The Madras High Court recently held that routers, hubs and switches would come within the meaning of ‘computer peripherals’ for which lower rate of 4% VAT is applicable under the Tamil Nadu General Sales Tax Act, 1959.
Justice T.S.Sivagnanam was hearing two writ petitions filed by the same petitioner challenging the clarification issued by the first respondent/Commissioner of Commercial Taxes, dated 29.07.2004, in exercise of his power under Section 28-A of the Tamil Nadu General Sales Tax Act, 1959.
The petitioner is a dealer in parts and accessories of computer and computer peripherals, and registered on the file of the second respondent, under the provisions of TNGST and Central Sales Tax Act, 1956.
The petitioner had approached the first respondent The Commissioner of Commercial Taxes seeking for a clarification with regard to the rate of tax, payable on certain devices. In return the respondent provided different tax rates for each computer devices.
The subject matter of the present writ petition were three products/items viz., i) Switches, ii) Hubs and iii) Routers were classified as computer peripherals and their tax rates. There was no problem insofar as the petitioner is concerned till 2002-03, and this problem arose on account of a clarification issued by the first respondent in favour of WIPRO Ltd., dated 23.12.2002.
In the said clarification the Commissioner clarified that the Switches and Electronic Cables are taxable at 10% and Hubs & Routers are concerned, they are treated as peripherals used for data communication and taxed at 12%.
When the petitioners assessment were reopened based on the clarification needed by other dealer requested the commissioner for confirming the clarification issued in their favour on 24.08.1998 with regard to products like Switches, Hubs of Routers, by clarifying that they are computer peripherals and taxable at 4% under Entry 18 (i) of Part B of the first schedule to the TNGST Act.
The single Judge held that in respect of the assessee’s own case, under Karnataka Value Added Tax Act, 2003, Advance Ruling Authority under the KVAT Act has ruled in favour of the petitioner and held that the products dealt with by them are computer peripherals.
The court also added that the impugned clarification is not sustainable, and the clarification issued in favour of the petitioner, dated 24.08.1998 after obtaining the Expert’s opinion of ELCOT will be valid and sustainable for all purpose.
The bench relied upon the decision of tribunal in the case of C.M.C Ltd., would support the petitioner’s case, insofar as the product, routers is concerned.
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