Himachal Pradesh High Court Quashes Revision Petition Against Nokia On Differential Tax Amount On Sale Of Mobile Charger

The Himachal Pradesh High Court has quashed the revision petition filed by the Department against Nokia on the differential tax amount on the sale of mobile chargers.

The bench of Justice Tarlok Singh Chauhan and Justice Satyen Vaidya has observed that the clear mandate of law is that the Court can exercise revisional jurisdiction under Section 48 of the Act only against the orders passed by the Tax Tribunal either under Section 45(2) or Section 46(3) of the VAT Act. Revisional jurisdiction can be exercised if the person aggrieved applies to the court within 90 days of the communication of the order and if any question of law arising out of an erroneous decision of law or failure to decide a question of law is found to exist.

The respondent/assessee, M/s Nokia India Sales Pvt. Ltd., is registered under the H.P. VAT Act, 2005, with the Excise and Taxation Department. It is engaged in the sale of mobile and cell phones, electronic goods, and electrical goods.

The Deputy Excise and Taxation Commissioner, Flying Squad South Zone, Parwanoo-cum-Assessing Authority passed a composite order by which a demand of Rs. 52.15 lakhs was created against the dealer on account of the differential amount of tax under the H.P. VAT Act, 2005.

The Deputy Excise and Taxation Commissioner-cum-Assessing Authority, FS Parwanoo, noted that the Deputy Excise and Taxation Commissioners (DETC)-cum-Assessing Authority held that since the respondent/dealer was selling the charger separately, it was therefore required to pay a separate 13.75% VAT rate on the chargers.

The assessee had paid 5% VAT on the chargers, and hence the DETC had directed it to pay the balance amount of 8.75% tax along with the interest.

The assessee resisted the imposition of 13.75% VAT on the grounds that the charger was part of the mobile phone and, when sold along with the mobile phone, could only be charged 5%, which was the rate of VAT being charged on the mobile phone sets.

However, DETC confirmed differential VAT liability amounting to Rs. 52.15 lakhs on the sale of cell phone chargers separately, sold along with cell phones in retail packs, during the period 01.01.2013 to 30.11.2014.

The assessee challenged the DETC’s order before the Excise and Taxation Commissioner-Appellate Authority, who dismissed the appeal and upheld the DETC's order.

The respondent/dealer thereafter filed the second appeal before the H.P. Tax Tribunal against the order of the Excise and Taxation Commissioner. The Tribunal allowed the appeal and quashed and set aside the orders of DETC, FS, Parwanoo, and the first appellate authority.

The department sought to invoke revisional jurisdiction of this Court under Section 48(1) of the VAT Act, 2005, by assailing the order dated June 14, 2017, passed by the Tax Tribunal in the Rectification Application of the petitioners, as well as the principal order dated August 28, 2022, passed by the same Tribunal in the exercise of powers under Section 45(2) of the VAT Act.

The court noted that the order passed by the Tax Tribunal in the Rectification Application filed by the Department under Section 47 of the VAT Act is not open to challenge by the petitioners before the High Court under Section 48 of the VAT Act. The Department can also not be allowed to assail the order dated June 14, 2017, passed by the Tax Tribunal, which is clearly beyond the period of limitation as prescribed under Section 48.

Case Title: State of Himachal Pradesh and Others Versus M/s Nokia India Sales Pvt. Ltd.

Citation: 2023 LiveLaw (HP) 65

Case No.: Civil Revision No. 10 of 2023

Date: 27/07/2023

Counsel For Petitioner: I.N. Mehta

Counsel For Respondent: Krishna Rao

Click Here to Read The Order