtained a licence from the Ericsson for its patented technology.

The bench, while ‘striking a balance’ between the rights of Ericsson and Xiaomi, allowed the Chinese firm to sell its Qualcomm chipset-based devices while directing it to deposit Rs 100 per device imported in the name of Registrar General of the Delhi High Court.

In the present order, Court also asked Xiaomi Technology India Pvt. Ltd that, imports made in January 2015 would likewise be disclosed by way of an affidavit and Rs 100 per device deposited in the name of Registrar General of this court by February 3, 2015. However, interim ban on import and sale of Xiaomi devices which run on other processors or chipsets shall continue, the court clarified.