TMI Blog2023 (2) TMI 1090X X X X Extracts X X X X X X X X Extracts X X X X ..... phones under the Entry 60(6)(g) of Schedule B of the Punjab VAT Act - the Apex Court had held that the battery charger cannot be held to be a composite part of the cellphone but is an independent product which can be sold separately without selling the cellphone. The High Court failed to appreciate the aforesaid fact and wrongly held that the battery charger is part of the cellphone. It is relevant to note that the decision in Nokia India Case is based on Entry 60(6)(g) of the Schedule B of the Punjab VAT Act. In the said Entry only cellular phone is defined and accessories are not included. The Hon ble Supreme Court of India has upheld Revenue s contention in that case because Entry 60(6)(g) of Schedule B of the Punjab VAT Act does not mention accessories for the purpose of taxing the items/product at 4%. Applicability of Entry 53 of Schedule III of the KVAT Act read with the Notification No. FD 43 CSL 07(02) dated April 4, 2007 issued by the State Government - HELD THAT:- In Entry No. 60(6)(g) of the Punjab VAT Act, the expression used is cellular telephone whereas in the Notification issued under KVAT Act, the words used are and parts thereof . Further, the parts fa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Venkatesh S. Arabatti, Advocate By Shri. Ravi Raghavan, Advocate By Shri. Atul Krishna Rao Alur, Advocate By Shri. Kamal Sawhney, Advocate Along With Smt. Anushka Gupta, Advocate By Smt. H. Vani, Advocate The State Of Karnataka, The Joint Commissioner Of Commercial Taxes (Appeals-3) Bengaluru The Commercial Tax Officer (Internal Audit And Inspection)-1 Versus M/s. Intex Technologies India Ltd. M/s. Spice Retail Ltd. M/s. Universal Telecommunications (India) Pvt. Ltd. M/s. Cellucom Retail India Pvt. Ltd. M/s. Samsung India Electronics Pvt. Ltd. M/s. Bharthi Airtel Services Ltd. M/s. Micromax Informatics Ltd. M/s. Redington India Ltd. M/s. WS Retail Services Pvt. Ltd. M/s. Ingram Micro India Pvt. Ltd., M/s. Panasonic India Pvt. Ltd., M/s. LG Electronics India Pvt. Ltd. M/s. Lava International Ltd., M/s. Savex Technologies Pvt. Ltd. M/s. Prakash Retail Pvt. Ltd. M/s. Lava International Ltd. M/s. Sony India Pvt. Ltd. M/s. Drive India Enterprises Solutions Ltd. M/s. Tumakuru Srivaaru Marketing Pvt. Ltd . ORDER P.S. DINESH KUMAR J., This batch of Revision Petitions by the Revenue is being disposed of by this common judgment as they involve common quest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... KVAT Act and the State Government has been issuing Notifications specifying the products which would be treated as IT products; Notification No. FD 43 CSL 07(02) dated April 4, 2007 states that IT products falling under Entry 53 of the Third Schedule of the KVAT Act have to be treated as IT Products; the issue involved in these petitions are covered by the authority in State of Punjab Others Vs. Nokia India Pvt. Ltd. [2014 (16) SCC 410, para 19] (hereinafter referred to as the Nokia India Case). mobile charger is not an integral part of the mobile phone to treat among composite goods because merely making a composite package of cell phone, charger shall not make it eligible as one of the composite goods for the purpose of interpretation of the provisions; the decision in Samsung (India) Electronics Pvt Ltd. Vs. State of Gujarat [2020 (2) TMI 1247] has no relevance; the decision in Samsung (India) Electronics Pvt. Ltd. Vs. State of UP [(2017) 77 Taxman.com 219 (All)] (hereinafter referred to as the Samsung India Case) also has no relevance. The said authority cannot be treated as a binding precedent because the facts of present case are simila ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... T products and telecommunication equipment' read with the Notifications would undoubtedly take precedence; the sale of mobile phones along with its charger in a single retail package constitutes a composite contract and requires the application of the dominant intention test, which is a proposition that was neither urged nor considered in Nokia India Case; as per Section 4 of the KVAT Act, charge is on the taxable turnover of a dealer. Under Rule 3 of the Karnataka Value Added Tax Rules 2005 [ KVAT Rules for short] , there is no mechanism by which the Revenue