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2016 (10) TMI 720 - ALLAHABAD HIGH COURT

2016 (10) TMI 720 - ALLAHABAD HIGH COURT - TMI - Taxability of a Car Stereo System - "electronic goods" falling under Entry 75 or "motor vehicle falling under Entry 18 - Whether a Car Stereo System was liable to be taxed under Entry 75 of a Notification dated 13 December 2002 or whether it was liable to be classified and taxed on the basis of it falling under Entry 18 of the Notification dated 29 January 2001 as amended and reiterated vide Notification dated 9 May 2003? - whether a car stereo is .....

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motor vehicle. It enables a driver undertaking a long journey to enjoy the ride and makes the trip pleasurable. Viewed in this sense, it must be held to be an article which adds to the comfort for the use of the motor vehicle. In view of the above, whether the Court applies the comfort test or whether it applies the test of whether an article can be said to be available for sale in an automobile market, on both scores, the car stereo held as an accessory. - The entry of "accessories" was pla .....

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r stereo held as accessory - revision application dismissed - decided in favor of Revenue. - Sales/Trade Tax Revision No. 901, 902 of 2012 - Dated:- 7-10-2016 - Hon'ble Yashwant Varma, J. For the Applicant : Amit Mahajan, Gaurav Mahajan For the Opposite Party : C.S.C. ORDER Heard Sri S.D. Singh, learned Senior Counsel assisted by Sri Garav Mahajan who has appeared for the revisionist and Sri B.K. Pandey who has appeared on behalf of the State-respondents. These two revisions with the consent .....

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e list to the aforesaid notification, after entries at serial Number 74, the following entries shall column wise be inserted, namely : Serial number Description of goods Point of tax Rate of tax percentage 1 2 3 4 75(i) (a) Television, video cassette recorders, video cassettee player, Satellite receiver, wireless set, video cassette, video games and electronic toys; M or I 12 per cent (b) Telephones including cordless phones, phones with cords, celluar phones and parts, accessories and component .....

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o wave tubes television components, television glass shells, electronic transducers, actuators, display devices that is light emitting diodes, liquid crystal diodeds, micro motors, crystals, tape deck mechanism, etched and framed foils, electronic tuners, deflection yokes, line output transformers, electrodeposited copper foils, printed circuit board laminate, populated printed circuit boards, power supply devices, cabinet and plastic components, Microwave oven and all other electronic goods not .....

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wheelers motor vehicles and tractors and harvester combines. Sales by dealer to consumer or, in this case of through a hire purchase company, to the hire purchase company financing this purchase by the consumer. 12 per cent (b) Fule efficient light commercial vehicles having engine capacity between 3000 cubic centimeter to 4000 cubic centimeter and certified as fuel efficient by an officer not below the rank of Deputy Secretary to the Government of India in the Ministry of Industry, Department .....

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in this case of sale through a hire purchase company, to the hire purchase company financing this purchase by the consumer. 12 per cent (ii) (a) Components, parts and accessories of vehicles specified in Clauses (i) and (iii) including batteries and trailers adapted for use along with said vehicles other than such trailers as are predominantly used along with any other vehicles. M or I 12 per cent (b) Tyre and tubes of vehicles specified in Clauses (i) and (iii) M or I 12 per cent (iii) Motor cy .....

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were undertaken for A.Y. 2005-06, the assessing authority accepted the account books maintained the revisionist but taxed the sale of Car Stereos @ 12%. The revisionist had accepted its liability of tax upon the said article treating it to be "electronic goods" thus falling within Entry 75. Aggrieved by the view that was taken by the assessing authority the revisionist preferred a First Appeal. The first appellate authority was informed during the course of proceedings before it that .....

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carried to the Tribunal. In the course of consideration of the matter the Tribunal felt that the decision rendered in proceedings pertaining to A.Y. 2004-05 required reconsideration. Accordingly, the President of the Commercial Tax Tribunal on 1 September 2010 proceeded to constitute a Larger Bench. It is the judgment rendered by the Larger Bench of the Tribunal on 27 September 2010 which forms subject matter of challenge in the instant revision. It also becomes relevant to note here that the de .....

