Canon India Private Limited and Others vs State of Tamil Nadu and Others

R. Banumathi and T.S. Sivagnanam, JJ.—These writ petitions arise under the Tamil Nadu Value Added Tax, 2006 (TN Act 31 of 2006)

(hereinafter referred to as the VAT Act). Broadly, there are two category of cases, one set of writ petitions filed for issuance of writ of Declaration

that Section 19(1) of the VAT Act prescribing the period for claim of Input Tax Credit (ITC) is inconsistent with the charging Section 3(2) and

Section 3(3) and the general scheme of the Act for filing return and annual assessment and reassessment embodied such as Section 22, 27(b),

Section 29, the revisional power u/s 53 and to be declared unenforceable and irrational infringing Article 14 and 19(1)(g) of the Constitution of

India insofar as setting out a condition as to time.

In the other set of writ petitions prayer has been made for issuance of writ of Mandamus to forbear the State of Tamil Nadu from recovering tax

in excess of 4% in disregard of item 24 of G.O. Ms. No. 3, CT and R (B1) department, dated 01.01.2007, notified under serial No. 68 of Part B

of the First Schedule to the VAT Act, by resorting to levy at 12.5% under the residuary classification of Part C of the First Schedule to the VAT

Act by giving effect to the order passed by the Commissioner of Commercial Tax, dated 18.04.2007.

By our order dated 25.06.2013, we have segregated the two batch of cases with request to counsels to advance arguments separately in each

batch, to be heard and decided separately.

Accordingly, we have first taken up for consideration the writ petition filed for issuance of writ of Mandamus with the aforementioned prayer.

In all these cases, the petitioners are manufacturers and successive dealers, who have effected sales and re-sales of Ink Jet Cartridges and toner

cartridges used in ink jet printers and laser printers. At the request of the learned Senior counsel appearing for the petitioners, we have taken W.P.

No. 25124 of 2009, as a lead case, which is a manufacturer/seller of Cartridges.

The petitioners would contend that all State Governments have agreed to tax Information Technology Products (IT Products) to VAT at the

rate of 4% (presently raised to 5%) and all states are taxing IT Products, namely, Ink Jet Cartridge as ""accessory"" or ""part"" of printer, which is a

peripheral"". It is stated that Section 3(2) read with serial No. 68 of Part B of First Schedule to the VAT Act deals with ""Information Technology

Products as notified by the Government"", where under the Government notified computer systems and peripheral and parts, and parts and

accessories of computer systems as peripheral. The goods listed in Part B of the First Schedule to the VAT Act attracts tax at the rate of 4% and

they are goods specified. It is stated that the revenue relies upon the residuary entry in Part C for unremunerated goods attracting tax at 14.5%. It

is stated that the petitioner and various dealers buy and re-sell Ink Cartridges for laser printer as an accessory to laser printer and the revenue

accepted that laser printer is within the entry computer systems, peripherals and parts and taxed as notified goods at 4% and the Commissioner of

Commercial Taxes clarified that laser printers, cartridges, Ink jet cartridges to printers were taxable under the residuary Entry in Part C of the first

schedule, when the petitioner and the successive dealers have all along sold the goods charging 4%, (presently 5%) VAT, under serial No. 68 of

Part B of the First Schedule. It is further submitted that through out the State of Tamil Nadu completed assessment are reopened and residuary

rate at 12.5% imposed on account of the circular/clarification of the Commissioner of Commercial Taxes. On account of the action of the revenue,

the petitioners have been put to great prejudice.