may artificially spilt the single value for goods forming part of a set; pursuant to the judgment in Nokia India Case, the Central Government have issued Office Memorandum F.No.34011/18/2015-SO(ST) dated 30.11.2015 clarifying the position and advising States that accessories be treated as a part of the main item when they are sold as a single unit; entries under the KVAT Act and Punjab Value Added Tax Act, 1914 [the Punjab VAT Act for short] are wholly different; the Allahabad High Court in Samsung India case, under similar circumstances, has distinguished the decision of Hon ble Sup ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on No. FD 43 CSL 07(02) dated April 4, 2007 is similar to the Entry in Heading 8517 of the Central Excise Tariff Act, 1985 [the CET Act in short] and the Customs Tariff Act, 1975 [the CET Act in short] , which reads as: Telephone sets, including telephones in cellular network, or for other wireless networks and other apparatus for the transmission or reception of voice, imagers or other data, including apparatus for communication in a wired or wireless network (such as local or wide area network) and parts thereof, but excluding attachments and transmission or reception apparatus of heading 8843,8525,8527 or 8528. (Emphasis Supplied) 14. The Apex Court in Nokia India Case, further held that: 14. 'Cellular telephone' is in schedule B at Entry No. 60(6)(g) vide HSN Code No.8525.20.17. The Tariff No.8525.20.17 only relates to cellular telephone and not the accessories. The Schedule 'B' does not indicate that the cellular phone includes the accessories like the chargers either in the HSN Code or by elaborating in words. 15. The Assessing Authority, Appellate Authority and the Tribunal rightly held that the battery charger is not a part ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e material which would permit the authorities to reassess or issue said notice. Decision of Nokia will not apply to facts of this case . (Emphasis Supplied) 18. As noticed hereinabove, in Entry No. 60(6)(g) of the Punjab VAT Act, the expression used is cellular telephone whereas in the Notification issued under KVAT Act, the words used are and parts thereof . Further, the parts falling under Heading 8843, 8825, 8527 or 8528 have been specifically excluded. It is relevant to notice that, battery charger which falls under Entry 8504 40 30 under the CET Act and CT Act, has not been excluded. This makes it clear that charger is a composite part in the package. Thus, the intention of the Revenue is unambiguous that the Notification was applicable for telephone sets and parts thereof which includes charger. Therefore, in our considered view, the Entries in Punjab VAT Act and the KVAT Act are different and the Entry under the Punjab VAT Act is limited only to cellular telephones in contradistinction to the Notification under KVAT Act. 19. Rule 3(b) of the GRI reads as follows: Mixtures, composite goods consisting of different materials or made up different compo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y of charger, headset, and ejection pin are incidental to the sale. Therefore, the Dominant Intention Test would apply to the present case and hence, charger cannot be differently taxed. 25. Section 4 of the KVAT Act reads as follows: 4. Liability to tax and rates thereof.- (1) Every dealer who is or is required to be registered as specified in Sections 22 and 24, shall be liable to pay tax, on his taxable turnover, (a) in respect of goods mentioned in,- (i) xxx (ii) Third Schedule, at the rate of five per cent, and (iii) xxx 26. The mobile phone finds its place in III Schedule and taxable at 5% and therefore, the charger which is also sold along with mobile phone in one set is together chargeable at 5%. This view is in consonance with the law laid down by the Apex Court in CIT Vs. B.C. Srinivasa Setty [(1981) 5 Taxmann 1 (SC)] , wherein it is held that the charging section and the computation provisions constitute an integrated code and if these two requirements are not jointly present, no tax can be levied or sought to be recovered. The relevant portion of the judgment reads as follows: 10. A transaction to which those provis ..... X X X X Extracts X X X X X X X X Extracts X X X X
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