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Ar. A. Shenbaga Nadar and P.V.P. Balasubramania Nadar Vs. the State of Madras - Court Judgment

LegalCrystal Citation
SubjectSales Tax
CourtChennai High Court
Decided On
Case NumberTax Case No. 117 of 1967 (Revision No. 66/67)
Judge
Reported in[1973]31STC81(Mad)
AppellantAr. A. Shenbaga Nadar and P.V.P. Balasubramania Nadar
RespondentThe State of Madras
Appellant AdvocateK.C. Rajappa, Adv.
Respondent AdvocateK. Venkataswami, First Assistant Government Pleader (Tax)
DispositionPetition allowed
Cases ReferredSimpson & Company Ltd. v. State of Madras
Excerpt:
- .....supplied by the customers. by the amending act no. 7 of 1965, the bodies built on chassis of motor vehicles belonging to others were specifically inserted as a specified, item of motor vehicles in item 3. after the amendment, a question as to whether the bodies built on chassis will be a motor vehicle or not, would not arise. but, the question is whether even before the amendment, the bodies fitted to chassis supplied by the customers was intended to be included in item 3. according to the revenue, the bodies fitted to chassis by the assessees would come under the words 'articles adapted for use generally as parts and accessories of motor vehicles'. it is not the case of the revenue that such bodies can be brought as component parts of the motor vehicles. dealing with the scope of.....
Judgment:

Ramanujam, J.

1. The assessees are dealers in automobiles. For the year 1962-63, they furnished a taxable turnover of Rs. 21,44,810.74 after claiming exemption on a turnover of Rs. 74,307.50 at 7 per cent., being the amount relating to the fixing of bodies on chassis. The assessing officer, however, disallowed this claim of exemption. Against the order of disallowance, the assessees appealed to the Appellate Assistant Commissioner who allowed the exemption in respect of Rs. 63,057.50 and sustained the levy at 7 percent, on a turnover of Rs. 11,250 being the price of the bodies fitted to the chassis supplied by the customers. As against the order of the Appellate Assistant Commissioner, the assessees preferred an appeal to the Sales Tax Appellate Tribunal.

2. Before the Tribunal, it was contended by the assessees that the disputed turnover of Rs. 11,250 represented the amount realised by body-building which is a works contract not amounting to a sale. They also contended that even if the body-building on chassis supplied by the customers is taken as a sale of the bodies, such sale should be taxed only at 2 percent, multi-point and not at a single point at 7 percent, under item 3 of Schedule I. The revenue contended that the bodies built on chassis supplied by the customers fell under item 3 of Schedule I even before its amendment in 1964 and, therefore, the levy at 7 percent, on the disputed turnover was proper. The Tribunal took the view that the bodies built on chassis supplied by the customers would fall under item 3 of Schedule I even before its amendment and, in that view, sustained the assessment on the disputed turnover at 7 per cent.

