Gujarat high court has held that the watches made and marketed by Titan Industries Ltd - Nebula Jewellery Watch is more a jewellery and less of a watch for the purpose of imposition of Value Added Tax (VAT), says reports.

With this, the Tata's brand has got a relief from paying heavy VAT duty of 12.5 per cent with addition of 2.5 per cent on its goods sold since 2008 in Gujarat.

The report further adds that the dispute arose in 2011, when joint commissioner of VAT computed heavy duty on Nebula watches. The company moved VAT tribunal, which last month ruled against the government's decision and accepted the company's argument that less duty should be fixed by treating the watches as piece of jewellery, as it falls under Entry 13(ii) of Schedule II.

The state government moved the HC against VAT tribunal's findings. A bench of Justice MR Shah and Justice BN Karia too noted that the watch is made out of 18K of gold. In manufacturing it, precious metals, stones and diamonds are used. The value of gold and precious stones in watch remains 90 per cent to 95 per cent. The value of watch is hardly 2 per cent to 9 per cent. These watches are manufactured with precision craftsmanship by designers and artisans like goldsmith.

The court also took into consideration that Nebula watches are sold at jewellery showrooms by jewellers and not in ordinary watch shops. The labour charges range up to Rs. 65,000. They are manually polished and individually inspected, cleaned and manually assembled.

The HC too upheld quashing of VAT commissioner's order with observation that when Nebula is manufactured as a jewellery watch rather than simple watch, it is valued at approximately Rs. 3 lakh per piece. Thus, it can be said to be an article of jewellery, the court concluded.