Karnataka High Court
M/S Mct Cards And Technology Pvt Ltd vs The State Of Karnataka on 19 April, 2023
Author: P.S. Dinesh Kumar
Bench: P.S. Dinesh Kumar
STRP No.15/2021
1
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 19TH DAY OF APRIL, 2023
PRESENT
THE HON'BLE MR. JUSTICE P.S. DINESH KUMAR
AND
THE HON'BLE MR. JUSTICE C.M. POONACHA
S.T.R.P. NO.15 OF 2021
BETWEEN:
M/S. MCT CARDS AND TECHNOLOGY PVT LTD
UDAYAVANI BUILDING
PRESS CORNER
MANIPAL-576 104
(REPRESENTED BY
ANNAND KUDIGRAMA DIRECTOR) ...PETITIONER
(BY SHRI. RAVI RAGHAVAN, ADVOCATE)
AND:
1. THE STATE OF KARNATAKA
(THROUGH ITS PRINCIPAL SECRETARY
FINANCE DEPARTMENT
VIDHANA SOUDHA
BANGALORE-560 001)
2. THE DEPUTY COMMISSIONER OF
COMMERCIAL TAXES
(AUDIT -4) DVO-4
MANGALORE DIVISION
MANGALORE-575 008
3. THE JOINT COMMISSIONER OF
COMMERCIAL TAXES (APPEALS)
STRP No.15/2021
2
MANGALORE DIVISION
MANGALORE-575 008. ...RESPONDENTS
(BY SHRI. JEEVAN J. NEERALGI, AGA)
THIS STRP IS FILED UNDER SEC.65(1) OF THE KARNATAKA
VALUE ADDED TAX ACT., 2003 AGAINST THE JUDGMENT DATED
27.08.2021 PASSED IN STA.NOS. 238 AND 239/2018 AND 166 AND
167/2019 ON THE FILE OF THE KARNATAKA APPELLATE TRIBUNAL
AT BENGALURU, DISMISSING THE APPEALS AND
CONFIRM/UPHOLDING THE ORDER DATED 26.03.2018 PASSED IN
CST/AP/9/2016-17 AND THE ORDER DATED 11.03.2019 PASSED IN
APPEAL NO.CST/AP/2/2018-2019 ON THE FILE OF THE JOINT
COMMISSIONER OF COMMERCIAL TAXES, (APPEALS) MANGALORE
DIVISION, MANGALURU. DISMISSING THE APPEALS FILED
AGAINST THE RE-ASSESSMENT ORDER DATED 29.11.2016 AND
DATED 12.04.2018 PASSED BY DEPUTY COMMISSIONER OF
COMMERCIAL TAXES (AUDIT 4) DVO, MANGALURU FOR THE TAX
YEAR 2011-2012 AND 2014-2015 RESPECTIVELY.
THIS STRP HAVING BEEN HEARD AND RESERVED FOR
ORDERS ON 06.03.2023, COMING ON FOR PRONOUNCEMENT OF
ORDERS THIS DAY, P.S. DINESH KUMAR J., PRONOUNCED THE
FOLLOWING:-
ORDER
This Revision Petition by the Assessee, directed against the order dated August 27, 2021 in STA No. 238 & 239/2018 and 166 & 168/2018 passed by the KAT1, Bengaluru, has been admitted to consider following questions of law:
1) In the facts and circumstances of the case, whether the Hon'ble Tribunal was right in holding that the 'photo 1 Karnataka Appellate Tribunal STRP No.15/2021 3 identity cards' sold by the Petitioner does not merit classification under Entry 71 of Schedule III to the Karnataka Value Added Tax Act, 2003;
2) Whether the Hon'ble Tribunal was right in holding that the 'photo identity cards' sold by the Petitioner are instead under the residuary category under Section 4(1)(b)(iii) of the Karnataka Value Added Tax Act, 2003;
3) Whether the Hon'ble Tribunal was right in holding that only the specific goods mentioned under Entry 71 of Schedule III to the Karnataka Value Added Tax Act, 2003 merit classification under the said Entry as 'printed material' as well as 'stationery articles'?
2. Heard Shri. Ravi Raghavan, learned Advocate for the Assessee and Shri. Jeevan J. Neeralgi, learned AGA for the Revenue.
3. Briefly stated the facts of the case are, assessee is a registered dealer under the Karnataka Value Added Tax Act, 20032. It is engaged in the activity of manufacture and sale of photo identity cards, smart cards, banking cards having magnetic strips. The Deputy 2 KVAT Act for the short STRP No.15/2021 4 Commissioner of Commercial Taxes (Audit-4) cum AO3, concluded the re-assessment vide order dated April 12, 2018 under Section 9(2) of the Central Sales Tax Act, 19564 read with Section 36 (1)& 72(2) of the KVAT Act in respect of the sale of photo identity cards holding that photo identity cards do not fall under the Entry No.71 of the Schedule III or any other Schedule of the KVAT Act and taxable at 14% as per Section 4(1)(b)(iii) of the KVAT Act.
