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Great Eastern Impex Pvt. Ltd. vs State Of Karnataka on 31 October, 2007

Karnataka High Court
Great Eastern Impex Pvt. Ltd. vs State Of Karnataka on 31 October, 2007
Equivalent citations: (2008) 14 VST 165 Karn
Author: K Manjunath
Bench: K Manjunath, A Nagaraj


ORDER

K.L. Manjunath, J.

1. The following substantial question of law arises for consideration in this petition:

Whether the bar code printers and bar code scanners and hand held terminals fall under entry 20, Part C(ii)(a) and (b) appended to the Second Schedule to the Karnataka Sales Tax Act, 1957?

2. The petitioner is a registered dealer under the Karnataka Sales Tax Act, 1957 dealing in bar code printer, bar code scanners and manually operated labelling machines. For the assessment period April 1, 2000 to March 31, 2001 the Deputy Commissioner of Commercial Taxes (Assessment)-13, Bangalore, by his order dated March 29, 2003 held that the goods sold by the petitioner are to be treated as electronic goods and that they do not fall under the category “computer peripherals” enumerated under serial No. 20 of Part C of the Second Schedule to the Karnataka Sales Tax Act, 1957 and the petitioner was called upon to pay the taxes.

3. Aggrieved by the order of assessment, the petitioner filed an appeal before the first appellate authority contending that the assessment officer has committed a serious error in not considering the products of the petitioner as computer peripherals as enumerated in serial No. 20 of Part C of the Second Schedule to the KST Act and it is not liable to pay sales tax at four per cent up to December 31, 1999. The first appellate authority rejected the contention of the appellant on the ground that bar code printers, bar code scanners and printed labels cannot be considered as computer peripherals and they are independent machineries and are to be treated as electronic goods and dismissed the appeal.

4. Being aggrieved by the concurrent findings of the assessment officer and the first appellate authority, an appeal was filed before the Karnataka Appellate Tribunal, Bangalore. The said appeal also came to be dismissed on August 29, 2006 by holding that bar code products are generally used in big commercial activities for accuracy and for avoiding human interaction and entry of inaccurate data by hand and that these goods are to be considered as electronic goods, since the bar codes are read only through the flow of electrons from the scanner and any goods which run through flow of electrons, are regarded as electronic goods. Accordingly, the appeal was dismissed.

5. Being aggrieved by the concurrent findings of all the authorities, the present revision petition is filed contending that the goods sold by the petitioner fall under serial No. 20, Part C(ii)(a) and (b) appended to the Second Schedule to the KST Act, 1957 and taxes are to be paid as computer peripherals.

6. We have heard both counsel for the parties.

7. The learned Counsel for the petitioner contends that the bar code printer is nothing but a type of printer used in the computer. The scanner is also similar to that of any other scanner used in the computer and the goods sold by the petitioner are nothing but a peripherals of a computer and that these products cannot be used without the assistance of computer and CPU. Relying upon the judgment of this Court reported as Balaji Computers v. State of Karnataka , he contends that in similar circumstances, this honourable court has held that the language employed in the exemption notifications and items in respect of which exemption has been given, has to be understood in the context in which exemption notifications came to be issued and that exemption notification has to be strictly construed and if there is any ambiguity in the language employed in exemption notification and if it is not clear and ambiguous, if a beneficial view has to be taken, the same has to be extended to the assessee. He also placed reliance on the judgment of the Supreme Court in Vee Nissan Electronics v. Commissioner of Central Excise, Mumbai and contends that tariff item does not mean only item specified fall under the definition but only clarifies that even those items would be covered under the definition-classification of goods. Contending that the goods sold by the petitioner are computer peripherals and even if the name of the products sold by the petitioner, namely, bar code, bar code scanner and bar code printers are not included in the notification in serial No. 20, Part C of the Second Schedule to the Act, he is entitled for the benefit under the said notification as it falls within the word “computer peripherals”. Serial No. 20, Part C of the Second Schedule to the KST Act, is extracted below:

Serial No. 20 of Part C of the Second Schedule:

