TMI Blog2018 (12) TMI 1162X X X X Extracts X X X X X X X X Extracts X X X X ..... ines of printer, scanner, fax and copier, the user can obtain all these capabilities by purchasing a multi-functional printer. The printers sold by the appellant are classifiable under Entry 84.71 of the IT Products Notification as “laser jet printers”. The specific entry must prevail over the residuary entry and hence, the appellant’s goods cannot be classified under the residuary entry. The appellant’s products have been rightly classified as attracting the rate of duty at 12.5% - substantial questions of law concurrently answered in favour of the Revenue and against the appellant-assessee - appeal dismissed. - MAHARASHTRA VALUE ADDED TAX APPEAL NO. 16 OF 2018 - - - Dated:- 20-12-2018 - S.C. DHARMADHIKARI B. P. COLABAWALLA, JJ. Mr. V. Sridharan-Senior Advocate with Mr. Prakash Shah, Mr. Jas Sanghavi and Mr. Viraj Y. Bhate I/b. M/s. PDS Legal for the petitioner. Ms. Jyoti Chavan-AGP for the respondents. Judgment :- (Per S. C. Dharmadhikari, J.) 1. This appeal by the appellant-dealer challenges the order passed on 26th September, 2017 by the Maharashtra Sales Tax Tribunal (hereinafter referred to as the MSTT ) in Value Added Tax Appeal No. 13 of 2012. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a, it made an application dated 14th July, 2005 under section 56 of the MVAT Act for determination of the disputed question (DDQ). This DDQ application was preferred before the second respondent. Exhibit B is a copy of this DDQ application. 8. The appellant forwarded details of some transactions and particularly those on which an opinion of the Commissioner was sought by it. These transactions are as follows:- i. rate of tax applicable on the sale and leasing of Multi-Function Printers; ii. rate of tax applicable on the sale of Spares, Drums, Toners, Developers of the said Multi-Function Printers; iii. Inclusion of the refundable security deposit in the value upon which sales tax is payable on the leasing of Multi-Functions Printers. 9. The appellant also forwarded copies of the invoice dated 11th July, 2005 pertaining to the sale of multi-functional printers and another invoice of the same date pertaining to sale of parts, accessories, drums etc. of these multi-functional printers. A copy of the agreement dated 11th July, 2005 pertaining to sale of multifunctional printers was also relied upon. 10. On these materials, the second respondent passed an order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o seven different settings that a user may program to accept custom media. The printer unit can accept digital data files either from the multi-functional machine s own central processing unit or from one or more computers connected to the data processing network on which the multifunctional printer resides. Also included within the same housing is an integrated input unit in the form of a high speed optical scanner. The scanner features a device which reads the document to be scanned. The scanner converts the scanned data into a digital document. The device can scan to file storage or to an internal network server or to external network servers or to an email box. In addition to the above components, a multi-functional printer also has an optional one or two-line facsimile modem. Thus, the multi-functional printer incorporates in a single housing a freely programmable CPU, an automatic data processing digital output unit and an automatic data processing digital input unit. To summarize, the multi-functional printers are modular units which connect to the computer/computer network and are used in automation activity of printing. The heart of the multi-functional printer consists of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... No. 3 of this notification in corresponding column 2 refers to the Central Excise Tariff Heading 84.71 and in column 3 describes the goods as automatic data processing machines and units thereof, magnetic or optical readers, machines for transcribing data onto data media in coded form and machines for processing such data. It also contains further elaboration. 15. The argument of Mr.Sridharan is that these products are classifiable under Entry 84.71 of the IT products notified as input units or output units, but these terms have not been defined anywhere in the notification. Hence, they would have to be interpreted in their ordinary sense and meaning. Relying upon the dictionary of science and technology so as to give a meaning to these terms and expressions and the dictionary of scientific and technical terms (6th Edition), Mr.Sridharan would urge that coupled with other dictionaries, including the Penguin Dictionary of Electronics (3rd Edition), the Dictionary of Computer Terms (3rd Edition) would denote that input means the receipt of information by a device, whereas, output means retrieval of information from a device in a manner understandable by the user. Mr.Sridharan, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctions performed by the multi-functional printers are scanning and copying or scanning, copying and fax. However, the essential function of the product is nothing but printing. 