2016 (11) TMI 1198 - HC - VAT and Sales Tax

Taxability - separate rate of tax on the Mobile Battery Chargers (MBC) sold along with the Mobile phones itself - KVAT Act, 2003 - Held that - reliance placed on the decision of the case of case of State of Punjab and others versus- Nokia India Private Limited 2014 (12) TMI 836 - SUPREME COURT where it was held that the Mobile Battery Chargers (MBC), cannot be treated as part of the Mobile Phones itself and they are mere accessories of the Mobile Phone and are to be taxed separately irrespective of their packing in the common package with Mobile phones - The said binding precedent from the Apex Court is binding on all Courts/authorities in the Country. It is not based only on particular entry for tax rate under any particular State. Therefore, this Court is not inclined to entertain this contention of the assessee. The other issues of assessment have already been left open to be raised before the appellate authorities under the Act, as the petitioner has an alternative remedy against the impugned assessment orders and therefore they have been left free to agitate those points before such appellate authorities - petition dismissed.

Summary

Issues involved:
Controversy over tax rate on Mobile Battery Chargers (MBC) sold with Mobile phones under the Karnataka Value Added Tax Act, 2003.

Analysis:

1. Interpretation of Tax Rate:
The judgment refers to a previous decision in the case of M/s. LAVA INTERNATIONAL LIMITED Vs. STATE OF KARNATAKA, where the court upheld a separate tax rate on Mobile Battery Chargers (MBC) sold with Mobile phones. This decision was based on the Supreme Court ruling in the case of State of Punjab vs. Nokia India Private Limited, which clarified that the charger is an accessory to the phone and not an integral part. The court emphasized that the charger can be sold separately from the phone, leading to separate taxation.

2. Comparison with Punjab Act:
The petitioner argued that since the entry under the Punjab Act differed from the KVAT Act, 2003, and the entry was adopted from Central Excise law, the Mobile Battery Chargers (MBC) sold with Mobile phones should be taxed at the same rate as the phones themselves. However, the court dismissed this contention, citing the clear precedent set by the Supreme Court that MBCs are accessories and should be taxed separately regardless of their packaging with the phones.

3. Precedent Binding on All Authorities:
The judgment emphasized that the Supreme Court's decision regarding the tax treatment of MBCs is binding on all courts and authorities in the country. The court declined to entertain the petitioner's argument, stating that the issue of assessment can be raised before the appellate authorities under the Act. The petitioners were advised to avail their alternative remedy against the assessment orders through the appellate process.

In conclusion, the court dismissed the writ petitions, citing the binding precedent set by the Supreme Court and allowing the petitioners to raise other assessment issues before the appellate authorities.