Delhi High Court
Canon India P. Limited vs Value Added Tax Officer And Anr. on 4 May, 2012
Author: Sanjiv Khanna
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ W.P.(C) 9805/2009
Reserved on: 25th January, 2012
% Date of Decision: 4th May, 2012
CANON INDIA P. LIMITED ..... Petitioner
Through Mr. S. Ganesh, Sr. Adv, Mr.
Rajiv K. Virmani, Sr. Adv. with
Amar Gupta, Mr. Dheeraj Nai
and Mr. Cheetan Chopra, Advs.
versus
VALUE ADDED TAX OFFICER AND ANR. ..... Respondent
Through Mr. H.C. Bhatia and Mr. K.K.
Ahuja, Advs.
+ W.P.(C) 8066/2011
INFRES METHODEX LTD ..... Petitioner
Through Mr. Randhir Chawla, Adv.
versus
VALUE ADDED TAX OFFICER AND ORS ..... Respondent
Through Mr. H.C. Bhatia and Mr. K.K.
Ahuja, Advs.
CORAM:
HON'BLE MR. JUSTICE SANJIV KHANNA
HON'BLE MR. JUSTICE R.V. EASWAR
SANJIV KHANNA, J.
The present writ petitions have been filed by Canon India Private
Limited and Infres Methodex Limited. In the case of Canon India
Private Limited, they have challenged the notice of default assessment of
tax and interest issued under Section 32 of the Delhi Value Added Tax
Act, 2004 (Act, for short).
2. By an interim order dated 6th July, 2009 in the case of Canon India
Pvt. Ltd., it was directed that there shall be stay of the impugned
demand. The said interim order has continued. In fact, the writ petition
filed by Canon India Private Limited was entertained as at that stage
reference was made to the decision of the advance ruling authority i.e.
Commissioner, Trade and Taxes, Delhi in the case of Ricoh India
Limited. The said decision of advance ruling authority was affirmed by
the Appellate Tribunal and thereafter was challenged in this Court in
STA 6/2010. In STA 6/2010, we have examined the question whether or
not multi functional printers are input or output units under Entry
No.41A of the notification issued under the Act. In the said case, we
have held as under:-
"18. ... Therefore, in respect of the period
prior to 30th November, 2005, we answer the
aforesaid question of law recording that the multi
function machines may or may not be computer
peripheral, depending upon the main purpose or
function which the machine was designed and
manufactured to perform. If the principal and
predominant purpose was to act as a computer
printer or scanner or as an input or output devise
of the computer, the multi functional machine
would qualify and fall under entry 41A clause
XXIII. However, if the machine was designed and
manufactured for some other primary purpose,
then it would not be covered by Entry 41A clause
XXIII. Mere description or the nomenclature
given by the manufacturer or trader is not relevant
and the assessee should justify and establish their
claim. We have applied the doctrine/test of
principal and dominant purpose, as it is the most
appropriate and logical test. The said test was
applied by the Supreme Court in the case of
Xerox India Ltd. (supra) for the purpose of
Customs Act. A multi functional printer or
machine may be able to perform several
functions, but an ancillary or incidental function
would not be relevant. The relevant determining
factor in such cases even for the period before 31 st
November, 2005, would be the dominant or main
purpose. This would prevent misuse and mis-
declaration by the seller, who may try and sell a
photocopier and a duplicating machine as a
computer peripheral when, in fact, the main
purpose and object of the machine was is to make
copies or duplicate documents.
19. With regard to the period after 30th
November, 2005, we have to examine the relevant
entries in 41A and compare them with the Entry
No.4171 of the Central Excise Tariff Act, 1985.
We have also to keep in mind the four notes,
which we have interpreted above. As per the
appellant, the multi functional machines/printers
fall in the category of input/output units, which
have been separately categorized at Sr. No.3
under column (2). It is not the case of the
appellant that the aforesaid devices should be
treated as an automatic data processing machines.
It is claimed that they are input or output units.
When we compare the entry input units and
output units in column (2) with Entry
No.8471.10.00, we find that the description is not
identical. Words used in the notification are
"input unit, (or) output unit". The word used in
entry No. 8471.10.00 are input or output units,
whether or not contain storage units in the same
housing. There is no reference to or requirement
of storage unit in column 2 of the notification.
Multi functional machine it is stated can act as
both an input unit and as an output unit. It
combines both functions. Reference was made to
Entry 8471.60, wherein words "combined input or
output units" is used, but the same is a heading.
This is clear as no rate of duty is
prescribed/stipulated against the said heading.
