1. The question of law which arises for consideration in this petition is whether the turnover in respect of plates used in switch gear boxes, sold by the petitioner to M/s. Mysore Electrical Industries Ltd., who are manufacturers of electrical switch gears, has to be taxed at a concessional rate under section 5(3A) of the Karnataka Sales Tax Act.
2. Section 5(3A) of the Act provides that notwithstanding anything contained in sub-section (1) or sub-section (3), the tax payable by a dealer in respect of any sale of goods mentioned in the Second Schedule by such dealer to a registered dealer for use by the latter as component part of any other goods mentioned in that schedule, which he intends to manufacture inside the State for sale, shall be at the rate of two per cent. or the rate specified in the Second Schedule in respect of such goods whichever is lower on the turnover relating to such sale. In order to claim the benefit of section 5(3A), the dealer has to show : (1) that the goods in question are mentioned in the Second Schedule; (2) that they are sold to a registered dealer for use by the latter as a component part of some other goods mentioned in column 2 of Second Schedule; and (3) that the purchaser intends to manufacture such other goods inside the State for sale.
3. In the instant case, it is not disputed before us that the goods sold by the petitioner are accessories of electrical goods. The Tribunal also finds that the goods come under item 61 of the Second Schedule. Hence, the first ingredient is satisfied.
4. It is not disputed that the purchaser, i.e., M/s. Mysore Electrical Industries Ltd., purchased the goods in question and used them in the manufacture of electric switch gears inside the State. Electric switch gears also come under item 61 of the Second Schedule. The only contention urged on behalf of the department in this case is that the goods in question, which are accessories, are not component parts of electric switch gears manufactured by the purchaser and, therefore, section 5(3A) is not attracted. The explanation to section 5(3A) provides that for the purpose of that sub-section 'component part' means an article which forms an identifiable constituent of the finished product and which along with others goes to make-up the finished product. The goods in question are identifiable constituents of the finished product, i.e., electric switch gears manufactured by the purchaser and they along with other goods go to make-up the finished product. We, therefore, hold that the goods sold by the petitioner are also component parts of the finished product manufactured inside the State by the purchaser. Since the finished product also falls under item 61 of the Second Schedule, it has to be held that the petitioner is entitled to the benefit of the concessional rate of taxation under section 5(3A) of the Act. In State of Tamil Nadu v. Binny's Engineering Works Ltd. ( 35 S.T.C. 260.), the High Court of Madras has also taken the same view and has held that the fuse switch boxes are component parts of electrical goods.
5. In view of the foregoing, we hold that the Tribunal was in error in holding that the turnover in respect of the goods in question is not covered by section 5(3A) of the Act.
6. The order of the Tribunal is set aside. The Commissioner Tax Officer is directed to revise the assessment in accordance with this order. The petition is accordingly allowed. No costs.
7. Petition allowed.