1961 (10) TMI 64 - HC - VAT and Sales Tax

Summary

Issues:
Interpretation of the term "refrigerator" under item No. 69 of Schedule B to the Bombay Sales Tax Act, 1953.

Analysis:
The case involved a dispute regarding the classification of a cooling plant sold by the dealers to a company under item No. 69 of Schedule B to the Bombay Sales Tax Act, 1953. The dealers contended that the cooling plant was not a refrigerator or air conditioning plant as per the definition in the Act. The Sales Tax Tribunal rejected the dealers' contention after considering evidence presented, including an affidavit explaining the plant's function in mercerising cotton fabric. The Tribunal held that the cooling plant fell within the definition of "refrigerator" under item 69, leading to the reference of the legal question to the High Court.

The main argument before the High Court was the interpretation of the term "refrigerator." One party argued that the term should be narrowly construed to refer only to domestic appliances used for preserving food and cooling drinks, citing a Supreme Court decision. Conversely, the opposing party contended that the term should encompass all cooling agents and that the legislative intent did not limit the term to domestic use. The court examined various dictionary definitions of "refrigerator" to determine its broad meaning, including apparatus for cooling liquids. The court noted that the absence of restrictive language in item 69 implied a broader interpretation of "refrigerator."

The court analyzed the functioning of the cooling plant based on the dealers' affidavit, which detailed the process of cooling caustic soda for mercerising cotton fabric. The court concluded that the plant's purpose of maintaining caustic soda at a low temperature qualified it as a refrigerator under item 69. Additionally, a letter from the purchasing company indicated that the cooling plant could be used for refrigeration purposes beyond mercerising. The court emphasized that the commercial understanding of "refrigerator" did not restrict it to domestic appliances, supporting the inclusion of the cooling plant under item 69.

In distinguishing a previous case involving the interpretation of a different term, the court emphasized that the term "refrigerator" had not acquired a restricted meaning in the commercial world. The court ruled in favor of the broad interpretation of "refrigerator" and held that the cooling plant sold by the dealers fell within the scope of item 69. Consequently, the court answered the legal question in the affirmative, requiring the dealers to pay the costs incurred by the Collector of Sales Tax. The reference was thus resolved in favor of the tax authorities.