The Tamil Nadu Authority for Advance Rulings in an application filed by HP India Sales Pvt Ltd held Desktop Computer known as Central processing unit along with its connected peripheral units is a single supply leviable to 9% GST.
The applicant is a subsidiary of HP Inc headquartered in California, USA and is engaged in the import and sale of IT products primarily personal computers (i.e., desktops and laptops) and printers
The issue for consideration before the present Authority is the determination of the applicable rate on supply of desktops consisting of CPU, monitor, keyboard and mouse or any combination of input/output unit. It involves the determination of whether the CPU along with the Monitor or other input/output units supplied by the applicant is a ‘single supply’.
The applicant submitted that Desktops are personal computers designed for regular use and generally houses a CPU along with other input and output units and are classified under 8471 of the Customs Tariff Act, 1962. Under GST these goods are liable to be taxed under 9% under Sl no 360 of Schedule III to Notification 1/2017-Central tax (rate) dated 28.06.2017
The Bench constituting of Hon’ble members Ms Manasa Gangotri Kata and Thiru Kurinji Selvaan V.S. held that Desktop Computer in common parlance and technical sense known as a system unit which is otherwise known as a Central processing unit along with its connected peripheral units give essential character to the product and hence is a single supply leviable to 9% GST.
On a perusal of relevant Section notes, it is evident that CTH 8471 covers ‘Automatic Data Processing Machines’ consisting of at least CPU, keyboard and Visual Display, the same housing or otherwise.
“As per Note 5A to Chapter 84, desktops supplied by the applicant are automatic data processing machines. The Desktops can consist of the variable number of units such as the keyboard, mouse monitor etc’ as per Chapter Note 58. Keyboards, mouse and monitors all qualify to be called as a unit of the automatic data processing machine as they satisfy the conditions of Chapter Note 5(C) in that they are of a kind solely or principally used in an automatic data processing system, they are connectable to the central processing unit either directly or through one or more other units; and are able to accept or deliver data in a form (codes or signals) which can be used by the system. As per Chapter Notes 5(c) keyboards and mouse if presented separately are to be classified under 8477. However, as per the Chapter Note 5(D) mentioned above, monitors, when supplied separately, do not fall under CTH 847L In the event the applicant supplies monitors separately under a different purchase order or invoice or a different line item in an invoice, they cannot be classified under 84ZL In that case they would have to be classified under 8528 depending on the type of monitor.”
“In the instant case in the tax invoice submitted by the applicant, the product description is given as Desktop Computer which in common parlance and technical sense known as a system unit which is otherwise known as a central processing unit along with its connected peripheral units of input & output devices. In this case, the processing unit gives the essential character to the product in question. Hence, the desktop consisting of CPU, monitor, Keyboard and mouse supplied by the applicant is a single supply classified under CTH 847I.”
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