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2016 (2) TMI 1363 - HC - VAT and Sales TaxClassification of goods - rate of tax - Multi Functional Device - taxable @ 4% under Schedule IV of the VAT Act or @ 12.5%/14% in the Residuary Entry of Schedule V of the said Act? - device carry out the function of scanning, photocopier, fax machine and as computer printer, under the provisions of the Rajasthan Value Added Tax Act, 2003 - HELD THAT:- The Multi Function Device comprising of computer printer, fax machine, photocopier and scanner-all-in-one, with the fast technology development, is an office equipment, which combines the aforesaid three or four devices and functions in one unit, and is largely used while attached with computer, though it may be used in some respects, as stand alone equipment, or even with or without being attached to the computer, like fax machine, as a part of it. The scanner, which produces digital image of the documents canned can be used only with the aid of computers, if the scanned image has to be transmitted to any other destination, though such transmission can be made possible through mobile phone also, as contended by the learned counsels for the Revenue. With the technology fast developing, it is now possible to do so and use Multi Functional Device with remote sensors in the computer system or Wi-fi. Therefore, actual and physical connection with the computer may not be even necessary - The dissection or separation of the various parts of this machine to decide the taxability of rate thereof, is not called for, but if admittedly, this device can be used as computer printer also, there appears to be no justification to tax it in the Residuary Entry, ignoring the specific entry relating to computer printers and its peripherals. It is well settled legal position that the Residuary Entry can be resorted to only if the commodity in question cannot be brought under the specific entries, and this proposition, is not disputed by either side before this Court. That as a matter of fact, the entry is wider, which includes not only computer printers, but computer peripherals also. This Court finds no justification in the contention raised by the learned counsels for the Revenue, that the word ‘peripherals’ has to be construed narrowly to limit and include only accessories like, mouse, webcam or keyboard, as computer peripherals, to be taxed @ 4% under the said entry, and not to include therein the Multi Functional Devices. In para 13 of the judgment in the case of Xerox India Limited v. Commissioner Of Customs, Mumbai, Mumbai [2010 (11) TMI 20 - SUPREME COURT], the Hon'ble Supreme Court held that about 85% of the total parts and components alongwith manufacturing cost is allocated to printing and it is to be used principally in Automatic Data Processing Machine (ADPM) and it is also connectible to the Central Processing Unit (CPU), and therefore, it is classifiable in entry 84.71.60 and not in the Residuary Entry 84.79.89. Similarly, in the case of Canon India (P) Ltd. v. State of Tamil Nadu [2015 (2) TMI 751 - MADRAS HIGH COURT], the Division Bench of the Madras High Court, in a case arising under the Tamil Nadu General Sales Tax Act, held that image runners (multifunction network printers) would fall under entry 18(i) of Part B of the First Schedule to the Tamil Nadu General Sales Tax Act, 1959 and would be taxable at 4%. The contention of the Revenue that image runner sold by the dealer could act as copier machine and other functions, like printing, scanning and faxing were added features to this machine, and therefore, it was taxable at 12%, was rejected by the Division Bench of the Madras High Court. Therefore, upon a detailed analysis and with reference to various technical literature and material, the cases laws in favour of the Assessees, this Court is satisfied that the commodity in question, namely, Multi Functional Device could not be taxed by the Assessing Authority under the Residuary Entry for the period from 01.04.2006 to 09.03.2010, and the said commodity would fall within the ambit and scope of entry relating to computer printers and computer peripherals, taxable @ 4% in Schedule IV of the VAT Act. The levy of tax in the Residuary Entry @ 12.5%/14% therefore, cannot be held, and to that extent, the order impugned of the learned Tax Board and the authorities below deserve to be quashed and set aside. They are accordingly set aside. As far as the question of imposition of interest and penalty is concerned, this Court is also satisfied that the levy of interest would fall, since the levy of additional tax itself is quashed by this Court, and the question of imposition of penalty, therefore, would not simply arise. The revision petitions filed by the Assessees are allowed and the revision petitions of the Revenue are dismissed.
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