TaxTMI 
TaxTMI 
2011 (3) TMI 1516
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....he hands of the assessee by the impugned assessment orders, against which both the appeals by the higher appellate forum were decided in favour of the assessee. Hence, these revision petitions at the instance of the Revenue. The learned Tax Board in its impugned order has relied upon two Supreme Court's decisions in favour of the assessee to arrive at the aforesaid conclusion, viz., (i) Union Carbide India Ltd. v. State of Andhra Pradesh reported in [1995] 98 STC 1 (SC) and (ii) Mehra Bros. v. Joint Commercial Tax Officer, Madras reported in [1991] 80 STC 233 (SC); [1991] 1 SCC 514. The question of law, which arises for consideration by this court is as to whether these two commodities CVT and UPS were rightly held by the appellate authorities below as taxable at four per cent as "accessories of computers" or whether they would be taxable at 10 per cent in the general residuary entry of the relevant notification dated March 27, 1995, applicable for these two assessment years. In order to apply the law to the facts of the present case, it would be appropriate to first understand as to what these two commodities are. From Wikipedia, the free encyclopedia downloaded from ....
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....oss up to 3 msecs. at typical loads. * Higher input voltage control range, for loads less than rated load * Very high line transient/spike rejection capability and excellent input to output isolation characteristic." The relevant tax rate entry No. 50 in the Notification (serial No. 968 S.O. 399) dated March 27, 1995 is reproduced hereinbelow: "50. All types of computers, computer software, electronic typewriters, 4%" black and white TC, telecommunication and sound transmitting equipments, electronic exchanges and switching equipments including parts and accessories thereof. The entry No. 100 relating to residuary entry read as under: "100. General rate, that is, all goods that are not covered by items 1 to 99. 10%" The commodities, viz., CVT and UPS are not specifically mentioned in any other entry of the Notification dated March 27, 1995, which enumerates 99 specific entries and one residuary entry. However, the entry No. 83 relating to electrical goods is also reproduced hereunder for comparison purposes. "83(a). All kinds of electrical goods including casing, electrical fans, lighting bulbs, electric earthenware, electrical porcelain ware, and part....
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....eness of something else". The court thus held that where the entry includes "parts" as well as "accessories", which are required for use in projectors or other cinematographic equipment in view of main use of arc carbons to be production of powerful lights used in projectors in cinema(s), they would be taxable in the aforesaid entry No. 4. The court further held that fact that they can also be used for searchlights, signalling, stage lighting, or where powerful lighting for photography or other purposes may be required, could not detract from the classification to which the carbon arcs belong. Relying upon the aforesaid judgment of the Supreme Court in Annapurna Carbon Industries [1976] 37 STC 378 (SC), in Mehra Bros. v. Joint Commercial Tax Officer, Madras reported in [1991] 80 STC 233 (SC); [1991] 1 SCC 514, the apex court dealing with the case of car seat covers or upholstery held that car seats or upholstery are "accessories of motor vehicles" and would be taxable under entry No. 3 of Schedule I, which reads as under (page 234 in 80 STC): "Motor vehicles, including motor cars, motor-taxi cabs . . . and articles (excluding batteries) adapted for use generally as parts and ....
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....ry of motor vehicle" and not merely as "article of plastic". The relevant portion from para 21 of the judgment relying upon aforesaid three judgments cited (supra), is quoted below (pages 712 and 713 in 8 VST): ". . . an 'accessory' by its very definition is something supplementary or subordinate in nature and need not be essential for the actual functioning of the product . . . nameplates add to the convenient use of the motor vehicle. Nameplate serves a very useful purpose inasmuch as it gives an identity to the vehicle. Each vehicle comes with a different brand name and in different models having distinct features. The manufacturers of different types of models of vehicles market them under a name and the vehicles are recognized and referred to by the nameplate affixed on them. Nameplates convey to the consumers the distinct features it carries. They add effectiveness and value to the vehicle and are, at the very least, accessories of the vehicle. Thus, even if there was any difficulty in the inclusion of the plastic nameplates as 'parts' of the motor vehicles, they would most certainly have been covered by the broader term 'accessory'. . ." On the ....
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.... set aside and the tax case revision is allowed. No costs." In the case of Katragadda Electronics (P.) Ltd. v. State of A.P. reported in [1988] 71 STC 281 (AP), the Division Bench of the Andhra Pradesh High Court held that voltage stabilizers could not be held to be exempted from sales tax being accessories to electrical energy where such exemption was granted from tax on the sale of electrical energy only. In para 3 of the said judgment rejecting the contention of the learned counsel for the assessee, the court held that what is exempted from tax is electrical energy and not any accessories to the same ; and therefore, the voltage stabilizers can never be regarded as accessories to electrical energy. For the purposes of ready reference, the relevant paras 3, 4 and 5 are reproduced hereinbelow (pages 282 and 283 in 71 STC) : "3. It is urged by Sri V.T.M. Prasad, learned counsel appearing for the petitioner in the first three tax revision cases, submits that as the voltage stabilizers supplied by the assessee therein are accessories to electrical energy, the same are exempted from tax under section 8 of the Act. We find it extremely difficult to accede to the submission of the....
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....s were referable to specific entries in the notification, there was no question of going to the residuary entry of 10 per cent. He also emphasized that since the words "parts and accessories thereof" both have been used in the relevant entry No. 50, quoted above, even if UPS and CVT do not form part of computer as such, but only aid or support the computer for their operations, they can certainly be described as "accessories" thereof and merely because these items can be used in other electrical equipments like refrigerators, etc., also it does not mean that they get excluded from the ambit and scope of word "accessory of computer". He also submitted that major and common use of these goods UPS and CVT is with the computers and, therefore, as per common parlance or trade parlance test, these items deserve to be taxed at concessional rate at four per cent. Having given my thoughtful consideration to the rival submissions made at the bar and relevant entries in the notification dated March 27, 1995 so also judgments cited at Bar, this court is of the considered opinion that the goods in question, namely, UPS and CVT are liable to be taxed at four per cent only under the relevant e....