“The Charger Which Is Sold Along With The Mobile Phone In One Set And Accordingly Taxable At 5%”: Karnataka High Court
The Karnataka High Court has passed a judgment on 10th February, 2023 held that the mobile phone finds its place in Schedule III and is taxable at 5%, and therefore, the charger, which is also sold along with the mobile phone in ‘one set,” is also chargeable at 5%.This was in the case of The State of Karnataka Versus The Index Technologies India Ltd.( STRP No. 8 Of 2022) and this is presided over by a division bench of Justice P.S. Dinesh Kumar and Justice T.G. Shivashankare Gowda.
FACTS OF THE CASE:
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. The department contended that “mobile charger is not an integral part of the mobile phone to treat among ‘composite goods’ because merely making a composite package of cell phone, charger shall not make it eligible as one of the composite goods for the purpose of interpretation of the provisions”.
JUDGEMENT:
The court contended that “A bare perusal of the Section 4 (charging section) of KVAT Act and Rule 3 (computation provision) of KVAT Rules would clearly indicate that there is no prescribed mechanism provided for determining the value of individual goods in a composite transaction. Thus, in the absence of a valuation mechanism, tax cannot be levied differently on each of the component by separating a single composite package. 28. In view of the above discussion, 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%”.
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JUDGEMENT REVIEWED BY PRATIKSHYA P. BEURA