9911796707
TMI Blog2013 (8) TMI 569X X X X Extracts X X X X X X X X Extracts X X X X ..... f the VAT Act prescribing the period for claim of Input Tax Credit (ITC) is inconsistent with the charging Section 3(2) and Section 3(3) and the general scheme of the Act for filing return and annual assessment and reassessment embodied such as Section 22, 27(b), Section 29, the revisional power under Section 53 and to be declared unenforceable and irrational infringing Article 14 and 19(1) (g) of the Constitution of India insofar as setting out a condition as to time. 3. In the other set of writ petitions prayer has been made for issuance of writ of Mandamus to forbear the State of Tamil Nadu from recovering tax in excess of 4% in disregard of item 24 of G.O.Ms.No.3, CT & R (B1) department, dated 01.01.2007, notified under serial No.68 of Part B of the First Schedule to the VAT Act, by resorting to levy at 12.5% under the residuary classification of Part C of the First Schedule to the VAT Act by giving effect to the order passed by the Commissioner of Commercial Tax, dated 18.04.2007. 4. By our order dated 25.06.2013, we have segregated the two batch of cases with request to counsels to advance arguments separately in each batch, to be heard and decided separately. 5. According ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ispensable for the functioning of the printers and the cartridges is not merely an accessory as the typewriter ribbon is an accessory to a typewriter. Further, it is stated that resort to residuary entry is plainly arbitrary and irrational, when there is a specific entry in serial No.68 of Part B of the First Schedule. It is further stated that even under the erstwhile Tamil Nadu General Sales Tax Act, 1959, (TNGST Act), both the printers and cartridges were charged at 4% under serial No.18 of Part B of the First Schedule. Reliance was placed on the clarification issued by the Commissioner vide letter dated 28.06.2007, when a clarification was sought for as to the rate of tax for the items viz., central processing unit, monitor, key board, mouse, speaker, CD writer, computer printer, ink jet, laser, fax etc., it was clarified that the rate of tax is 4% under entry No.68 in Part B of the First Schedule. It is submitted that printer is a peripheral and a cartridge is an accessory or a part of the printer and therefore, the terms should be interpreted as ordinarily understood and attributed to these words by people usually conversant with and dealing in such goods. Reliance was placed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n and with regard to the effect of such circulars, reliance was placed on the decision of the First Bench of this Court in W.A.No.551 of 2009 [Pepsi Co India Holdings (Pvt) Ltd., vs. Commissioner of Commercial Tax and others], dated 10.11.2009; State of Maharastra vs. Bardma of India Limited [(2005) 140 STC 17 (SC)]; and Pizzeria Fast Foods vs. Commissioner of Commercial Taxes, [(2005) 140 STC 97 (MAD)] and the decision of the Hon'ble Supreme Court in Filterco & another vs. Commissioner of Sales Tax [(1986)61 STC 318 (SC)]. 11. On the above contentions, the learned Senior counsel submitted that the issue relating to classification of ink jet cartridges is no longer res integra and has been decided by two High Courts holdings, they are accessories to printers and in the light of the circular/clarification issued by the Commissioner of Commercial Taxes stating that the goods have to be classified under the residuary entry, it would be a futile exercise to go before the assessing authority and this Court can consider the issue in these writ petitions. 12. We have heard the submissions of learned Senior counsel Mr.Aravind P.Dattar, who also reiterated the submissions. 13. The learne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the facts stated above and the submissions made on either side, two questions arise for consideration:- (i) Whether the writ petitions could be entertained and the petitioners be permitted to approach this Court without availing the remedy provided under the TNVAT Act? (ii) Whether this Court should dwell into the question as to whether ink jet cartridges and toner cartridges are accessories to printer and whether they would fall within Entry 22 & 24 of serial No.68 in Part B of First Schedule of the Act attracting 4% VAT, as such question, essentially being a issue relating to classification of goods? Question No.(i) 16. From the facts narrated above, it is seen that Commissioner of Commercial Tax has issued series of clarifications relating to rate of tax for ink jet cartridges and toner cartridges based on requests made by manufacturers, successive dealers and the Manufacturers Association for Information Technology, New Delhi. In the said clarification, dated 21.05.2007, it has been stated that ink jet cartridges and toner cartridges are taxable at 12.5% of Part C to the First Schedule to the VAT Act w.e.f., 01.01.2007. 17. The enforcement group of the respondent departme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9, (supra) which arose out of a proceedings under the Tamil Nadu VAT Act. 8. In our view, as far as the present case is concerned, once a clarification is given by the Commissioner of Commercial Taxes, that will bind the subordinate assessing authorities and one cannot expect a different order from the assessing officers. In these circumstances, no fruitful purpose would be served by directing the appellant to go for an assessment and for that reason, not to entertain the writ petition. That apart, in the present case, for the very branded products, there is a well reasoned Division Bench judgment of another High Court. It is a settled proposition that in tax matters, when there is a Division Bench judgment of another High Court on a similar provision, it has to be treated with due respect and in the instant case, since the Guwahati High Court has taken a view, which is according to us also otherwise correct, there is no reason for us to take a different view. 20. As noticed above, this Court held that in view of a clarification issued by the Commissioner of Commercial Tax, no fruitful purpose would be served by directing the appellant therein to go for an assessment and for that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the clarification was issued based on which the petitioners are now called upon to pay tax at 14.5%, there was no enabling power to issue such clarifications. In fact, this issue was considered by a Division Bench of this Court in Texy One Private Limited vs. The Principal Commissioner [(2012) 52 VST 377 Madras, wherein the Division Bench held that on the date when the circular was issued, the Commissioner did not have statutory powers to issue such circular and the net result is that the circular has no statutory force. 