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Pashabhai Patel and Co. (P.) Ltd. Vs. Collector of Sales Tax, Maharashtra State - Court Judgment

LegalCrystal Citation
SubjectSales Tax
CourtMumbai High Court
Decided On
Case NumberSales Tax Reference No. 10 of 1962
Judge
Reported in[1964]15STC32(Bom)
ActsBombay Sales Tax Act, 1953
AppellantPashabhai Patel and Co. (P.) Ltd.
RespondentCollector of Sales Tax, Maharashtra State
Appellant AdvocateR.V. Patel, Adv.
Respondent AdvocateN.A. Palkhivala, Adv.
Excerpt:
sales tax - agricultural machinery - bombay sales tax act, 1953 - whether sales of tractors made by applicants covered by entry 9 - entry 9 is meant for agricultural machinery - use of tractors is for many purposes other than agriculture - held, sale of tractor did not fall under entry 9 as sales effected by applicant had not been made exclusively to agriculturist. - - -2. it was the contention of the applicant before the sales tax authorities as well as the sales tax tribunal that a tractor was an agricultural machinery within the meaning of entry no......to us the following question of law : 'whether on the facts and circumstances of the case the sales of tractors made by the applicants are covered by entry no. 9 of schedule b to the act of 1953.' 6. mr. patel appearing for the applicant contends that the expression 'agricultural machinery' occurring in entry no. 9 is not in any manner qualified. the entry does not says that machinery used for agricultural purposes would be taxed under entry no. 9, but, on the other hand, the entry mentions 'agricultural machinery' without qualifying it in any manner. it must, therefore, be held that any machinery which could be used for the purpose of agriculture is an agricultural machinery within the of entry no. 9. it is not disputed that a tractor is a machinery. it is also not in dispute that.....
Judgment:

Tambe, J.

1. The applicant before us is a private limited company dealing in tractors. It is a registered dealer under the Bombay Sales Tax Act (Act No. 3 of 1953) (hereinafter referred to as the Act). The total sales effected by the applicant in the assessment year 1954-55 (1st April, 1954, to 31st March, 1955), amounted to Rs. 6,46,047. The applicant had been taxed on these sales under entry No. 80 in Schedule B of the Act. That entry reads :

------------------------------------------------------------------------ 'Serial Description Rate of Rate of Rate of No. of goods. Sales Tax. General Purchase Sales Tax. Tax. ------------------------------------------------------------------------ 80 All goods other than 2 nP. in 3 nP. in 2 nP. those specified from the rupee. the rupee in the time to time in rupee.' Schedule A and in the preceding entries. ------------------------------------------------------------------------

2. It was the contention of the applicant before the Sales Tax Authorities as well as the Sales Tax Tribunal that a tractor was an agricultural machinery within the meaning of entry No. 9 under Schedule B of the

3. Act and, therefore, was taxable at the rates mentioned under entry No. 9. That entry reads :-

------------------------------------------------------------------------ 'Serial Description Rate of Rate of Rate of No. of goods Sales Tax. General Purchase Sales Tax. Tax. ------------------------------------------------------------------------ 9 'Agricultural machinery nil Three naye Two naye and implements or parts paise in paise thereof including parts the rupee. in the of such machinery and rupee.' implements (except such agricultural implements as are declared tax-free under entry 1 of Schedule A). ------------------------------------------------------------------------

4. It would be seen that the only difference between the rate of tax under entry No. 9 and entry No. 80 relates to the payment of sales tax. If the sale of a tractor falls under entry No. 9, the applicant pays no sales tax, though he has to pay the general sales tax and the purchase tax, as the case may be, the rates of which are common both under entry No. 9 and entry No. 80. On the other hand, if the sale of tractors is taxed under entry No. 80, he also pays sales tax at the rate of 2 nP. in the rupee. In other words, the applicant's complaint is against the excess charge of tax at the rate of 2 nP. in a rupee under the heading 'sales tax'.

