2014 (2) TMI 390 - HC - VAT and Sales Tax

Rate of tax - Tax on sale of loudspeaker - Whether the goods sold by the assessee is covered by Notification in G.O.P.No.187 dated 30.03.1990 and what would be the rate of tax on the sale of goods - Held that - rate of tax payable by any dealer on the sale of electronic goods in the category falling under Entry No.11, I Schedule to the TNGST Act shall be liable to be taxed at the rate of 3%. Now the issue to be considered is as to whether the speakers sold by the assessee/dealer are electronic goods - assessee has sold speakers along with car radios, radios and Tvs and not speakers, which are used in mike sets - car stereos are admittedly electronic goods covered by Entry 55 and speakers are nothing but accessories which are separately covered by the very same entry i.e. Entry 55 of the Kerala General Sales Tax Act - nobody can have a dispute that speakers attached to stereos are not accessories to it because without the speaker, stereo cannot be put to use at all; so much so, loud speakers which do not form accessory to any electronic item, only are covered by Entry 134 and loud speakers constituting accessory of electronic goods like stereo, car stereos and radios are covered by Entry 55. In Entry 11 of the First Schedule to the Tamil Nadu General Sales Tax Act, it was enumerated as Sound transmitting equipment including telephones and loud speakers and spare parts thereof . By virtue of Notification G.O.P.No.187 dated 30.03.1990, reducing the rate of tax to 3% on sale of electronic goods with effect from 17.03.1990, the appellant/assessee is entitled to the benefit of said Notification, since the sale of speakers of the assessee were along with car radios, radios and TV sets, which are admittedly electronic items - Following decision of State of Kerala, Rep. By Joint Commissioner Vs. M/s.Sigma Inc.Palarivattom 2010 (9) TMI 954 - KERALA HIGH COURT - Decided in favour of assessee.

Summary

Issues:
Interpretation of Notification G.O.P.No.187 dated 30.03.1990 regarding the rate of tax on the sale of goods, specifically loud speakers; Determination of whether the speakers sold by the assessee are electronic goods entitled to the concessional levy of tax at 3%.

Analysis:
The Tax Case (Appeal) before the Madras High Court involved a dispute over the rate of tax applicable to the sale of loud speakers by the assessee. The Joint Commissioner of Commercial Taxes II had exercised suo motu revisional power to propose assessing the sale of loudspeakers at 15% under Section 3(2) of the Tamil Nadu General Sales Tax Act, contrary to the assessee's claim for a concessional levy of 3% under G.O.P.No.187 dated 30.03.1990. The Appellate Assistant Commissioner had initially accepted the assessee's claim for the concessional levy.

Upon further review, the Joint Commissioner contended that the speakers sold by the assessee were not electronic items and thus should be taxed at 15%. The Madras High Court considered the relevant provisions, including Entry 11 of the First Schedule of the Tamil Nadu General Sales Tax Act, which includes "Sound transmitting equipment including telephones and loud speakers and spare parts thereof" taxable at 15%. The Notification G.O.P.No.187 dated 30.03.1990 reduced the rate of tax to 3% on the sale of electronic goods, which the court found applicable to the present case.

The court examined the nature of the speakers sold by the assessee, noting that they were sold along with car radios, radios, and TVs, which are electronic items. Drawing from a decision of the Kerala High Court, the Madras High Court emphasized that speakers attached to electronic items are considered accessories covered by the concessional levy. Therefore, the court concluded that the assessee's speakers were electronic goods entitled to the benefit of the Notification G.O.P.No.187 dated 30.03.1990, and allowed the Tax Case (Appeal) in favor of the assessee.

In summary, the judgment clarified the interpretation of the notification regarding the rate of tax on the sale of goods, specifically focusing on whether the speakers sold by the assessee qualified as electronic goods for the concessional levy of 3%. The court's analysis highlighted the classification of speakers as accessories to electronic items, ultimately granting the assessee the benefit of the concessional levy under the relevant notification.