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Commissioner of Sales Tax Vs. Govardhandas Manmohandas - Court Judgment

LegalCrystal Citation
SubjectSales Tax
CourtMumbai High Court
Decided On
Case NumberSales Tax Reference No. 61 of 1979 in Reference Application No. 79 of 1979
Judge
Reported in[1986]63STC434(Bom)
Acts Bombay Sales Tax Act, 1959 - Sections 52
AppellantCommissioner of Sales Tax
RespondentGovardhandas Manmohandas
Excerpt:
.....section 52 and entry 22 of schedule e and entry 12 of schedule c to bombay sales tax act, 1959 - whether the parts of oil engines sold to agriculturists fell within entry 12 of schedule c or covered by residuary entry 22 of schedule e - components, parts and accessories which are referred to in entry 12 are components, parts and accessories of those main items covered by entry 12 - entry 12 does not cover oil engines - parts of oil engines are not included in description 'parts and accessories' - held, parts of oil engines not covered by entry 12 of schedule c but fell under entry 22 of schedule e. - - -under entry 12 as it existed prior to 11th may, 1973, agricultural machinery and implements as well as parts of such machinery and implements were covered by the entry (unless such..........a component of such a pumping set. but when one of the components is expressly excluded from the entry, parts of such a component cannot be included in that entry. there is nothing in the language of entry 12 of schedule c which would warrant such inclusion.12. it was submitted on behalf of the respondent that there are other entries under the bombay sales tax act, 1959, which would go to show that when an entry covers several items and only parts of some of these items are to be included in that entry, the entry in question expressly states so; thus, for example, entry 65 of schedule c is as follows :'wireless reception instruments and apparatuses and radio gramophones and electrical valves, batteries, transmitters, accumulators, amplifiers and loudspeakers, required for use therewith.....
Judgment:

Sujata V. Manohar, J.

1. Respondent M/s. Govardhandas Manmohandas is a registered dealer under the Bombay Sales Tax Act, 1959. The business of the respondent consists of purchasing and selling pumping sets to agriculturists. The pumping sets have two components, viz., a pump and an oil engine. There is no dispute that the pumping sets sold by the respondent are agricultural machinery. The respondent, however, also sells to agriculturists parts of oil engines. It seems that the clients of the respondent who have purchased pumping sets from the respondent also purchased from the respondent replacements for the parts of the sets which get worn out. Such parts include parts of oil engines.

2. In respect of the parts of oil engines which were sold by the respondent to the agriculturists under several bills, the respondent made an application dated 7th December, 1974, before the Commissioner of Sales Tax under section 52 for determining whether the items referred to in the bills which were the subject-matter of the application, fell within entry 12 of Schedule C to the Bombay Sales Tax Act, 1959. In other words, the issue was whether parts of oil engines which were sold by the respondent to agriculturists for replacement in their pumping sets could be considered as parts of agricultural machinery.

3. The 20 items which were enumerated in the application in respect of which determination was sought, were as follows :

----------------------------------------------------------------------Sr. Name of article Bill No. & date so Bill No. & date soNo. far as first far as secondapplicant is applicant isconcerned. concerned.----------------------------------------------------------------------1 2 3 4----------------------------------------------------------------------1. (Cylinder) Liner VB 3 6441 dt. 19.11.74 L9908/29.11.742. Piston-VC-25-VC-29 6441 dt. 19.11.74 '3. Camshaft extension VD-25 ' '4. Valve spring-inner-outerVB-21-22 ' J9902/29.11.745. Valve guide-VB-26 6445 dt. 19.11.74 '6. Fulcrum bracket VD-15 ' -7. Joint for exhaust ' L9926/30.11.748. Filter ring ' J9897/28.11.749. Stud for inlet & exhaust ' -manifold-VB 39(a)10. Locker box-VB-2-45 ' L9903/29.11.7411. Valve cap VB-23 ' J9902/29.11.7412. Inlet & exhaust value-VB-20 ' '13. Intermediate bearing VC-43 6452 dt. 10.11.74 J9897/28.11.7414. Oil seal-VC-19 ' G9832/17.11.7415. Camshaft bush-VA-12 61471 dt. 18.11.74 -16. Thrust washer-VC-6 61471 dt. 18.11.74 L9932/17.11.7417. Rain bearing-VC-13 ' J9897/28.11.7418. Fuel injection nozzle VS-29 51488/18.11.74 -19. Fuel pump tappel plunger ' J9901/29.11.7420. Compression ring-VC-28-29 ' J9926/30.11.74----------------------------------------------------------------------

All these are parts of an oil engine.