It is submitted that cartridges are fitment to ink jet printers and laser printers and indispensable for the functioning of the printers and the

cartridges is not merely an accessory as the typewriter ribbon is an accessory to a typewriter. Further, it is stated that resort to residuary entry is

plainly arbitrary and irrational, when there is a specific entry in serial No. 68 of Part B of the First Schedule. It is further stated that even under the

erstwhile Tamil Nadu General Sales Tax Act, 1959, (TNGST Act), both the printers and cartridges were charged at 4% under serial No. 18 of

Part B of the First Schedule. Reliance was placed on the clarification issued by the Commissioner vide letter dated 28.06.2007, when a

clarification was sought for as to the rate of tax for the items viz., central processing unit, monitor, key board, mouse, speaker, CD writer,

computer printer, ink jet, laser, fax etc., it was clarified that the rate of tax is 4% under entry No. 68 in Part B of the First Schedule. It is submitted

that printer is a peripheral and a cartridge is an accessory or a part of the printer and therefore, the terms should be interpreted as ordinarily

understood and attributed to these words by people usually conversant with and dealing in such goods. Reliance was placed on the decision of the

Hon''ble Supreme Court in State of Uttar Pradesh and Another Vs. Kores (India) Ltd., ]. Further to explain the meaning of the word accessory,

reliance was placed on the decision of the Hon''ble Supreme Court in Annapurna Carbon Industries Co. Vs. State of Andhra Pradesh, .

The learned Senior counsel placed reliance on the decision of the Division Bench of the Delhi High Court in Commissioner of Trade and Taxes

Vs. Symphony Enterprises , wherein it was held that toners and cartridges are part and accessories of goods as mentioned in the relevant entry in

the Delhi Value Added Tax Act, 2004. Much reliance was placed on the decision of the Division Bench of the Gauhati High Court filed by the

petitioner in the lead case before us, Hewlett Packard India Sales Pvt. Ltd. Vs. State of Assam and Others, wherein it was held that cartridges are

integral part of the printer attracting 5% tax. To support the contention that residuary entry cannot be invoked unless the department can establish

that the goods in question can by no conceivable process of reasoning be brought under any of the tariff, reliance was placed on the decision of the

Hon''ble Supreme Court in M/s. Bharat Forge and Press Industries (P) Ltd. Vs. Collector of Central Excise, Baroda, Gujarat, and the decision of

the Hon''ble Supreme Court in Dunlop India Ltd. and Madras Rubber Factory Ltd. Vs. Union of India (UOI) and Others, . Reference was also

made to the advance ruling given by the Government of Andhra Pradesh dated 06.12.2005, clarifying ink jet and laser printer cartridge as an

accessory of an ink jet and laser printer and liable to tax at 4%.

In response to a query raised by this Court as to why the petitioners should not avail the statutory remedy as provided under the Act in terms of

Sections 51, 54, 58 etc., the learned Senior counsel submitted that once a clarification is issued by the Commissioner of Commercial Taxes, it will

bind the subordinate assessing authority and it would be a futile exercise to go for a assessment, more so, when a Division Bench of another High

Court on a similar provision held that these cartridges are accessories to printers and therefore, the petitioner would be justified in approaching this

Court invoking its jurisdiction under Article 226 of the Constitution. In support of such contention and with regard to the effect of such circulars,

reliance was placed on the decision of the First Bench of this Court in W.A. No. 551 of 2009 [Pepsi Co. India Holdings (Pvt.) Ltd., vs.

Commissioner of Commercial Tax and others], dated 10.11.2009; State of Maharashtra Vs. Bradma of India Ltd., and Tvl. Pizzeria Fast Foods

Restaurant (Madras) Pvt. Ltd. Vs. Commissioner of Commercial Taxes and Others, and the decision of the Hon''ble Supreme Court in Filterco

and Another Vs. Commissioner of Sales Tax, Madhya Pradesh and Another, ].

On the above contentions, the learned Senior counsel submitted that the issue relating to classification of ink jet cartridges is no longer res

integra and has been decided by two High Courts holdings, they are accessories to printers and in the light of the circular/clarification issued by the

Commissioner of Commercial Taxes stating that the goods have to be classified under the residuary entry, it would be a futile exercise to go before

the assessing authority and this Court can consider the issue in these writ petitions.

We have heard the submissions of learned Senior counsel Mr. Aravind P. Dattar, who also reiterated the submissions.

