1952 (1) TMI 8 - HC - VAT and Sales Tax

Summary

Issues:
1. Whether the cost of wages paid to painters of number plates and traffic signals, as well as the cost of installation of traffic signals, should be deducted from the taxable turnover.
2. Whether number plates for motor vehicles are accessories and should be charged at a special rate under the Sales Tax Act.

Analysis:
1. The first issue revolves around whether the wages paid for preparing number plates and traffic signals, as well as the cost of installation, can be deducted from the taxable turnover. The court examined Section 2(h) of the Sales Tax Act, which defines the "sale price" to include any sum charged for services rendered by the dealer. Since the wages and installation costs were not separately charged but included in the flat rate price, the court ruled that these costs cannot be deducted from the taxable turnover. Therefore, the applicants' contention on this point failed.

2. The second issue pertains to whether number plates for motor vehicles should be considered accessories and charged at a special rate under the Act. The court analyzed the definition of "accessory" from various dictionaries and the relevant entry in the Schedule. It was argued that number plates are essential only for registration purposes under the Motor Vehicles Act and are not integral to the functioning of a motor vehicle. The court held that number plates are not accessories as they can be used for other types of vehicles and are not essential equipment for a motor vehicle. Therefore, the court concluded that number plates should be charged at the general rate, not the special rate as contended by the Department.

Judgment:
The Tribunal modified the order, directing a refund of Rs. 1,951-1-0 to the applicants, after deducting the amount already refunded. The court rejected the Department's interpretation and held that number plates and traffic signals are liable to sales tax at the general rate, not the special rate. The judgment reversed the earlier decision, reducing the tax amount and penalty imposed on the applicants accordingly. The court emphasized that number plates are not accessories to motor vehicles and should be charged at the general rate as per the Sales Tax Act.