Rate of duty is prescribed against each sub-
heading. Thereafter, sub-headings read, printer,
line printer, dot matrix printer, letter quality daisy
wheel printer, graphic printer, plotter, laser jet
printer, inkjet jet printer and others. "Others" fall
under the sub-heading 8471.60.29. The multi
functional machines/printers will not fall under
any of the specific sub-heading, but would fall
under the residual sub-heading 8471.60.29 i.e.
"others". This is also clear when we examine the
bills of entry, which have been filed by Canon
India Private Limited, who have filed a writ
petition before us and has been heard alongwith
this appeal. In the said bills of entry, machines
have been cleared under tariff entry 8471.60.29
i.e. "others".
xxx
21. ............. Thus, with regard to the
period after 30th November, 2005, the question of
law mentioned above is answered holding, inter
alia, that the doctrine of dominant purpose of the
multi functional machine will determine/decide
whether it is an input or output unit of an
automatic data processing machine. In case the
principal or dominant purpose is to act as input or
output unit, then it would qualify and will be
covered by Entry 41A at Sr. No.3. However, in
case multi functional machine is a duplicator or a
photocopying machine, which incidentally can be
used as a printer or a scanner etc., the said
machine would not qualify and cannot be treated
and regarded as input or output unit of automatic
data processing machine. Said machines would
not qualify under Entry 41A and will be covered
by the residuary tax rate. Question referred to
above is accordingly answered.
22. As noted above, the factual aspects with
reference to each machine has to be examined.
The appellant had applied for advance
adjudication/ruling. They should have produced
necessary data/particulars to show and establish
that principal/dominant object of the machine was
to perform functions of an input or output unit of
an automatic data processing machine. The onus
was on the appellant to show and establish the
principal or dominant purpose as they were the
manufacturers or traders of the said machines.
Thereafter, it was open to the Revenue to
contradict or take a contrary stand, on basis of the
relevant material and evidence, if required and
necessary take help of expert evidence. In the
absence of factual details, we cannot give any
firm opinion. We are not inclined to remit the
matter, as the appellant had made an application
for advance ruling and there have been lapses on
their part and more importantly the question and
issue can be examined at the stage of
assessment/appellate proceedings. The question
of law is accordingly answered. The appeal is
partly allowed and the order of the tribunal to the
extent contrary to the observations made above
shall be treated as set aside. In the facts and
circumstances of the case, there will be no order
as to costs."
3. Similarly, the writ petition filed by Infres Methodex Limited was
entertained because of the writ petition filed by Canon India Private
Limited and subject matter of controversy was also pending
consideration in STA 6/2010. In this case, assessments have been
framed for the assessment year 2007-08 by subjecting to tax
multifunctional product under the unclassified rate of 12.5%. In the writ
petition it has been stated that this order has been passed following the
determination order passed by the Commissioner as an advance ruling
authority in the case of Ricoh India Limited, which has been affirmed by
the tribunal.
4. Our decision in the case of Ricoh India Limited would be equally
applicable to the facts of the present case.
5. As recorded in the case of Ricoh India Limited, the issue in
question first requires determination of factual aspects viz., whether or
not the multi functional machine in question, is in fact, input or output
unit of an automatic data processing machine. For deciding this fact, we
have to look at the dominant/principal purpose for which the machine
was designed and manufactured. Depending upon the said factual
finding, it has to be determined and decided whether or not the said
machine would fall under Entry No.41A or should be treated as falling in
other or general category.
6. In these circumstances, we feel that these writ petitions should not
be entertained and the petitioners should be relegated and asked to
exhaust statutory remedies where both questions of law and facts can be
elucidated and examined. Normally when alternate remedy is available,
writ petitions, especially, in taxation matters are not entertained. (See
Bafna Healthcare Pvt. Ltd. and ors. versus Commissioner of Central
Excise, Delhi- IV W.P.(C) No. 2448/2010 dated 4th August 2011.)
7. These writ petitions are accordingly dismissed with a direction
that the petitioners should take recourse to the statutory remedies. The
interim orders shall remain in force for a period of 60 days to enable the
petitioners to approach the departmental/appellate authorities for stay of
the impugned demand. In case there is any delay in filing of appeal etc.
because of the pendency of the present writ petitions, the authorities
shall condone the delay as the petitioners were bonafidely pursuing the
present writ petitions before this Court. Appeals/objections will not be
dismissed in case the same are filed within a period of four weeks from
today. In the facts of the present case, there will be no order as to costs.
-sd-
(SANJIV KHANNA)
JUDGE
-sd-
(R.V. EASWAR )
JUDGE
May 4th , 2012
NA