4. On appeal, the JCCT(A)5and KAT confirming AO's Order, dismissed assessee's appeals. Hence, this revision petition.
5. Shri. Ravi Raghavan, learned Advocate for the Assessee, submitted that:
photo identity cards are manufactured by cutting the plastic sheets in defined sizes, digitally 3 Assessing Officer 4 CST Act for the short 5 Joint Commissioner of Commercial Taxes (Appeals). STRP No.15/2021 5 printing the text, placing the logo/photo of the institution and laminating the card; photo identity cards being printed material other than books meant for reading, merit classification under Entry 71 of Schedule III to the KVAT Act; Entry 71 has two parts. While, the first part relates to Printed material (other than books meant for reading), the second part relates to stationery articles. Therefore, Entry 71 must be read disjunctively;
the term 'printed material' is not defined under the KVAT Act and hence dictionary meaning must be borrowed to understand the nature of said product;
the raw material in the case of 'photo-identity card' is undisputedly a plastic sheet which undergones a process of cutting to requisite size, digital printing of text material and the STRP No.15/2021 6 photograph. Therefore, the product is nothing but a 'printed material';
photo identity card is classifiable under Chapter 49 of the Central Excise Tariff Act, 19856. HSN7 Explanatory Notes to Chapter 49 defines 'printed' also means reproduced by means of a duplicating machine, produced under the control of an automatic data processing machine, embossed, photographed, photocopied, thermocopied or typewritten;
all printed materials with the exception of books meant for reading fall within the scope of Entry 71 of III Schedule to KVAT Act and hence, would cover the photo identity cards.
With these submissions, Shri. Ravi Raghvan contended that the impugned order is unsustainable and prayed for allowing this petition. 6 'the CET Act' for short 7 Harmonized System of Nomenclature STRP No.15/2021 7
6. Opposing the petition, Shri. Jeevan J. Neeralgi, for the Revenue, submitted that:
photo identity cards are not mere a printed material. It undergoes a systematic process of manufacturing compared to any other printed material; the manufacturing of photo identity cards includes printing hologram, personalised photos, lamination etc;
photo identity cards are customer specific depending on the quality, quantity and other requirements. It is not plain printing and cannot be used by general public;
the term 'photo identity card' is not specifically mentioned in any Entry under the KVAT Act. Therefore, they do not fall under any specific Entry. With these submissions, he prayed for dismissal of this petition.STRP No.15/2021
8
7. We have carefully considered rival contentions and perused the records.
8. In substance, assessee's case is, all printed materials with the exception of books meant for reading fall within the scope of Entry 71 of Schedule III to the KVAT Act.
9. Revenue's case is, photo identity cards are custom made based on the requirements of the customers. They are not specifically mentioned in the KVAT Act and therefore, they do not fall within the ambit of Entry 71 of Schedule III to the KVAT Act.
10. Entry 71 of Schedule III of the KVAT Act reads thus:
"printed materials other than books meant for reading; stationery articles namely Account books, paper envelopes, diaries, calendars, race cards, catalogues, greeting cards, invitation cards, humour post cards, picture post cards, cards for special occasions, photo and stamp albums, computer stationery."STRP No.15/2021
9
11. The relevant Tariff Entry under the CET Act reads as follows:
Heading No. Sub heading No. Description of goods 49.01 Printed books, newspapers, pictures and other products of the printing industry;
manuscripts, typescripts and plans
12. The first part of Entry 71 of the Schedule III to the KVAT Act specifies printed materials other than books meant for reading. The Tariff item No. 49.01 of the CET Act includes other products of the printing industry.
13. For the purpose of Chapter 49 of the CET Act, 'printed' also means 'reproduced' by means of a duplicating machine, produced under the control of a computer, embossed, photographed, photocopies, thermocopied or typewritten. It is relevant to note that, photo identity cards are also produced by using a computer, holograms are embossed, and photographs STRP No.15/2021 10 affixed. Therefore, in our consider view, a photo identity card falls within the definition of 'other products of printing industry' under Tariff item No. 49.01 of the CET Act.
14. It is further relevant to notice that certain items which are excluded under Tariff item No. 49.01 have been specifically stated in Chapter 49 of the CET Act, which reads as follows:
"1. This Chapter does not cover:
(a) photographic negatives or positives on transparent base (Chapter 37);
(b) maps, plans or globes, in relief, whether or not printed (heading 9023); or
(c) Playing cards or other goods of Chapter 95 "
15. Thus, it is clear that the Parliament has excluded only certain items and Photo identity card is not one such excluded item.
16. It is settled that if an item is cleared under a particular tariff, by the Central Excise Authority, the same STRP No.15/2021 11 is not disputable by the VAT Authorities. (See: Samsung India Electronics Pvt. Ltd V/s. State of Gujarat8).
17. Therefore, the principal contention urged by the Revenue that photo identity cards do not fall under the Entry 71 of Schedule III to the KVAT Act, is untenable because, the KVAT Authority is bound by the classification accepted by the Central Excise Authority.
18. In view of the above discussion, we are of the considered view that the photo identity cards fall under Entry 71 of Schedule III to the KVAT Act under the category of printed materials other than books meant for reading, and accordingly, taxable at 5%.
19. Hence the following:
ORDER
a) The revision petition is allowed.
b) The substantial questions of law are answered in favour of the Assessee and against the Revenue. 8
2020 (2) TMI 1247 (Guj) (Paras No.25 & 28) STRP No.15/2021 12
c) The order dated August 27, 2021 in STA No. 238 & 239/2018 and 166 & 168/2018 passed by the KAT, Bengaluru confirming the order passed by the AO and KAT is set aside.
No costs.
Sd/-
JUDGE Sd/-
JUDGE SPS