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2005 Supreme(Kar) 70
Karnataka High Court
Judges : H.L.DATTU,H.N.NAGAMOHAN DAS
DIEBOLD SYSTEMS PVT.LTD. - Appellant
Versus
COMMISSIONER OF COMMERCIAL TAXES (KARNATAKA) - Respondent
Sales Tax Appeal 2 Of 2004
Decided On : 01/31/2005
Headnote:That is to say
INTERPRETATION OF STATUES
That is to say - Interpretation of - The expression is the commence-ment of ancillary clause - Explains meaning of the principal clause.
[H. L. Dattu And H. N. Naga Mohan Das, JJ]: The expression "that is to say" is employed to make clear and fix the meaning of what is to be explained or defined. Such words are not used as a rule, to amplify the meaning while removing a possible doubt for which purpose the word includes is generally employed. In unusual cases, depending upon the context of the words "that is to say", this expression may be followed by illustrative instances.
Cases Referred: AIR 2004 SCW 6583; [2001] 121 STC 510; [2003] 259 ITR 502; 268 ITR 128; AIR 1954 SC 561 ; AIR 1976 SC 800; 1991 Suppl (1) SCC 2002.
Automated Teller Machines
KARNATAKA RENT CONTROL ACT, 1961 - II Schedule, Parts C and E - Automated Teller Machines - Tax on - ATMs are not computers by themselves - Hence, tax cannot be levied under Entry 20(1) of Part C - They are exigible to tax under Entry 4 of Part E.
[H. L. Dattu And H. N. Naga Mohan Das, JJ]: An Automatic Teller Machine, in our view, is an electronic device, which allows a bank s customer to make cash withdrawals, and check their account balances at any time without the need of human teller, probably that most widely used means of "electronic funds transfer". From the literature and the books on computers produced the ATM is not a computer by itself and it is connected to a computer that performs the tasks requested by the person useing ATMs. The computer is connected electronically to many ATMs that may be located from some distance from the computer. In common parlance, it is understood as electronic device and therefore, the revisonal authority is justified in holding that ATMs are electronic goods and the levy of tax nd the sale of ATMs requires to be made under Entry 4 of Part E of Second Schedule to the Act.
Cases Referred: AIR 2004 SCW 6583; [2001] 121 STC 510; [2003] 259 ITR 502; 268 ITR 128; AIR 1954 SC 561; AIR 1976 SC 800; 1991 Suppl (1) SCC 2002.
Automated Teller Machine
WORDS AND PHRASES - Automated Teller Machine - An ATM is not a computer by itself. It is connected to a computer that performs the tasks requested by the person using the ATM. The computer is connected electronically to many ATM s that may be located some distance from the computer.
Computer terminal
WORDS AND PHRASES - Computer terminal - In Columbia Encylopedia, Sixth Edition, computer terminals are described as, a device that enables a computer to receiver or deliver data. Computer terminals vary greatly depending on the format of the data they handle. For example, a simply early terminal comprises a typewriter keyboard for input and a typewriter-printing element for alpha-numeric output. A more recent variation includes the keyboard for input and a television screen to display the output. The screen can be Cathode-ray tube or a gas plasma panel, the later involving an Ionized Gas (sandwiched between glass layers) that glows to form dots which inturn, connect to form lines. Such displays can present a variety of output, ranging from simple alpha numeric to complex graphic images used as design tools by Architects and Engineers. Portable terminals frequently use liquid crystal displays because of their low power requirements. The terminals of pen-based computers use a stylus to input hand writing on the screen. Touch sensitive terminals accept input made by touching a pressure-sensitive panel in front of a menu displayed on the screen. Other familiar types of terminals include store checkout systems that deliver detailed printed receipts and use later scanners to read the bar codes on packages and automatic teller machines in banks.
Electronic
WORDS AND PHRASES - Electronic - The word "Electronic" has been defined by Megraw -Hill Dictionary of Scientific and Technical Terms (Second Edition), as pertaining to electron devices or to circuits or system utilising electron devices, including electron tubes, magnetic amplifiers, transistors and other devices, that do the work of electron tubes. The word electron has been defined as a stable elementary particle with an indivisible charge of negative electricity, found in all atoms and acting as a carrier of electricity in solids.
Revisional authority
KARNATAKA RENT CONTROL ACT, 1961 - Section 22-A - Revisional authority - Powers of - Divergent opinion among members of Advance Rulings Authority - Majority opinion prejudicial to revenue- Commissioner can invoke his suo motu revisional powers.
[H. L. Dattu And H. N. Naga Mohan Das, JJ]: If two views are possible in understanding the nature of the commodity and the rate of tax applicable on the sale of such commodity, the revisional authority should not exercise his supervisory jurisdiction under Sec. 22-A of the Act. This is well settled legal principle and there cannot be any dispute on this proposition of law. But at the same time, it requires to be kept in view that the revising authority is authorised under the Act to revise an order, which is erroneous and prejudicial to the interest of the revenue. The amended provision authorises the Commissioner to invoke his suo-motu revisional powers, when there is divergent opinion among the members of the Advance Ruling Authority, and if the majority opinion is erroneous and prejudicial to the interest of the revenue.
( 1 ) THE appellant is a public limited company engaged in the manufacture and supply of Automated Teller Machines (ATM's for short ). In view of the configuration and for the purpose for which is put to use, the appellant company is of the view that the sale of ATM's is eligible to single point levy of tax under Sec 5 (3) (a) of the Karnataka Sales Tax Act, 1957 (hereinafter for the sake of brevity referred to as 'act, 1957 ). However, in order to have the views of the department in this regard, in particular, the Advance Ruling Authority constituted by the Commissioner of Commercial Taxes in exercise of his powers under Section 4 of the Act, the appellant company had filed an application before the Advance Ruling Authority in Form 54 as provided under Rule 27-E (1) of the Karnataka Sales Tax Rules, 1957 ('rules' for short), seeking clarification on the rate of tax applicable under the Act on sale of Automated Teller Machines.
( 2 ) IN response to the notice of the hearing issued by the Advance Ruling Authority, Sri Mohan Mudkavi learned Chartered Accountant along with the Vice-President of the Company had appeared before the Authority and represented the facts and also had produced the literature and description of the ATM's. The basic submission that was made was, ATM is a combination of a Computer and it runs on a processor and the purpose for which it is put to use, is to dispense with cash and therefore, had requested the Authority to classify ATMs as goods falling under Entry 20 of Part C' of the Second Schedule to the Act and not Electronic goods falling under Entry 4 of Part 'e' of Second Schedule to the Act.
( 3 ) THE Advance Ruling Authority (Majority View) after referring to the dictionary meaning of the word "automated Teller Machines" and the product literature produced by the appellant company, by their order No. CLR. CR. 6/2002-03 dated 1. 10. 2002 have clarified that ATM's can be classified under the caption "computer terminals" and therefore, ATM's would fall under Entry 20 (ii) (b) of Part 'c' of Second Schedule to the Act and the basic tax applicable is four percent. ( 4 ) THE Chairman of the Advance Ruling Authority has dissented from the majority view and has opined, that the goods in question would fit into the description of electronic goods, parts and accessories thereof and therefore, falls under Entry 4 of Part 'e' of the Second Schedule to the KST Act and the basic rate of tax applicable is 12%.
( 5 ) THE Commissioner of Commercial Taxes being of the view, that the Authority for clarification and Advance Ruling, has erroneously classified ATM's as "computer terminals" and the basic rate of tax is at 4%, instead of classifying the product as electronic goods falling under Entry 4 of Part 'e of the Second Schedule to the Act and liable to tax at 12% and thereby has caused prejudice to the interest of the revenue, had initiated suo-motu rcvisional proceedings under Sec. 22-A (1) of the Act by issuing a show cause notice dated 2. 9. 2003, inter alia directing the appellant company to show cause, why the order passed by the Authority for clarification and Advance Ruling vide order No. CLR. CR. 6/2002-03 dated 1. 10. 2002 should not be set aside and the goods in question should not be treated as "electronic goods" falling under Entry 4 Part 'e of Second Schedule to the Act liable to tax at 12%. After receipt of the show cause notice, the appellant company has filed its reply dated 16. 9. 2003, inter alia requesting the Commissioner of Commercial Taxes to accept the order passed by the Advance Ruling Authority dated 1. 10. 2002 and to drop the proposal made in show cause notice dated 2. 9. 2003.
( 6 ) THE Commissioner of Commercial Taxes, after considering the reply filed by the appellant company, has confirmed the proposal made by him in the show cause notice dated 2. 9. 2003, by his order dated 29. 11. 2003. The findings and the conclusions reached by the Commissioner of Commercial Taxes
