While considering a bunch of revision petitions the Karnataka High court held that chargers sold along with mobile phones are taxable at 5 percent under the Karnataka Value Added Tax Act,2003.
The above revision petition was filed by the revenue against the order of Karnataka Appellate Tribunal.
The fact for leading to the petition was, Assessee Intex Technologies India Ltd is a registered dealer under the Karnataka Value Added Tax Act, 2003. They are engaged in trading mobile phones, parts and accessories.
They sell mobile phones in a composite package which also contains accessories such as headsets, cables, ejection pin, adapter, charger, manual etc.
For the assessment year 2010-11 to 2013-14 assessing officers passed an order under section 39(1) of the KVAT Act, 2003 subjecting to tax, the sales turnover of mobile chargers at the rate of 13.5% to 14.5%.
Thereafter the assessor filed an application for rectification and the assessing officer passed orders under Section 69 of the KVAT Act 2003, rectifying the order by dropping estimated turnover as per the return and books of accounts.
Against the order of Joint Commissioner of Commercial Taxes (Appeals) assessee filed an appeal before the Karnataka Appellate Tribunal. Thus the Tribunal allowed the appeal of the assessee. Aggrieved revenue preferred an appeal before the Karnataka High Court.
Jeevan J. Neeralgi, Advocate General for Karnataka Appeared for the revenue , submits that
Entry 53 of Third Schedule of the KVAT Act 2003 provides that IT Products and Telecommunication equipment are liable to be taxed at the rate prescribed under Section 4(1)(a)(ii) of the KVAT Act, 2003.
He also contended that, “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”
T. Suryanarayan, K. Arvind Kamath, and Sandeep Huilgol advocates appeared for the assessees, relied upon the decision of the Samsung India case, contented that “chargers sold as part of a composite package with mobile phones are taxable at the same rate as the mobile phones”.
The division bench of Justice P.S.Dinesh Kumar and Justice T.G.Shivashankare Gowda dismissed the revision petition filed by the revenue.
observed that “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%”
Further the bench determined that, Section 4 of KVAT Act 2003 and Rule 3 of KVAT Rules would clearly indicate that there is no prescribed mechanism provided for determining the value of individual goods in a composite transaction. Thus, in the absence of a valuation mechanism, tax could not be levied differently on each of the components by separating a single composite package.
Subscribe Taxscan Premium to view the JudgmentSupport our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates
