STATE OF TAMIL NADU Vs. CMC LIMITED

JUDGEMENT

(1.) THIS tax case (revision) is preferred by the Revenue aggrieved against the order passed by the Tamil Nadu Sales Tax Appellate Tribunal (Main Bench), Chennai. The issue that raised by the Revenue in this revision is as to whether the goods sold by the respondent/assessee is exigible to tax at the rate of four per cent as goods falling under Sl. No. 22 of entry 68 of Part B of the First Schedule or falling under entry 69 of Part C of the First Schedule of the Tamil Nadu Value Added Tax Act, 2006 (hereinafter called as "the TNVAT Act, 2006") as claimed by the Revenue.

(2.) THE respondent/assessee, who is a dealer in computers and spares, was assessed on a total and taxable turnover of Rs. 21,50,50,767 and 21,50,50,767, respectively for the assessment year 2006 -07 under section 22(2) of the TNVAT Act, 2006. On verification of the assessment records, the assessing officer found that the dealer had made sale of routers at the rate of four per cent claiming that the commodity is an information technology product. The assessing officer rejected the claim stating that the router is an external device and there was no specific entry for the commodity router in the First Schedule to the TNVAT Act, 2006 and hence the commodity router was liable to be assessed to tax at 12.5 per cent treating it as an unclassified item under entry 69 of Part C of the First Schedule (Commodity Code No. 301) to TNVAT Act, 2006. Accordingly, the assessing officer demanded tax at 12.5 per cent together with penalty. Aggrieved by the order of the assessing officer, the assessee preferred an appeal before the Appellate Deputy Commissioner, who relying upon the definition of "router" from Wikipedia and its nature and use in computer data transfer, came to the conclusion that router is a computer peripheral and a device used in conjunction with the computer and therefore, falls under Sl. No. 22, entry 68 of Part B of the First Schedule. For better clarity, the relevant portion of the order of the Appellate Deputy Commissioner reads as follows:

(3.) AGGRIEVED by the order of the Appellate Deputy Commissioner, the Revenue has preferred an appeal before the Tamil Nadu Sales Tax Appellate Tribunal. The Tribunal held that router is a network device that forwards data from one network to another and it is used for transmitting computer data from one area to another. The Tribunal relied upon the Microsoft Dictionary to define the word "computer peripheral". It has been clearly held by the Tribunal that based on the definition, a computer peripheral was often, but not partially or completely dependent on the host and it expands the capability of the computer, but it did not form part of the core computer architecture. Further, the Tribunal while upholding the order of the Appellate Deputy Commissioner, held as follows: