2015 (12) TMI 1295 - HC - VAT and Sales Tax

Classification of uninterrupted power supply (UPS) with its parts ought to relate to the Information Technology products - Whether IT product or not - Held that - Tribunal found that the lengthy discussion in the Commissioner s order omits from consideration the plain language of the Entry. If the Information Technology products and which are extensively used in modern day business and even at home require uninterrupted power supply then any facility or product ensuring uninterrupted power supply with its parts ought to relate to the Information Technology products. That is how the Serial No. 56 the Entry reads as above. In the light of the subsequent developments, the Notification has been issued. Once the uninterrupted power supply and its parts have been specifically made referable to Entry No.56, then, there was no warrant for invoking and applying the residuary entry merely because that guarantees higher revenue. The approach of the Tribunal is precisely on these lines. Once the product in question has been classified in the light of the plain and clear language of the entry, then, we do not see any question of law arising for our determination and consideration in these appeals. - Decided against assessee.

Summary

Issues:
1. Interpretation of Schedule Entry C-56 and Notification Entry -11 dated 17.10.2005 regarding the classification of a product as an IT product.
2. Determining whether a specific product, a 600 VA Pure Sine Wave Home UPS, falls under the category of IT products as per the mentioned entries.
3. Clarification on the applicability of tax rates based on the classification of the product.

Analysis:

Issue 1: Interpretation of Schedule Entry C-56 and Notification Entry -11:
The main issue in this case revolves around the interpretation of Schedule Entry C-56 and Notification Entry -11 dated 17.10.2005. The Tribunal had to decide whether the product in question, a 600 VA Pure Sine Wave Home UPS, qualifies as an IT product under these entries. The Tribunal extensively referred to the relevant entries and notifications to make its decision.

Issue 2: Classification of the product:
The Tribunal analyzed whether the product, despite being labeled as an uninterrupted power supply, should be considered an IT product under Entry C-56. The Tribunal considered the clear language of the entry and the Notification, emphasizing that any product ensuring uninterrupted power supply, like the one in question, should be classified as an IT product. The Tribunal found that the product fell under Entry No. 56 and not the residuary entry, as determined by the Commissioner of Sales Tax.

Issue 3: Applicability of tax rates:
The Tribunal's decision on the classification of the product had implications on the applicable tax rates. By classifying the product under Entry C-56, which attracts a 4% tax rate, the Tribunal dismissed the appeal by the Revenue seeking a higher tax rate under the residuary entry. The Tribunal emphasized that once a product is classified based on the clear language of the entry, there is no scope for applying a different tax rate based on revenue considerations.

In conclusion, the High Court upheld the Tribunal's decision, dismissing the Revenue's appeal. The judgment clarified the classification of the product as an IT product under Schedule Entry C-56 and Notification Entry -11, highlighting the importance of interpreting tax entries based on their plain language and intent.