1967 (4) TMI 191 - HC - VAT and Sales Tax

Summary

Issues:
1. Interpretation of whether a specific implement falls under the exemption of agricultural implements from sales tax.
2. Determination of whether the implement in question qualifies as an "agricultural implement" under the relevant sales tax legislation.

Detailed Analysis:
1. The case involved a reference from the Sales Tax Tribunal regarding the classification of a specific implement, known as "phawada," under the exemption from sales tax for agricultural implements. The question was whether the implement, similar to a hoe, falls under the exemption provided in the M.P. General Sales Tax Act, 1958. The implement in question, a "Bombay type of phawada," is used in various activities, including construction, road building, mining, and limited agricultural operations like bunding fields and cutting embankments.

2. The relevant provision under consideration was Item No. 1 of the First Schedule of the Sales Tax Act, which exempts agricultural implements operated by human or animal agency. The State Government's notification listed "hoes (all kinds)" as exempted articles. The dispute arose as the taxing authorities considered the phawadas to be spades rather than hoes, leading to different interpretations regarding the applicability of the sales tax exemption.

3. The court analyzed the definitions of "hoe" and "spade" from dictionaries to determine the characteristics of each tool. It noted that while a hoe is primarily used for breaking up or loosening the ground, a spade is a broad-bladed digging tool. The court compared the features of the English hoe with the phawada and found similarities, concluding that the phawada could be described as a hoe, particularly since the notification included "hoes (all kinds)."

4. However, the court emphasized that being classified as a hoe does not automatically qualify the phawada as an agricultural implement exempt from sales tax. It highlighted the distinction between being a hoe and being an agricultural implement, noting that the implement must satisfy the criteria of being commonly used for agricultural purposes. The court referenced previous judgments regarding the classification of machinery as agricultural implements, emphasizing the need for the implement to be generally and commonly recognized as being used for agriculture.

5. Ultimately, the court concluded that while the phawada could be considered a hoe, its principal and primary use was not for agricultural purposes. The court highlighted that the implement was predominantly used by building contractors, miners, and the Public Works Department for various non-agricultural activities. Therefore, the court held that the phawada did not qualify as an agricultural implement exempt from sales tax under the relevant legislation.

6. The court answered the reference accordingly, directing the non-applicant to pay the costs of the Commissioner of Sales Tax. The decision underscored the importance of considering the primary use of an implement in determining its classification as an agricultural implement for sales tax purposes.