The learned Additional Advocate General appearing for the respondents submitted that printers will not come under the classification of

Information Technology Products, which are covered in serial No. 68 of Part B of First Schedule. By relying upon the meaning of the words

''Information Technology'' as given in P. Ramanatha Aiyar, Advanced Law Lexicon, it is submitted that unless the product stores, retrieves and

transfer information, it would not fall within the meaning of Information Technology Product and therefore, it is submitted that the petitioners cannot

fall back on serial No. 68 in Part B of First Schedule. Reference was also made to the information available in Wikipedia on Information

Technology and it is submitted that printers would not fall within the meaning of the Information Technology. It is submitted that the information

available in Wikipedia could be looked into for the purpose of gathering information as held by the Hon''ble Supreme Court in Ponds India Ltd.

(Merged with H.L. Ltd.) Vs. Commissioner of Trade Tax, Lucknow, . By referring to the counter affidavit and the reply affidavit filed by the

respondents, it is submitted that the computer can function or can be operated without a printer and when printer cannot be called as peripheral or

a part or as accessory of computer, toner and ink cartridges cannot be classified to be falling under Entry 24 in serial No. 68 of Part B. It is further

submitted that under the erstwhile TNGST Act both printers and cartridges were included in serial No. 18 of Part B of First Schedule, but under

the VAT Act, the legislature has expressly excluded both printers and cartridges and therefore, the assessing authority correctly classified the

goods as residuary item falling under Entry 69 of Part C of the First Schedule. The learned Additional Advocate General sought to distinguish the

decisions of the Bombay High Court and the Gujarat High Court referred supra, by stating that the description of products under TNVAT Act is

different and serial No. 68 deals with Information Technology Products and therefore, those decisions cannot be applied to the facts of the present

case.

We have elaborately heard Mr. C. Natarajan, learned Senior counsel appearing for the petitioners and Mr. Arvind Pandian, learned Additional

Advocate General for the respondents and given our anxious consideration to the submissions made and the materials placed on record.

On the facts stated above and the submissions made on either side, two questions arise for consideration:-

(i) Whether the writ petitions could be entertained and the petitioners be permitted to approach this Court without availing the remedy provided

under the TNVAT Act?

(ii) Whether this Court should dwell into the question as to whether ink jet cartridges and toner cartridges are accessories to printer and whether

they would fall within Entry 22 and 24 of serial No. 68 in Part B of First Schedule of the Act attracting 4% VAT, as such question, essentially

being a issue relating to classification of goods?

Question No. (i)

From the facts narrated above, it is seen that Commissioner of Commercial Tax has issued series of clarifications relating to rate of tax for ink

jet cartridges and toner cartridges based on requests made by manufacturers, successive dealers and the Manufacturers Association for

Information Technology, New Delhi. In the said clarification, dated 21.05.2007, it has been stated that ink jet cartridges and toner cartridges are

taxable at 12.5% of Part C to the First Schedule to the VAT Act w.e.f., 01.01.2007.

The enforcement group of the respondent department appears to have visited the premises of one such dealer and recorded statement from

them stating that the rate of tax adopted at 4% in the monthly return is incorrect instead of adopting 12.5% and have also collected a compounding

fee of Rs. 2,000/-. Pursuant thereto, the said dealer was issued recovery notice demanding the differential tax to be paid immediately, failing which

the dealer was informed that Distraint action would be initiated. As against the collection of compounding fee, the said dealer preferred a revision

to the Joint Commissioner under the VAT Act. The revisional authority by order dated 20.04.2009, rejected the revision petition and held that the

levy of compounding fee was correct. To arrive at such a conclusion, the revisional authority had taken umbrage under the circular issued by the

Commissioner of Commercial Tax clarifying that ink jet cartridges and toner cartridges are taxable at 12.5% of Part C to the First Schedule of the

Act and not at 4% under serial No. 68 of Part B of First Schedule. The revisional authority did not adjudicate upon the classification issue raised

by the said dealer.

Thus, the department appears to have taken a firm stand wholly based on the circular/clarification issued by the Commissioner of Commercial

Taxes. In such circumstances should the petitioners be relegated to avail the remedy under the Act?

