2022 (3) TMI 981 - HC - VAT and Sales Tax

Interpretation of statute - notification No.FD 116 CSI 2006 (9) dated 31.03.2006 vis-a-vis the notification dated 09.10.2013 issued by the office of the Commissioner of Commercial Taxes (Karnataka) - documents necessarily required to accompany the goods - Levy of penalty - transportation of Spectrum Analyzer without being accompanied by e-sugam as prescribed under the Notification dated 09.10.2013 - Whether the Tribunal has erred in holding that the Spectrum Analyzer is a product without examining the question as to whether the said goods are electronic goods or not falling within the scope of the notification dated 09.10.2013? HELD THAT - Indisputably, by virtue of the notification dated 31.03.2006, the Spectrum Analyzer is classified under Entry No.53 of the III schedule to the Act. IT products do not find a place in the notification dated 09.10.2013. However, an endeavor has been made by the department to bring this Spectrum Analyzer under the category of electronic goods of all kinds to levy penalty under Section 53(12) of the Act for non compliance of accompanying the e-sugam along with the goods carried in the goods vehicle. This exercise of the Revenue certainly runs counter to the FD notification dated 31.03.2006. The Spectrum Analyzer having classified as IT product in terms of the said notification ought not to have been brought under the Entry 13 - electronic goods of all kinds as per the notification dated 09.10.2013 by the Revenue to levy penalty under Section 53(12). Even otherwise, it is not in dispute that the assessee has subsequently raised esugam and produced the same along with the reply. The Tribunal has rightly analyzed the matzerial facts and arrived at a conclusion that the Spectrum Analyzer being an IT product, included under the notification dated 31.03.2006, the department ought not to have insisted for e-sugam to be accompanied with the goods moving in the goods vehicle. There are no irregularity or perversity being found with the order impugned, the same deserves to be confirmed - Sales Tax Revision Petition stands dismissed.

Summary

Issues:
Interpretation of notifications regarding e-sugam requirement for goods transportation; Classification of Spectrum Analyzer as IT product or electronic goods.

Analysis:
1. The High Court of Karnataka heard a Sales Tax Revision Petition filed by the revenue challenging a judgment passed by the Karnataka Appellate Tribunal. The main issues raised were whether the Tribunal erred in setting aside the penalty levy for transporting Spectrum Analyzer without e-sugam and whether the Spectrum Analyzer should be considered an IT product or electronic goods under specific notifications.

2. The respondent, a Private Limited Company dealing in IT products, moved Spectrum Analyzer without e-sugam, considering it an IT product. The Enforcement Officer imposed a penalty for non-compliance, which was challenged by the respondent in appeals. The Tribunal allowed the appeal, leading to the revenue's revision petition.

3. The petitioner argued that the Spectrum Analyzer should be classified as electronic goods under a specific notification, requiring e-sugam compliance. The respondent contended that the Spectrum Analyzer fell under IT products based on a different notification, justifying the non-requirement of e-sugam.

4. The Court analyzed the notifications dated 31.03.2006 and 09.10.2013 to determine the classification of the Spectrum Analyzer. The notification from 2006 classified the Spectrum Analyzer as an IT product, while the 2013 notification mandated e-sugam for electronic goods. The Tribunal's decision favoring the respondent was upheld based on these interpretations.

5. Ultimately, the Court found no irregularity in the Tribunal's decision, confirming it in favor of the respondent. The Spectrum Analyzer was deemed an IT product, and the requirement for e-sugam was considered unnecessary, leading to the dismissal of the Sales Tax Revision Petition.