Case Title: M/s Compuage Infocom Limited Versus The Assistant Commissioner
Case No.: S.B. Sales Tax Revision / Reference No. 182/2017
Decided on: 30/05/2023
Coram: HON’BLE MR. JUSTICE SAMEER JAIN
Facts of the case:
The petitioners are in the business of selling computers and computer-related products, including networking cables (CAT-5 and CAT-6) whose primary function is data transmission. The petitioner -assessee has classified the networking cables as ‘computer peripherals’ and discharged its VAT liability.
The department classified the networking cables under the residuary head and not the specific head and imposed an additional tax and interest upon the petitioner-assessee. The assessees contended that the department has not discharged its onus to prove that CAT-5 and CAT-6 cables would not be included in the broad and ex pert or technical opinion was sought, nor was any evidence brought on record to prove their point. As per settled law, the onus or burden to show that product falls within a particular tariff item is always on the department.
The assessees submitted that as the CAT-5 and CAT-6 cables are primarily and predominantly used to physically connect the computer system to a network , they would necessarily have to be included in the broad definition of ‘computer peripheral’, as per the common parlance test and end usage test.
The department contended that CAT-5 or CAT-6 cables are essentially networking cables whose use and application are not restricted to computer network and are used in a wide array of services, including telecommunication, cable networks, CCTV cameras, etc. The authorities below have rightly the definition of computer peripherals to those hardware apparatus whose usage is confined to the operation of computers only.
The court noted that Entry Nos. 3 and 24 of Part-A of Schedule IV to the RVAT Act were subsequently amended to specifically include “networking items” ” in Entry 3 and “networking cables of different types such as flat cables, CAT 3 cables, CAT 5 cables, and CAT 6 cables” in Entry 24.
JUDGEMENT
The bench of Justice Sameer Jain has observed that the department has utterly failed to adduce any evidence, technical or otherwise, to substantiate is always on the revenue, more so when the revenue is trying to classify products in the residuary entry as against the specific entry.
The court quashed the order.
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Written by: Mahima Saini