3. In this revision, the learned counsel for the assessees contends that the view taken by the Tribunal could not be sustained, that the statement of objects and reasons of the Amending Act No. 7 of 1965 makes it clear that the Government all along treated the entry in item 3 of Schedule I as not including the body-building operations and that even otherwise the entry in item 3, as it stood before its amendment, would not take in the bodies fitted by the assessees to the vehicles supplied by the customers. By the Amending Act No. 7 of 1965, the bodies built on chassis of motor vehicles belonging to others were specifically inserted as a specified, item of motor vehicles in item 3. After the amendment, a question as to whether the bodies built on chassis will be a motor vehicle or not, would not arise. But, the question is whether even before the amendment, the bodies fitted to chassis supplied by the customers was intended to be included in item 3. According to the revenue, the bodies fitted to chassis by the assessees would come under the words 'articles adapted for use generally as parts and accessories of motor vehicles'. It is not the case of the revenue that such bodies can be brought as component parts of the motor vehicles. Dealing with the scope of a similar entry, i. e., item 4 of Section 3(2) of the Tamil Nadu General Sales Tax Act, 1959, this court in Simpson & Company Limited v. State of Madras [1969] 23 S.T.C. 374 expressed the view that the bus bodies would not fall within any one of the goods in the said item. According to the learned Judges, bus bodies cannot be regarded either as component parts of motor vehicles or accessories thereto. They also referred to the fact that the Government themselves proceeded on the basis that the said item did not include the bus bodies fitted to chassis and that it is only on that basis the amendment of item 3 of Schedule I had been brought about for the specific purposes of including bus bodies in that item. The learned counsel for the revenue, however, brings to our notice a decision of the Allahabad High Court in The Commissioner of Sales Tax, Uttar Pradesh v. Pritam Singh [1968] 22 S.T.C. 414, where the question arose as to whether the body mounted on the chassis of a motor vehicle was an integral part of the motor vehicle and, therefore, truck bodies or a component part of the motor vehicle within the meaning of item 24 of the notification dated 31st March, 1956, issued under Section 3-A of the Uttar Pradesh Sales Tax Act, 1948. That item 24 is similar to item 3 of Schedule I to the Tamil Nadu General Sales Tax Act before its amendment in 1964. The learned Judges in that case held that the body built on chassis of a motor vehicle supplied by the customer has to be treated as a component part. The reason given is as below :

Now, a component part of an article is one of the parts constituting it. It is an integral part necessary to the constitution of the whole article. Without it, it would not be possible to conceive of the entire article as a whole....To function as a conveyance, the motor vehicle must be capable of accommodating the passengers or carrying the goods intended to be conveyed....There can be no dispute that in order to serve that purpose effectively it is necessary for a motor vehicle to have a body mounted on it.

4. This decision, which holds that a body built on a chassis is a component part of a motor vehicle, cannot apply to the question that arises here as to whether the body built on the chassis is an article adapted for use as part and accessory of a motor vehicle. As already stated, it is not the case of the revenue that the bodies built on chassis will come within the term 'component parts of motor vehicles'. Therefore, that decision is not helpful for the present discussion.

5. The statement of objects and reasons of the Amending Act 7 of 1965, which specifically included bodies built on chassis of motor vehicles. belonging to others along with the other categories of motor vehicles referred to in that item, is as follows:

Motor bodies built on chassis are at present being taxed in the State at 2 percent, multi-point. Most of the other State Governments are at present charging 10 percent, single point. The Government has, therefore, decided to bring bodies built on chassis belonging to others under item 3 of Schedule I.

6. The above statement of objects and reasons clearly indicates that the Government has all along proceeded on the basis that but for the amendment, the bodies built on chassis cannot be brought under item 3 and that the taxation authorities have been taxing such bodies built on chassis only at multi-point and at 2 per cent. This shows how the Government understood the provision in item 3 of Schedule I prior to its amendment. Though the interpretation placed by the Government on a statutory provision like item 3 is not conclusive, still it serves as an effective guide to a proper interpretation of item 3. As pointed out by Bernard Schwartz in his 'Introduction to American Administrative Law', Second Edition, at page 54:

Administrative interpretation are in most cases accepted as final. Those affected will normally conform to them, for they serve as the guides to administrative action. In America, indeed, they tend to acquire all but statutory effect because of the great deference which the courts normally pay to them, where the governing legislation is not wholly clear. As stated by the Supreme Court, 'it is the settled rule that the practical interpretation of an ambiguous or doubtful statute that has been acted upon by official charged with its administration will not be disturbed except for weighty reasons'.

7. The above passage makes it clear that the interpretation placed on a statutory provision by the Government cannot altogether be ignored and this is the view taken by the Bench of this Court in Simpson & Company Ltd. v. State of Madras [1969] 23 S.T.C. 374. We, therefore, hold, agreeing with the view taken in the said case, that the bodies built on chassis supplied by the customers will not be attracted by item 3 of Schedule I before its amendment in 1965.

8. The tax case is, therefore, allowed. But, there will be no order as to costs.


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