2016 (4) TMI 1311 - HC - VAT and Sales Tax

Rate of Tax - cell phone chargers, which were being sold along with cell phones in a single package - entry No. 60 (f) (vii) of Part-II A of Schedule A of the H.P. VAT Act, 2005 - Held that - Identical issues relating to both of question of alternative remedy as also regarding levy of VAT @ 13.75% on the mobile chargers have already been considered by this Court in the case of M/s Samsung India Electronics Pvt. Ltd. Versus State of H.P. & ors. 2015 (6) TMI 1155 - HIMACHAL PRADESH HIGH COURT , wherein it was held that the writ petitioner has not only an alternative and efficacious, rather a proper remedy under the provisions of H.P. VAT Act, 2005 and therefore, the present petition is not maintainable - petition dismissed.

Summary

Issues Involved:
1. Levy of VAT on cell phone chargers.
2. Alternative remedy and maintainability of the writ petition.

Detailed Analysis:

1. Levy of VAT on Cell Phone Chargers:
The core issue in this case revolves around the correct rate of Value Added Tax (VAT) applicable to cell phone chargers sold along with cell phones in a single package. The petitioner was paying VAT at 5% on these chargers, whereas the Excise and Taxation Officer determined that the correct rate was 13.75%. The Assessing Authority based its decision on the Supreme Court's judgment in "State of Punjab Vs. M/s Nokia India," where it was held that a mobile/cell phone charger is an accessory to the cell phone and not a part of it. Consequently, the charger is an independent product that can be sold separately and should be taxed accordingly. The Assessing Authority thus directed the petitioner to pay the differential VAT amounting to ?24,52,973/-.

2. Alternative Remedy and Maintainability of the Writ Petition:
The petitioner contended that the writ petition should be entertained despite the existence of an alternative remedy under the H.P. VAT Act, 2005. However, the court referenced its earlier judgment in "Samsung India Vs. State of H.P. and others," which held that even if there is an illegal or irregular exercise of jurisdiction by the authorities, the proper course of action is to appeal through the statutory mechanisms provided under the VAT Act, rather than filing a writ petition. The court emphasized that the existence of an alternative remedy typically precludes the maintainability of a writ petition unless there are exceptional circumstances, such as a violation of fundamental rights or principles of natural justice.

The court also cited various precedents, including "Union of India vs. Guwahati Carbon Limited," "Nivedita Sharma vs. Cellular Operators Association of India," and "Commissioner of Income Tax vs. Chhabil Dass Agarwal," to reinforce the principle that statutory remedies should be exhausted before resorting to writ jurisdiction. The court noted that the petitioner had not demonstrated any exceptional circumstances that would justify bypassing the alternative remedy.

Conclusion:
The court concluded that the writ petition was not maintainable due to the availability of an adequate and efficacious alternative remedy under the H.P. VAT Act, 2005. The petitioner was advised to pursue the statutory appeal process, and the time spent in prosecuting the writ petition would be excluded when computing the limitation period for filing the appeal. Consequently, the writ petition was dismissed in limine.

In summary, the judgment emphasized the importance of adhering to statutory remedies for tax disputes and upheld the higher VAT rate on cell phone chargers based on established legal principles.