1970 (3) TMI 134 - HC - VAT and Sales Tax

Summary

Issues:
1. Whether cycle seat covers made of thick tanned leather should be treated as a commodity different from tanned leather?
2. If the answer to the first question is affirmative, whether such leather covers should be taxed as unclassified goods, leather goods, accessories of a cycle, or cycle parts?

Analysis:
The case involved a dispute between the assessee and the revenue regarding the turnover of cycle seat covers made of hard tanned leather for the assessment year 1961-62. The department assessed the turnover of these covers at 5% under a specific entry in a notification, while the assessee argued that the covers should have been taxed differently. The first question raised was whether the leather seat covers should be considered a separate commodity from tanned leather. The court held that a leather seat cover is indeed a distinct commodity from tanned leather, rejecting the assessee's argument that they are the same.

Regarding the second question, the court determined that the leather covers should be classified as leather goods under a specific notification, rather than as cycle parts or accessories. The court emphasized that while the covers are used in the manufacture of cycle seats, they are not sold directly to consumers as separate parts but as complete cycle seats. Drawing an analogy from a previous case, the court clarified that only finished articles can be considered as cycle parts, not component parts like the leather covers. Additionally, the court ruled out considering the leather covers as accessories of the cycle, as they are accessories of a part of the cycle, not the cycle as a whole.

Ultimately, the court answered both questions against the assessee, concluding that the leather covers are taxable as leather goods under a specific notification, and not as cycle parts or accessories. Since the success of the parties was divided, no order was made regarding costs, and the fee of the counsel was assessed.