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ers from any error either of facts or of law in any manner. Learned Standing Counsel could not dispute that no question of law in fact has arisen in the matter and Tribunal has recorded findings of facts and therefore, this revision has to be dismissed. 3. Even otherwise, this revision is preferred under Section 11(1) of U.P. Trade Tax Act, 1948. The procedure for filing revision is prescribed in Chapter 27 of the High Court Rules. Rules 1 to 13, thereof, basically talks of procedure of filing a .....

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ns mentioned therein. Therefore, procedure in Rules 1 to 19(B) subject to modification and adoption etc. would apply for filing revision also. 4. Rule 5 of Chapter 27 of the High Court Rules contemplates filing of an affidavit of service of the copy of application, which is being filed in this Court. If the revision is preferred by assessee, he shall serve copy of revision upon learned Standing Counsel and file an affidavit of service giving facts as stated in Rule 5(1) and if revision is prefer .....

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rised to receive notice on behalf of the department concerned, and further stating that the Standing Counsel has been intimated the date of filing in Court of the application. (2) An application made by the Commissioner of Income Tax shall normally be accompanied by an affidavit of service stating that a copy of the application together with other papers and affidavit accompanying it have been served on the assessee in accordance with the procedure prescribed therefor by the Income Tax Act, 1961 .....

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on after serving a copy thereof on the Counsel for the applicant, a rejoinder affidavit may similarly be filed in another one week." 5. Thus, affidavit of service has to accompany revision application, but proviso to sub Rule 2 provides, that, if due to lack of time or for any other sufficient reason, affidavit of service is not accompanying the application filed by Commissioner of Trade Tax, such affidavit must be filed within three weeks' of the date of institution of application. The .....

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meaning thereby there is no notice or opportunity to the assessee and revision has not been filed in the manner prescribed in the Rules. 7. It is true that revision filed by Revenue, may not be dismissed for technical reasons, but where service has not been effected upon assessee for several years all together and Commissioner of Trade Tax apparently has failed to comply with statutory requirement of filing affidavit of service, this Court finds no justification, still to continue with said rev .....

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ot stated to have taken the matter further and it is submitted that the judgment rendered by the learned Single Judge of this Court on the revision aforementioned has attained finality. It is in the above backdrop that the rival submissions may now be noticed. Admittedly, the Tribunal has proceeded to hold that Car Stereos are an accessory to a motor vehicle and therefore chargeable to tax under Entry 18. The view so taken represents a paradigm shift from the opinion which was formed by the Trib .....

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treated as accessories to a motor vehicle. Dealing with the said issue, the Supreme Court in paragraph 5 of the report held as follows: "5. In Supreme Motors v. State of Karnataka case (supra), the Karnataka High Court has taken different view. It held that the car seat covers, at best could make the seat more comfortable, but do not serve as aids to the vehicle as a whole, and therefore, they must fall outside the ambit of entry 73 of the Second Schedule to the Karnataka Sales Tax Act, 19 .....

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e considered view that the test laid down by the Karnataka High Court that the accessories as a part must contribute for convenience or effectiveness in the use of the car as a whole is not a correct test. In our view the correct test would be whether the article or articles in question would be an adjunct or an accompaniment or an addition for the convenient use of another part of the vehicle or adds to the beauty, elegance or comfort for the use of the motor vehicle or a supplementary or secon .....

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n the use of the vehicle. Another test may be whether a particular article or articles or parts, can be said to be available for sale in an automobile market or shops or places of manufacture; if the dealer says it to be available certainly such an article or part would be manufactured or kept for sale only as an accessory for the use in the motor vehicle. Of course, this may not also be a conclusive test but it is given only by way of illustration. Undoubtedly some of the parts like axle, steer .....

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d High Court held that cycle covers, Rexine Saddle Cover whether part or accessory of vehicle under item 34 of the notification dated April 5, 1961 issued by the State of U.P. under Sections, of the U.P. Sales Tax Act (15 of 1948) with the same reasoning, as was given by the Karnataka High Court to be not accessories. We express that the Allahabad High Court also has not laid down the test correctly." (emphasis supplied) It has further been pointed out that the aforesaid judgment was subseq .....

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ential for the actual functioning of the product. Applying the test laid down in Mehra Bros. case (supra), it cannot be denied that name plates add to the convenient use of the motor vehicle. Name plates serve a very useful purpose inasmuch as it gives an identity to the vehicle. Each vehicle comes with different brand name and in different models having distinct features. The manufacturers of different type of models of vehicles market them under a name and the vehicles are recognized and refer .....

