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of <h1>Tax Rate Upheld for Video Conferencing Equipment as Electronically Related</h1> <h3>Godrej & Boyce Mfg. Co. Ltd. Versus State of Kerala</h3> The Court upheld the tax rate of 12.5% for video conferencing equipment, ruling it falls under electronically related digital online systems, distinct ... - Issues:1. Interpretation of HSN Code for tax rate determination on video conferencing equipment.2. Classification of video conferencing equipment under the tax schedule.Issue 1: Interpretation of HSN Code for tax rate determination on video conferencing equipment:The appellant questioned the justification of taxing video conferencing equipment at 12.5% when the HSN Code specified a lower rate of 4%. The appellant argued that as per the rules of interpretation, items under the same heading should have consistent tax rates. However, the Commissioner clarified that video conferencing equipment, being electronically related digital online systems, did not fall under the HSN Code mentioned by the appellant. The Court agreed with the Commissioner, emphasizing that video conferencing equipment consists of components beyond those covered by the HSN Code, making it distinct from the items classified under that code. Therefore, the Court upheld the tax rate of 12.5% for video conferencing equipment.Issue 2: Classification of video conferencing equipment under the tax schedule:The appellant contended that video conferencing equipment should be classified under a specific entry in the tax schedule, attracting a lower tax rate of 4%. The appellant argued that the equipment fell under a particular HSN Code and should be treated accordingly. However, the Revenue argued that since video conferencing equipment was not specifically described in the tax schedule, it should be taxed at 12.5%. The Court examined the HSN Code and the nature of video conferencing equipment, concluding that the equipment's components and functionality aligned more with electronically related digital online systems rather than electrically related equipment specified in the HSN Code. Therefore, the Court upheld the tax rate of 12.5% for video conferencing equipment. Additionally, the Court noted that the appeal was not maintainable as the appellant had not challenged the original clarificatory order passed by the Commissioner.In conclusion, the Court dismissed the appeal, affirming the tax rate of 12.5% for video conferencing equipment based on its classification as electronically related digital online systems, distinct from the items covered by the HSN Code.
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