4. By his order dated 11th April, 1975, the Commissioner of Sales Tax held that the goods were covered by the residuary entry 22 of Schedule E to the Bombay Sales Tax Act, 1959, and not under entry 12 of Schedule C to the said Act.

5. Being aggrieved by the order of the Commissioner of Sales Tax, the respondent preferred an appeal before the Tribunal. The Tribunal by its order dated 5th April, 1977, reversed the order of the Commissioner and held that the said 20 items fell within the scope of entry 12 of Schedule C to the Bombay Sales Tax Act, 1959. From this decision of the Tribunal, the following question has been referred to us for determination :

'Whether, on a true and proper interpretation of entry 12 of Schedule C to the Bombay Sales Tax Act, 1959, as it stood at the material time, the Tribunal was justified in holding that the parts and accessories of oil engines, as mentioned in the application, were covered by the scope of the said entry ?'

6. In order to appreciate the rival contentions which have been raised in relation to the interpretation of entry 12 of Schedule C to the Bombay Sales Tax Act, 1959, it is necessary to set out the entry as it existed prior to 11th May, 1973, and the entry as it existed after 11th May, 1973. It is the latter entry which was in force at the relevant time. The said entry during the aforesaid periods was as follows :

---------------------------------------------------------------------- Sl. Description of goods Rate of sales Rate of purchase Period No. tax in paise chase tax in of in the rupee paise in the operation rupee ---------------------------------------------------------------------- 12. Agricultural machinery Three Three 1.1.60 to and implements (other 10.5.73 than implements specified in entry 1 in Schedule A) and parts of such machinery and implements.

12. Agricultural machinery Three Three 11.5.73 to and implements (other 30.6.81 than tractors, oil engines and electric motors and implements specified in entry 1 in Schedule A) and components, parts and accessories thereof. ---------------------------------------------------------------------- Under entry 12 as it existed prior to 11th May, 1973, agricultural machinery and implements as well as parts of such machinery and implements were covered by the entry (unless such implements fell within entry 1 of Schedule A). By the amended entry, which was in force at the relevant time, the scope of exclusion was widened. From the description of agricultural machinery and implements, tractors, oil engines and electric motors were also excluded in addition to implements covered by entry 1 of Schedule A. As a result of this amendment, therefore, oil engines were excluded from agricultural machinery and implements. The last part of entry 12 covers 'components, parts and accessories thereof'. The words 'thereof' refer to the main items covered by entry 12. The main items are agricultural machinery and implements excluding inter alia oil engines. Hence only components, parts and accessories of such agricultural machinery and implements as are covered under entry 12 also form a part of entry 12. Since oil engines inter alia are expressly excluded from agricultural machinery and implements, parts of oil engines are not covered under entry 12 of Schedule C.

7. In the case of Koel Sales and Service v. State of Maharashtra reported in [1984] 56 STC 151 a Division Bench of this High Court was required to consider whether an oil engine used as a component of a pumping set was covered by entry 12 of Schedule C or whether it fell under the residuary entry 22 of Schedule E. The Court held that in view of the amended entry 12 of Schedule C, oil engines are expressly excluded from agricultural machinery referred to in the entry and hence they would not be covered by entry 12 of Schedule C. An oil engine cannot be considered as a component of agricultural machinery for the purpose of entry 12.

8. In the present case, we have to consider a slightly different aspect of the same entry, viz., whether parts of oil engines are covered under entry 12 of Schedule C, although oil engines are not so covered.

