2016 (12) TMI 60 - HC - VAT and Sales Tax

Breach of principles of natural justice - the revised proposition notice was given by the respondent-Assessing Authority only on 19.08.2016 and even though the officer concerned was under transfer, he passed the impugned reassessment order dated 25.08.2016 - the issues regarding sales returns etc. have not been properly appreciated by the respondent-Assessing Authority - Held that - the petitioner-assessee has an effective alternative remedy of appeal against the impugned reassessment order passed by the respondent-Assessing Authority, these writ petitions are not maintainable and the petitioner-assessee deserves to be relegated back to the Appellate Authority. Applicability of rate of tax on chargers is concerned - Held that - the mobile battery chargers have been held to be only the accessories of mobile phones and they cannot be treated as part of the mobile phones itself. It will definitely attract a separate rate of tax as in the present case, it is rightly charged at 14.5% and the difference of tax at 9% was demanded by the respondent-Assessing Authority, as the petitioner-assessee had charged and collected the tax only at the rate of 5.5% on the sale of mobile battery chargers. Except the aforesaid issue of rate of tax, the petitioner-assessee is relegated to the Appellate forum - appeal disposed off.

Summary

Issues:
1. Breach of principles of natural justice in reassessment order
2. Proper appreciation of issues regarding sales returns
3. Rate of tax applicable on mobile battery chargers

Analysis:
1. The petitioner challenged a reassessment order by the Assistant Commissioner of Commercial Taxes, alleging a breach of natural justice due to a delayed notice and issues not being properly considered. The counsel argued that the officer passed the order despite being under transfer, affecting the assessment process.

2. The petitioner contended that the respondent-Assessing Authority failed to properly assess issues related to sales returns. However, the main focus of the case revolved around the rate of tax applicable under the Karnataka Value Added Tax Act, 2003, on the sale of mobile battery chargers, whether sold with mobile phones or separately.

3. The court referred to a Supreme Court judgment in the case of State of Punjab v. Nokia India Private Limited, establishing that mobile battery chargers are accessories to mobile phones and not integral parts. Consequently, the chargers attract a separate tax rate, distinct from mobile phones. The respondent-Assessing Authority correctly applied a tax rate of 14.5% instead of the 5.5% charged by the petitioner, demanding the difference in tax.

4. Given the binding precedent and the availability of an alternative appeal process, the court held that the writ petitions were not maintainable. The petitioner was directed to pursue the matter through the Appellate Authority, except for the issue of the tax rate on chargers, which was conclusively settled by the Supreme Court judgment.

5. The court instructed the petitioner to file an appeal within four weeks, ensuring the Appellate Authority would decide the case on its merits without raising objections on limitations. The judgment concluded by disposing of the writ petitions without imposing any costs on the parties involved.