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TMI Blog2023 (2) TMI 1228X X X X Extracts X X X X X X X X Extracts X X X X ..... Court failed to appreciate the aforesaid fact and wrongly held that the battery charger is part of the cellphone. It is relevant to note that the decision in Nokia India Case is based on Entry 60(6)(g) of the Schedule B of the Punjab VAT Act. In the said Entry only cellular phone is defined and accessories are not included. The Hon'ble Supreme Court of India has upheld Revenue's contention in that case because Entry 60(6)(g) of Schedule B of the Punjab VAT Act does not mention accessories for the purpose of taxing the items/product at 4%. Entry 53 of Schedule III of the KVAT Act read with the Notification No. FD 43 CSL 07(02) dated April 4, 2007 issued by the State Government - HELD THAT:- 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 i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ribunal was right in law in holding that mobile phone chargers sold along with mobile phone in a composite pack attracts tax at the same rate as applicable to mobile phone only and it cannot be taxed at higher rate as unscheduled goods under Section 4(1) (b) (iii) of the Act? 3. Briefly stated the facts in M/s. Intex Technologies India Ltd. are, it is a registered dealer under the Karnataka Value Added Tax Act, 2003 [ KVAT Act' for short] . It is engaged in trading mobile phones, parts and accessories. It sells mobile phones in a composite package which also contains accessories such as headsets, cables, ejection pin, adapter, charger, manual etc. The AO [Assessing Officer] passed an order under Section 39(1) of the KVAT Act subjecting to tax, the sales turnover of mobile charger at the rate of 13.5% to 14.5% for A.Y. [Assessment Year] 2010-11 to 2013-14. The assessee filed an application for rectification and the AO passed orders under Section 69 of the KVAT Act, rectifying the order by dropping estimated turnover as per the return and books of accounts. The JCCT(A) [Joint Commissioner of Commercial Taxes (Appeals)] . dismissed assessee's appeal. On further ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed a clarification on September 06, 2008 clarifying that the Mobile chargers attract tax at the rate of 12.5%; the Tribunal has erred in interpreting the Notification and holding that Telephone sets, including telephones for Cellular networks would include sets of Cellular Phones also; chargers though sold with the mobile phones, are independent gadgets and therefore, cannot be taxed at par with a mobile phone; the Tribunal has erred in holding that charger sold along with mobile phone in a composite pack attracts tax as that of mobile phone, is contrary to law laid down in Nokia India Case. 5. Opposing the appeal, Shri. T. Suryanarayan, Shri. K. Arvind Kamath, Shri. Sandeep Huilgol, learned Senior Advocates and other Advocates for respective assessees, in substance, contented that: once the goods are manufactured/imported and cleared by classifying them under a particular HSN [Harmonized System of Nomenclature] Code, then the only question that needs determination for VAT classification is whether the said goods is listed in IT product notifications or not; as per Rule 3(a) of the GRI [General Rules of Interpretation] , the entry of 'telephon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ional rate of tax which applies to cellphones under the Entry 60(6)(g) of Schedule B of the Punjab VAT Act. The said Entry reads as follows: Telephones, cell phones, tele-printer, wireless equipment and parts thereof, Digital Video Disc and Compact Disc and Information Technology products as given hereunder- 6. Transmission apparatus other than apparatus for radio or TV broadcasting: (g) Cellular telephone 9. In Nokia India Case, the Apex Court has held that: 19. in view of the aforesaid facts, we find that the Assessing Authority, Appellate Authority and the Tribunal rightly held that the mobile/cellphone charger is an accessory to the cellphone and is not part of the cellphone. We further hold that the battery charger cannot be held to be a composite part of the cellphone but is an independent product which can be sold separately without selling the cellphone. The High Court failed to appreciate the aforesaid fact and wrongly held that the battery charger is part of the cellphone. 10. It is relevant to note that the decision in Nokia India Case is based on Entry 60(6)(g) of the Schedule B of the Punjab VAT Act. In the said Entry only cellular phone is define ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Apex Court has observed that: ...It is difficult to regard a word, a clause or a sentence occurring in a judgment of this Court, divorced from its context, as containing a full exposition of the law on a question when the question did not, even fall to be answered in that judgment. 16. Para 14 of the judgment in Nokia India Case, clearly indicates that the said decision is based on Entries of the Punjab VAT Act, wherein the prime issue for consideration was whether the mobile charger is an accessory or not. But in the case on hand, the issue involved is, when the mobile phone is sold along with the charger what must be the rate of tax? 17. The Allahabad High Court, in the facts of that case has distinguished Nokia India Case and held thus: 9. On the submissions made and decision relied on, we have no hesitation in holding that all the material was before the authorities concerned Judgment in State of Punjab v. Nokia India Pvt. Ltd., (2014) 16 SCC 410, could not have been followed so as to invoke the jurisdiction under Section 29 of the Act because in the case on hand as far as Nokia was concerned, the phone charger was sold as a separate accessory and, therefore ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of products or articles put up together to meet a particular need or carry out a specific activity; and (c) are put up in a manner suitable for sale directly to users without repacking (eg. in boxes or cases or on boards). 21. Therefore, in view of the above, 'telephone sets' can be considered as 'goods put up in sets for retail sale' under Rule 3(b) of the GRI. 22. Further, Rule 3(b) states that goods put up in sets for retail sale shall be classified as if they consist of the material or component which gives them their essential character. In the present case, the essential character of mobile set is the mobile phone and not the charger. Thus, the classification based on components mentioned above would apply and as per the essential character, the retail set containing of a mobile phone and a mobile charger shall be classifiable as 'mobile phones' under heading 8517. 23. In BSNL v. Union of India (2006) 3 SCC 1, relied upon by the assessees, it has held that: 50. What are the goods in a sales transaction, therefore, remains primarily a matter of contract and intention. The seller and such purchaser would have to be ad idem as to the s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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