2022 (3) TMI 1252 - HC - VAT and Sales Tax

Classification of goods - sale of Printer under VAT Act as a Computer peripheral - taxable at 4% or as unclassified items under Schedule @ 12.5%? - HELD THAT - Since the invoice produced by the Revisionist before the Tribunal by the revisionist showed Multifunctional Printer as Multifunctional Device, the Tribunal did not provide the benefit of the order dated 05.03.2014 of the Commissioner and confirmed the order passed by the Assessing Authority and the First Appellate Authority - It has also been stated in the said counter affidavit that in the case of the Revisionist for Assessment year 2010-11 the First Appellate Authority had cancelled the Assessment order and remanded the matter to the Assessing Authority by its order dated 01.12.2015. The Assessing Authority being satisfied that the case in hand was of a Multifunctional Device/Multifunctional Printer and came under the Category of Computer peripheral had accordingly taxed it @5% by the Assessment order dated 01.12.2015. Similarly, for the Assessment year 2011-12, by an assessment order dated 02.02.2015 tax has been levied @ 12.5% 1% Additional Tax and on Appeal the matter was remanded. After remand the Assessing Authority had treated it as a Computer peripheral. Same is the case for Assessment Year 2012-13, wherein the Assessing Authority has treated the Printer in question as Multifunctional Device and taxed it @ 4% 1% Additional Tax i.e. 5% by its Assessment order dated 02.03.2016. This Court has perused the impugned order it is apparent from a perusal of the order of the Tribunal that the Tribunal had not given the benefit of the judgment rendered in M/s Xerox India Limited Vs. Commissioner of Customs, Mumbai 2010 (11) TMI 20 - SUPREME COURT and not treated Multifunctional Printer as a Computer peripheral only because the manufacturer in the case before the Supreme Court had given Certificates with regard to its Printers and various models thereof saying that parts of all such Multifunctional Devices were used to the extent of 75% to 85% for the purpose of printing - Keeping in mind the law settled by the Hon'ble Supreme Court in the case of M/s Xerox India Limited Vs. Commissioner of Customs, Mumbai , this Court finds that the Revisionist is an Authorized Dealer of a Printer manufacturer by the name of Sharp Computer Systems, and although their Printers are multifunctional in nature their components are mainly used for the purpose of printing and their main character is that of a Printer, therefore, the Revision deserves to be allowed. The Tribunal committed factual and legal error in treating the multifunctional printers sold by the revisionist as falling in the Residuary category - The Revision is allowed.

Summary

Issues Involved:
1. Classification and tax rate applicable to Multifunctional Printers under the U.P. Value Added Tax Act, 2008.
2. Whether the Commercial Tax Tribunal was justified in not giving the benefit of the Supreme Court judgment in the case of M/s Xerox India Ltd. vs. Commissioner of Customs, Mumbai.

Detailed Analysis:

Issue 1: Classification and Tax Rate Applicable to Multifunctional Printers

The revisionist, a firm trading in photocopies, printers, cartridges, toners, and spares, was assessed by the Assessing Authority on 29.02.2012 for the sale of Multifunctional Printers at 12%, creating a dispute of ?7,23,387/-. The revisionist had admitted tax at 4%, treating the printer as a computer peripheral under Entry 22 of the Schedule, which reads "Computer System and Peripherals Electronic Diaries for the Assessment year 2008-09."

The Assessing Authority, however, assessed the sale under the Residuary Entry, taxing it at 12.5% meant for unclassified items. The revisionist argued that a printer, despite its multifunctional capabilities (scanning, emailing, faxing, copying), is primarily a computer peripheral and should be taxed at 4%. The Tribunal, however, did not extend this benefit and rejected the second appeal, maintaining the higher tax rate.

Issue 2: Benefit of Supreme Court Judgment in M/s Xerox India Ltd. vs. Commissioner of Customs, Mumbai

The revisionist contended that the Tribunal's judgment was contrary to the Supreme Court's decision in M/s Xerox India Ltd. vs. Commissioner of Customs, Mumbai, where the Supreme Court had classified similar multifunctional devices as computer peripherals, thus qualifying for a lower tax rate.

The Tribunal did not provide the benefit of the Supreme Court judgment because the revisionist did not present any factual basis or manufacturer certificates to support the claim that the predominant function of the multifunctional printers was printing. The Tribunal referred to dictionaries to define "peripherals" and concluded that multifunctional printers, which perform various functions independently of a computer, could not be classified as computer peripherals.

The revisionist later presented a certificate from Sharp Business India Limited, stating that more than 75% of the parts of their multifunctional devices are used for printing, but this certificate was not before the Tribunal during the initial proceedings.

Court's Decision:

The Court reviewed the Supreme Court judgment in M/s Xerox India Ltd. vs. Commissioner of Customs, Mumbai, which dealt with the classification of multifunctional machines under the Customs Tariff Act, 1975. The Supreme Court had concluded that such machines, primarily used for printing and attached to a computer, should be classified as computer peripherals.

The Court found that the Tribunal had committed an error in not giving the benefit of the Supreme Court judgment to the revisionist. The revisionist's multifunctional printers, predominantly used for printing, should be classified as computer peripherals and taxed at 4%.

Conclusion:

The Court allowed the revision, set aside the Tribunal's order, and directed the Tribunal to re-determine the tax amount payable by the revisionist within three months, considering the observations made in the judgment. The Court also noted that for the assessment year 2008-09, there was a disputed tax liability, while for other years, the authorities had accepted the revisionist's contention.