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TMI Blog2023 (2) TMI 1090X X X X Extracts X X X X X X X X Extracts X X X X ..... or the Petitioners: By Shri. Jeevan J. Neeralgi, AGA For the Respondent : By Shri. S. Ganesh, Advocate SHRI. V.S. Harish, Advocate, By Shri. K. Aravind Kamath, Senior Advocate For Smt. Veena J. Kamath, Advocate By Shri. Sandeep Huilgol, Advocate BY Shri. G.S. Alok, Advocate and Shri. Sameer Jain, Advocate By Shri. P.E. Umesh, Advocate, By Shri. P.B.Harish, Advocate By Shri. T. Suryanarayana, Senior Advocate For Ms. Tanmayee Rajkumar, Advocate By Shri. Venkatesh S. Arabatti, Advocate By Shri. Ravi Raghavan, Advocate By Shri. Atul Krishna Rao Alur, Advocate By Shri. Kamal Sawhney, Advocate Along With Smt. Anushka Gupta, Advocate By Smt. H. Vani, Advocate The State Of Karnataka, The Joint Commissioner Of Commercial Taxes (Appeals-3) Bengaluru The Commercial Tax Officer (Internal Audit And Inspection)-1 Versus M/s. Intex Technologies India Ltd. M/s. Spice Retail Ltd. M/s. Universal Telecommunications (India) Pvt. Ltd. M/s. Cellucom Retail India Pvt. Ltd. M/s. Samsung India Electronics Pvt. Ltd. M/s. Bharthi Airtel Services Ltd. M/s. Micromax Informatics Ltd. M/s. Redington India Ltd. M/s. WS Retail Services Pvt. Ltd. M/s. Ingram Micro India Pvt. Ltd., M/s. Panasonic India Pvt. Ltd. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion, submitted that: * Entry 53 of Third Schedule of the KVAT Act provides that IT [Information Technology] Products and Telecommunication equipment are liable to be taxed at the rate prescribed under Section 4(1)(a)(ii) of the KVAT Act. However, insofar as it relates to Telecommunication equipment, the same requires to be notified by the State Government in exercise of powers conferred under the KVAT Act and the State Government has been issuing Notifications specifying the products which would be treated as IT products; * Notification No. FD 43 CSL 07(02) dated April 4, 2007 states that IT products falling under Entry 53 of the Third Schedule of the KVAT Act have to be treated as IT Products; * the issue involved in these petitions are covered by the authority in State of Punjab & Others Vs. Nokia India Pvt. Ltd. [2014 (16) SCC 410, para 19] (hereinafter referred to as the Nokia India Case). * mobile charger is not an integral part of the mobile phone to treat among 'composite goods' because merely making a composite package of cell phone, charger shall not make it eligible as one of the composite goods for the purpose of interpretation of the provisions; * the dec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ter was not argued in the Nokia India Case and there is no finding on the said aspect. However, this issue has been considered in Samsung India Case and it has been held that Nokia India Case is not applicable; * it is settled that a special entry in law would over-ride a general entry and therefore, Entry 53 of the III Schedule of the KVAT Act, being a special entry for 'IT products and telecommunication equipment' read with the Notifications would undoubtedly take precedence; * the sale of mobile phones along with its charger in a single retail package constitutes a composite contract and requires the application of the dominant intention test, which is a proposition that was neither urged nor considered in Nokia India Case; * as per Section 4 of the KVAT Act, charge is on the taxable turnover of a dealer. Under Rule 3 of the Karnataka Value Added Tax Rules 2005 ['KVAT Rules' for short], there is no mechanism by which the Revenue may artificially spilt the single value for goods forming part of a set; * pursuant to the judgment in Nokia India Case, the Central Government have issued Office Memorandum F.No.34011/18/2015-SO(ST) dated 30.11.2015 clarifying the pos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... KVAT Act read with the Notification No. FD 43 CSL 07(02) dated April 4, 2007 issued by the State Government, which is for consideration in these present Revision Petitions before us. 12. Entry 53 of Schedule III of the KVAT Act reads thus: "IT Products including telecommunication equipment as may be notified." 13. The Notification No. FD 43 CSL 07(02) dated April 4, 2007 is similar to the Entry in Heading 8517 of the Central Excise Tariff Act, 1985 [the CET Act in short] and the Customs Tariff Act, 1975 [the CET Act in short], which reads as: "Telephone sets, including telephones in cellular network, or for other wireless networks and other apparatus for the transmission or reception of voice, imagers or other data, including apparatus for communication in a wired or wireless network (such as local or wide area network) and parts thereof, but excluding attachments and transmission or reception apparatus of heading 8843,8525,8527 or 8528." (Emphasis Supplied) 14. The Apex Court in Nokia India Case, further held that: "14. ...'Cellular telephone' is in schedule B at Entry No. 60(6)(g) vide HSN Code No.8525.20.17. The Tariff No.8525.20.17 only relates to cellular ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w that petitioner was a single unit as a cell phone and that assessments, which were made, could not have been reopened on the basis of a subsequent judgment and same was bad in the eyes of law... 10. In the facts of this case, it cannot be said that there was any fresh material nor any tangible material which would permit the authorities to reassess or issue said notice. Decision of Nokia will not apply to facts of this case." (Emphasis Supplied) 18. As noticed hereinabove, in Entry No. 60(6)(g) of the Punjab VAT Act, the expression used is 'cellular telephone' whereas in the Notification issued under KVAT Act, the words used are 'and parts thereof'. Further, the parts falling under Heading 8843, 8825, 8527 or 8528 have been specifically excluded. It is relevant to notice that, battery charger which falls under Entry 8504 40 30 under the CET Act and CT Act, has not been excluded. This makes it clear that charger is a composite part in the package. Thus, the intention of the Revenue is unambiguous that the Notification was applicable for telephone sets and parts thereof which includes charger. Therefore, in our considered view, the Entries in Punjab VAT Act and the KVAT Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Assessees' have rightly canvassed the application of Dominant Intention Test. There can be no doubt that the main intention of a purchaser/seller while buying/selling a 'Mobile Set' is to buy/sell the mobile phone and not charger alone. Supply of charger, headset, and ejection pin are incidental to the sale. Therefore, the Dominant Intention Test would apply to the present case and hence, charger cannot be differently taxed. 25. Section 4 of the KVAT Act reads as follows: "4. Liability to tax and rates thereof.- (1) Every dealer who is or is required to be registered as specified in Sections 22 and 24, shall be liable to pay tax, on his taxable turnover, (a) in respect of goods mentioned in,- (i) xxx (ii) Third Schedule, at the rate of five per cent, and (iii) xxx" 26. The mobile phone finds its place in III Schedule and taxable at 5% and therefore, the charger which is also sold along with mobile phone in 'one set' is together chargeable at 5%. This view is in consonance with the law laid down by the Apex Court in CIT Vs. B.C. Srinivasa Setty [(1981) 5 Taxmann 1 (SC)], wherein it is held that the charging section and the computation provisions constitute an ..... X X X X Extracts X X X X X X X X Extracts X X X X
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