22. A multi-functional printer is sold and marketed as a printer with additional capabilities such as copy, fax and scan. Thus, the understanding in the commercial parlance and of the end customer/user is that of a printer, with supplementary features and capabilities. Rather than having to invest in four separate machines of printer, scanner, fax and copier, the user can obtain all these capabilities by purchasing a multi-functional printer. 23. Therefore, the printers sold by the appellant are classifiable under Entry 84.71 of the IT Products Notification as laser jet printers . The specific entry must prevail over the residuary entry and hence, the appellant s goods cannot be classified under the residuary entry. 24. It is submitted by Mr. Sridharan that without prejudice to the submissions made above, in any case, even if multi-functional printers are conceivably classifiable both under Entry 84.71 of the IT Products Notification as also the residuary Entry, benefit should be given to the appel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arketing had been introduced. An item which would ordinarily be sold at say ₹ 20,000/- was being billed at say ₹ 12,000/-. However, the customer was required to give a deposit of ₹ 8,000/- to the seller. The deposits in many cases were made refundable after five years or so with no interest or negligible interest. This was clearly a device to evade sales tax. The amendment has been with a view the plug the loophole. 30. For all these reasons, Mr.Sridharan would submit that the impugned order should be set aside and the appeal be allowed. 31. Ms. Jyoti Chavan learned AGP appearing for the respondents submitted that the view taken by the tribunal is correct and there is no perversity or error of law apparent on the face of the record therein. She submitted that Entry 56 of Schedule C appended to the MVAT Act is pertaining to IT products taxable at 4% as notified by the Government from time to time. The notification under this entry is issued on 1st April, 2005. The excise tariff heading 84.71, out of which major part is notified under Entry C-56 does not include the product in question. In other words, multi-functional unit is not mentioned in this notific ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Commissioner, by the order at Exhibit E at page 90 of the paper book, noted these facts and contentions. He noted the fact that the digital multi-functional product is claimed to be a photo copier and as also has a printer, fax machine, document server and scanner etc. The argument was that this is a IT product covered by Schedule Entry C-56 taxable at 5% and it is covered by excise heading 84.71. The Commissioner, however, was of the opinion that the heading 84.71 of the Central Excise Tariff includes certain particular input output units like teletypewriter, data entry terminal, line printer, dot matrix printer etc., but digital multi-functional machines, which do not come in the description as against the heading 84.71 are not covered by Schedule Entry C-56. The bill of entry shows clearance under Heading 84716029, which covers other category . The description given against the heading as notified for the purpose of the MVAT Act does not include the other category . The description given against the notified heading is specific. It does not include digital multi-functional unit . Therefore, the product is not covered by Schedule Entry C-56 and is taxable at 12.5%. Simila ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uding personal computers, others Digital automatic data processing machines comprising in the same housing at least a central processing unit and an input and output unit whether or not combined, micro computer / processor, large / mainframe computer, computer presented in form of systems, digital processing units, storage units, input units, output units, Teletypewriter, Data entry terminal, Line printer, Dot matrix printer, Letter quality daisy wheel printer, Graphic printer, Plotter, Laser jet printer, Key board, Monitor, storage units, floppy disc drive. Winchester / hard disc drives, Removal /exchangeable disc drives, magnetic tape drives, Cartridge tape drive, other units of automatic data processing machines, Uninterrupted power supply units (UPS). 4 84.73 Parts and accessories (other than covers, carrying cases and the like) suitable for use solely or principally with machines of heading No.84.70, parts and accessories of the machines of heading No.84.70, parts and accessories of the machines of heading No.84.71, Headstack, connectors for computer terminals, micro processor for automatic data processing mac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ettes, audio tape cassettes in finished form (Blank), optical media discs, CD Recordable, CD Rewritable. 14 85.24 Software including Information Technology software on any media, video compact disc of educational nature, other video compact discs and digital video discs. 