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TMI Blog2022 (2) TMI 1106X X X X Extracts X X X X X X X X Extracts X X X X ..... ification No.1/2017 Central Tax Rate dated 28-6-2017. As far as these toys consists of electronic components irrespective of the usage, they would attract 18% GST as per Sl.No. 440 of Schedule-III of the Rate Notification - Appeal dismissed. - TN/AAAR/01/2022(AR) - - - Dated:- 13-1-2022 - THIRU M.V.S. CHOUDARY, AND THIRU K. PHANINDRA REDDY, MEMBER Represented by : S. Murugappan, Counsel for M/s. Navabharat Imports Preamble 1. In terms of Section 102 of the Central Goods Services Tax Act 2017/Tamil Nadu Goods Services Tax Act 2017 ( the Act , in Short), this Order may be amended by the Appellate authority so as to rectify any error apparent on the face of the record, if such error is noticed by the Appellate authority on its own accord, or is brought to its notice by the concerned officer, the jurisdictional officer or the applicant within a period of six months from the date of the Order. Provided that no rectification which has the effect of enhancing the tax liability or reducing the amount of admissible input tax credit shall be made, unless the appellant has been given an opportunity of being heard. 2. Under Section 103(1) of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , that the toys proposed to be imported include both electronically operated toys as well as manually operated toys in which electronic parts were fitted for providing light, music and horn etc. They furnished the functionalities of some of the toys as listed below: Children's Scooter SC-007 It is a scooter toy applicable for the age range between 3-5 years old in which the toddler will be placed in the seat provided and has to move with the wheels provided only by applying pressure with the legs and handle bar shall be used to change the direction. This toy is provided with light in the handle bar and the music. Activity Ride-on It is a car toy applicable for the age ranging from 12 Months - 36 Months old. The toddler will be placed in the seat provided and has to be pushed by the other person for the movement and the steering provided shall be used for changing the direction. This toy is provided with electronic lights and music in the form of buttons present in the steering. Smart Tri-Cycle It is a tri-cycle toy which is applicable for the age range upto 18 months. The toddler has to be placed in the seat provided and has to pedal for the m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that these toys are manually operated and remain fully operational and functional even without light, music or horn. They added that electronic circuits are dedicated only for the purpose of enhancing quality of entertainment through light, music, horn etc. and it is in no way interferes with operational features of the toy. 3. The Appellant had sought Advance Ruling on the following questions: When physical force is the primary action of a Toy and if the light and the music are ancillary to it then whether it is to be classified under Electronic Toys or other than Electronic Toys ? 4. The A.AR pronounced the following rulings: The products Children Scooter, Activity Ride-on, Smart Tricycle and Kick Scooter, in which physical force is the primary action and contains an in built electronic circuit, are Electronic Toys and the applicable GST Rate is CGST @9% as per serial number 440 of Schedule-III of Notification No. 01/2017-CT (Rate) dated 28.06.2017 and SGST @9% as per Sl.no.440 of Schedule-III to Notification No. II(2)/CTR/532 (d-4)/2017 Vide G.O.Ms No.62 dated 29.06.2017. 5. Based on the above ruling, the Appellant has filed the present appeal. The grou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as 'principal activity' and the light / music / sound as 'secondary activity'. The standard itself refers to use of electricity for 'secondary functions'. When the toy makers and the authorities who prescribe standards for such toys refer to such secondary functions using electricity, it will be illogical for the Authority to conclude that in their opinion both mobility as well as flashing of light / music, all will be principal activities. 