Madras High Court
M/S.Texonic Instruments vs The Commissioner Of Commercial Taxes on 12 July, 2018
Author: T.S.Sivagnanam
Bench: T.S.Sivagnanam
In the High Court of Judicature at Madras Dated : 12.07.2018 Coram : The Honourable Mr.Justice T.S.SIVAGNANAM Writ Petition No.22263 of 2013 & M.P.Nos.1 and 2 of 2013 & W.P.Nos.19866 to 19868 of 2013 & M.P.Nos.1+1+1 of 2013 M/s.Texonic Instruments Rep. By its Partner 9, Athipattan Street Chennai 600 002 ... Petitioner Vs 1.The Commissioner of Commercial Taxes Ezhilagam, Chennai 2.The Assistant Commissioner (CT) Chintadripettai Assessment Circle Chennai ...Respondents Writ petition filed under Article 226 of The Constitution of India praying for the issuance of a Writ of Certiorari to call for the records of the 1st respondent in Lr.No.VAT Cell/51297/2007 (VCC No.1447) and quash the clarification dated 11.12.2017 issued therein. W.P.Nos.19866 to 19868 of 2013 M/s.Texonic Instruments Rep. By its Partner 9, Athipattan Street Chennai 600 002 ... Petitioner in all WPs Vs 1.The Assistant Commissioner (CT) Chintadripettai Assessment Circle Chennai 2.The Commissioner of Commercial Taxes Ezhilagam, Chennai ...Respondents in all Wps Writ petitions filed under Article 226 of The Constitution of India praying for the issuance of a Writ of Certiorari to call for the records of the 1st respondent in TIN 33840580223/2010-11, 33840580223/2011-12 and 33840580223/2012-13 and quash the order dated 16.05.2013 For Petitioner : Ms.Hema Muralikrishnan For Respondents: Mr.M.Hariharan Additional Government Pleader COMMON ORDER
The petitioner, who is a registered dealer on the file of the respondent under the provisions of the Tamil Nadu Value Added Tax Act, 2006 and Central Sales Tax Act, 1956 has filed these writ petitions for the following reliefs:
(i) In W.P.Nos.19866 to 19868 of 2013, the petitioner has challenged the Assessment Orders passed by the respondent/Assessing Officer dated 16.05.2013 for the Assessment years 2010-11 to 2012-13.
(ii) In W.P.No.22263 of 2013, the petitioner has challenged a clarification issued by the Commissioner of Commercial Taxes dated 11.12.2007.
2. The reason for challenging the clarification dated 11.12.2007 is on account of the fact that the Assessing Officer followed the said clarification and completed the assessment and held that the petitioner's product cannot be treated as an Information Technology product and it is only a telecommunication cable and hence, levying tax at 4% does not arise and the product is to be taxed at 12.5%.
3. Heard Mrs.Hema Muralikrishnan, learned counsel for the petitioner and Mr.M.Hariharan, learned Additional Government Pleader appearing for the respondents.
4. The clarification issued by the Commissioner of Commercial Taxes dated 11.12.2007 was on a request made by M/s.Rashi Peripherals Pvt. Ltd., Egmore, Chennai. The said dealer requested for a clarification as regards the rate of tax under TNVAT Act for networking cable. The commissioner had clarified that networking cable is taxable at 12.5% vide Entry No.69 of Part C of First Schedule to TNVAT Act, 2006 with effect from 01.01.2007. Though the clarification binds the Assessing Officer, it does not bind the dealer, who is not a party to the clarification or in other words, a third party to the proceedings. Therefore, the respondent could not have completed the assessment solely based upon the clarification, but should have made an endeavour to examine as to what is the nature of the products, as to whether the product is an information technology product or simply a telecommunication cable. Therefore, in my view, there is no necessity to set aside the clarification dated 11.12.2007, as the impugned clarification does not bind the petitioner.