The Hon''ble Supreme Court in the case of Filterco (supra) considered the correctness of a decision of the High Court, which dismissed the

writ petition without entering into the merits stating that there is a remedy available under the relevant enactment, namely, Madhya Pradesh General

Sales Tax Act, 1958. Interfering with the decision of the High Court, the Hon''ble Supreme Court held that the High Court should have examined

the matter on merits, as in the said case, there was an order passed by the Commissioner of Sales Tax, which was clearly binding on the assessing

authority and by approaching the said authority, it would be a exercise in futility. Similar is the view taken by this Court in the case of Pizzeria Fast

Foods, (referred supra). Several decisions to support such proposition were cited at the bar, which have been referred to supra and it may not be

necessary to refer to all those decisions and it would suffice to refer the decision of the First Bench of this Court in W.A. No. 551 of 2009, (supra)

which arose out of a proceedings under the Tamil Nadu VAT Act.

In our view, as far as the present case is concerned, once a clarification is given by the Commissioner of Commercial Taxes, that will bind the

subordinate assessing authorities and one cannot expect a different order from the assessing officers. In these circumstances, no fruitful purpose

would be served by directing the appellant to go for an assessment and for that reason, not to entertain the writ petition. That apart, in the present

case, for the very branded products, there is a well reasoned Division Bench judgment of another High Court. It is a settled proposition that in tax

matters, when there is a Division Bench judgment of another High Court on a similar provision, it has to be treated with due respect and in the

instant case, since the Guwahati High Court has taken a view, which is according to us also otherwise correct, there is no reason for us to take a

different view.

As noticed above, this Court held that in view of a clarification issued by the Commissioner of Commercial Tax, no fruitful purpose would be

served by directing the appellant therein to go for an assessment and for that reason not to entertain the writ petition. It was further observed that in

tax matters, when there is a Division Bench judgment of another High Court on similar provision, which according to the said Division Bench was a

correct view, it is all the more a reason not to relegate the party to a procedure of assessment.

As noticed by us, when one of the dealer was imposed a compounding fee on the ground that he had adopted 4% as rate of tax instead of

12.5%, he preferred a revision petition before the statutory revisional authority. It appears that the said dealer raised a contention before the

revisional authority that the goods are chargeable to 4% tax under serial No. 68 of Part B, as the goods fall under the category parts and

accessories of computer system and peripherals. Further, it was contended that a printer cannot function without the ink or toner cartridge and

printing activity is carried out by the printers only in conjunction with ink cartridge or toner cartridge and hence, they are only parts of printers liable

for tax at 4%. The revisional authority being wholly guided by the circular issued by the Commissioner of Commercial Taxes, dated 11.05.2007,

rejected the contention of the dealer and observed that the ink cartridge and toner cartridge are taxable at 12.5% of Part C to First Schedule to

the Act. The revisional authority did not adjudicate the question as regards classification and whether a printer was a peripheral and whether the

ink cartridge was a part and accessory to a peripheral. This order passed by the revisional authority dated 20.04.2009 is an illustration to

demonstrate that the authorities under the Act will not and cannot bypass the circular/clarification issued by the Commissioner of the Commercial

Taxes department, who is the highest authority of the department.

That apart, as pointed out by the learned Senior counsel Mr. Aravind P. Dattar, at the time when the circular/clarification was issued, there

was no enabling power under the VAT Act to issue such circulars or clarifications, which would bind the assessing authorities. The power to issue

clarification and advance ruling was conferred on a State Level Authority comprising of the Commissioner of Commercial Taxes and two

Additional Commissioners by insertion of Section 48A to the VAT Act by amendment Act 26 of 2011 w.e.f., 27.09.2011. Therefore, on the date

when the clarification was issued based on which the petitioners are now called upon to pay tax at 14.5%, there was no enabling power to issue

such clarifications. In fact, this issue was considered by a Division Bench of this Court in Texx One Private Ltd. Vs. Principal Commissioner and

Commissioner of Commercial Taxes and Another, wherein the Division Bench held that on the date when the circular was issued, the

Commissioner did not have statutory powers to issue such circular and the net result is that the circular has no statutory force.

