High Court order in favor of CMDA-Delhi

Syeda Beenish

New Delhi

September 10th, 2007

Ink cartridges, toner cartridges, printer ribbons have been declared as the
accessories and would continue to be eligible for 4 percent tax instead of 12.5
percent tax. This was the order passed by a bench consisting of Justice Madan B
Lokur and Justice Dr S. Muralidhar of the Delhi High court. They dismissed the
appeal of the petitioner i.e. Commissioner of Trade and Taxes Delhi Govt. and
agreed with the previous view and judgment of the Tribunal, Value Added Tax,
Delhi.

For those who came in late, this issue began around April 2006 when the New
Delhi-based Computer and Media Dealers Association (CMDA) had filed a writ
petition in the Delhi High Court about the confusion related to the VAT imposed
on peripherals. Puneet Singhal, President, CMDA said, "We approached the
department for the clarification as to how much VAT are cartridges and printer
ribbons eligible for? Though no written confirmation was given to CMDA, when
minutes of the meeting were submitted to the department stating four percent VAT
on the various printer cartridges, there was no opposition to the conclusion
drawn also."

Last year the court nullified the order passed by RK Verma, VAT Commissioner
of New Delhi, stating that printer cartridges attract value added tax of 12.5
percent. The 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. So the CMDA had to re-approach the Delhi High
Court.

The High Court then directed the matter to the Tribunal Court for further
hearings in which petitioners wanted to know the taxation structure on various
printer cartridges. At the Tribunal Court, it was announced that cartridges
would be only eligible for four percent VAT as per the order passed on 13th of
September, 2006.

But, the Commissioner of Trade and Taxes challenged the order in the High
Court early this year. As a result of which, CMDA filed a reply and now has won
the case.

Talking about the judgment, an elated and confident Singhal said, "This
is the third time we have won the case. At every level the interest of the CMDA
members has been safe guarded." He also opined that after losing at all
forums the department should not venture any further appeal.