Karnataka High Court
M/S Lava International Limited vs State Of Karnataka on 10 November, 2016
Author: Vineet Kothari
Bench: Vineet Kothari
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 10TH DAY OF NOVEMBER, 2016
BEFORE
THE HON'BLE Dr.JUSTICE VINEET KOTHARI
WRIT PETITION Nos.55790-801/2016 (T-RES)
BETWEEN
M/S. LAVA INTERNATIONAL LIMITED
NO.64, 2ND CROSS
PATTEGAR PALYA
SRINIVASANAGAR
NAGARABHAVI
BENGALURU-560 072
(REPRESENTED BY
GENERAL MANAGER
FINANCE DIRECT TAXATION
BIBHASH DEB)
...PETITIONER
(BY SRI ATUL K ALUR, ADVOCATE)
AND
1. STATE OF KARNATAKA
REPRESENTED BY FINANCE SECRETARY
GOVERNMENT OF KARNATAKA
VIDHANA SOUDHA
AMBEDKAR VEEDHI
BENGALURU-560 001
Date of order : 10.11.2016 in WP Nos.55790-801/2016
M/s. Lava International Limited vs.
State of Karnataka and others
2/7
2. THE COMMISSIONER OF
COMMERCIAL TAXES
VANEJE THERIGE KARYALAYA
GANDHI NAGAR
BENGALURU-560 009
3. THE ASSISTANT COMMISSIONER OF
COMMERCIAL TAXES
(AUDIT-2.5) DVO-2
ROOM NO.505, V FLOOR
A BLOCK, KORAMANGALA
BENGALURU-560047
4. THE ASSISTANT COMMISSIONER OF
COMMERCIAL TAXES, LVO -70
PEENYA INDUSTRIAL ESTATE
KIADB BUILDING
PEENYA
BENGALURU-58
...RESPONDENTS
(BY SRI V SREENIDHI, AGA)
THESE WRIT PETITIONS ARE FILED UNDER ARTICLES
226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO
QUASH THE REASSESSMENT ORDER PASSED UNDER SECTION
39(1) OF THE KVAT ACT AND THE ASSESSMENT PERIOD 2014-
15 DATED 25.08.2016 AT ANNEXURE-J PASSED BY R-3 IN SO
FOR THE PETITIONER IS CONCERNED AND ETC.,
THESE WRIT PETITIONS COMING ON FOR PRELIMINARY
HEARING THIS DAY, THE COURT MADE THE FOLLOWING:
Date of order : 10.11.2016 in WP Nos.55790-801/2016
M/s. Lava International Limited vs.
State of Karnataka and others
3/7
ORDER
Mr. Atul K Alur, Adv. for Petitioner.
Mr. V Sreenidhi, AGA for Respondents.
1. The present writ petitions are directed against the reassessment order passed by the Assistant Commissioner of Commercial Taxes for the period April 2014 to March 2015 vide Annexure-J dated 25.08.2016 placed on record.
2. Learned counsel for the petitioner urged before the Court that there has been breach of principles of natural justice in the present case since the revised proposition notice was given by the respondent-Assessing Authority only on 19.08.2016 and even though the officer concerned was under transfer, he passed the impugned reassessment order dated 25.08.2016. He also submitted that the issues regarding sales returns etc. have not been properly appreciated by the respondent-Assessing Authority.
3. The main question involved in the present case is also about the rate of tax applicable under the Karnataka Date of order : 10.11.2016 in WP Nos.55790-801/2016 M/s. Lava International Limited vs. State of Karnataka and others 4/7 Value Added Tax Ac, 2003, on the sale of mobile battery chargers, which are sold in the same package as the mobile phones and separately also. As far as this issue is concerned, that is no longer res integra, as the same has been decided by the Hon'ble Supreme Court in the case of State of Punjab and others -versus- Nokia India Private Limited (2015) 77 VST 427 (SC), which was quoted in the revised proposition notice itself by the respondent-Assessing Authority and the same is again quoted herein below for ready reference;
" If the charger was a part of cell phone, then cell phone could not 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 batter charger, implying thereby, that it is nothing but an accessory to the mobile phone. Further, as per the information available on the website of Nokia, the Company has invariably put the mobile battery charger in the category of an accessory which means that in the common Date of order : 10.11.2016 in WP Nos.55790-801/2016 M/s. Lava International Limited vs. State of Karnataka and others 5/7 parlance also, the mobile battery charger is understood as an accessory. It has also been noticed that, a Nokia make battery charger is compatible to many models of Nokia mobile phones and also many models of Nokia make battery chargers which are compatible to a particular model of Nokia mobile phone, imparting various levels of effectiveness and convenience to the users .... and " .... The mobile/cell phone charger is an accessory to cell phone and is not a part of the cell phone. We further hold that the battery charger cannot be held to be composite part of the cell phone but is an independent product which can be sold separately, without selling the cell phone."
(emphasis supplied)
4. In view of the aforesaid and in view of the fact that the petitioner-assessee has an effective alternative remedy of appeal against the impugned reassessment order passed by the respondent-Assessing Authority, these writ petitions are not maintainable and the petitioner-assessee deserves to be relegated back to the Appellate Authority.
Date of order : 10.11.2016 in WP Nos.55790-801/2016 M/s. Lava International Limited vs. State of Karnataka and others 6/7
5. As far as the issue of applicability of rate of tax on chargers is concerned, in view of the aforesaid binding precedent of the Supreme Court, this question is not left open for any further debate by the petitioner-assessee and the mobile battery chargers have been held to be only the accessories of mobile phones and they cannot be treated as part of the mobile phones itself. It will definitely attract a separate rate of tax as in the present case, it is rightly charged at 14.5% and the difference of tax at 9% was demanded by the respondent-Assessing Authority, as the petitioner-assessee had charged and collected the tax only at the rate of 5.5% on the sale of mobile battery chargers.
6. Except the aforesaid issue of rate of tax, the petitioner-assessee is relegated to the Appellate forum and if, such an appeal is filed by the petitioner-assessee within a period of four weeks from today, the Appellate Authority shall decide the same on merits, without raising any objection as to the question of limitation and on the basis Date of order : 10.11.2016 in WP Nos.55790-801/2016 M/s. Lava International Limited vs. State of Karnataka and others 7/7 of the material evidence to be produced before it, in accordance with law.
Accordingly, the writ petitions are disposed of. No costs.
Sd/-
JUDGE mv