Pretoria - While the Samsung Galaxy S7, commonly referred to as a smart phone, has many advanced functions, it is still a phone and not a computer, the Supreme Court of Appeal has ruled.
The court was faced with an appeal by Samsung Electronics SA regarding the classification of this phone for import duty purposes.
The amount of customs duty payable upon importation depends on the tariff heading as classified by the commissioner for the Sars.
The question which arose for determination in the appeal was whether the Samsung Galaxy S7 was a “telephone for cellular networks”, or “falls under the category of other apparatus for the transmission or reception of voice, images or other data”.
In September 2017, the Sars commissioner notified the importer of the product, Samsung Electronics SA, of a tariff determination that the product was classified as “machines for the reception, conversion and transmission or regeneration of voice, images or other data.”
The effect of this classification was that a lower import duty was applicable.
However, a few months later, Sars reclassified the product as “telephones for cellular networks or for other wireless networks, designed for use when carried in the hand or on the person”.
This meant that the Galaxy S7 fell under a different category, for which more import tax was payable.
Samsung turned to the Gauteng High Court, Pretoria, to fight the second classification, but the court ruled in favour of the taxman.
Samsung subsequently approached the Supreme Court, where it also lost this round.
Samsung argued that although the product performed the function of a cellular telephone, it was a multifunctional machine. It said that by reason of its multifunctional nature, the product’s principal function was not that of a telephone for cellular networks.
Judge Nathan Ponnan said Samsung used dictionaries, some dating to the 1980s, to explain the meaning of a “telephone”. It focused on the transmission and reception of sound or voice/speech as the defining feature of a telephone.
“While this may well have been true at the time of the grant of a patent to Alexander Graham Bell in the late 19th century, what a telephone is and what a telephone does, this has changed with the evolution of technology,” he said.
The judge said a smartphone had come to be understood as a modern type of mobile phone or cellular phone.
“Contrary to the thesis advanced by the appellant, namely that a smartphone is an apparatus that has evolved to the point of no longer being a cellular phone, but rather some other apparatus that operates over a cellular network, the language of the appellant and the appellant’s literature produced in evidence indicate that a smartphone (including the product) is simply an evolved and more advanced cellphone than earlier cellphones,” he said.
Judge Ponnan added that the fact that the product could connect to the internet and browse the Internet like a computer, did not make it more like a traditional laptop or desktop computer with which shared internet browsing functionality.
The judge concluded that although it shared many features of communication technology common to computers, the Samsung Galaxy S7 is clearly identified as a telephone and not as some other apparatus.
Thus, he said, Sars’ categorisation of this product was correct.
Pretoria News