——————————————————————————-

20(i)  Computers of all kinds, namely, main       1.4.1998 to    Four per cent
       frame, mini, personal, micro computers     31.02.1999 
       and the like consisting of monitor,        1.1.2000 
       to Eight per cent key board, mouse, 
       floppy drives, cartridge,                  31.3.2001
       tape drives, CD ROM drives, DAT drives, 
       hard disks and their parts
  (ii) Peripherals, that is to say:
       (a) All kinds of printers and their        1.4.1998 to    Four per cent
       parts, namely, dot matrix, ink jet, laser, 31.12.1999
       line, line matrix and the like             From 1.1.2000  Eight per cent
       (b) Terminals, scanners, multimedia        1.4.1998 to    Four per cent
       kits, plotters, modem and their parts      31.12.1999
                                                  From 1.1.2000  Eight per cent
 (iii) Computer consumables, namely, stationery,  1.4.1998 to    Four per cent
       floppy disks, CD ROMS, DAT                 31.12.1999 
       tapes, printer ribbons, printer            From 1.1.2000  Eight per cent
       cartridges and cartridge tapes
  (iv)   ...                                          ...             ...
-------------------------------------------------------------------------------

 

8. In serial No. 20, Part C of the Second Schedule after the words “all kinds of printers and their parts, namely, dot matrix, ink jet, laser, line, line matrix”, the words “and the like” are used. Therefore, we have to consider whether the words “and the like” can be extended to the benefit of the petitioner.

9. The learned Government Advocate relying upon the judgment of this Court in Diebold Systems Pvt. Ltd. v. Commissioner of Commercial Taxes, Karnataka, Bangalore , contends that the goods sold by the petitioner do not fall under serial No. 20, Part C of the Second Schedule to the KST Act, and these goods are to be treated as electronic goods, as ATM is not considered as peripherals of computers by this Court. According to him, an ATM machine would work similar to the work of the goods sold by the petitioner and that these items are specialised items and have to be construed as electronic goods and not computer peripherals. According to him, the intention of the Legislature was to give benefit to the goods which are being used by a common man and since the bar code scanners dealt by the petitioner will be used only by a particular class of people, namely, business class, such a benefit cannot be extended to the petitioner.

10. The learned Counsel for the petitioner has produced certain assessment orders for the years 2001-02, 2002-03 and 2003-04. For the subsequent years, the very same officer has treated the goods of the petitioner as computer peripherals. For the year April 1, 2004 to December 31, 2004, the very same officer has passed the order granting relief to the petitioner treating the goods sold by the petitioner as computer peripherals. Even the other officers who has passed the order for the subsequent years have treated the goods of the petitioner as computer peripherals. These facts are not disputed by the learned Government Advocate.

11. After hearing the learned Counsel for the parties and on perusal of serial No. 20 of Part C of the Second Schedule to the KST Act, it is clear that while describing the word “peripherals”, all kinds of printers and their parts, namely, dot matrix, ink jet, laser, line, line matrix, and the words “and the like” are included. It is not the case of the State Government that bar code printer does not fall within the category of printer. It is also a type of printer used in the business line, by using the computer. Without the computer a bar code printer cannot be made use of for printing purposes. Similarly, the scanner is also included in SI. No. 20(ii)(b) of Part C of the Second Schedule to the KST Act. The petitioner is also dealing with the scanner, which is known as bar code scanner. The word “scanner” used in SI. No. 20(ii)(b) of Part C of the Second Schedule and the scanner of the petitioner are working in the same line. Both the scanners are used in computers. When these facts are not in dispute and when the same authorities have given the benefit to the petitioners for the subsequent year treating it as computer peripherals, when the Division Bench of this Court has taken a view that where there is an ambiguity in the notification and if more than one view is possible, then such benefit has to be given to the assessee. Since the expression “bar code” is not used in SI. No. 20 of Part C of the Second Schedule to the KST Act or any other category, as the same has to be treated as computer peripherals, we are of the opinion that the question of law has to be answered in favour of the petitioner and our view is also supported by the subsequent orders passed by the very same authorities.

12. Accordingly, this petition is allowed.

13. The orders passed by the assessment officer and the first appellate authority and the order of Appellate Tribunal are hereby quashed by holding that the goods sold by the petitioner are to be treated as computer peripherals.

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