In the light of the above discussion and taking note of the decisions cited supra, in our view the circular issued by the Commissioner though

stated to be without jurisdiction, the circular having been issued by the highest officer in the department, the assessing officers, who are subordinate

officers cannot be expected to take a different view and therefore, no useful or fruitful purpose would be served in directing the petitioners to avail

the remedy under the Act and therefore, these writ petitions questioning the classification of the goods are held to be maintainable before this Court

on account of the reasons recorded above. This conclusion of ours is fortified by the decision of the Hon''ble Supreme Court in State of U.P. and

Others Vs. Indian Hume Pipe Co. Ltd., .

Question No. (ii)

Having held that the writ petitions are maintainable, it has to be decided as to what would be the appropriate entry under which ink jet

cartridges and toner cartridges are to be classified.

The petitioner in the lead case before us had been confronted with an identical problem under the Delhi Value Added Tax Act and the question

of taxability of ink cartridges and toner cartridges used in ink jet printers and laser jet printers was subject matter in issue. The petitioner/assessee

subjected themselves to the proceedings under the Delhi VAT Act and the goods were charged to tax at the rate of 12.5% treating the cartridges

as unsettled goods, neither parts nor accessories to printers. The petitioner/assessee approached the Commissioner (Appeals) who confirmed the

finding of the assessing authority, feeling aggrieved, they approached the High Court by filing a writ petition, which was allowed and the matter was

remanded to the Commissioner. Once again the Commissioner held that the cartridges attract tax at 12.5% under the Delhi VAT Act. This was

challenged before the Appellate Tribunal for Value Added Taxes, Delhi. The Tribunal accepted the case of the petitioner/assessee and observed

that laser jet printers and ink jet printers are covered under chapter heading HSN 84.71, which finds place in entry No. 41-A (xxv), which reads

as parts and accessories of HSN 84.69, 84.70 and 84.71. The Tribunal went on to examine the meaning of the words ""parts and accessories"",

which have not been specifically defined under the Delhi VAT Act. After considering the definition given in the dictionaries and examining the

various decisions of the Hon''ble Supreme Court as to how entries in taxing statute are understood in common parlance especially in commercial

circle held that the petitioner/assessee have proved that ink cartridges and toner cartridges are parts/accessories, rather essential parts of the

respective printers and the printers become incomplete and incapable of functioning without the ink/toner cartridges and this is sufficient guide to

show that ink cartridges and toner cartridges are parts of ink jet and laser jet printers. Accordingly, the appeal was allowed and the rate of tax was

at fixed 4%. The revenue preferred appeal to the Delhi High Court, which was dismissed (in 2007 INDLAW, Delhi 1301) holding that toner and

cartridges do not fall under entry 54 of the Third Schedule of Delhi VAT Act, as they are parts and accessories and the order of the appellate

tribunal was confirmed.

The petitioner/assessee faced a similar problem under the Assam Value Added Tax Act and the Central Sales Tax Act, where an order of

assessment was passed demanding higher rate of tax. Therefore, the petitioner/assessee filed writ petitions before the Gauhati High Court and the

issue raised was whether ink jet cartridges and toner cartridges are covered by entry 4 of Part B of Second Schedule to Assam VAT Act

attracting lesser rate of tax or whether they are covered by residuary entry in schedule V providing higher rate of tax.

The Division Bench of Gauhati High Court in the decision of Hewlett Packard India Sales Pvt. Ltd. Vs. State of Assam and Others, accepted

the case of the petitioner/assessee and answered the question as framed in favour of the assessee. At this stage, it would be beneficial to refer to

the operative portion of the judgment and order:-

The learned counsel for the Revenue submitted that in Part A of the Second Schedule, entry 50 provides for ""printing ink excluding toner and

cartridges"" and thus expression toner and cartridges has been expressly used wherever so intended and on that ground the goods in question

should be treated as falling the residue entry.

