2010 (9) TMI 954 - HC - VAT and Sales Tax

Summary

Issues involved: Interpretation of tax classification for speakers sold for fixing in cars u/s Entry 134 and Entry 55 of the K.G.S.T. Act.

In the judgment, the High Court of Kerala considered a revision filed by the State regarding the tax classification of speakers sold by the respondent for fixing in cars. The main question was whether the speakers should attract sales tax at 12% under Entry 134 for sound transmitting equipment including loudspeakers, or at 8% under Entry 55 for electronic goods. The assessment in question pertained to the year 2003-2004.

The assessee sold car stereos along with speakers and also sold stereos and speakers separately. The classification applied by the officer was electronic goods under Entry 55 for stereos and stereo with speakers, taxed at 8%. However, for independent invoices covering only the sale of speakers, the Assessing Officer applied the 12% rate under Entry 134 for sound transmitting equipment. The Tribunal ruled in favor of the respondent, stating that speakers are also electronic goods assessable under Entry 55 at 8%. The State filed a revision against this decision.

The High Court analyzed the relevant Entries, with the Government Pleader arguing based on the dictionary and Encyclopaedia meaning of "loudspeaker," while the respondent's counsel relied on Entry 55 itself. After considering both arguments and examining the Entries, the Court upheld the Tribunal's decision in favor of the respondent. The Court found that car stereos are electronic goods covered by Entry 55, and speakers are accessories covered by the same entry. The Court rejected the argument that items covered by specific entries are excluded from Entry 55, emphasizing that Entry 55 covers a category of goods without specifying individual items. The Court clarified that accessories like speakers attached to stereos are assessable under Entry 55, while standalone loudspeakers not forming accessories to electronic items are covered by Entry 134. Therefore, the Court dismissed the revision case and upheld the Tribunal's order in favor of the respondent.