Allahabad High Court
M/S. Kores (India) Limited Lucknow ... vs Commissioner Of Trade Tax U.P. Lucknow on 23 January, 2020
Author: Alok Mathur
Bench: Alok Mathur
HIGH COURT OF JUDICATURE AT ALLAHABAD, LUCKNOW BENCH Court No. - 26 AFR Case :- TRADE TAX REVISION No. - 14 of 2007 Revisionist :- M/S. Kores (India) Limited Lucknow Thr.Sr.Branch Manager Opposite Party :- Commissioner Of Trade Tax U.P. Lucknow Counsel for Revisionist :- S.M.K.Chaudhary,Vikas Sharma,Yogesh Chandra Srivastava Counsel for Opposite Party :- C.S.C. Hon'ble Alok Mathur,J.
1. Heard Sri Vikas Sharma, learned counsel for the revisionist as well as Sri Rohit Nandan Shukla, learned Standing Counsel for the respondent.
2. By means of this revision the revisionist has assailed the order dated 15.02.2007, passed by the Trade Tax Tribunal (hereinafter referred to as "the Tribunal"), thereby dismissing the second appeal of the revisionist and up holding the order dated 09.11.2006, passed by the Joint Commissioner (Appeals), Trade Tax, Lucknow in the first appeal of the revisionist. This revision pertains to assessment year 2003-04.
3. The revisionist is a Company engaged in the business of manufacture and sale of stationary items such as carbon paper, drawing paper, art material, computer printer, note counting machine etc. which are consumable items. The controversy involved in the present revision is with regard to the rate of tax on H.P. Printer toner and cartridges.
4. It has been submitted that on the sale of H.P. toner and cartridges rate of tax should be 4% while the Assessing Officer has taxed the said goods at the rate of 10%. Therefore, the controversy is whether the H.P. Printer toner and cartridges would be considered to be part of a computer printer or not. In case it is considered to be part of the printer then it will be liable to be taxed at the rate at which the printer is taxed i.e. at the rate of 4% and if it is considered to be an accessory then the same would be liable to be taxed at the rate of 10%.
5. The Tribunal while considering the aforesaid question had recorded finding that the H.P. toner and cartridge does not fall into the category of parts of the printer and that they are just consumable goods and therefore same are liable to be taxed at the rate of 10%.
6. Learned Standing Counsel on the other hand submits that the Tribunal has considered the submissions made by the revisionist, various provisions of charging Sections and case law in this regard has been duly considered and therefore there is no infirmity in the order of the Tribunal.
7. Heard learned counsel for the parties and perused the record.
8. The question which falls for consideration of this Court is whether under the entry computer hardware, software and other computer consumable would include the toner and printer cartridge, which are used alongwith the computer printer.
9. To decide the aforesaid controversy, this Court will have to consider as to whether cartridge of printer is an essential component of a printer, without which the printer cannot function as a whole or is a cartridge consumable or supplementary or subordinate in nature and will not be needed in actual functioning of the product. It is an admitted position and a fact of common knowledge that a printer cannot function without a cartridge. Function of a printer is to produce printed pages and when blank page is inserted, printed page is turned out with printed words engraved there upon which is only because of the cartridge. In absence of a cartridge blank page will be turned out as a blank page without any impression or characters on it. A printer, therefore, is rendered useless without a cartridge and therefore it can safely be concluded that cartridge is an essential component and integral part of a computer printer, without which a printer cannot function.
10. This Court in Trade Tax Revision No. 85 of 2013 - M/s Wep Peripherals Ltd. Lucknow through Authorised Secretary Vs. Commissioner of Commercial Taxes U.P. Lucknow (decided on 25.10.2018) has considered the question with regard to nature of Ribbon Cartridge used in Dot Matrix Printers as to Whether the Ribbon Cartridge is not a part of computer printer, therefore, not a computer hardware as such not amenable to tax at the rate 4% instead it was taxable at the rate 10% as an unclassified item as it was an accessory of computer printer and not its part?
11. In the case of M/s Wep Peripherals Ltd. Lucknow (supra) the Court has resorted to the "common parlance test" i.e. how the commodity is understood and considered by those dealing in it, and therefore it took into account the fact that the Ribbon Cartridge is sold alongwith the printer which according to the Court was the safest test to conclude that the Ribbon Cartridge was part of the Dot Matrix Printer.
12. Learned counsel for the revisionist has also placed reliance on the judgment of Madras High Court in the case of Canon India Private Limited Vs. State of Tamilnadu/ Commissioner of Commercial Taxes/Commercial Tax Officer (Writ Petition No. 4042 of 2008 alongwith other connected matter, decided on 17th July, 2013). In the case of Cannon India Private Limited (supra) the Madras High Court has considered various judgments and also the judgment of the Delhi High Court in the case of Commissioner of Trade Taxes vs. Symphony Enterprises And Others, 2007 INDLAW DEL 1301, wherein it has been clearly held that toners and cartridges are part and accessories to computer systems. The functioning of these cartridges was explained, from which it appears that ink cartridge is a sophisticated Engineering design to provide and regulate back pressure, which is essential to perform its job of delivering the right amount of ink to the printer nozzel and toner cartridge, which is fitted in laser jet printer generates laser beam which acts on the photo sensitive drum. Thus, the ink jet cartridge/toner cartridge is a part and accessory to a printer, which has been held to be a peripheral to a computer system. Therefore, all spare parts, components and accessories of such goods shall also be taxed at the same rate, as that of the goods if such spare parts, components and accessories are not specifically enumerated are liable to be tax in the same manner as goods enumerated in the schedule.
13. In order to determine the above controversy, it is necessary to examine the nature of goods as dealt by the seller and consumer of the said product or better known as the "Common Parlance Test".
14. Undoubtedly, the printer is sold along with the 'Cartridge' and is included in the package containing the printer and therefore from the above fact it can be deduced that the printer includes a 'Cartridge' and are sold together. 'Cartridge' being a consumable item has to be periodically replaced/recharged with toner.
15. In the light of the above discussion, this Court is of the considered view that toner cartridges are part of a printer and are liable to be taxed at the same rate as printer. It is the duty of the taxing authority, firstly to see that whether an item falls in any of the category mentioned in the schedule and only when such an item is not found falling in any of the schedule can the same be taxed in the ancillary clause.
16. In the instant case toner cartridge being part of printer, which are sold alongwith printers have to be taxed at the same rate as the printers and not under the residuary provision.
17. In view of the discussion made above, this Court is of the considered opinion that the impugned order passed by the Tribunal is not sustainable and the same is accordingly set aside.
18. The revision is allowed.
19. The question of law is answered accordingly.
Order Date :- 23.1.2020 A. Verma (Alok Mathur, J.)