9. It was submitted by Mr. Patel, learned counsel for the respondent, that although oil engines are excluded from entry 12 of Schedule C, parts of oil engines are also parts of agricultural machinery. He submitted that oil engines are used as component parts of pumping sets. They are components of agricultural machinery. It is only because of their express exclusion that oil engines are not covered by entry 12. This is not the case with parts of oil engines since parts of oil engines are not expressly excluded. Hence parts of oil engines continue to be covered by entry 12 of Schedule C. It is not possible to accept this submission of the respondent. The submission, in our view, proceeds on a wrong interpretation of the provisions of entry 12 of Schedule C. The components, parts and accessories, which are referred to in entry 12 are components, parts and accessories of those main items which are covered by entry 12. Admittedly entry 12 does not cover oil engines. Therefore, parts of oil engines are not included in the description 'parts and accessories thereof'.

10. It was pointed out on behalf of the respondent that parts of oil engines in question are parts which are sold by the respondent to agriculturists for use in their pumping sets. These pumping sets are only sold to agriculturists. The purchasers of these parts of oil engines are also agriculturists. Hence these parts must be considered as parts of agricultural machinery. We cannot accept this submission because the nature of the item does not depend upon the person to whom the item is sold or the purpose for which such an item is purchased by the person concerned, unless the entry expressly refers to such purpose. Classification of an item cannot change depending upon the person who buys them or the purpose for which he buys them. The fact, therefore, that these items are used for repairing pumping sets by agriculturists does not assist the respondent.

11. It was urged in this connection by Mr. Patel that we have to consider how the item in question is normally regarded. He submitted that since the item was used for repairing pumping sets, it must be considered as a part of agricultural machinery. In the present case, however, the entry in question does not cover all types of agricultural machinery. It excludes oil engines. Therefore, parts of oil engines cannot be considered as falling within the item in question. It is true that pumping sets are sold as one unit and they ate considered as agricultural machinery. It is also true that an oil engine is a component of such a pumping set. But when one of the components is expressly excluded from the entry, parts of such a component cannot be included in that entry. There is nothing in the language of entry 12 of Schedule C which would warrant such inclusion.

12. It was submitted on behalf of the respondent that there are other entries under the Bombay Sales Tax Act, 1959, which would go to show that when an entry covers several items and only parts of some of these items are to be included in that entry, the entry in question expressly states so; Thus, for example, entry 65 of Schedule C is as follows :

'Wireless reception instruments and apparatuses and radio gramophones and electrical valves, batteries, transmitters, accumulators, amplifiers and loudspeakers, required for use therewith and components, parts and accessories of such wireless instruments, apparatuses and radio gramophones.'

He has submitted that where certain spare parts or accessories are to be expressly excluded, there are entries in the said Act which in terms exclude such spare parts and assessories. In this connection Mr. Patel has relied upon entry 20 of Schedule C, which is as follows :

'Electrical goods (other than those specified in entry 15 in Schedule E) not being machinery used in the manufacture of goods, and spare parts and accessories of such machinery.'

We are not in agreement with the interpretation put by Mr. Patel on the provisions of entry 20 of Schedule C. This, however, is not the subject-matter of the present reference and we need not examine what exactly is included or is covered by entry 20 of Schedule C. Each entry requires to be interpreted in the light of the language which is used in that entry. In our view, the language of entry 12 of Schedule C as it existed at the relevant time is quite clear. It only includes components, parts and accessories of agricultural machinery other than (inter alia) oil engines.

13. Mr. Patel relied upon a decision of the Madras High Court in the case of William Jacks and Co. Ltd. v. State of Madras reported in [1955] 6 STC 301 where the Madras High Court has observed that the article sold has to be taken as a unit in determining if it comes within the description of an entry. It cannot be split up into its component parts and distributed among different entries unless any such component part is sold as an independent item. The ratio of that case has no application in the present case. There is no question here of splitting up the integrity of any item which is being classified. We are concerned only with parts of oil engines. There is an express exclusion of oil engines and its parts from agricultural machinery and its parts. Therefore, parts of oil engines are not covered by the entry in question.

14. It is true that if there is any ambiguity or doubt in relation to the interpretation of an entry, the benefit of such a doubt should go to the assessee. But, in our view, in the present case the entry in question is quite clear. Parts of oil engines in question would fall under the residuary entry 22 of Schedule E to the Bombay Sales Tax Act, 1959, since there is no argument advanced that they fall under any other entry.

15. In the premises, the question which is referred to us is answered in the negative and against the respondent.

16. The respondent will pay to the applicant the costs of the reference. Reference answered in the negative.


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