After due consideration, we are of the view that the question has to be answered in favour of the assessee. The items in question are integral

part of printer which undisputedly is covered by entry 3. Thus, we are in agreement with the view taken by the Delhi High Court. Principle laid

down in judgments of the honourable Supreme Court about interpretation of ""accessory"" also lends support to the contention of the assessee.

As regards the contention raised on behalf of the Revenue that toners and cartridges have been specifically used in Part A, for exclusion from

entry 50, and the same could not be impliedly included under entry 4 of Part B of the Second Schedule, we are of the view that scope of entry 4 of

Part B of the Second Schedule is much wider. While exclusion may be considered necessary from printing ink in entry 50 of Part A (Part A deals

with ""general"" goods), specific mention thereof may not be necessary in general and wide entry in entry 4 of Part B-parts and accessories of

computer systems and peripherals (Part B deals with IT goods).

It is settled that a fiscal entry is to be given a common sense meaning as understood by persons dealing with such goods and not any technical

meaning. Filterco and Another Vs. Commissioner of Sales Tax, Madhya Pradesh and Another, . Applying this test, ink of the printer has to be held

to be its accessory, in absence of any compelling reason.

Accordingly, we answer the question in favour of the assessee and allow the writ petitions in above terms. The assessments may now be

revised accordingly.

We are informed that no appeals have been preferred by the revenue against the decision of the Delhi High Court and the Gauhati High Court

referred supra. Those judgments and orders have attained finality.

As has been held in the case of Pepsi Co. India Holdings (Pvt.) Ltd., (supra) in tax matters, when there are two Division Bench judgment of

other High Courts on a similar provision, which we also find to be the correct legal position and the said judgments having attained finality, we feel

that there is no valid and justifiable reason brought forth before us to take a different view.

While, we are entirely in agreement with the decisions of the Delhi High Court and the Gauhati High Court referred above, we shall assign

independent reasons with specific reference to the provisions in the Tamil Nadu VAT Act.

Section 3 of the Act deals with ''Levy of taxes on sales of goods''. Sub-section (1) of Section 3 casts a mandate on every dealer, other than a

casual trader or agent of a non-resident dealer, whose total turnover for a year is not less than rupees five lakhs and every casual trader or agent of

a non-resident dealer, whatever be his total turnover, for a year, shall pay tax under the VAT Act. Sub-Section (2) of Section 3 states that subject

to the provisions of sub-section (1), in the case of goods specified in Part B or Part C of the First Schedule, the tax under the VAT Act shall be

payable by a dealer on every sale made by him within the state at the rates specified therein. Proviso to sub-section (2) provides that all spare

parts, components and accessories of such goods shall also be taxed at the same rate as that of the goods if such spare parts, components and

accessories are not specifically enumerated in the First Schedule and made liable to tax under that schedule. Sub-section 3 of Section 3 states that

the tax payable under sub-section (2) by a registered dealer shall be reduced, in the manner prescribed, to the extent of tax paid on his purchase of

goods specified in Part-B or Part-C of the First Schedule, inside the state, to the registered dealer, who sold the goods to him. Thus, sub-section

(1) and (2) of Section 3 are the charging provisions.

The First schedule to the Act specifies the rate of tax for the goods described therein. The First Schedule consist of three parts, namely, Part

A: goods which are taxable at the rate of 1%, Part B: goods, which are taxable at the rate of 5% and Part C: the goods which are taxable at the

rate of 14.5%. Part B deals with goods, which are taxable at 5% (rate of tax increased from 4% to 5% from 12.07.2011). Serial No. 68 of Part B

and Entries 22 and 24 would be relevant for the purpose of deciding the cases on hand.

Serial No. 68, Information Technology Products as

notified by

the Government

Entry 22 diaries; Computer Systems and Peripherals,

Electronic

(a) Computer systems, peripherals

and parts

(b) Electronic diaries

Entry 24 Parts and Accessories of goods

mentioned in

serial Nos. 21,11,22 and 27.

