2012 (10) TMI 974 - HC - VAT and Sales Tax

Whether inkjet cartridges and tonor cartridges are covered by entry 4 of Part B of the Second Schedule to the Assam Value Added Tax Act 2003 which lists items attracting lesser rate of tax or covered by residue entry in Schedule V providing higher rate of tax? Held that - Question has to be answered in favour of the assessee. The items in question are integral part of printer which undisputedly is covered by entry 3.It is settled that a fiscal entry is to be given a common sense meaning as understood by persons dealing with such goods and not any technical meaning. Applying this test ink of the printer has to be held to be its accessory in absence of any compelling reason. Thus allow the writ petitions in above terms.

Summary

Issues:
Whether "inkjet cartridges" and "tonor cartridges" are covered by entry 4 of Part B of the Second Schedule to the Assam Value Added Tax Act, 2003.

Analysis:
The petitioner, engaged in the sale of IT products, claimed that inkjet and toner cartridges should be taxed at a lower rate. However, the assessment authorities disagreed, citing a clarification issued by the Commissioner. The central issue in all three writ petitions was the classification of these items under the tax schedule.

The assessment order considered cartridges as consumables rather than parts or accessories of a printer, leading to a demand for a higher tax rate. The appellate authority upheld this decision, referencing judgments and the absence of specific references to HSN in the Assam VAT Act.

The petitioner argued that cartridges are essential for printers to function and should be considered accessories. They relied on previous court judgments, including the Delhi High Court and Supreme Court decisions on the interpretation of "accessory" in tax laws.

The High Court sided with the petitioner, considering cartridges as integral parts of printers covered under a lower tax rate entry. They emphasized the common-sense interpretation of fiscal entries and the necessity of cartridges for printer operation. The court's decision favored the assessee, requiring a revision of the assessments accordingly.