15 85.25 Transmission apparatus other than apparatus for radio broadcasting or TV broadcasting, transmission apparatus incorporating reception apparatus, digital still image video cameras. 16 85.27 Radio Communications receivers, radio pagers. 17 85.29 (1) Aerials, antennae and their parts. (2) Parts of goods specified in heading No.85.25 and 85.27. 18 85.31 LCD panels, LED panel and parts thereof. 19 85.32 Electrical capacitors, fixed variable or adjustable (preset) and parts thereof. 20 85.33 Electr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Note.-(3) Subject to Note 2, for the purpose of any entry contained in this notification, where the description against any heading or, as the case may be, sub-heading, matches fully with the corresponding description in the Central Excise Tariff, then all the commodities covered for the purposes of the said tariff under that heading or sub-heading will be covered by the scope of this notification. Note.-(4) Where the description against any heading or subheading is shown as other , then the interpretation as provided in Note 2 shall apply. By order and in the name of the Governor of Maharashtra, SUDHAKAR JAMODE, Deputy Secretary to Government. 37. A bare perusal of this notification would reveal that the Government of Maharashtra specified the goods in the Schedule to be IT products for the purpose of the said Entry 56 and at Sr.No.3 corresponding to Central Excise Tariff Heading 84.71, automatic date processing machines and units thereof, magnetic or optical readers, machines for transcribing data onto data media in coded form and machines for processing such date, are enlisted. The argument before the Commissioner as also before the tribunal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uced rate of tax. 38. The tribunal placed very strong reliance on the judgment of the Delhi High Court in the appellant s own case. There, the argument was that an application for advance ruling was made before the Commissioner under section 84 of the Delhi Value Added Tax Act, 2004. The tribunal upheld the finding of the Commissioner that multi-functional printers/copiers/scanners having HSN Code No. 8471.60.29 and sales of spares and consumables of the above products having HSN Code No.8473.30.99 during the period 1st April, 2005 to 31st March, 2007, are taxable under the residuary head and, therefore, attract VAT at 12.5% and are not falling under Entry 41A of the Third Schedule to the Act and therefore, are not taxable at 4%. Paragraphs 2 to 8 of the judgment of the Delhi High Court read as under:- 2 The substantial question of law, on which we have heard learned counsel for the parties and which requires adjudication, is as under : Whether the multi-functional printers/machines and their spares and consumables, during the period April 1, 2005 to March 31, 2007, are taxable under entry 41A of the Third Schedule to the Delhi Value Added Tax Act, 2004 or are taxable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eriod April 1, 2005 to August 7, 2005, entries 41 and 41A were as under: Entry No. Description 41 IT products including computers, telephone and parts thereof, teleprinter and wireless equipment and parts thereof. 41A IT products notified by the Ministry of IT as specified below : (i to xxii) ... (xxiii) computer systems and peripherals, electronic diaries.... 7 During the period August 8, 2005 to November 29, 2005, entry Nos.41 and 41A were as under: Entry No. Description 41 Computers, telephone and parts thereof, telephone and wireless equipments and parts thereof..... 41A IT products notified by the Ministry of IT as specified below: (i to xxii)..... (xxiii) Computer systems and peripherals, electronic diaries. . 8 Entries 41 and 41A underwent substantial changes with effect from November 30, 2005 and thereafter during the relevant period, read: 41. Computes, te ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on in the Central Excise Tariff Act, 1985, then, only those commodities described in this entry and in the entry number 84 will be covered by the scope of this notification and other commodities though covered by the corresponding description in the Central excise tariff will not be covered by the scope of this notification. Note.-(3) Subject to Note (2), for the purpose of any entry contained in this notification, where the description against any heading or, as the case may be, sub-heading, matches fully with the corresponding description in the Central Excise Tariff, then all the commodities covered for the purpose of the said tariff under that heading or subheading will be covered by the scope of this notification. Note.-(4) Where the description against any heading or sub-heading is shown as other , then, the interpretation as provided in Note 2 shall apply. 