Allahabad High Court
M/S Wep Peripherals Ltd.Lko.Throu ... vs Commissioner Of Commercial Taxes ... on 25 October, 2018
Author: Rajan Roy
Bench: Rajan Roy
HIGH COURT OF JUDICATURE AT ALLAHABAD, LUCKNOW BENCH AFR Court No. - 22 Case :- TRADE TAX REVISION No. - 85 of 2013 Applicant :- M/S Wep Peripherals Ltd.Lko.Throu Authorised Secy. Opposite Party :- Commissioner Of Commercial Taxes U.P.Lucknow Counsel for Applicant :- Mudit Agarwal,Desh Bandhu Bhargava Counsel for Opposite Party :- C.S.C. Hon'ble Rajan Roy,J.
Heard Shri Mudit Agarwal, learned counsel for the revisionist and Shri Sanjay Sareen, learned Additional Chief Standing Counsel for the State.
As per the circular of the Commissioner Trade Tax dated 26.10.2001 it is not in dispute that a Computer Printer is a computer hardware for the purposes of taxation under Entry 75(ii) of the Notification dated 13.12.2002 issued under Section 3-A(1)(b) which corresponds to a similar entry in the earlier Notification dated 15.10.2000 at Serial No. 75 thereof which finds mention in the aforesaid Notification dated 26.10.2004, therefore, the following question of law arises for consideration in this case:-
"Whether the Tribunal was correct in holding that Ribbon Cartridge is not a part of computer printer, therefore, not a computer hardware as such not amenable to tax @ 4% instead it was taxable @ 10% as an unclassified item as it was an accessory of computer printer and not its part ?"
Both the learned counsel for the revisionist and State have agreed to address the Court on the aforesaid legal question today itself.
The facts of the case in brief are that the petitioner herein manufactures ribbon cartridges to be used in Dot Matrix printers. As already mentioned hereinabove it is not indispute by the revenue that the Dot Matrix printer is a computer hardware. Now, the only question to be considered herein is as to whether ribbon cartridge is a part of Dot Matrix printer so as to qualify for taxation under Entry 75(ii) under the fiscal entry "Computer hardware, software and parts thereof......" or not as, if it qualifies then it would be taxable @ 4% but if it does not it would be taxable @ 10% as an unclassified item.
The dispute pertains to the Assessment Year 2005-06. In the subsequent Assessment Year 2006-07 the Assessee Authority took the same view as has been taken in this case i.e. against the revisionist, however, the First Appellate Authority upturned the decision of the Assessing Authority and held that ribbon cartridge was part of Dot Matrix printer, therefore, it was a part of computer hardware and taxable @ 4%, however, a Second Appeal against the decision is pending before the Tribunal at the behest of the Revenue.
The contention of Shri Mudit Agarwal, learned counsel for the revisionist was that the Tribunal as also the First Appellate Authority and Assessing Authority have erred in holding that the Ribbon Cartridge is an accessory and not a part of Dot Matrix printer. In this regard he has relied upon the decision reported in 2008 (12) SCC 45; Commissioner of Central Excise, Delhi Vs. Insulation Electrical Private Limited, wherein it has been held that a "Part" is an essential component of the whole without which the whole cannot function, whereas, "accessory" is something supplementary or subordinate in nature and need not be essential for actual functioning of the product. Based on the aforesaid it has been contended by the learned counsel for the revisionist that the Dot Matrix printer can not be used without the ribbon cartridge and that the cartridge manufactured for a specific printer can not be used in another printer, meaning thereby, any other cartridge can not used in that printer.
He further contended that in such matters the common parlance test is resorted to i.e. how the commodity is understood and considered by those dealing in it, therefore, he says that for the Assessing Authority to say that the Dot Matrix printer could have been used even without the ribbon cartridge by inserting a carbon paper within two pages and then do the printing work is rather far fetched and this can not be the basis for interpretation of a fiscal entry nor to determine taxability of a product to trade tax under the U.P. Trade Tax Act, 1948.
Further more the learned counsel for the revisionist relied upon the decisions reported in AIR 1961 SC 1325; Ramavtar Bhudhaiprasad Vs. Assistant Sales Tax Officer, Akola, (1988) 2 SCC 470; M/s Asain Paints India Ltd. Vs. Collector of Central Excise, (1996) 9 SCC 402; Shree Baidyanath Ayurved Bhavan Ltd. Vs. Collector of Central Excise, (1998) UPTC 1086; M/s Pappur Sweets and Biscuits Vs. Commissioner of Trade Tax,U.P. and (2003) 3 SCc 111; Alpine Industries Vs. Collector of Central Excise to address that in common parlance or the commercial sense Ribbon Cartridge is treated as part of Dot Matrix printer and is also sold along with it by those who deal in it, therefore, this is the safest test in view of the aforesaid decisions, but, the Tribunal as also the other Authorities have erred in treating the said items as an accessory and not a ''part' of the Dot Matrix printer specially in view of the decision of the Supreme Court rendered in the case of Commercial of Central Excise, Delhi Vs. Insulation Electrical Private Limited.
Shri Agarwal, learned counsel for the revisionist has also relied upon two reports of experts which are contained in Annexure No. 3 and 4 to the revision to contend that even the experts of the Trade have opined that ribbon cartridge is part of Dot Matrix printer. In this context he has also referred to the decision of the Supreme Court in the case of Ponds India Limited (Merged with H.L. Limited) Vs. Commissioner of Trade Tax, Lucknow reported in 2008 (8) SCC 369 to contend that the experts opinion has to be given due weightage, however, he says that inspite of the said expert opinion having been filed before the Assessing Authority and which were also available before the First Appellate Authority and the Tribunal at neither of these three levels the same was considered thereby vitiating the decision of the said Authorities including the Tribunal.
