(Prayer: Tax Case Appeal filed under Section 37 of the TNGST Act, 1959 to revise the order of the Joint Commissioner of Commercial Taxes II (SMR) dated 27.08.1998 passed in Ref.No.F3/86740/95/SMR.No.315/96.)
T.S. Sivagnanam, J.
1. This Tax Case (Appeal) filed by the assessee is directed against the order of the Joint Commissioner of Commercial Taxes II (SMR) dated 27.08.1998 passed in Ref.No.F3/86740/95/SMR.No.315/96. The Joint Commissioner, while exercising Suo motu power of revision as against the order of the Appellate Assistant Commissioner, issued notice to the appellant/assessee proposing to assess the sale of loudspeaker at the rate of 15% under Section 3(2) of the Tamil Nadu General Sales Tax Act vide Entry No.11 of the First Schedule.
2. The assessee was assessed to total and taxable turnover of Rs.14,30,930/- and Rs.10,12,534/- respectively for the year 1992-93 under the Tamil Nadu General Sales Tax Act. The Assessing Officer assessed the sales turnover of Rs.2,51,700/- being the tax on the sales of loudspeaker at 15% under Section 3(2) of the Tamil Nadu General Sales Tax Act vide Entry No.11 of the First Schedule.
3. Aggrieved by this, the assessee filed appeal before the Appellate Assistant Commissioner disputing the rate of tax at 15% as against their claim for concessional levy of tax at 3% as per G.O.P.No.187 dated 30.03.1990. The Appellate Assistant Commissioner accepted the case of the assessee and allowed the case for concessional levy at 3%.
4. The Joint Commissioner, exercising his suo motu revisional power issued notice stating that the sale of speaker effected by the assessee are completely different from loud speaker classified under Entry 11 of the First Schedule to the TNGST Act, 1959 and not entitled for exemption for concessional levy of tax at 3% as per G.O.P.No.187 dated 30.03.1990. Further the Joint Commissioner stated that the assessee has not adduced any proof to show that loudspeaker is an electronic item. Notice in this regard was issued to the assessee calling for their objections.
5. The assessee stated that they are dealers in speakers of small sizes and that they were fitted in Car radios, Radios and T.Vs.; that they are not like mike sets, that all the dealers had paid only at the rate of 3% ; the Government in Lr.No.22730/II-1,86-1 CT & RE dated 03.06.1986 have classified this item that it may be seen in item 5 of the First Schedule relevant to the year 1992-93; that G.O.P.No.187 dated 30.03.1990 may be considered.
6. The Joint Commissioner held that the assessment related to 1992-93 and speaker sold by the assessee were found to be not electronic items and hence, liable to be taxed at 15%. Following the decision of the Sales Tax Appellate Tribunal, Additional Bench, Madurai in T.A.No.169/94 dated 06.05.1995 for the year 1991-92, the Joint Commissioner confirmed the proposal and restored the order of assessment. Aggrieved by the same, the present Tax Case (Appeal) has been filed.
7. We have heard the learned counsel appearing for the appellant and learned Additional Government Pleader appearing for the respondent and perused the materials available on record.
8. The only question that arises for consideration in this Tax Case (Appeal) is as to whether the goods sold by the assessee is covered by Notification in G.O.P.No.187 dated 30.03.1990 and what would be the rate of tax on the sale of goods viz., loud speaker.
9. Entry 11 of the First Schedule of the Tamil Nadu General Sales Tax Act enumerates as under:-
S.No.11-Original Entry under Part I, First Schedule of the Tamil Nadu General Sales Tax Act, 1959:-
" Sound transmitting equipment including telephones and loud speakers and spare parts thereof" – taxable at 15%.
In the Notification G.O.P.No.187 CT & RE dated 30.03.1990 effective from 17.03.1990, the rate of tax on first sale was 4% and subsequently, the rate was reduced to 3% on the sale of electronic goods and components w.e.f.17.03.1990 by virtue of Notification in G.O.P.No.187/30.03.1990. The said Notification reads as under:-
" 807. Reduction in rate to three per cent in respect of the tax payable by any dealer on the sale of electronic goods and components in the categories falling under any of the entries in the First Schedule to the TNGST Act except those falling under entry 1-B of the said Schedule to the said Act.
The notification shall come into force on 17.03.1990.
The expression "Three per cent" was substituted for the expression "four per cent" originally notified in Notn.No.II(1)/CTRE/52(f)/90 by G.O.P.No.187 CT & RE dated 30.03.1990. Effective from 17.03.1990. Electronic goods other than those falling under item 1-B the rate of tax on first sale is 4% from 17.03.1990.
Rate reduced to 3% on the sale of electronic goods and components w.e.f.17.03.1990 (G.O.P.No.187/30.03.1990) under Sl.No.807 of the Notification."
10. Thus by virtue of the above Notification, the rate of tax payable by any dealer on the sale of electronic goods in the category falling under Entry No.11, I Schedule to the TNGST Act shall be liable to be taxed at the rate of 3%. Now the issue to be considered is as to whether the speakers sold by the assessee/dealer are electronic goods.
11. Admittedly, the assessee has sold speakers along with car radios, radios and Tvs and not speakers, which are used in mike sets. The assessee placed reliance on the decision of Kerala High Court in the case of State of Kerala, Rep. By Joint Commissioner Vs. M/s.Sigma Inc.Palarivattom, by order dated 6th September, 2010 in ST.Rev.No.175 of 2008. In the said decision, the question before the Division Bench of the Kerala High Court was that whether the speakers sold by the respondent therein for fixing in cars attract sales tax at 12% under Entry 134 of the First Schedule providing for Sound transmitting equipment including loud speaker of electronic goods under Entry 55 of the Kerala General Sales Tax Act. The Division Bench of the Kerala High Court, after taking note of the relevant provision and the entries to the I Schedule of Kerala General Sales Tax Act observed that car stereos are admittedly electronic goods covered by Entry 55 and speakers are nothing but accessories which are separately covered by the very same entry i.e. Entry 55 of the Kerala General Sales Tax Act. The Division Bench further held that nobody can have a dispute that speakers attached to stereos are not accessories to it because without the speaker, stereo cannot be put to use at all; so much so, loud speakers which do not form accessory to any electronic item, only are covered by Entry 134 and loud speakers constituting accessory of electronic goods like stereo, car stereos and radios are covered by Entry 55 and accordingly, the Division Bench of Kerala High Court dismissed the State's Revision.
12. As far as the present case is concerned, the Notification G.O.P.No.187 dated 30.03.1990
Please Login To View The Full Judgment!
is widely couched to cover sale of goods falling under Entry 11 of First Schedule to the Tamil Nadu General Sales Tax Act. 13. As noticed above, in Entry 11 of the First Schedule to the Tamil Nadu General Sales Tax Act, it was enumerated as "Sound transmitting equipment including telephones and loud speakers and spare parts thereof". By virtue of Notification G.O.P.No.187 dated 30.03.1990, reducing the rate of tax to 3% on sale of electronic goods with effect from 17.03.1990, the appellant/assessee is entitled to the benefit of said Notification, since the sale of speakers of the assessee were along with car radios, radios and TV sets, which are admittedly electronic items. 14. In the light of the above findings, the Tax Case (Appeal) stands allowed. No costs.