Classification of goods for tax purposes should prioritize commercial identity over functional capability, determining correct tax application based on primary market understanding.

Judgment :

S.Talapatra, J.

1. This matter is taken up through hybrid mode.

2. Heard Mr. S.S. Padhi, learned Addl. Standing Counsel, for CT & GST appearing for the Petitioner. None appears for the Opposite Party (the assessee) despite due notice.

3. By means of this petition, filed under Section 19 of the ORISSA ENTRY TAX ACT , 1999 read with Rule 24 of the ORISSA ENTRY TAX RULES , 1999, the Petitioner (the revenue) has challenged the order dated 30.09.2015 delivered in S.A. No. 92(ET) of 2013-14 by the Odisha Sales Tax Tribunal. The Sales Tax Tribunal has by way of affirmation has held by the said order that the multi-functional digital copier is exigible to the Entry Tax @ 1% as the said product is covered by Entry No. 70 of Part-I of the Orissa Entry Tax Rate Chart. It has been further observed that as per Entry No. 23 of Part-II of the said rate chart, the copier or the xerox machine is subject to levy of tax at the rate of 2%.

It has been noted that the dealer [the Opposite Party herein] deals in multi-functional digital copiers which are used for various purposes, such as, printing, scanning, photo copying, fax, e-mail etc. The xerox machine and the copier cannot print. Thus, the item, dealt in by the dealer, comes under the broad category of the computer peripherals and such classification has been done after carrying out the functional test. That apart, it has been observed strangely that Multi-functional digital copiers are available in the computer show- rooms. For that reason, it has been held that for taxing under the OET Act, the multi-functional digital copier will come under the category, as specified in Entry No. 70 of Part-I which include computers, their spare parts, accessories, stationeries and consumable and computer softwares.

4. After observing thus, the Sales Tax Tribunal by the order dated 30.03.2013 has refused to interfere with the order dated 10.01.2013 passed in the First Appeal No. AA-108111110000077. By the said order dated 10.01.2013, the First Appellate Authority had allowed the appeal of the Opposite Party under Section 16 of the ORISSA ENTRY TAX ACT , 1999 by returning the finding that multi- functional digital copiers may act as combination of devices viz. (a) printer, (b) scanner, (c) photo copier, (d) fax and (e) e-mail. Except the photo copier, the others are connectable to the Central Processing Unit (CPU) of the automatic data processing system and they are able to accept or deliver data in a form (codes or signals) which can be used by the system.

5. Mr. S.S. Padhy, learned Addl. Standing Counsel, CT & GST who has appeared for the revision petitioner, has contended that the principal function of any multi- functional digital copier is printing/copying. The value of printing components of the machine is more than the value of the other components, if put together. Thus, it cannot be held to be a computer peripheral. Reference has been made to a decision of the Division Bench of West Bengal Taxation Tribunal in Ricoh India Limited and Another Vrs. ACST, Public Relation Office and Others , (2008) 14 VST 491 (WBTT).The first Appellate Court having relied on the said decision has disagreed with the inference drawn by the Assessing Authority (under the OET Act) that the multi-functional digital copier is not xerox machine and as such, the duty or tax will be fixed under Entry 70, Part-I of the schedule.

6. For purpose of reference, let us visit the statutory provisions as made under Part-I and Part-II of the Schedule.

Part-II of the Schedule

Entry 23:Copier, Xerox Machine, Fax, VCR, VCP, VCD, DVD, Video Camera; or

Part-I of the Schedule Entry 70: Computer, ITS Spare Parts, Accessories, Stationeries and Consumables an