Judgment · High Court · 2012

(cid:28)All other goods not covered by First, Second, Third and Fourth Schedule

12.5% at the relevant period (Now 13.5%) SCHEDULE V Rate of Tax It may also be also be necessary to refer to the discussion in the impugned orde rs. In assessment order it was observed :- (cid:28)Cartridges of a printer are more apt to be regarded as well as are commonly und erstood as consumable rather than parts and accessories of it. The products unde r question appear to be a compounded device for storing ink as well as for spray ing it on the body of the blank paper to produce printed copy. There is no doubt that the printing ink loaded in the device does not qualify to be included as (cid:28) Parts and accessories (cid:29) of the printer when considered on its own. As regard the inbuilt contrivance for spraying the ink, it is analogous to a fuel injection pu mp of a motor vehicle or can be understood so. It was held in the case of Ghazia bad Engineering Co. (P) Ltd. vs. Commissioner of Sales Tax, (1991) 80 STC 243 (D elhi) that a fuel injection pump can neither be regarded as an accessory nor a s pare part of motor vehicle. Therefore, the averment of the dealer for treating cartridges under Entry Sl. No .3 & 4 of the second schedule Part B As regards contention of H.S.N. classification adopted under the Central Excise Tariff schedule enumerating the item inkjet cartridges under the broad head 8443 along with printers, ink, parts etc. it would be worth while to remember that t he State Legislature enjoys wide freedom in choosing the rate of tax to be impos ed on the subject covered by its allotted legislative field and is, therefore no t bound by any system of classification of goods adopted by other bodies. Furthe is found not acceptable. r only the entries contained in second schedule Part C make a reference to the c orresponding entry heading of Central Excise Tariff Act, 1985. The said referenc e is conspicuously absent in entries incorporated in other schedule or Part of s chedules. The dealer’s contention, therefore, fails on this count, too. (cid:29) The appellate authority observed :- (cid:28)Now, even though the petitioner has raised some pertinent points by quoting sev eral Supreme Court and High Court Judgments including ruling of the Delhi VAT Tr ibunal on the matter which goes in his favour, there are some arguments or point s that go in favour of the revenue as well. First relates to judgement pronounced by The Honourable Delhi High Court in case of Commissioner of Trade and Taxes vs. HP India Sales Private Limited (2007- VI L-18-HC-DEL) on the same issue holding that inkjet cartridges and toner cartridg es are (cid:28)parts and accessories (cid:29) of goods mentioned in HSN 84.71 (ie, printers). B ut this judgement was given with reference to Harmonic System of Nomenclature ( (cid:28) HSN (cid:29)) of products applicable under the Central Excise Act and the Customs Tariff Act which is not relevant in the state of Assam since Entry 4 of Part B of the second Schedule to the Assam VAT Act does not make reference to HSN which is con spicuously absent. Under the AVAT Act, 2003, reference to HSN is made only in Pa rt-C of Second Schedule for Industrial Inputs and Packing Materials which does n ot include HSN 84.71 (ie, printers). The State Legislature enjoys wide freedom i n choosing the rate of tax to be imposed on the subject covered by its allotted legislative field and is therefore not bound by any system of classification of goods adopted by other bodies. Besides, contention of the appellant that all the States in India, which have i mplemented VAT and notified information technology products, have been treating inkjet cartridges and toner cartridges as (cid:28)parts and accessories of computer per ipherals (cid:29) is not correct. The Commissioner of Commercial Taxes, U.P. under secti on 59 of the VAT Ordinance, 2008 NTN (Vol.-36)-50, (Commissioner decisions) held in case of Docket Care System, Lucknow, Application No.20/2008 decided on 27.2. 2008 that toner and cartridges are not classified under the VAT ordinance. Hence , they are taxable at the rate of 12.5% as unclassified goods under Schedule 5. The dealer’s contention was that toner and cartridges are integral part of print er which is part of the computer system. Hence, it should be taxable at the rate of 4% under entry 22 of Schedule II, Part B. (cid:29) Learned counsel for the petitioner submitted that the goods in question can be t reated as parts or accessories of computer system or peripherals. As per clarifi cation by the Commissioner also printer is a part of computer system and periphe rals. The printer cannot be operated without inkjet cartridges or toner cartridg es and thus the said items can certainly be treated as accessories to the printe r. Judgment of Delhi High Court in Commissioner of Trade and Taxes vs. HP India Sales Private Limited (2007- VIL-18-HC-DEL) relates to the assessee itself and t he entry was in identified terms. Therein it was observed : (cid:28)5. 69, 84.70 and 84.71. Learned counsel for the Assessee has drawn our attention t o the entry 84.71 of the HSN. This contains a large number of sub-entries. A ref erence has been made to Entries 8471 60 21 onwards. They deal with different kin ds of printers that is Line printer, Dot matrix printer, Letter quality daisy wh eel printer, Graphic printer, Plotter, Laser jet printer and ink jet printer etc . A perusal of the entries show that it is necessary to go back to HSN 84.

