The Indiana Tax Court addressed whether cell phones qualify for Indiana’s telecommunications equipment exemption from sales and use tax. New Cingular purchased certain cell phones that were later used to fulfill contractual obligations by either providing them free to customers who entered service agreements, or by issuing replacements under insurance programs. New Cingular sought a refund of use tax paid on those phones, asserting that the phones were exempt as “radio or microwave transmitting or receiving equipment.” The Department denied the refund, arguing that the exemption applied only to central network infrastructure under the provider’s custody and control, and not customer-used devices.
The court rejected the Department’s position, finding no textual support for limiting the exemption to infrastructure equipment. Furthermore, the court concluded the relevant “acquisition” for use‑tax purposes was New Cingular’s purchase of the phones from suppliers, not the customers’ subsequent receipt of the phones.