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Paul Lazar Vs. State of Kerala - Court Judgment

LegalCrystal Citation
SubjectSales Tax
CourtKerala High Court
Decided On
Case NumberT.R.C. No. 50 of 1975
Judge
Reported in[1977]40STC437(Ker)
AppellantPaul Lazar
RespondentState of Kerala
Appellant Advocate V.M. Prahhakaran Nair and; Jose K. Kochupappu, Advs.
Respondent AdvocateGovernment Pleader
DispositionPetition dismissed
Cases ReferredState of Madras v. R.M. Krishnaswami Naidu
Excerpt:
- - the sales tax officer held that it was not and his decision was confirmed in appeal by the appellate assistant commissioner as well as by the sales tax appellate tribunal. it is not sufficient if the article has been used as a material or a constituent in the manufacture of the final product, like, for example, steel is used in the manufacture of transformers, motor vehicles, electric fans and the like or wood is used in the construction of boats, etc. in our view, the tribunal was perfectly justified in observing:.....commissioner as well as by the sales tax appellate tribunal.2. the assessee is a dealer in copper wires and other goods. he sells copper wires to the indian transformers ltd., alwaye. it is not disputed that these wires are used by the buyers in the process of manufacturing transformers. during the assessment year 1966-67, the assessee sold copper wires for a total sum of rs. 1,75,843.82 to the indian transformers ltd. and furnished to the department declarations in form 18 for the purpose of availing himself of the concessional rate of 1 per cent in terms of sub-section (3) of section 5 of the kerala general sales tax act, 1963, for short, the act. we shall read sub-section (3):(3) notwithstanding anything contained in sub-section (1) or sub-section (2), the tax payable by a.....
Judgment:

T. Kochu Thommen, J.

1. The only question which arises in this tax revision case is whether copper wire is a component part of electrical transformers. The Sales Tax Officer held that it was not and his decision was confirmed in appeal by the Appellate Assistant Commissioner as well as by the Sales Tax Appellate Tribunal.

2. The assessee is a dealer in copper wires and other goods. He sells copper wires to the Indian Transformers Ltd., Alwaye. It is not disputed that these wires are used by the buyers in the process of manufacturing transformers. During the assessment year 1966-67, the assessee sold copper wires for a total sum of Rs. 1,75,843.82 to the Indian Transformers Ltd. and furnished to the department declarations in form 18 for the purpose of availing himself of the concessional rate of 1 per cent in terms of Sub-section (3) of Section 5 of the Kerala General Sales Tax Act, 1963, for short, the Act. We shall read Sub-section (3):

(3) Notwithstanding anything contained in Sub-section (1) or Sub-section (2), the tax payable by a dealer in respect of any sale of the goods mentioned in the First Schedule by such dealer to another for use by the latter as component part of any other goods mentioned in the said schedule, which he intends to manufacture inside the State for sale, shall be at the rate of only one per cent on the taxable turnover relating to such sale :

Provided that the provisions of the Sub-section shall not apply to any sale unless the dealer selling the goods furnishes to the assessing authority in the prescribed manner a declaration duly filled in and signed by the dealer to whom the goods are sold containing the prescribed particulars in a prescribed form.

3. One of the conditions which a dealer will have to satisfy before he can claim the concessional rate under the Sub-section is that the goods sold by him fell within the First Schedule to the Act. In the instant case, the goods sold by the assessee are copper wires. The question is whether these wires can be regarded as component parts of transformers which are admittedly electrical goods falling within the First Schedule. If copper wires do not fall within the First Schedule, the concessional rate would not be available to the seller of such goods. The relevant entry in the First Schedule is entry No. 26. It reads as follows:

The First Schedule

Goods in respect of which single point tax is leviable under Sub-section (1) or Sub-section (2) of Section 5.

______________________________________________________________________

SI. No. Description Point of levy Rate of tax

of the goods

(1) (2) (3) (4)

________________________________________________________________________

(Per cent)

26 All electrical goods (other At the point of first 9.'

than those specifically men- sale in the State by

tionedin this sche- dule), a dealer who is

instruments apparatus, liable to tax

appliances and all such under Section 5.

articles the use of which

cannot be had except

with the application of

electrical energy, including

fan and lighting bulbs, electr-

ical earthenwares and por-

celain and all other access-

ories and component parts

either sold as a whole or

in parts.

__________________________________________________________________________________

5. A component part has to be an identifiable object. It is not sufficient if the article has been used as a material or a constituent in the manufacture of the final product, like, for example, steel is used in the manufacture of transformers, motor vehicles, electric fans and the like or wood is used in the construction of boats, etc. These are raw materials used in the construction of such goods. They are not component parts in the sense that steering-wheels are to a vehicle or fan-blades are to a fan. Steering-wheels and fan-blades are identifiable as component parts and are so understood in common parlance. In order to be regarded as a component part the article so used must have a commercial identity as a distinguishable part of the whole. It is not necessary that the article should be capable of being visually identified in the finished product, so long as it can be identified by chemical or other test: State of Madras v. R.M. Krishnaswami Naidu [1970] 26 S.T.C. 42 (S.C).

6. The principle which can be deduced from the decisions cited above is that an article can be regarded as a component part of the principal object only if the latter is incomplete without the former and the former is capable of identification either visually or through chemical or other test as a distinguishable part of the finished product. Applying this test it is not possible to say that copper wire, although a necessary material or constituent used in the manufacture of electrical transformers, has an identity of its own to be regarded as a component part of electrical goods. In our view, the Tribunal was perfectly justified in observing: 'Though copper wires are used as one of the materials in the production of certain electrical goods, it cannot be termed as a component part of such item.' In the circumstances, the tax revision case lacks merits and it is dismissed with costs. Counsel's fee Rs. 150.


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