In terms of the above entries computer systems, peripherals and parts, and parts and accessories of computer systems, peripherals and parts

attract 5% tax. Peripherals has not been defined under the Act.

In Commissioner of Central Excise, Mumbai vs. CMS Computers Private Limited [2005-TIOL-57-SC-CX-LB], was an appeal against the

judgment of the Tribunal wherein, the assessee was issued show cause notice by the department claiming that monitors and printers were parts of

computers and required to be included in the value of computers and if such value to be included, the assessee was not entitled to the benefit of an

exemption notification. The Hon''ble Supreme Court held that monitors or printers were peripheral items, which may be required along with a

computer and is not an essential part of the computer and its value cannot be included in the value of computer. The operative portion of the

judgment reads as follows:-

It appears to us that a monitor or a printer is not an essential part of the computer. It is a peripheral item which may be required along with a

computer. We are unable to accept the submission that by virtue of Chapter Note 5 to Chapter 84 a monitor or printer becomes an essential part

of a computer. By virtue of this Chapter Note a monitor and/or a printer may also be classifiable under the same tariff heading. However, merely

because the tariff entry may also include a monitor or printer would not lead to the conclusion that a monitor or printer is an essential part of a

computer. All that this Chapter Note indicates is that not only the computer but a monitor and a printer are also excisable products. But the

monitor and/or printer will be excisable in the hands of their manufacturer. The respondents do not manufacture the monitor or the printer. On

facts, it could not be disputed that in approximately 70% of the cases monitors and printers are not supplied along with the computer sold by the

respondents. Thus, it cannot be concluded that respondents sell their computer as a unit which include a monitor and a printer. As a monitor and

printer are not essential parts of the computer their value cannot be included in the value of computer. We, however, clarify that situation may be

different where a manufacture sells a computer with a monitor and a printer as a unit.

In the light of the above decision of the Hon''ble Supreme Court, printer has to be treated as a peripheral to a computer system. In terms of

Entry 22 in serial No. 68 of Part B of First Schedule Computer Systems and Peripherals are chargeable to 5% tax. In terms of Entry 24 of serial

No. 68 Parts and Accessories of Computer Systems and Peripherals also attract tax at 5%. The product in question in these cases are ink jet

cartridges and toner cartridges. Undoubtedly, ink jet cartridges and toner cartridges are parts and accessories of a printer, which has been held to

be a peripheral to a computer system by the Hon''ble Supreme Court. Therefore, those parts and accessories of a printer should also attract the

same rate of tax, namely, 5%. This conclusion is in consonance with the statutory provision, namely, proviso to sub-section (2) of Section 3. In

terms of the said proviso all spare parts, components and accessories of such goods shall also be taxed at the same rate, as that of the goods if

such spare parts, components and accessories are not specifically enumerated in the First Schedule and made liable to tax under that schedule.

Admittedly, ink jet cartridges and toner cartridges have not been specifically enumerated in serial No. 68 of Part B of the First Schedule. In

such situation, the cartridges being parts and accessories of a peripherals, namely a printer, they should also be liable to tax at the same rate as that

of the goods enumerated in Entry 22 and 24. It was contended by the respondent that the cartridges are consumables. On a careful perusal of the

entries giving description of goods in Part B of First Schedule, we find that the term consumables has not been used in the VAT Act. Therefore,

even if such term was used in the erstwhile TNGST Act, that can hardly be a reason to treat these cartridges as consumables under the VAT Act

and resort to residuary entry No. 69 of schedule C, which deals with any other goods not specified in any of the schedules.

It has to be seen as to whether the department is right in claiming that the cartridges are chargeable to tax at 14.5% under the residuary Entry

No. 69 of C. The Hon''ble Supreme Court in the case of Bharat Forge and Press Industries, (supra) considered the very question as to when the

department can claim that goods are chargeable to duty as per a residuary entry. It was held that unless the department can establish that the

goods in question can by no conceivable process of reasoning be brought under any of the tariff items then and then only they can resort to a

residuary item. Therefore, in the instant case, the stand taken by the revenue that the rate of tax shall be as per the residuary Entry 69 is

unacceptable.

