By G. G. Goyal | Chartered Accountant
C. B. Thakar | Advocate
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Rate of tax — Sale of digital inverters with UPS facility — Information technology products — Taxable at 4% — Schedule Entry 60(27) of Punjab Vat Act, 2005 — Tribunal cannot brush aside reports of technical experts.
Facts:
The appellant sold microteck digital inverters, manufactured by M/s. Microteck International, as UPS-EB having extra facility of UPS (Uninterrupted Power Supply) to run computers and paid 4% rate of tax being covered by sub-entry (27) of entry 60 of Schedule B of the Punjab VAT Act, 2005. The designated authority held it taxable @12.5% being covered by residual entry. The Appellate Authority relying on report of certain laboratories allowed appeal, against which the Department filed appeal before the Punjab VAT Tribunal. The Tribunal allowed appeal filed by the Department and held that only such uninterrupted power supply (UPS) products which were information technology products were to fall in Entry 60 of Schedule B and any other product even if named UPS would be chargeable @12.5% tax. The appellant referred substantive question of law to the Court for determination arising out of the order passed by the Tribunal.
Held:
The product sold by the appellant is an electronic power source which stores the energy in batteries connected to it when the AC source is present and converts this energy automatically to AC power when the input AC source fails and automatically feeds so generated AC powers to load connected and returns to mains when the AC source comes back to the input side. As per certificate of IIT Delhi the product sold by the appellant is a UPS. This could be used both as inverter as well as in computers. The appellant sold the goods in the market through retailers and was not in a position to determine as to what use the goods would be put to, as the same would be entirely at the discretion of purchaser.
The Court following the decision of the Madras High Court in case of State of Tamil Nadu v. M/s. Vinyl Cable Industries, (1993) 88 STC 430 and decision of SC in case of M/s. Hindustan Poles Corporation, (2006) 145 STC 625 held that goods in question sold by the appellant fulfil all the conditions of an UPS and hence taxable at 4%. The Court further held that the Tribunal fell in error in brushing aside the reports of technical experts opining that goods in question were UPS.