39. The Delhi High Court was of the view that the multifunctional machines in the case of Xerox India Limited vs. Commissioner of Customs, Mumbai (2010) 14 SCC 430, which were principally performing the function of a printer, should be classified under the Head 84.71.60 and they could not be class ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fferent from the corresponding description of the goods in the Central Excise Tariff Act, 1985, reference to the entry in the Central Excise Tariff Act, 1985 should not be made. This becomes clear when we read Note (3). The said note stipulates that when description of any heading or sub-heading in the Act matches with the corresponding description in the Central Excise Tariff Act, 1985, then, all commodities covered for the purpose of the said tariff under the Central Excise Tariff Act, 1985, would be covered under the scope of the notification. Note (3) also clarifies that the term notification is not with reference to the four notes, but the notification issued under the VAT Act. The reason is obvious that any gods not covered by the notification would fall outside the scope of Schedule III and would not be taxable at 4-5 per cent, but at 12.5 per cent. The aforesaid interpretation, gains strength and merits acceptance when we refer and interpret Note (4). Note (4) states that if the commodity of goods falls under the heading or sub-heading other in the Central Excise Tariff Act, 1985, then interpretation stipulated in Note (2) would apply. In other words, the goods would be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the conclusion that before 30th November, 2005 can this machine be said to be a IT product. Before 30th November, 2005 the position has been considered and it is held that Note 4 to the notification under the Delhi Value Added Tax Act, 2004 with reference to Entry 41A specifically states that it would not apply in case the goods falling under sub-heading others in the Central Excise Tariff Act, 1985. Hence, the other issue was not required to be considered. 41. In our case, the tribunal followed the Delhi High Court judgment and dismissed the VAT Appeal. A similar note, as is referred in the Delhi High Court judgment, is also found in the notification dated 1st April, 2005 and it says that where the description against any heading or sub-heading is shown as other , then the interpretation as provided in Note 2 shall apply. Thus, when any commodities are described in heading or as the case may be sub-heading and the aforesaid description is different in any manner from the corresponding description in the Central Excise Tariff Act, 1985, then only those commodities described as aforesaid will be covered by the scope of this notification and other commodities though covere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... put by an user into the computer or via a document provided in the scanner. This information is then brought out by printing, copying or scanning into storage. We are not in agreement with Mr.Sridharan and accepting his argument would mean we ignore and brush aside the notification dated 1st April, 2005. It may be that multifunctional printers are classifiable under Entry 84.71 of the IT products notification as automatic data processing machine or units thereof or as other units of automatic data processing units, but insofar as the subject notification is concerned, they have not been included. It may be that the multi-functional printers of the appellant cannot be operated independently, but are designed to operate in conjunction with an automatic data processing machine such as a computer. It may be that it is connected to central processing unit of the automatic data processing machine via a cable to accept data from the same and deliver data in a form usable by the system. Once the controversy is to be decided on the touchstone of the MVAT Act and the Schedule Entry thereto and the notification referred therein, then, function and usage of the multi-functional printers can h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was no scope for taking recourse to the residuary entry. It is in these circumstances that the Madras High Court judgment in the case of Canon India (P) Ltd. vs. State of Tamil Nadu was followed so also the judgment in the case of Xerox India Limited (supra). Once we have come to the conclusion that the same was under a distinct law, then, even this judgment is of no assistance. 46. As a result of the above discussion, we are of the clear view that the appellant s products have been rightly classified as attracting the rate of duty at 12.5%. The substantial questions of law concurrently answered in favour of the Revenue and against the appellant-assessee by the impugned order do not require any other answer. In other words, the view taken by the tribunal is consistent with the notification and the Schedule Entry. It cannot be termed as perverse or vitiated by any error of law apparent on the face of the record. For all these reasons, this appeal fails. The substantial questions of law and particularly enumerated and framed above are answered in favour of the Revenue and against the assessee. The appeal is accordingly dismissed, but without any order as to costs. - - TaxTMI - ..... X X X X Extracts X X X X X X X X Extracts X X X X
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