Delhi Tribunal reverses Commissioner's orders on VAT

Clarifying VAT misgivings over ink and toner cartridges, Delhi Tribunal Court
in its landmark judgment has declared that ink cartridges and toner cartridges
are the accessories and thus attract four percent VAT not 12.5 percent as
asserted by VAT commissioner in earlier court pleadings. The court has clearly
stated in its verdict that ink and toner cartridges are classified under third
schedule of Delhi VAT under entry 41A(XXV) and should be levied VAT @ four
percent.

It may be recalled that this matter of whether cartridges fall under the
category of accessories (scheduled goods) or essential parts (unscheduled good)
of a printer was taken up for hearing by Delhi High Court in response to the
writ petition filed by CMDA (Computer Media Dealers Association) last year when
the court nullified the order passed by one RK Verma, VAT Commissioner, Delhi,
stating that printer cartridges attract value added tax of 12.5 percent.
Subsequently, the VAT Commissioner was asked by the court to pass a new order
taking into consideration related articles of the VAT schedule. Preceding this
VAT Commissioner was of the view that cartridges are the unscheduled goods
covered by section 4(1)(e) and should be levied 12.5 percent tax under the Delhi
VAT Act.

Thereafter, the High Court directed the matter to Tribunal Court for further
hearings in which petitioners wanted determination about the taxation structure
on cartridges. CMDA took up the matter when Ranvir Sahi of Symphony Enterprises
approached the association wanting assistance into the matter when he was guided
by VAT Commissioner that 12.5 percent VAT should be paid on cartridges reversing
his own earlier interpretation that consumables attract four percent tax.

Feeling jubilant over the victory of association's efforts in resolving VAT
issue Puneet Singhal, President, CMDA said, “We are extremely glad that the
courts verdict has come in our favor which is a big respite for channels
community. We full fledged supported Sahi when he came to us for involvement in
his quest to resolve the matter with the respective authority, despite the fact
that he was not the member of CMDA. The courts judgment in this particular
matter has strengthened government stance of giving special importance to IT
trade and traders.”

According to Balram Sanghal, CMDA's counsel in the matter courts decree has
come exactly in time enabling channel partners to heave a sigh of relief. He
said, “In this particular case everything was based on facts and it was the
learned VAT Commissioner who had to re-evaluate his stance. I am happy that I
have been able to discharge my duties to the clients efficiently and fruitfully.”

Three separate applicants namely Symphony Enterprises, Computer Media Dealers
Association and Hewlett Packard had filed applications under section 76 of the
Delhi Value Added Tax Act, to clarify their beliefs on taxability of cartridges.
However, the respondent (in this case VAT Commissioner) was resolute on his
stand that there is a very narrow compass on whether cartridges should be
treated as a part or an accessory of a printer and therefore should be levied
VAT @12.5 percent.

ANJALI CHAUDHARY