State of Karnataka Vs Intex Technologies India Ltd (Karnataka High Court)
Karnataka High Court held the charger which is sold along with the mobile phone in one set and accordingly taxable at 5% as covered under entry 53 of Schedule III of KVAT Act.
Facts- M/s. Intex Technologies India Ltd. are, it is a registered dealer under the Karnataka Value Added Tax Act, 2003. It is engaged in trading mobile phones, parts and accessories. It sells mobile phones in a composite package which also contains accessories such as headsets, cables, ejection pin, adapter, charger, manual etc. The AO passed an order u/s. 39(1) of the KVAT Act subjecting to tax, the sales turnover of mobile charger at the rate of 13.5% to 14.5% for A.Y. 2010-11 to 2013-14. The assessee filed an application for rectification and the AO passed orders u/s. 69 of the KVAT Act, rectifying the order by dropping estimated turnover as per the return and books of accounts. The JCCT(A) dismissed assessee’s appeal. On further appeal, KAT, by the impugned order, has allowed assessee’s appeal. Feeling aggrieved, the Revenue has preferred these petitions.
Conclusion- The Assessees’ have rightly canvassed the application of Dominant Intention Test. There can be no doubt that the main intention of a purchaser/seller while buying/selling a ‘Mobile Set’ is to buy/sell the mobile phone and not charger alone. Supply of charger, headset, and ejection pin are incidental to the sale. Therefore, the Dominant Intention Test would apply to the present case and hence, charger cannot be differently taxed.
The mobile phone finds its place in III Schedule and taxable at 5% and therefore, the charger which is also sold along with mobile phone in ‘one set’ is together chargable at 5%.
We are of the considered view that the definition contained in the Notification issued under the KVAT Act includes the charger which is sold along with the mobile phone in one set and accordingly taxable at 5%.
FULL TEXT OF THE JUDGMENT/ORDER OF KARNATAKA HIGH COURT
This batch of Revision Petitions by the Revenue is being disposed of by this common judgment as they involve common questions of law.
2. The facts are illustratively taken from STRP No.8/2022 (State of Karnataka Vs. M/s Intex Technologies India Ltd.) directed against the order dated March 10, 2021 in STA No. 88-91/2018 passed by the KAT1, Bengaluru. Though it has been admitted to consider three questions of law, after hearing Learned AGA for the Revenue and Learned Advocates for the Assessees, in our opinion only the following question arises for consideration in all these petitions:
1) Whether on the facts and in the circumstances of the petitioner’s case, the Appellate Tribunal was right in law in holding that “mobile phone chargers” sold along with mobile phone in a composite pack attracts tax at the same rate as applicable to “mobile phone” only and it cannot be taxed at higher rate as unscheduled goods under Section 4(1) (b) (iii) of the Act?
3. Briefly stated the facts in M/s. Intex Technologies India Ltd. are, it is a registered dealer under the Karnataka Value Added Tax Act, 20032. It is engaged in trading mobile phones, parts and accessories. It sells mobile phones in a composite package which also contains accessories such as headsets, cables, ejection pin, adapter, charger, manual etc. The AO3 passed an order under Section 39(1) of the KVAT Act subjecting to tax, the sales turnover of mobile charger at the rate of 13.5% to 14.5% for A.Y.4 2010-11 to 2013-14. The assessee filed an application for rectification and the AO passed orders under Section 69 of the KVAT Act, rectifying the order by dropping estimated turnover as per the return and books of accounts. The JCCT(A)5 dismissed assessee’s appeal. On further appeal, KAT, by the impugned order, has allowed assessee’s appeal. Feeling aggrieved, the Revenue has preferred these petitions.
4. Shri. Jeevan J. Neeralgi, Learned AGA for the Revenue, praying to allow the petition, submitted that:
