9911796707
TMI Blog2023 (2) TMI 1228X X X X Extracts X X X X X X X X Extracts X X X X ..... 22 (State of Karnataka Vs. M/s Intex Technologies India Ltd.) directed against the order dated March 10, 2021 in STA No. 88-91/2018 passed by the KAT [Karnataka Appellate Tribunal], Bengaluru. Though it has been admitted to consider three questions of law, after hearing Learned AGA for the Revenue and Learned Advocates for the Assessees, in our opinion only the following question arises for consideration in all these petitions: 1) Whether on the facts and in the circumstances of the petitioner's case, the Appellate Tribunal was right in law in holding that "mobile phone chargers" sold along with mobile phone in a composite pack attracts tax at the same rate as applicable to "mobile phone" only and it cannot be taxed at higher rate as unscheduled goods under Section 4(1) (b) (iii) of the Act? 3. Briefly stated the facts in M/s. Intex Technologies India Ltd. are, it is a registered dealer under the Karnataka Value Added Tax Act, 2003 ['KVAT Act' for short]. It is engaged in trading mobile phones, parts and accessories. It sells mobile phones in a composite package which also contains accessories such as headsets, cables, ejection pin, adapter, charger, manual etc. The AO [ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... High Court of Allahabad has interpreted the provisions contained in Article 366(29A) of the Constitution of India which mainly relates to the transfer of goods in due course of execution of a 'works contract'. Therefore, the said authority does not support the case of assessee; * re-opening of assessment is not based upon the judgment rendered in Nokia India Case by the Apex Court. The Commissioner of Commercial Taxes, in exercise of powers vested under Section 59(4) of the KVAT Act has issued a clarification on September 06, 2008 clarifying that the Mobile chargers attract tax at the rate of 12.5%; * the Tribunal has erred in interpreting the Notification and holding that "Telephone sets, including telephones for Cellular networks" would include "sets" of Cellular Phones also; * chargers though sold with the mobile phones, are independent gadgets and therefore, cannot be taxed at par with a mobile phone; * the Tribunal has erred in holding that charger sold along with mobile phone in a composite pack attracts tax as that of mobile phone, is contrary to law laid down in Nokia India Case. 5. Opposing the appeal, Shri. T. Suryanarayan, Shri. K. Arvind Kamath, Shri. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... chargers sold as part of a composite package with mobile phones are taxable at the same rate as the mobile phones. 6. We have carefully considered the rival contentions and perused the records. 7. One of the main contentions raised by Revenue is that the decision in Nokia India Case delivered by the Hon'ble Supreme Court is applicable to the present case. 8. The issue involved in Nokia India Case was whether mobile charger should be excluded from the entry of concessional rate of tax which applies to cellphones under the Entry 60(6)(g) of Schedule B of the Punjab VAT Act. The said Entry reads as follows: "Telephones, cell phones, tele-printer, wireless equipment and parts thereof, Digital Video Disc and Compact Disc and Information Technology products as given hereunder- 6. Transmission apparatus other than apparatus for radio or TV broadcasting: (g) Cellular telephone" 9. In Nokia India Case, the Apex Court has held that: "19. in view of the aforesaid facts, we find that the Assessing Authority, Appellate Authority and the Tribunal rightly held that the mobile/cellphone charger is an accessory to the cellphone and is not part of the cellphone. We further hold that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have been operated without using the battery charger. But in reality, it is not required at the time of operation. Further, the battery in the cell phone can be charged directly from the other means also like laptop without employing the battery charger, implying thereby, that it is nothing but an accessory to the mobile phone." (Emphasis Supplied) 15. In Madhav Rao Jiwaji Rao Scindia Bahadur and Ors. Vs. Union of India 1971 SCR (3) 9, the Apex Court has observed that: "...It is difficult to regard a word, a clause or a sentence occurring in a judgment of this Court, divorced from its context, as containing a full exposition of the law on a question when the question did not, even fall to be answered in that judgment." 16. Para 14 of the judgment in Nokia India Case, clearly indicates that the said decision is based on Entries of the Punjab VAT Act, wherein the prime issue for consideration was whether the mobile charger is an accessory or not. But in the case on hand, the issue involved is, when the mobile phone is sold along with the charger what must be the rate of tax? 17. The Allahabad High Court, in the facts of that case has distinguished Nokia India Case and held thu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ey consisted of the material or component which gives them their essential character, in so far as the criterion is applicable". 20. Explanation X of Rule 3(b) of the GRI reads: "For the purposes of this Rule, the term "goods put up in sets for retail sale" shall be taken to mean goods which: (a) consist of at least two different articles which are, prima facie, classifiable in different headings. (b) consist of products or articles put up together to meet a particular need or carry out a specific activity; and (c) are put up in a manner suitable for sale directly to users without repacking (eg. in boxes or cases or on boards)." 21. Therefore, in view of the above, 'telephone sets' can be considered as 'goods put up in sets for retail sale' under Rule 3(b) of the GRI. 22. Further, Rule 3(b) states that goods put up in sets for retail sale shall be classified as if they consist of the material or component which gives them their essential character. In the present case, the essential character of mobile set is the mobile phone and not the charger. Thus, the classification based on components mentioned above would apply and as per the essential character, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ovisions in the Income Tax Act, where under each head of income the charging provision is accompanied by a set of provisions for computing the income subject to that charge. The character of the computation provisions in each case bears a relationship to the nature of the charge. Thus the charging section and the computation provisions together constitute an integrated code. When there is a case to which the computation provisions cannot apply at all, it is evident that such a case was not intended to fall within the charging section..." (Emphasis Supplied) 27. A bare perusal of the Section 4 (charging section) of KVAT Act and Rule 3 (computation provision) of KVAT Rules would clearly indicate that there is no prescribed mechanism provided for determining the value of individual goods in a composite transaction. Thus, in the absence of a valuation mechanism, tax cannot be levied differently on each of the component by separating a single composite package. 28. In view of the above discussion, we are of the considered view that the definition contained in the Notification issued under the KVAT Act includes the charger which is sold along with the mobile phone in one set and accor ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