23. In the light of the above discussion and taking note of the decisions cited supra, in our view the circular issued by the Commissioner though stated to be without jurisdiction, the circular having been issued by the highest officer in the department, the assessing officers, who are subordinate officers cannot be expected to take a different view and therefore, no useful or fruitful purpose would be served in directing the petitioners to avail the remedy under the Act and therefore, these writ petitions questioning the classification of the goods are held to be maintainable before this Court on account of the reasons recorded above. This conclusion of ours is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appeal to the Delhi High Court, which was dismissed (in 2007 INDLAW, Delhi 1301) holding that toner and cartridges do not fall under entry 54 of the Third Schedule of Delhi VAT Act, as they are parts and accessories and the order of the appellate tribunal was confirmed. 26. The petitioner/assessee faced a similar problem under the Assam Value Added Tax Act and the Central Sales Tax Act, where an order of assessment was passed demanding higher rate of tax. Therefore, the petitioner/assessee filed writ petitions before the Gauhati High Court and the issue raised was whether ink jet cartridges and toner cartridges are covered by entry 4 of Part B of Second Schedule to Assam VAT Act attracting lesser rate of tax or whether they are covered by residuary entry in schedule V providing higher rate of tax. 27. The Division Bench of Gauhati High Court in the decision of HP India Sales Limited vs. State of Assam, [2012 56 VST 472] accepted the case of the petitioner/assessee and answered the question as framed in favour of the assessee. At this stage, it would be beneficial to refer to the operative portion of the judgment and order:- 12. The learned counsel for the Revenue submitted that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eel that there is no valid and justifiable reason brought forth before us to take a different view. 30. While, we are entirely in agreement with the decisions of the Delhi High Court and the Gauhati High Court referred above, we shall assign independent reasons with specific reference to the provisions in the Tamil Nadu VAT Act. 31. Section 3 of the Act deals with 'Levy of taxes on sales of goods'. Sub-section (1) of Section 3 casts a mandate on every dealer, other than a casual trader or agent of a non-resident dealer, whose total turnover for a year is not less than rupees five lakhs and every casual trader or agent of a non-resident dealer, whatever be his total turnover, for a year, shall pay tax under the VAT Act. Sub-Section (2) of Section 3 states that subject to the provisions of sub-section (1), in the case of goods specified in Part B or Part C of the First Schedule, the tax under the VAT Act shall be payable by a dealer on every sale made by him within the state at the rates specified therein. Proviso to sub-section (2) provides that all spare parts, components and accessories of such goods shall also be taxed at the same rate as that of the goods if such spare parts, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be required along with a computer. We are unable to accept the submission that by virtue of Chapter Note 5 to Chapter 84 a monitor or printer becomes an essential part of a computer. By virtue of this Chapter Note a monitor and/or a printer may also be classifiable under the same tariff heading. However, merely because the tariff entry may also include a monitor or printer would not lead to the conclusion that a monitor or printer is an essential part of a computer. All that this Chapter Note indicates is that not only the computer but a monitor and a printer are also excisable products. But the monitor and/or printer will be excisable in the hands of their manufacturer. The respondents do not manufacture the monitor or the printer. On facts, it could not be disputed that in approximately 70% of the cases monitors and printers are not supplied along with the computer sold by the respondents. Thus, it cannot be concluded that respondents sell their computer as a unit which include a monitor and a printer. As a monitor and printer are not essential parts of the computer their value cannot be included in the value of computer. We, however, clarify that situation may be different where ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s are chargeable to duty as per a residuary entry. It was held that unless the department can establish that the goods in question can by no conceivable process of reasoning be brought under any of the tariff items then and then only they can resort to a residuary item. Therefore, in the instant case, the stand taken by the revenue that the rate of tax shall be as per the residuary Entry 69 is unacceptable. 38. It is the submission of the learned Additional Advocate General that serial No.68 of Part B of First Schedule would not apply to printers as they are not Information Technology Products and the printer does not answer the definition of Information Technology as defined in the Law Lexicon and Wikipedia. It is to be noted that serial No.68 of Part B deals with Information Technology Products as notified by the Government. Therefore, the Information Technology Products which have been notified by the Government shall fall under serial No.68. If we are to accept the submission of the learned Additional Advocate General, then several of the products notified under serial No.68 do not answer the definition of Information Technology as given in the Law Lexicon. By way of illustrat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... We find that the term accessories is used in the schedule to describe goods which may have been manufactured for use as an aid or addition. A sense in which the word accessory is used is given in Webster s Third New International Dictionary as follows: An object or device that is not essential in itself but that adds to the beauty, convenience, or effectiveness of something else. Other meanings given there are: supplementary or secondary to something of greater or primary importance , additional , any of several mechanical devices that assist in operating or controlling the tone resources of an organ . Accessories are not necessarily confined to particular machines for which they may serve as aids. The same item may be an accessory of more than one kind of instrument. 42. After due consideration, we are of the view that the question has to be answered in favour of the petitioners/assesses and we hold that ink jet cartridges and toner cartridges are parts and accessories of printer which is a peripheral to a computer system and would be covered under Entry Nos.22 & 24 of serial No.68, Part B of First Schedule to the TNVAT Act. 43. In the result, the writ petitions are allowed ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
