2002 (7) TMI 781 - HC - VAT and Sales Tax

Summary

Issues:
1. Whether the T.V. antenna is an inseparable component of T.V. or an accessory?
2. Whether the assessing officer was right in levying sales tax at six per cent based on the Notification No. FD 32 CSL 87(V) March 28, 1987?

Analysis:

Issue 1:
The petitioner, a manufacturer of T.V. antenna, challenged the assessment of sales tax at six per cent instead of three per cent, contending that the antenna should be considered a T.V. component and taxed accordingly. The Karnataka Appellate Tribunal upheld the assessing officer's decision that the antenna is an accessory, not a component, and should be taxed at six per cent. The court analyzed various legal precedents to determine the classification of the antenna. It was established that an item is considered an accessory if it enhances the main product's performance but is not essential for its basic functionality. In this case, the T.V. antenna was deemed an accessory as the T.V. set could function without it for certain purposes, such as playing video cassettes. Therefore, the court affirmed the assessing officer's classification of the antenna as an accessory.

Issue 2:
Regarding the legality of the sales tax levy at six per cent based on specific notifications, the court differentiated this case from previous judgments that deemed discriminatory tax rates illegal. The court clarified that the notifications in question classified T.V. sets as accessories, justifying the imposition of the revised six per cent tax rate. The court held that the earlier rulings on discriminatory tax rates did not apply in this scenario. Consequently, the court answered both issues in the affirmative, upholding the decision to levy sales tax at six per cent on T.V. antennas classified as accessories.

In conclusion, the court dismissed the revision petitions, affirming the classification of T.V. antennas as accessories and the levy of sales tax at six per cent based on relevant notifications.