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TMI Blog2016 (2) TMI 1363X X X X Extracts X X X X X X X X Extracts X X X X ..... these revision petitions are pertaining to the assessment of the Assessee-Companies between the period 01.04.2006 to 09.03.2010, and arise out of the order of the learned Rajasthan Tax Board, Ajmer, holding against the Assessee-Companies that such Multi-Functional Devices are not Computer Printers or Computer Peripherals, taxable @ 4% under Schedule IV of the VAT Act, but are taxable, for the aforesaid period @ 12.5%/14% in the Residuary Entry of Schedule V of the said Act. The Assessee-Companies collected and paid the tax on sales of the said Multi Functional Devices @ 4% in Schedule IV for the aforesaid period, whereas the Revenue demanded tax @ 12.5%/14% in the Residuary Entry for the aforesaid period. But the learned Tax Board set aside the penalty imposed on the Assessee-Companies, by the impugned orders, and therefore, as far as imposition of tax at higher rate is concerned, the Assessee-Companies felt aggrieved and filed the present revision petitions, while the Revenue filed these revision petitions, aggrieved by the deletion of penalty imposed by the Assessing Authority under Section 61 of the VAT Act, before this Court. 4. Before proceeding further, it is considered appr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aries." 6. Mr. Alkesh Sharma, Mr. Sameer Jain with Ms. Mahi Yadav, Mr. M.R. Devnath, Mr. Siddharth Ranka, Mr. M.I. Khan, Mr. Devendra Kumar with Mr. Dinesh Kumar, Ms. Pragya Sethia and Mr. Javed Khan, learned counsel for the Assessee-Companies made the following submissions: (i) That the Multi Functional Devices comprising of scanner, photocopier, fax machines and computer printer-all-in-one, is nothing but a computer printer or computer system peripheral, and since it has no stand alone function, except when used with the computer, they cannot be taxed under the Residuary Entry, in the face of the specific entries under the aforesaid notifications applicable for the period between 01.04.2006 and 09.03.2010, on the basis of the amendment effected by the notification dated 09.03.2010, excluding the Multi Functional Devices from the said category in Schedule IV prescribing rate of tax @ 4%, from the definition of computer printers, which later on, vide notification dated 06.03.2013, they were again included alongwith the various items of computer peripherals and accessories, taxable @ 4%. (ii) The learned counsels for the Assessee-Companies urged that the notification dated 09.0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a Limited v. Commissioner Of Customs, Mumbai, Mumbai, 2001 (13) E.L.T. 165 (Cegat, Delhi). 9. Learned counsels for the Assessee-Companies, therefore, urged that the additional tax imposed by the Assessing Authority and upheld by the learned Tax Board, treating the items to be falling under the Residuary Entry, deserves to be quashed and set aside, and insofar as the learned Tax Board setting aside the penalty imposed on the Assessee-Companies, the impugned orders may be maintained and the question of imposition of penalty does not arise, since irrespective of the rate of tax applicable to the Assessee-Companies had disclosed all the relevant particulars in their returns and there was no element of mens rea applicable in the present cases, and even if it is held to be a debatable issue, the imposition of penalty could not be justified, and therefore, the levy of penalty deserves to be set aside, and has rightly been set aside by the learned Tax Board. 10. On the other hand, Mr. R.B. Mathur with Ms. Tanvi Sahai, Mr. Archit Bohra and Ms. Meenal Ghiya and Mr. Nitin Jain, learned counsels for the Revenue urged that the intention of the legislature of excluding the Multi Functional Dev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deliberately paid the lesser rate of tax @ 4%, on the said commodity, instead of 12%/14% under the Residuary Entry and in the past period under the Rajasthan Sales Tax Act, 1994, when the VAT Act was not in force, the Assessee-Companies had themselves paid the tax on the sales of these commodities under the Residuary Entry of the Rajasthan Sales Tax Act, 1994. However, for this later submission, there was no relevant document produced by the Revenue before this Court in support of this contention. 12. The learned counsels for the Revenue also submitted that the learned Tax Board, in one case of RICOH India Ltd., the Additional Commissioner of Commercial Taxes under Section 36 of the VAT Act decided this controversy in favour of the Revenue that the Multi Functional Devices are not IT products or its peripherals, and even the learned Tax Board decided this question against the Assessee, against which a revision petition filed by them, namely, S.B. Sales Tax Revision Petition No. 81/2008-RICOH India Ltd. v. Rajasthan Tax Board, Ajmer, came to be dismissed by a coordinate Bench of this Court on 28.11.2014, for want of prosecution. Therefore, the learned counsels for the Revenue urge ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... can be made possible through mobile phone also, as contended by the learned counsels for the Revenue. With the technology fast developing, it is now possible to do so and use Multi Functional Device with remote sensors in the computer system or Wi-fi. Therefore, actual and physical connection with the computer may not be even necessary. The major user of the Multi Functional Devices, the taxability of which is in question before this Court, is as a computer printer and one study in this regard produced by the learned counsels for the Assessees by the 'World Book Encyclopedia', indicates that typical page consumption analysis discloses that of the total output, 67% is printed, 30% is copied and 3% is faxed. The Assessees before this Court also contended that the dominant use of Multi Functional Device in question is computer printer only, with which the documents in the computer system is printed with the help of the said equipment or machine. The dissection or separation of the various parts of this machine to decide the taxability of rate thereof, is not called for, but if admittedly, this device can be used as computer printer also, there appears to be no justification to tax it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ame housing." 