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Recently Maharashtra Sales Tax Department has undertaken search/ survey operations at the premises of various computer/ IT products dealers and importers. The main contention of the Department contains many issue related to various IT products.
The Federation of All India IT Associations (FAIITA) has raised this issue this issue on a national platform to discuss and to resolve this issue for the betterment of IT partners.
FAIITA has come up with many points where the association wants the Tax department should rethink and revised the norms on different products .
Like, Laptop Carry Cases used for laptops are taxable at 12.5% and now at 13.5%. Even if carry cases are sold as a bundle with laptops, the department values the carry cases on its own and contends that it should be taxable at 12.5%. Tax Department is not ready to accept carry cases as a packing material. Also, Tax department is not ready to accept it as a bundled product/ free product/ part of laptop itself.
Talking about the adapters for laptops are taxable at 12.5% now it at 13.5% even if adapters are sold as a bundle with laptops, the department values the adapters on its own and contends that it should be taxable 12.5% which is now 13.5%. Tax department is relying on the decision of Honorable Supreme Court declared in the year 2015 regarding Nokia Chargers and is demanding liability even for years prior to 2015.
After the Supreme Court decision in the case of Nokia, State Taxes Division of Department of Revenue, Ministry of Finance has sent Office Memorandum to all states to take a view that accessories are a part of the main item when they are sold together as a single unit. Apparently Govt of Maharashtra has not yet acted on this. Department is not ready to accept Adapters as a connector. Govt of Maharashtra has declared its IT policy in 2009 in which “Adapters” have been classified as IT product and in the same policy instructions have been given to all departments to issue suitable notifications. Apparently Sales Tax Department has not yet acted upon its own Govt.’s policy.
Tablet PCs are technological innovations and are condensed form of a Laptop. Tablets have a facility for internet connectivity through a sim card. Just because tablets may use sim cards which in turn may be used for making calls, department wants to treat tablets as mobile phones and is demanding tax 12.5% now at 13.5%.
In a interview with The DQ Week, Champak Raj Gujjar, President, FAIITA said, “This impact will be a big blow to the industry. Many players will have to close down/ run away or keep on fighting legal battles for years to come and pay for legal costs.”
“Our Requests to the Government is to suitable notification should be issued to clarify tax rates for bundled products in a prospective manner. Suitable notification be issued to clarify tax rates for adapters and tablets in a prospective manner. Decisions like Nokia should not be applied retrospectively. Tax should not be recovered again and again from each player in distribution channel he added”
Champak informed The DQ Week and added, “We are meeting with the Finance Ministry and Honorable Chief Minister of Maharashtra in few days where we will discuss on the same points. We hope and very confident that we will get the favor of decision and this will be for the betterment of IT market and IT players.