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as erroneously come to the conclusion that 'plastic name plates' are not 'parts and accessories' of motor vehicles for the purposes of headings 87.08 and 87.14." (emphasis supplied) The principles enunciated by the Court in Mehra Bros. were reiterated. Sri S.D. Singh, learned Senior Counsel has contended that Mehra Bros. is not an authority for the proposition that Car Stereos are accessories to a motor vehicle. He submits that the primary and in fact the sole issue which st .....

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He submits that the case before the Supreme Court was essentially in respect of an intrinsic part of a motor vehicle, namely the car seat and its cover, and it was in the aforesaid backdrop that the Court proceeded to hold that the cover of a car seat would be also liable to be treated as an accessory. Sri Singh submits that the observation in paragraph 5 in respect of car stereos and air conditioners was only by way of in illustration and does not represent the ratio decendi of the judgment its .....

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eo is not an accessory to a motor vehicle. Sri Pandey, learned Standing Counsel, on the other hand, has taken the Court through the detailed judgment rendered by the Tribunal and submits that the view taken by the Larger Bench is in consonance with the principles laid down by the Supreme Court in Mehra Bros. He submits that a car stereo is liable to be treated as an accessory by virtue of it being an article which aids in the comfort and use of the vehicle even though, it may be of a supplementa .....

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ring to the competing entries extracted at the beginning of this judgment, Sri Pandey contends that Entry 18 was a specific entry dealing with accessories of motor vehicles and must therefore override Entry 75 which was of a general character. It is these rival submissions which fall for consideration. The first issue which arises for determination is whether Sri Singh is correct in his submission that the judgment rendered by the learned Single Judge on 6 September 2014 binds or at least clinch .....

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ute that no question of law, in fact, arose from the order of the Tribunal. The learned Single Judge then proceeded to consider as to whether the revision as filed was in compliance with the provisions of Chapter XXVII Rule 5 of the Allahabad High Court Rules, 1952. In the facts of that case, the learned Single Judge proceeded to hold that there has been a failure to comply with the provisions of the said rule. The learned Single Judge thereafter proceeded to hold in paragraph 9 that the revisio .....

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as accessories to a motor vehicle or electronic goods. From a reading of the said order it is clear and apparent that there was neither an enunciation of a legal principle or a categorical finding to the effect that car stereos were not liable to be treated as accessories. All that can be deduced from the said order is that in the facts of that case, the learned Single Judge came to hold that no question of law arose from the order of the Tribunal. The judgment of the learned Single Judge, in t .....

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(P) Ltd. The issue, in the considered view of this Court as to whether a Car Stereo is liable to be treated as an accessory to a motor vehicle, is liable to be judged and answered on the basis of the principles and tests as enunciated by the Supreme Court in the two judgments mentioned above. In the absence of consideration of the said two precedents by the learned Single Judge, the dismissal of the revision on 6 September 2014, neither binds this Court nor did it bind the Tribunal which render .....

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ros. was considering the issue of whether a car seat cover is liable to be treated as an accessory it is also an authority for answering the issue as to what article would in fact be liable to be viewed as an accessory to a motor vehicle. To answer the said issue the Supreme Court formulated the following tests: A. Whether the article is an adjunct or addition for the convenient use of other parts of a vehicle; B. Adds to the beauty, elegance or comfort for the use of the motor vehicle; and C. W .....

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est formulated by the Karnataka High Court which was to the effect that the accessory must add to the convenience or effectiveness of the use of a car as a whole. The negation of this test as formulated by the Karnataka High Court is of significance. If the test was to be that the accessory must add to the convenience or effectiveness of the use of the car as a whole, it would clearly narrow down the number of article which may be liable to be treated as an accessory. This simply because there w .....

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the vehicle. Significantly, the test which was laid down by the Supreme Court in Mehra Bros. thereafter was whether a particular article or a particular part could be said to be available for sale in an automobile market or shop or a place of manufacture. Their Lordships, then further proceeded to hold that if a dealer were to state that the same is available as an article or part which was manufactured or kept for sale only as an accessory for the use in motor vehicles, the same would also be .....

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