#6. There is no dispute that toners and cartridges are used in the above kin ds of printers. Therefore, toners and cartridges are part and accessories of goo ds mentioned in HSN 84.71 and therefore, covered by Entry 41A(xxv) of the DVAT A ct, 2004. (cid:29) Learned counsel for the petitioner also relied upon judgment of the Hon’ble Supr eme Court in STATE OF UTTAR PRADESH AND ANOTHER VS. M/S KORES (INDIA) LTD. (1976 ) 4 SCC 477 and M/S. ANNAPURNA CARBON INDUSTRIES CO. VS. STATE OF ANDHRA PRADESH Regarding ribbon also to which the abovementioned rule of construction e , (1976) 2 SCC 273. In M/S KORES (INDIA) LTD. it was held that typewriter ribbo n was an accessory of the typewriter. Reference is made to para 17. (cid:28)17. qually applies, we have no manner of doubt that it is an accessory and not a par t of the typewriter (unlike spool) though it may not be possible to use the latt er without the former. Just as aviation petrol is not a part of the aeroplane no r diesel is a part of a bus in the same way, ribbon is not a part of the typewri ter though it may not be possible to type out any matter without it. (cid:29) In M/S. ANNAPURNA CARBON INDUSTRIES CO. it was observed that the term accessory refers to an aid or addition. Reference is made to para 10. We find that the term (cid:28)accessories (cid:29) is used in the schedule to describe (cid:28)10. goods which may have been manufactured for use as an aid or addition. A sense in which the word accessory is used is given in Webster’s Third New International Dictionary as follows : An object or devices that is not essential in itself but that adds to the beauty , convenience, or effectiveness of something else. Other meanings given there are (cid:28) (cid:28)supplementary or secondary to something of gre ater or primary importance (cid:29), (cid:28)additional (cid:29), (cid:28)any of several mechanical devices th at assist in operating or controlling the tone resources of an organ (cid:29). (cid:28)Accessor ies (cid:29) are not necessarily confined to particular machines for which they may serv e as aids. The same item may be an accessory of more than one kind of instrument . (cid:29) Learned counsel for the revenue submitted that in part-A of Second Sched ule, Entry 50 provides for (cid:28)Printing ink excluding toner and cartridges (cid:29) and thu s expression toner and cartridges has been expressly used wherever so intended a nd on that ground the goods in question should be treated as falling the residue entry. After due consideration, we are of the view that the question has to be answered in favour of the assessee. The items in question are integral part of p rinter which undisputedly is covered by Entry 3. Thus, we are in agreement with the view taken by the Delhi High Court. Principle laid down in judgments of Hon’ ble Supreme Court about interpretation of ’accessory’ also lends support to the contention of the assessee. As regards the contention raised on behalf of the revenue that toners an d cartridges have been specifically used in Part-A, for exclusion from Entry 50, and the same could not be impliedly included under Entry 4 of Part-B of the Sec ond Schedule, we are of the view that scope of Entry 4 of Part-B of Second Sched ule is much wider. While exclusion may be considered necessary from printing ink in Entry 50 of Part-A (Part A deals with ’general’ goods), specific mention the reof may not be necessary in general and wide entry in Entry 4 of Part-B - part s and accessories of computer systems and peripherals (Part B deals with IT good s). It is settled that a fiscal entry is to be given a common sense meaning as under stood by persons dealing with such goods and not any technical meaning. (FILTER CO AND ANOTHER VS. COMMISSIONER OF SALES TAX, MADHYA PRADESH AND ANOTHER, (1986) 2 SCC 103 para 12), Applying this test, ink of the printer has to be held to be its accessory, in absence of any compelling reason. Accordingly, we answer the question in favour of the assessee and allow the writ petitions in above terms. The assessments may now be revised accordingl y.