CASE LAWS DETAILS
DECIDED BY: SUPREME COURT OF INDIA,
IN THE CASE OF: Commissioner of Trade Tax Vs. Parikh Gramodyog Sansthan, APPEAL NO: Civil Appeal No. 651 of 2005, DECIDED ON August 11, 2010
The Respondent/Assessee is in the business of manufacture of voltage stabilizer and sales thereof. The Assessing Officer had passed Assessment Order dated March 31, 1997 under section 41(8) of the UP Trade Tax Act, 1948, directing S/S. Parikh Gramodyog Sansthan (Respondent) to pay Sales Tax in a sum of Rs. 1,00,875.55 and Rs. 1,93,438.00 for the assessment years 1994-95 and 1995-96 respectively. This quantification was based on the rate applicable to electrical goods. The Respondents had stated that they were liable to pay taxes at the rates applicable to electronic goods under the old Entry 74(f) and the amended Entry 74(a)(iii) of the Notification, which was 4 per cent for the assessment years 1994-95 and 1995-96.
Being aggrieved by the order passed by the Assessing Officer dated March 31, 1997, the assessee had preferred an appeal before the Commissioner of Trade Tax, which was dismissed vide order dated 29-7-1997. Subsequently, the Respondents filed second appeal before the Trade Tax Tribunal, Moradabad. The Tribunal while modifying the order passed by the Assessing Officer had held that voltage stabilizers were `electronic’ goods and not `electrical’ goods, primarily on the ground that electrical goods involve the consumption of electricity, whereas an electronic device functions through the creation of an electron vacuum in the semiconductor material. The Tribunal also referred to a certificate issued by the Principal Director of Electronic Service and Training Centre of Ram Nagar, Nainital, which is a Government Society, that voltage stabilizers are electronic devices. The Tribunal also noted that the Text Book `Basic Electronic Engineering’ by M.L Anumani, categorises voltage stabilizers as electronic goods. The Tribunal also had taken note of circular issued by the U.P Government dated 31-3-1992 (Notification No. 1223), the notification issued by the Punjab Government dated 10-11-1987, as well as Exemption No. 12 of Entry No. 23 of the Excise Act, all of which categorizes voltage stabilizers as electronic goods.
The voltage stabilizer is an instrument which can be used by application of electrical energy and not an instrument for generation, distribution or transmission of electrical energy, but are used for regulating the inflow of electrical energy for variety of appliances. Voltage stabilizers serve the purpose of producing a constant output voltage from a variable input voltage. As a rule, voltage stabilizers operate with an in-phase regulated transistor, which has a control input driven by a stabilized control voltage. It is possible, given a constant control voltage to largely stabilize the output. Voltage in a defined operating range, by way of the characteristic response of the transistor acting as the actuator. The stabilized output voltage serves, as a rule, to supply voltage to electronic circuits which are connected down stream and often have a dedicated voltage regulator for voltage supply.
Purpose of Voltage Stabilizers :
Voltage stabilizers provide a steady amount of electrical current to electronic devices when power fluctuates in the house or business where the devices are located. Power surges and sudden power drops can cause serious damage to computers and other sensitive electronics. Voltage stabilizers store power and provide power from its reserve to attached devices, which bypasses power fluctuations. Some voltage stabilizers are also incorporated into a Universal Power Supply (UPS), which is a backup battery system that allows devices such as computers to continue operating for a limited period of time in the event of a power failure.
Standard Voltage Stabilizer Operation :
The specifics of how a voltage stabilizer operates varies from one type to another, but the basics remain the same. A voltage stabilizer is plugged into an outlet, which charges a series of capacitors or battery units in the stabilizer. These capacitors maintain their charge even if the amount of power from the outlet fluctuates. Any device plugged into the stabilizer will draw its power from the capacitors or battery instead of directly from the outlet. The voltage stabilizer is wired so that the outlet and the devices are on separate circuits. As a device drains power from the capacitors, the power coming in from the outlet will continue to recharge them. Due to resistance in the stabilizer’s circuitry, its power to devices is lower than the ideal voltage from the outlet. This means devices may function slightly slower when connected to a voltage stabilizer.
A capacitor (formerly known as condenser) is a passive electronic component consisting of a pair of conductors separated by a dielectric (insulator). When there is a potential difference (voltage) across the conductors a static electric field develops in the dielectric that stores energy and produces a mechanical force between the conductors. An ideal capacitor is characterized by a single constant value, capacitance, measured in farads. This is the ratio of the electric charge on each conductor to the potential difference between them.
Capacitors are widely used in electronic circuits for blocking direct current while allowing alternating current to pass.
It is evident from the facts of the case that an automatic voltage stabilizer involves the operation of a number of electronic components. A voltage stabilizer might have many components some of which use electricity. This cannot be the sole reason for classifying it as an electrical good. As noticed earlier, an electrical device can be an electronic device, but an electronic device cannot be an electrical device. The Tribunal which is the last fact finding authority after taking into consideration the components of voltage stabilizer, the purpose for which it is used and the principles on which it works has come to the conclusion that the voltage stabilizer is electronic goods, for the purpose of taxation under U.P. Trade Tax Act, we are in agreement with the reasoning and conclusion reached by the Tribunal.