TaxTMI 
TaxTMI 
2015 (2) TMI 751
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....nctions such as scanning, copying and/or faxing or is restricted to the types of printers mentioned after the word "like" in the said Entry? C. Whether any qualifications, conditions or restrictions are to be read into the meaning of the word "printers" used in Schedule I, Part B, Entry 18(i) so as to limit the entry only to particular kinds of printers or the usage of the word "printers" in the said Entry would include every species thereof? D. Whether the "printers" mentioned in Schedule I, Part B, Entry 18(i) would include only those printers which are exclusively used for printing or would also include all types of printers including those with additional subsidiary functions such as copying, scanning or faxing? E. Whether the use of the word "like" after "printers" in Schedule I, Part B, Entry 18(i) is merely descriptive and illustrative or exhaustive? F. Whether the Tribunal was correct in holding that the Disputed Printers will not fall within the ambit of Schedule I, Part B, Entry 18(i) because the said Printers were capable of performing "additional functions" of copying and faxing? G. Whether the Tribunal erred in not considering the judgment of the Supreme Court in ....
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.... the appellant had clearly established that the C Forms had been furnished for this turnover and instead confirming the remand order of the lower authority in this regard? O. Whether the Tribunal was correct in not setting aside the levy of penalty to the tune of Rs. 42,033/- and instead confirming the remand order of the lower authority in this regard?" 2.1. The brief facts of the case are as under: The assessment in the above cases relates to the assessment years 2004-2005 and 2005-2006. The assessee is a dealer in computer peripherals, image runner, fax machines, toner, photocopier machine and its spares and consumables, etc. 2.2. For the relevant assessment years, the assessee claimed that the Image Runners (Multifunction network printers) would fall under Schedule I, Part B Entry 18(i) at 4%. The relevant entry is referred to hereunder: "Schedule I, Part B, Entry 18(i) at 4% Computers, personal, mini, mainframes and laptops of analog and digital varieties including automatic teller machines, their hardware and peripherals like modem and speakers, key board, monitor, mouse, CPU, floppies of all sizes cartridge tape drives, CD ROM drives, DAT drives, hard disks, printers li....
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....with C form and 12% without C form 2.6. Aggrieved by the order of the Assessing Officer, the assessee went before the Appellate Assistant Commissioner, who held that the goods would fall under Schedule I, Part D, Entry 40 of the Tamil Nadu General Sales Tax Act. Not satisfied by the order of the First Appellate Authority, the assessee appealed to the Tamil Nadu Sales Tax Appellate Tribunal. 2.7. The contention of the assessee before the Authorities below, more particularly before the Tribunal, which is based on oral and written submissions, is that the main function of Image Runner Advance - Canon model is the execution of high capacity office network laser printing, apart from regular scanning, faxing and copying. This equipment caters to the need of office, which requires primarily network, laser printing with the combined benefit of scanning, fax and copying. The primary and predominant function of this equipment is printing. The digital laser printing technology, which is the hallmark of these printers, ensures greater speed quality, consistency and product life. The assessee submitted that the predominant function of the Image Runner printer is printing documents. The print....
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...., one record units and other electronic goods. - 8% 2.11. The Tribunal also relied upon another circular of the Commissioner of Commercial Taxes dated 27.10.2003, which reads as follows: "The Commissioner of Commercial Taxes also issued another circular in this nature of goods in Acts Cell-II/89210/2002 dated 27.10.2003 (available in Assessment Year 2002-2003 File Page No.357). Printer with add on features of scanning and copying and faxing. Classified under Entry 14(iv) in Part-D of 1st Schedule. If the above product is imported origin then it is taxable at 20% under 80 of 11th Schedule to the TNGST Act. - 4% with C form and 12% without C form" 2.12. After considering all these aspects, the Tribunal came to the conclusion that in view of the contradictions, it decided to fix the image runner under Entry C-13(i) of First Schedule. The said Entry reads as follows: "Schedule I, Part C, Entry 13(i) Electronic goods not specified elsewhere - 4% with C form and 12% without C form" The reasoning of the Tribunal in this regard is extracted hereunder: "From the above two clarifications, it is learnt that both clarifications contradicting each other. So from the function of the di....
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....by the Assessing Officer, Appellate Assistant Commissioner, the Appellate Tribunal and the reasoning given by the Authority for Clarification and Advance Ruling, the matter may be remanded to the Original Authority for passing a detailed and speaking order after considering all the issues. He also vehemently contended that some of the functions of image runner would not fall under Entry 18(i) of Part B of Schedule I and, therefore, the goods in question fall under residuary entry. 5. We have heard the learned counsel for the petitioner and the learned Standing Counsel appearing for the respondent and perused the order passed by the Tribunal and the authorities below. 6. Even though several questions of law have been raised by the petitioner for consideration, the learned counsel on either side concur that the core issue around which the entire case revolves is: Whether the Image Runners (Multi-function Network Printers) sold by the assessee are to be classified under Schedule I, Part B, Entry 18(i) as claimed by the assessee or under Schedule I, Part C, Entry 13(i) as held by the Tribunal? 7.1. Before adverting to the merits of the case, it is apposite to refer to the decision....
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....9;The heading which provides the most specific description shall be preferred to headings providing a more general description...' 11) Further, Rule 3(b) of the same reads as follows: 'Mixtures, composite goods consisting of different materials or made up of different components,and goods put up in sets for retail sale, which cannot be classified by reference to (a), shall be classified as if they consisted of the material or component which gives them their essential character, insofar as this criterion is applicable." 12) In addition, Note 3 of Section XVI (which includes both Chapter 84 and Chapter 85) reads as follows: 'Unless the context otherwise requires, composite machines consisting of two or more machines Supreme Today With All High Courts Page 5 of 6 fitted together to form a whole and other machines designed for the purpose of performing two or more complementary or alternative functions are to be classified as if consisting only of that component or as being that machine which performs the principal function.' 13) It is not in dispute that the Multi-Functional Machines in question, Xerox Regal 5799 has about 85% of the its total parts and component....
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....evealing its Customs Tariff Classification under the code 8443.3100. Besides, the Partner representing the applicant-firm has placed reliance on the decisions rendered by the Hon'ble High Court of Madras in the case of Canon India Limited and Others vs. State of Tamil Nadu and Others reported in 2013-VIL-53-MAD and Hon'ble Supreme Court in the case of XEROX India Limited vs. Commisioner of Customs, Mumbai reported in 2010(260) E.L.T. 161 (S.C.), wherein it has been adjudged that the Multifunction Devices are peripherals to the computer system. The Partner of the applicant-firm has finally pleaded that the structural and functional features of the digital Multifunction Devices may be considered as that the Computer peripheral, classifiable as an Information Technology Product liable to VAT at the rate of 5% under Entry 68 of Part-B of the First Schedule to the Act." 8.2. The Authority for Clarification and Advance Ruling placing reliance on the notification issued by the Government of India, Information Technology Department in G.O.No.3, CT & R (B1) Department, dated 1st January, 2007, interpreted Entry 68 Part B item No.22 and came to hold that multi-function device is an ....
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....g that the other interpretation given by the lower authorities is not accepted, on a conspectus of the issue raised by the petitioner and the orders passed by the authorities below, we find that the issue that has to be decided is whether image runner multifunction network printer is a "peripheral" of a computer or such other device having different functional capability which would fall under other entries as contended by the Department. It is seen from the order of the Authorities below that the technical details of the Image Runner have already been submitted before the lower authorities. 10. The first issue that the petitioner has been canvassing is the predominant use of the goods in question. It is the specific plea of the petitioner before the Original Authority as well as before the first Appellate Authority that the image runner is predominantly a multifunction network printer and it performs other functions like scanning, fax, documents storage and copying. Besides the facility of network printing, the add on features of scanning, fax, photocopying make the goods a multi-function device. 11. The fact that the goods in question work in conjunction with a computer, ....
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....cuments, load data or work as an input devise of the computer or work as an output device to take printouts etc. from the computer. At the same time, there can be photocopiers, whose main purpose is to copy or act as a duplicating machine to make copies of documents. Incidentally, they may also be used as a printer. This would require elucidation and examination of factual matrix in each case and the machine in question on case to case basis." (emphasis supplied) 13. In the case on hand, on considering the functions of the Image Runner in the light of the decisions, referred supra, we are of the firm view that the goods in question are "peripherals" and the function of printing of documents based on a command given by the computer in the form of digital signals transmitted through networking device, namely, Local Area Network (LAN), makes it ample clear that it serves as an input and output device and therefore, it would partake the character of the "peripheral, which includes printer and scanner. 14. We, therefore, have no hesitation to hold that the goods in question are "peripherals" to a computer working in conjunction with the computer. There is no question of classifying ....
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....ds Ltd. v. Collector of Customs, (2005) 12 SCC 731 and CCE v. Carrier Aircon Ltd., (2006) 5 SCC 596. (emphasis supplied) 18. On Entry 68 Part B of Schedule I in relation to TNVAT Act 2006, while dealing with the issue of interpretation of a "peripheral", this Court in T.C.(R) No.36 of 2014 by order dated 01.09.2014 sustained the order of the Tribunal, as to what constitute "peripheral", holding as follows: "5. Aggrieved by the order of the Appellate Deputy Commissioner, the Revenue has preferred an appeal before the Tamil Nadu Sales Tax Appellate Tribunal. The Tribunal held that router is a network device that forwards data from one network to another and it is used for transmitting computer data from one area to another. The Tribunal relied upon the Microsoft Dictionary to define the word 'computer peripheral'. It has been clearly held by the Tribunal that based on the definition, a computer peripheral was often, but not partially or completely dependent on the host and it expands the capability of the computer, but it did not form part of the core computer architecture. Further, the Tribunal while upholding the order of the Appellate Deputy Commissioner, held as follo....
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.... lists of Information Technology products mentioned in Entry 68, has not specifically mentioned the word "Router", but it is a part coming under computer peripherals and parts. The judgments relied by the learned counsel for the respondent are also not of much help in this regard and are directly applicable to the facts of the case. In the above circumstances, it is held that the finding of the first appellate authority that "Router" is nothing but a computer peripheral which is eligible for concessional rate of 4% is sustainable and it does not require any interference. The State appeal lacks merits and is liable to be dismissed and the point is answered accordingly." 9. We find that the definition 'peripheral', as has been concluded by the Appellate Deputy Commissioner as well as by the Tribunal, is clearly an ancillary device of a computer, similar to that of key board, floppy disk or hard drive, which enables the transmission of data from one computer to another or one area to another. The definition of the term 'peripheral' as per the dictionary meaning is as follows: "lying at the outside or away from the central part; outer; external" 10. It is not in disp....