In a landmark verdict concerning telecom services, the Supreme Court on Thursday stayed the action of state governments to recover sales tax from all service providers including Bharat Sancahr Nigam Ltd.

A bench comprising Justice S Rajendra Babu and Justice A R Lakshman said the state governments could go ahead with the assessment of the sales tax but would take no cohesive action to recover them.

The Supreme Court will refer the matter to a larger bench to adjudicate the question whether states were empowered to collect sales tax for the services rendered by the telecom companies.