2025-VIL-340-HP
  1. Home
  2. 2025-VIL-340-HP

VAT High Court Cases

Himachal Pradesh VAT Act, 2005 - Demand of differential VAT including interest on the sale of cellphone chargers sold alongwith cellphone in retail packs, during the period 01.04.2014 to 31.03.2016 - Application of judgment of the Hon’ble Supreme Court in State of Punjab vs Nokia India Ltd. case – Revenue in appeal against Tax Tribunal judgement which allowed the appeal filed by Respondent-assessee and set aside the assessment order passed by the Assessing Authority – Whether the cell phone charger is an accessory to the cell phone and not a part of the cell phone, and therefore liable to be taxed at a higher rate under HPVAT Act, 2005 – HELD - the cellphone charger is an accessory to the cellphone and not a composite part of the cellphone. The Supreme Court in the Nokia India Pvt. Ltd. case, had categorically held that the mobile/cellphone charger is an accessory to the cellphone and is not a part of the cellphone. The battery charger cannot be held to be a composite part of the cellphone but is an independent product which can be sold separately, without selling the cellphone. Wherever two different products are sold in same retail package, it essentially attracts different rates of tax – Further, the provisions of the HPVAT Act, 2005 are similar to the Punjab VAT Act, which was the subject matter in the Nokia India Pvt. Ltd. case. The contentions raised by the respondent based on the judgments of the Allahabad High Court and the Karnataka High Court are rejected as the provisions of the VAT Acts in those cases are entirely different – The cellphone charger is an accessory and not a composite part of the cellphone, therefore, the differential VAT liability imposed by the Assessing Authority is correct - The learned Tribunal wrongly interpreted the judgment in Nokia India case and thereby, reached at a wrong conclusion - the impugned orders passed by the Tribunal are set aside and the petition is allowed - Classification Hierarchy under Rule 3 of the General Rules for the interpretation of the harmonized system – In terms of Rule 3(a) when a specific entry is available the commodity has to be considered under the specific category/entry for all intents and purposes. Even in the commodity classification under the Custom Tariff Act, chargers and mobiles are classified under different heads and have different distinct codes - The Rule (3) (b) would only be applicable if there is no specific entry with regard to products and they are being sold together in a retail package. However, that is not the case with chargers and phones as they have distinct codes. These observations are in consonance with the judgment of the Hon’ble Supreme Court in the Nokia’s case that has stated that charger is an independent product and is a mere “accessory to the phone.” This shows that the Custom Tariff Act, 1975 entries and the Hon’ble Apex Court judgment in the Nokia’s case are in tandem and consonance with each other. Moreover, applying the rules of interpretation of custom duty (rule 3) is an exercise done arbitrarily. Such reliance defeats the purpose of residual entries. This would encourage unscrupulous companies to resort to packaging different commodities under the same retail package thereby bypassing the residual entries and defeating their significance. This would become a tax evasion tactic. The phrase ‘goods sold in sets for retail’ can be exploited by companies to evade the residuary tax. The ‘goods sold in sets for retail’ has to qualify some form of test of being composite or the part of the main product. That is not the case in a mobile and a charger as has been conclusively held by the Hon’ble Supreme Court in Nokia’s case.
Download File

Quick Search

/

Advance Search

GST Resources

/

Gst Rate Finder

Tax Vista

Your Biweekly Tax Recap

By Dr. G. Gokul Kishore

Weekly Summary

VIL Video

GSTAT Rules & Industry Preparedness
By Vivek Jalan

Create Account

Security-Code
New Code?

Log In

New User ? Forgot Password ?

Forgot Password

Security-Code
New Code?
Please Note: This facility is only for Subscribing Members.

Email this page

Feedback this page

Schedule a Demo

Schedule a demo to know the features and advantages of VILGST portal. Get to know the tips to find the desired results in faster way.

Caselaw Request Form (CRF)

Didn’t find what you are searching for? No worries, please give us the following details and VIL will email you the desired Caselaws at the earliest:

Security-Code
New Code?