Shri Agarwal, learned counsel for the revisionist has also relied upon the decision of the First Appellate Authority in the case of M/s Select Technology Limited Vs. Deputy Commissioner, Commercial Tax Division- 12, Lucknow dated 20.08.2014, wherein this very issue came up for consideration and after an extensive and elaborate discussion of the issue from various aspects including the factual and the legal opinion has been expressed by the First Appellate Authority that ribbon cartridge was a part of Dot Matrix printer, therefore, it was exigable to tax at the sale of 4% as part of computer hardware. Moreover, he says that said decision has been upheld by the Tribunal vide judgment dated 09.03.2017 rendered in Second Appeal 98 of 2015 against which as per his information no revision has been filed before the High Court, therefore, the same has attained finality.
Shri Agarwal also relied upon the decision of the Supreme Court reported in 1996 (10) SCC 413; Union of India and Ors. Vs. Garware Nylons Ltd. and Ors. to contend that the burden of proof is on the Taxing Authority to show that the particular item in question is taxable in the manner claimed by them. Mere assertion on the part of the Revenue in this regard is of no avail. There should be material to enter appropriate finding in that regard and the material may be either oral or documentary. It is for the Taxing Authority to lay evidence in that behalf even before the First Adjudicating Authority. Based on the aforesaid he submitted that no evidence whatsoever was led by the Revenue at any stage to establish that ribbon cartridge was not a part of Dot Matrix printer.
The learned counsel for the revisionist also relied upon the decision reported in 2012 (56) VST 472; Hewlett Packard India Sales Pvt. Ltd. Vs. State of Assam and Ors., wherein the Cartridges of Ink-jet Printer and Laser Printer were held to be part of the printer.
Shri Sanjay Sareen, learned Additional Chief Standing Counsel on the other hand relied upon a decision of the Supreme Court reported in AIR 1977 SC 132; State of U.P. Vs. Kores India Ltd. which has been referred in the judgments of the Tribunal and the other Authorities wherein it had been held that a typewriter ribbon used in the manual type writer was an accessory and was not a part of the type writer (unlike spool) though it may not be possible to use the latter without the former. This conclusion was arrived at by the Supreme Court based on the common parlance test as according to it manual type writers were sold in the market without the type writer ribbons as had been held by the High Court of Karnataka in the case of State of Mysore Vs. Kores (India) Ltd. reported in 1970 (26) STC 87 which had been relied by the Supreme Court, however, when Shri Sareen was confronted as to on what basis the Assessing Authority had arrived at the conclusion or had made the observation that the Dot Matrix Printer could be used without the ribbon cartridge by inserting a carbon paper between two papers, Shri Sareen was not able to give any satisfactorily reply nor place any evidence which may have been led before the Assessing Authority or the Appellate Authority in this regard by the Revenue.
Having heard the learned counsel for the parties and perused the records as also having gone through the decisions cited by them, this Court is of the view that the matter requires reconsideration at the level of the Tribunal for the reasons, firstly, it is to be ascertained as to whether the Dot Matrix printer could be used without the ribbon cartridge as has been opined by the Assessing Authority without referring to any material before it. This would be essential in the context of the decision of the Supreme Court in the case of Commercial of Central Excise, Delhi Vs. Insulation Electrical Private Limited so as to ascertain as to whether ribbon cartridge was a part of the Dot Matrix pinter and therefore a part of computer hardware or it was a simply an accessory as per the test laid down therein. Secondly, the question to be considered by the Tribunal would be as to whether a ribbon cartridge is sold along with the printer as was the evidence led in the case of M/s Select Technology Limited decided by the First Appellate Authority on 20.08.2014, which had been upheld by the Tribunal on 09.03.2017 as already mentioned hereinabove, as in the present case this Court finds that on this aspect of the matter no evidence was led by the concerned parties though it was necessary. While considering the aforesaid issues the Tribunal shall also taken into consideration its earlier judgment in the case of M/s Select Technology Limited as also the judgment of the First Appellate Authority in the said case which it had upheld in that case and the decisions referred hereinabove along with such other decisions as may be applicable in the issue, including the decision of the Supreme Court rendered in Kores India Ltd. (supra).
In view of the what has been discussed hereinabove, this Court is of the view that the Tribunal has not considered the matter in the correct perspective and approach, thereby, rendering its judgment erroneous and liable to be interfered with. It has simply been persuaded by the decision of the Single Judge Bench of this Court in the case of Commissioner of Sales Tax, U.P. Vs. Punjab Gramophone House, Aminabad Park, Lucknow reported in 1978 U.P.T.C. 664 and other decisions and has merely observed that printer ribbon cartridge being consumable item is not part of the printer which by itself can not be the determining factor as is evident from the above discussion. The question involved is answered accordingly. Considering the relevant aspects of the matter as noticed hereinabove, its judgment is set-aside. The matter is remanded back to it for reconsideration in the light of the above observations but with expedition. It is expected that the proceedings after remand shall be concluded by the Tribunal within a period of six months. The trade tax revision is allowed in part.
Order Date :- 25.10.2018
R.K.P. (Rajan Roy,J.)