5. Now, it had been contended before the Sales Tax Authorities on behalf of the applicant that sales were effected to persons, who had used the tractors sold for agricultural purposes only and that as such tractors and spare parts sold would fall under entry No. 9. (This contention does not appear to have been substantiated.) Mr. Patel appearing for the applicant, however, stated before us that, according to the detailed list, which had been submitted to the Sales Tax Authorities, nearly half the number of tractors were sold to agriculturists. However, that does not appear to be the fact found. The other circumstances, on which reliance has been placed by the applicant in support of its contentions, were that at the time of clearance of these tractors through customers, these goods were treated as import-duty free, being agricultural tractors. He further relied on the fact that the import licence granted to the applicant by the Import Controller was for the purchase of agricultural tractors. He also referred to certain catalogues to show that tractors are also used for agricultural operations. The Additional Collector of Sales Tax held that even assuming that tractors were sold for being used for agricultural operations, that would not mean that the articles sold fell within entry No. 9. According to the Additional Collector, agricultural machinery would ordinarily mean that type of machinery, which is exclusively used for the purpose of agriculture : tractor was not a machinery, which was exclusively used for agricultural purposes and, therefore, was not an agricultural machinery within the meaning of entry No. 9. The Tribunal, however, has not agreed with the extreme view of the Additional Collector. The Tribunal, after considering all the material placed before it by the applicant, and also considering the material placed before it by the learned counsel appearing for the department, which consisted of two authoritative books relating to the use of tractors, describing in detail the purpose for which the tractors was used and could be used, held that in its opinion the evidence that had been produced before it sufficiently showed that a tractor cannot be said to be essentially or primarily intended to be used for agricultural purposes and, therefore, cannot be regarded as an agricultural machinery. It further observed that it was significant to note that the applicant had sold some of the tractors to the Public Works Department, which had little connection with agricultural operations. The Tribunal thus rejected the contention of the applicant that a tractor was agricultural machinery within the meaning of entry No. 9 in Schedule B. On an application for reference made by the applicant, the Tribunal has referred to us the following question of law :

'Whether on the facts and circumstances of the case the sales of tractors made by the applicants are covered by entry No. 9 of Schedule B to the Act of 1953.'

6. Mr. Patel appearing for the applicant contends that the expression 'agricultural machinery' occurring in entry No. 9 is not in any manner qualified. The entry does not says that machinery used for agricultural purposes would be taxed under entry No. 9, but, on the other hand, the entry mentions 'agricultural machinery' without qualifying it in any manner. It must, therefore, be held that any machinery which could be used for the purpose of agriculture is an agricultural machinery within the of entry No. 9. It is not disputed that a tractor is a machinery. It is also not in dispute that the tractor could be used for agricultural purposes. The tax on the sale of tractors, therefore, must be levied under entry No. 9 and not under entry No. 80.

7. We find it difficult to accept the contentions advanced by the learned Advocate. It is true that the entry does not say 'machinery used for the purposes of agriculture' and, therefore, actual use of the machinery for agricultural purpose need not be established, but then the person claiming that a particular machinery is an agricultural machinery must establish as a fact that the machinery conforms to the description of agricultural machinery. In other words, the dealer must establish that in the commercial world that particular type of machinery is understood as agricultural machinery. It has to be established that the particular type of machinery is generally and commonly used for the purpose of agriculture. Now, the facts found are not that tractors are generally or principally used for the purpose of agriculture, nor is there any finding that a tractor is understood in the commercial world as an agricultural machinery. On the other hand, the order of the Tribunal shows that a tractor is used where a large percentage of the available power is required as force rather than speed. The use to which the tractor is put is in pushing down trees, pushing large piles of dirt or rocks, or loading scrapers and operating up steep grades or against the high rolling resistance of soft roads. Tractor also is used for clearing and grubbing involving a complete disposal of all timber, roots, and brush from the vicinity of operations. It is also used for clearing small trees, for pulling or pushing loads, a power unit for winches and hoists and a moving mount for bulldozer blades, side booms and front-end bucket loaders. The Tribunal has also observed that tractors have been used on all of India's Five Year Plan Projects for clearing jungles, ploughing kans lands, digging canals or building dams, roads and pipe lines or for moving earth for soil erosion or flood control, etc. It would be seen that the use of tractors is for many other purposes than agriculture. In short a tractor is used wherever a large percentage of available power is required to be used and in that sense a tractor may also be used for the purpose of agriculture when for the particular purpose large percentage of power is required to be used. In other words, a tractor may be brought in use for large scale agriculture, but the evidence discussed by the Tribunal and to which we have made a reference in brief, shows that the principal and primary use of a tractor is not for agriculture. That being the position, in our opinion, the Tribunal was right in holding that the sale of tractors did not fairly and squarely fall under entry No. 9 of the Act. The Tribunal also has found as a fact that the sales effected by the applicant had not been exclusively to agriculturists.

8. In the circumstances, answer to the question referred to us should be against the dealer. We accordingly answer the question in the negative. The applicant-dealer shall pay the costs of department.

9. Reference answered in the negative.


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