Skip to content


The State of Mysore Vs. M.N.V. Rao - Court Judgment

LegalCrystal Citation
SubjectSales Tax
CourtKarnataka High Court
Decided On
Case NumberSales Tax Revision Petition Nos. 50 to 53 of 1963, S.T.A. Nos. 187, 188, 189 and 190 of 1962-63
Judge
Reported in(1964)2MysLJ338; [1964]15STC540(Kar)
ActsMysore Sales Tax Act, 1957 - Sections 8 and 23(1); Indian Income-tax Act, 1922 - Sections 10(2); Madras District Municipalities Act, 1920 - Sections 249
AppellantThe State of Mysore
RespondentM.N.V. Rao
Appellant AdvocateG.B. Kulkarni, Government Pleader
Respondent AdvocateC. Divakar, Adv.
Excerpt:
.....it is noticed that there is a serious lapse on the part of the revenue authorities and also on the part of the registering authorities for non-compliance of provisions of sections128 and 129 of the act . on facts, held, in the present case, it is noticed that on such transfer being made by the 4th respondent venkata rao to rachaiah swamy who had filed a petition originally, no such entries are being made in the revenue records which ultimately resulted in the land tribunal not issuing notice to rachaiah swamy who had purchased the property and who ought to have been heard in the matter when them after was pending before the land tribunal. instead, notice was once again sent to the original owner although he had no interest in the property which resulted in miscarriage of justice. - ..........the conclusion that the legislature had maintained a distinction between machinery that generated power and machinery that did not, and that item no. 20 includes only those machines which general power. it appears that the tribunal got the apparatus produced, and its description, according to the chairman who delivered the judgment of the tribunal, is - 'it is a complicated iron apparatus, built on an iron stand. some training and a small degree of skill are required to operate it. it has no relation or even resemblance, to what is known as 'charaka''. in paragraph 7 the tribunal has observed - 'now coming to the 'cottage basin' which is the subject-matter of these appeals, we find that it does not generate any power. it is worked by turning the main wheel by hand. the revolutions to.....
Judgment:
ORDER

Tukol, J.

1. The sole question that arises for our consideration in these petitions filed by the State Government of Mysore under section 23(1) of the Mysore Sales Tax Act, 1957 (which is hereinafter called the Act) is whether the 'cottage basin' which is used in the silk industry for spinning and reeling silk is a 'machinery' under item 20 in Schedule 2 to the Act.

2. The respondent is a manufacturer of an apparatus or contrivance called 'cottage basin'. It is used for spinning and reeling silk. The respondent was assessed to sales tax on his total turnover, treating the apparatus manufactured by him as 'machinery' within the meaning of item No. 20 of the Second Schedule to the Act by the Commercial Tax Officer. The respondent appealed against the order to the Deputy Commissioner without any success. He held that 'cottage basins' are not charaka but that they are 'machinery' within the meaning of that terms used in serial No. 20 of the Second Schedule. It may be mentioned that item No. 10 of the Fifth Schedule to the Act - charaka and their parts - are classified amongst goods exempted from tax under section 8 of the Act. The contention of the respondent has all along been that the apparatus is charaka and is therefore exempted from sales tax. This contention was rejected by the Commercial Tax Officer, the Deputy Commissioner as also by the Sales Tax Appellate Tribunal. Having rejected the contention that the apparatus was not a charaka, the Tribunal proceeded to consider whether it is a machinery within the meaning of item No. 20 of the Second Schedule to the Act. The Tribunal referred to item 10 (fire-arms), item 14 (bicycles), item 15 (dictaphones), item 17 (sound transmitting equipment including telephones) and item 18 (typewriters) and came to the conclusion that the Legislature had maintained a distinction between machinery that generated power and machinery that did not, and that item No. 20 includes only those machines which general power. It appears that the Tribunal got the apparatus produced, and its description, according to the Chairman who delivered the judgment of the Tribunal, is -

'It is a complicated iron apparatus, built on an iron stand. Some training and a small degree of skill are required to operate it. It has no relation or even resemblance, to what is known as 'charaka''.

In paragraph 7 the Tribunal has observed -

'Now coming to the 'cottage basin' which is the subject-matter of these appeals, we find that it does not generate any power. It is worked by turning the main wheel by hand. The revolutions to which the main wheel is put to, are transmitted to other smaller wheels and spinning is achieved as in the case of a charaka. Such an apparatus cannot therefore be classified as 'machinery' falling under item 20 of the Second Schedule. Hence were reject this view taken by the Department.'

3. It is contended by the learned Government Pleader on behalf of the State that the view taken by the Tribunal was erroneous as no distinction was made by the Legislature between machines that generate power and the machinery that does not, that 'cottage basin' was machinery within the meaning of item No. 20 in the Second Schedule and that the view taken by the departmental authorities is correct.

4. The Act itself does not contain any definition of the term 'machinery' and hence the difficulty. It is unnecessary to consider whether 'charaka' is a machine or not, since it has been included specifically amongst goods exempted from tax under section 8. Schedule 2 to the Act contains the items referred to in the order of the Tribunal - fire-arms, bicycles, dictaphones, sound transmission equipment including telephones and loud-speakers and typewriters and duplicating and roneo machines. The classification is adopted more for the purpose of prescribing different rates of taxation and does not appear to have been with the object of distinguishing machines which generate power and which do not generate power as observed by the Tribunal. Item No. 20 refers to 'all machinery and spare parts thereof' and makes the same liable to single point tax leviable on the first or earliest of successive dealers at 4 per cent. of the sale price.