7. In para 7.7 the Authority has gone to the extent of stating that the function of flash light / music / sound are not dependant on the physical / manual force and the toy can be used for developing fine motor skills such as blinking, switching on/off of the music even without applying physical force of pedalling or pushing the toy. 8. It appears that the Authority has completely lost sight of the purpose of purchasing such toys. No sensible person will buy a toy scooter or car toy only for the purpose of switching on/off of music or making horn or for blinking lights. There are hundreds of other toys which can product music or generate visual effects. No one will buy these tri-cycles or scooters for using the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (S.C.) the Apex Court has made the following observations in paragraphs 18 and 31 and these will be directly relevant to the present case. 18. Time and again, the principle of common parlance as the standard for interpreting terms in the taxing statutes, albeit subject to certain exceptions, where the statutory context runs to the contrary, has been reiterated. The application of the common parlance test is an extension of the general principle of interpretation of statutes for deciphering the mind of the law maker; it is an attempt to discover the intention of the Legislature from the language used by it, keeping always in mind, that the language is at best an imperfect instrument for the expression of actual human thoughts. . . 31. Therefore, what flows from a reading of the aforementioned decisions is that in the absence of a statutory definition in precise terms; words, entries and items in taxing statutes must be construed in terms of their commercial or trade understanding, or according to their popular meaning. In other words they have to be constructed in the sense that the people conversant with the subject-matter of the statute, would attribute to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... statute at particular time would be the decisive test. ... . . 11. It is a well-settled principle of construction, as mentioned before, that where the word has a scientific or technical meaning and also an ordinary meaning according to common parlance, it is in the latter sense that in a taxing statute the word must be held to have been used, unless contrary intention is clearly expressed by the legislature. This principle is well-settled by a long line of decisions of Canadian, American, Australian and Indian cases. Pollock J. pointed out in Grenfell v. I.R.C. (1876 1 Ex. D 242 at 248) that if a statute contains language which is capable of being construed in a popular sense, such a statute is not to be construed according to the strict or technical meaning of the language contained in it, but is to be construed in its popular sense, meaning, of course, by the words 'popular sense that which people conversant with the subject-matter with which the statute is dealing would attribute to it. The ordinary words in every day use are, therefore, to be construed according to their popular sense. ... 15. Apart from the above, there are numerous judgments rendered ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... law before this Appellate Authority on 22.12.2021. The Authorized representatives of the Appellant Tvl. S. Murugappan, learned Counsel of the appellant appeared for hearing. The learned Counsel reiterated the written submissions and emphasized that the whole issue is whether the presence of 'Electronic Circuit' will make the toys under consideration as 'Electronic Toys'. He contended that when there is no statutory definition of 'Electronic Toys', the popular meaning/common parlance understanding is to be adopted, that when there are two functions in a toy and the 'Primary function' is made through electronics, then such toys are 'Electronic toys'. In this case, the toys are bought only for enriching the main 'Motor activity of cycling, pedaling, etc the presence of visual/ sound effect are add-on features which do not make them 'electronic toys'. The learned Counsel referred to the explanatory notes to HSN and stated that the wheeled toys and the Mechanical toys are considered separately, that in common parlance, these toys are not mentioned under 'Electronic Toys'. 7. Discussion: We have gone through the submi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nging from 3-14 years. This tri-cycle has to be driven upon standing on one leg in the tri-cycle and pushing with the other leg. Though they contended that the toys are functioning independent of the electronic circuit provided therein, but the fact remains that the toys are equipped with such electronic circuit irrespective of the fact that they are for other functions. 8. With regard to the submission of the learned counsel that the common parlance alone has to be applied in the absence of definition of Electronic toy in the said notification or in the Act. In this regard, it is pertinent to note that the Tamil Nadu Advance Ruling Authority has relied on the various standards applicable for these toys and in para.7.6 of the ruling a reference has been made to GB standard 19865-2005 which provides as mentioned below: This Standard deals with the safety of toys that have at least one function dependent on electricity Toys using electricity for secondary functions are within the scope of this standard . The Hon'ble High Court of Madras in the case of Southern Refractories Minerals Vs. State of Tamil Nadu reported in 81 STC 387 (1991) held that in interpreting ..... X X X X Extracts X X X X X X X X Extracts X X X X
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