21. In para 13 of the said judgment, the Hon'ble Supreme Court held that about 85% of the total parts and components alongwith manufacturing cost is allocated to printing and it is to be used principally in Automatic Data Processing Machine (ADPM) and it is also connectible to the Central Processing Unit (CPU), and therefore, it is classifiable in entry 84.71.60 and not in the Residuary Entry 84.79.89. The relevant paras No. 13 to 15 of the judgment in Xerox India Limited v. Commissioner Of Customs, Mumbai, Mumbai (supra) are quoted below for ready reference:- "13. It is not in dispute that the Multi-Functional Machines in question Xerox Regal 5799 has about 85% of its total parts and components along with manufacturing cost allocated to printing, as does 74% of the Xerox SD155 model. This clearly shows that the printing function emerges as the principal function and gives the Multi-Functional Machines its essential charger. Having such a nature, it is also clearly meets the three-fold requirement of Chapter Note-5(B), as it is to be used in ADPM, it is connective to the Central Processing unit, and it is able to accept data in a form (codes or signals), which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e and other functions, like printing, scanning and faxing were added features to this machine, and therefore, it was taxable at 12%, was rejected by the Division Bench of the Madras High Court. 23. The extract of the judgment in the case of Canon India (P) Ltd. v. State of Tamil Nadu (supra) is quoted below for ready reference "The petitioner was a dealer in computer peripherals, image runners, fax machines, toner, photocopier machines and their spares and consumable. It claimed that the image runners (multi-function network printers) would fall under entry 18(i) of Part B of the First Schedule to the Tamil Nadu General Sales Tax Act, 1959, taxable at four per cent. The assessing officer held that the image runner sold by the dealer could act as copier machine and other functions like printing, scanning and faxing were added features to this machine and, therefore, it was taxable at 12 per cent under entry 14(iv) or entry 40 of Part D of the First Schedule to the Act. The Appellate Assistant Commissioner affirmed this and the Appellate Tribunai classified the image runner under entry 13(i) of Part C of the First Schedule to the Act taxable at 10 per cent. On revision petitions: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... whether "router" was a computer peripheral or not. Answering the question in affirmative, the Court held it to be computer peripheral, in the following terms: "A computer "peripheral" is an ancillary device of a computer, similar to that of key board, floppy disk or hard drive, which enables the transmission of data from one computer to another or one area to another. A "router" is a device falling outside the main part, namely, computer and it is partially or completely dependent on the host and expands the capabilities of the computer and it does not form pat of the core architecture. All computer peripherals have not been defined in entry 22 of the notification dated January 1, 2007 issued for purposes of entry 68 of Part B of the First Schedule to the Act. Therefore, whatever goods fall within the definition of "peripheral" would be entitled to such a benefit. A router, from the nature of its use in conjunction with the computer defined based on relevant compute related dictionary and date, is a computer peripheral, falling under entry 22 of the notification issued for purposes of entry 68 of Part B of the First Schedule to the Tamil Nadu Value Added Tax Act, 2006." 25. Thes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also not placed before this Court for consideration and only the order of the Additional Commissioner was so placed, which also is of no assistance to the Revenue, in the present cases. 29. On the contrary, in the case of same Ricoh India Limited v. Commissioner, 2012 (52) VST 49 (Delhi)], the Delhi High Court held as under [vide quote from the judgment of Madras High Court in the case of Canon India (P) Ltd. v. State of Tamil Nadu (supra)] ".........16. The question, therefore, which is raised and has to be answered, is whether the multi-functional machines or printers are computer peripherals or not? The term 'peripheral has not been defined in the VAT Act and, therefore, has to be given its natural and common sense meaning. A computer mainly consists of Central Processing Unit, which cannot operate and function without peripherals like monitor, keyboard, printer etc. Some of the peripherals may be mounted or housed in the computer cabinet itself like hard disc, CD ROM, mic, etc. Sometime peripherals can be separate and have to be attached to the central processing unit. The term 'peripheral' has been defined in Oxford Dictionary to mean as under:- '(of a device) able to be ..... X X X X Extracts X X X X X X X X Extracts X X X X
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