5. We got the apparatus 'cottage basin' and it was demonstrated to us. It is fixed on an iron stand. It has basins in the middle where in water is put. Cocoons are put into this water and the water is heated. As some distance from the basin, six metallic discs with a fine hole in each of them are fixed against a rod, each protruding in such a way that six threads can be spun at a time. Each thread passes through a fine hold of each disc and is connected to reel. Six reels are mounted on a rod which is fixed within the top portion of the frame. On one side, we have a big wheel which can be rotated by hand, on the other side there are two gear-wheels (one big and the other small). When the big wheel is moved round by the hand the gear-wheels being to move causing corresponding motions in the reels which rotate in such a way that the threat is wound against each of them in a manner so as to avoid knotting. It will thus be seen that the 'cottage basin' is a mechanical contrivance worked with manual power. It regulates the movement of the reels with the definite object of reeling silk threads round about the mounted reels with sufficient speed and in a regular manner so as to avoid knotting. It minimizes labor. The use of the two gear-wheels facilitates and increases the efficiency of reeling. Further, the advantage accruing by the use of this apparatus is that six threads can be reeled at a stretch, minimizing the cost of labor. We have therefore no doubt in holding that this apparatus is a combination of some mechanical contrivances worked with manual power with the object of reeling superior grades of silk from cocoons, facilitating at the same time the elimination of dirt and the possibility of silk getting knotted in the act of reeling and spinning. Our attention has been drawn to a decision of the Judicial Committee of the Privy Council in Corporation of Calcutta v. Cossipore Municipality A.I.R. 1922 P.C. 27, where Lord Atkinson had to consider whether a steel tank with its supporting structure for storage of water was machinery or not. During the course of the judgment, his Lordship observed :-

'Their Lordships concur with Lord Davey in thinking that there is great danger in attempting to give a definition of the word 'machinery' which will be applicable in all cases. It may be impossible to succeed in such an attempt. If their Lordships were obliged to run the hazard of the attempt they would be inclined to say that the word 'machinery' when used in ordinary language, prima facie, means some mechanical contrivances which, by themselves or in combination with one or more other mechanical contrivances, by the combined movement and interdependent operation of their respective parts generate power, or evoke, modify, apply or direct natural forces with the object in each case of effecting so definite and specific a result. The tank and its supporting structure do not satisfy this definition.

But their Lordships think that however skilful definitions of 'machinery' may be framed, the determination in any given case of what is or is not 'machinery' must, to a large extent, depend upon the special facts of the case ..........'

In the present case, we have already pointed out that the apparatus has certain mechanical contrivances. We have also pointed out that the wheel which is rotated by the hand causes the rotation of gear-wheels also as both of them are connected by a common rod. The combined movement and the interdependent operations of the gear-wheels and the big wheel tend to move the reels mounted on the rod and produce well regulated rotations so as to produce a definite and specific result, viz., reeling the silk thread round the reels eliminating all dirt and possibility of knotting. This Court had occasion to consider the meaning of the word 'machinery' in Mangalore Ganesh Beedi Works v. Commissioner of Income-tax (I.T.R.C. 14 of 1962, decided on 16th July 1963; since reported at [1964] 52 I.T.R. 615). The judgment was delivered by my learned brother Hegde, J. Therein, the court had to consider the meaning of the expression 'machinery' found in section 10(2) of the Indian Income-tax Act, 1922, which occurs in juxtaposition with the expression 'plant'. Various decisions dealing with section 10(2) and interpreting the expression 'machinery' were considered. The decision arrived at by the court is that in the absence of statutory definition, the word 'machinery' has to be given the ordinary meaning and that the term is not restricted to a self-contained unit capable of being put to use in the business.

6. Our attention was drawn to a decision of the Madras High Court in Krishnan v. Municipal Prosecutor : AIR1926Mad430 in which the court had to consider the meaning of 'machinery' as contemplated in section 249 of the Madras District Municipalities Act, 1920. In that case the petitioner had a weaving factory containing nine looms of the sort which the weaver works with his hands and feet. Section 249 prohibited the use of certain premises within the municipal limits for certain purposes specified in the Schedule to the Act. It was contend by the Prosecutor that the installation of the looms was likely to be dangerous to human life, health or property and therefore the installation of the machinery without licence contravened section 249 of the Act. In considering whether the looms were 'machinery' Jackson, J., who delivered the judgment was of the opinion that that the machinery contemplated in the Act is machinery worked by power, such as steam, water, or electrical power, and should be confined only to such forms of machinery as may reasonably be held to be in the same category as combustibles and unwholesome or dangerous trades, but machinery worked by hand, such as handlooms or sewing machines, is excluded. His Lordship did not hold that the handlooms were not 'machinery'. He only held that they did not come within the object of section 249. During the course of the judgment, his Lordship dealt with the meaning of the word 'machinery' and said :-

'........... the term is now confined to some sort of apparatus for applying mechanical power, it has within those limits a very wide application. Not only a handloom but any hand instrument which involves more than one simple mechanical principle is a machine. For instance, though a hammer may be called an instrument, a nail extractor is a machine and a hand ginning apparatus is a machine. Thus even in its ordinary sense 'machine' would seen to have a wider connotation than the clause intends ...........'

7. From the description of the instrument given by us above it is clear that it directs natural forces with the object of achieving definite result and thus it falls within the second part of the definition given in the Privy Council decision in Corporation of Calcutta v. Cossipore Municipality A.I.R. 1922 P.C. 27. Hence we have no hesitation in holding that the 'cottage basin' is a machinery within the meaning of that term in item No. 20 of the Second Schedule to the Act. The view taken by the Tribunal is erroneous. We accordingly allow the petitions, set aside the orders passed by the Tribunal and restore the orders passed by the Deputy Commissioner. The respondent shall pay the costs of the petitioner and bear his own costs. Advocates' fee Rs. 100.

8. Petitions allowed.


Save Judgments// Add Notes // Store Search Result sets // Organizer Client Files //