It is the submission of the learned Additional Advocate General that serial No. 68 of Part B of First Schedule would not apply to printers as

they are not Information Technology Products and the printer does not answer the definition of Information Technology as defined in the Law

Lexicon and Wikipedia. It is to be noted that serial No. 68 of Part B deals with Information Technology Products as notified by the Government.

Therefore, the Information Technology Products which have been notified by the Government shall fall under serial No. 68. If we are to accept the

submission of the learned Additional Advocate General, then several of the products notified under serial No. 68 do not answer the definition of

Information Technology as given in the Law Lexicon. By way of illustration, the following products also find place in serial No. 68, namely, micro

phones, multimedia speakers, LCD Panels, LED Panels, Electronic Calculators, Switches and uninterrupted power supply. Therefore, while

interpreting the scope of serial No. 68 of Part B, it has to be noted that it is not sufficient for a product to be an Information Technology Product to

fall within the entries in serial No. 68, but the requirement being it should be notified by the Government to be an Information Technology Product

to fall under serial No. 68 of Part B. Therefore, the plea raised in this regard is misconceived.

As noticed above, the Delhi High Court in the case of Symphony Enterprises, referred supra, has rendered a clear finding that toners and

cartridges are parts and accessories to computer systems. The functioning of these cartridges was explained to us from which it appears that ink

cartridge is a sophisticated Engineering design to provide and regulate back pressure, which is essential to perform its job of delivering the right

amount of ink to the print-head nozzle and toner cartridge, which is fitted in laser jet printer generates laser beam which acts on the photo sensitive

drum. Thus, the ink jet cartridge/toner cartridge is a part and accessory to a printer, which has been held to be a peripheral to a computer system.

In State of Uttar Pradesh and Another Vs. Kores (India) Ltd., the question which arose for consideration is whether ribbon is an accessory or

a part of the typewriter. It was held that the ribbon is an accessory and not a part of the typewriter unlike spool. The Hon''ble Supreme Court held

that the description of the class of goods which are to be taxed under an Act have to be construed in the sense in which they are popularly

understood by those who deal in them and who purchase and use them.

In Annapurna Carbon Industries Co. Vs. State of Andhra Pradesh, the question which arose for consideration is whether sales of arc-carbons

known as cinema arc-carbons would fall under Entry No. 4 of First Schedule of the A.P., General Sales Tax Act, which entry covered

cinematographic equipment, including cameras, projectors and sound recording and reproducing equipment, lenses, film and parts and accessories

required for use therewith. While answering the question in favour of the assessee, the Hon''ble Supreme Court held as follows:-

We find that the term accessories is used in the schedule to describe goods which may have been manufactured for use as an aid or addition. A

sense in which the word accessory is used is given in Webster''s. Third New International Dictionary as follows:

An object or device that is not essential in itself but that adds to the beauty, convenience, or effectiveness of something else.

Other meanings given there are: supplementary or secondary to something of greater or primary importance, additional, any of several mechanical

devices that assist in operating or controlling the tone resources of an organ.

Accessories are not necessarily confined to particular machines for which they may serve as aids. The same item may be an accessory of more

than one kind of instrument.

After due consideration, we are of the view that the question has to be answered in favour of the petitioners/assesses and we hold that ink jet

cartridges and toner cartridges are parts and accessories of printer which is a peripheral to a computer system and would be covered under Entry

Nos. 22 and 24 of serial No. 68, Part B of First Schedule to the TNVAT Act. In the result, the writ petitions are allowed holding that ink jet

cartridges and toner cartridges are parts and accessories of printer which is a peripheral to a computer system and would be covered under Entry

Nos. 22 and 24 of serial No. 68, Part B of First Schedule to the Tamil Nadu Value Added Tax Act, 2006. No costs. Consequently, connected

miscellaneous petitions are closed.