1963 (3) TMI 42 - HC - VAT and Sales Tax

Summary

Issues:
1. Whether the sale of tractors by a private limited company should be taxed under entry No. 9 or entry No. 80 of the Bombay Sales Tax Act.
2. Whether tractors can be considered as agricultural machinery under entry No. 9 of the Act.

Detailed Analysis:
The case involved a private limited company that sold tractors and was taxed under entry No. 80 of the Bombay Sales Tax Act. The company contended that tractors should be taxed under entry No. 9, which had lower tax rates for agricultural machinery. The difference in tax rates between the two entries was mainly related to the sales tax component. The company argued that tractors were used for agricultural purposes and should fall under entry No. 9, exempting them from sales tax. However, the Sales Tax Authorities and the Sales Tax Tribunal did not agree with this contention, stating that tractors were not exclusively used for agricultural purposes and, therefore, did not qualify as agricultural machinery under entry No. 9.

The Tribunal considered various factors, including evidence presented by the company and the department, such as import duty treatment, import license, and tractor usage descriptions. The Tribunal concluded that tractors were not primarily intended for agricultural use based on the evidence provided. It noted that tractors were used for various purposes beyond agriculture, such as construction and infrastructure projects. The Tribunal rejected the company's argument that tractors should be classified as agricultural machinery under entry No. 9.

The company appealed the Tribunal's decision, arguing that the term "agricultural machinery" in entry No. 9 was not qualified and should encompass any machinery usable for agriculture. However, the Court found that to qualify as agricultural machinery, a particular type of machinery must be commonly understood and used for agricultural purposes in the commercial world. The Court emphasized that tractors were used for a wide range of activities beyond agriculture, as evidenced by the Tribunal's findings on their diverse applications. Therefore, the Court upheld the Tribunal's decision that tractors did not fall under entry No. 9 and should be taxed under entry No. 80.

In conclusion, the Court ruled against the company, affirming that the sale of tractors should be taxed under entry No. 80 of the Act. The Court held that tractors were not exclusively used for agriculture and did not meet the criteria to be classified as agricultural machinery under entry No. 9. Consequently, the company was directed to pay the costs of the department, and the reference was answered in the negative.