5.Therefore, Writ Petition No.22263 of 2013 is disposed of by observing that the impugned clarification dated 11.12.2007 issued in favour of a third party dealer does not bind the petitioner. Though may bind the respondent, it cannot be the sole basis for determining the rate of tax in respect of the products dealt with by the petitioner.
6. In W.P.Nos.19866 to 19868 of 2013, the petitioner is challenging the Assessment Orders for the Assessment years 2010-11 to 2012-13. As pointed out earlier, the Assessment orders have been solely based upon the clarification issued by the Commissioner, which is now held to be not binding on the petitioner. To demonstrate as to what is the nature of the product, learned counsel for the petitioner has produced certain materials from which it is seen that the cable is to be used in low voltage single transmission in the Information Technology industries. The technical specifications have been given in the said brochure.
7. The learned counsel referred to the clarification issued by the Commissioner of Commercial Taxes, Goa under Section 69(3) of the Goa Value Added Tax Act, 2005 wherein a clarification was sought for regarding categorization of Sold Data Cables imported by the said dealer, wherein among other things, it has been pointed out that the Finance Department, Mumbai vide notification dated 17.10.2005 issued in terms of the Maharashtra Value Added Tax Act, 2002 at Serial No.35, having heading No.8544, have declared the goods optical fibre cables Networking cables such as Flat Cables CAT 3 cables, CAT 5 cables, CAT 6 cables, unshielded twisted pair (UTP) cable as an Information Technology Product. Similarly, the Finance Department of Gujarat, vide notification dated 01.08.2009, issued under the Gujarat Value Added Tax Act, 2003 at Serial No.35m having heading 8544, declared the optial fibre cables, Networking cables such as Flat cables, CAT 3 cables, CAT 5 cables, CAT 6 cables, unshielded twisted pair (UTP) cables as an Information Technology product. Further reliance has also been placed on the certificate issued by the National Institute of Technology, Karnataka, Surathkal dated 25.06.2004 to state that the product dealt with by the petitioner is an Information Technology product. Thus, the respondent while completing the assessment has to ascertain the nature of the product and then come to the conclusion as to what would be the appropriate classification for the product.
8. The first step that has to be undertaken is to examine as to whether the product will fall within Entry 68 of Part B of First schedule to the Tamil Nadu Value Added Tax Act, 2006, which deals with Information Technology Product. For testing this question, the respondent has to necessarily examine the product, its application and all other technical specifications before arriving at a conclusion. Having arrived at a conclusion that it is an Information Technology product, the respondent should consider as to under which entry the product would fall, whether Entry 19 or Entry 20 as submitted by the petitioner. Hence, for the above reasons, the impugned Assessment orders have to be redone.
9. In the result,
(i) W.P.Nos.19866 to 19868 of 2013 are allowed and the impugned Assessment Orders are set aside and the matter is remanded to the respondent for fresh consideration to examine the nature of product dealt with by the petitioner and after affording an opportunity of personal hearing, take an independent decision in the matter.
(ii) Writ Petition No.22263 of 2013 is disposed of by observing that the impugned clarification dated 11.12.2007 issued in favour of a third party dealer does not bind the petitioner. Though may bind the respondent, it cannot be the sole basis for determining the rate of tax in respect of the products dealt with by the petitioner.
No costs. Consequently, the connected miscellaneous petitions are closed.
12.07.2018 Internet : Yes gpa To
1.The Deputy Commissioner of Income Tax Transfer Pricing Officer IV 121, Mahatma Gandhi Road Chennai 600 034
2.The Deputy Commissioner of Income Tax Company Circle I (1) No.121, Mahatma Gandhi Road Chennai 600 034 T.S.SIVAGNANAM,J gpa Writ Petition No.22263 of 2013 & M.P.Nos.1 and 2 of 2013 & W.P.Nos.19866 to 19868 of 2013 & M.P.Nos.1+1+1 of 2013 12.07.2018