1970 (9) TMI 98 - HC - VAT and Sales Tax

Summary

Issues:
Interpretation of Notification No. S.T. 1367/X-1045(19)-1960 dated 5th April, 1961 regarding taxation rate for steel trays and steel calendars for the years 1963-64 and 1964-65.

Analysis:
The case involved a reference from the Additional judge (Revisions) Sales Tax, Agra, under section 11(3) of the U.P. Sales Tax Act, seeking the opinion of the court on the taxability of steel trays and steel calendars manufactured and sold by the assessee. The dispute centered around whether these items should be taxed at the rate of 3 paise per rupee under Notification No. S.T. 1367/X-1045(19)-1960 or at the general rate of 2 paise per rupee as unclassified items under section 3 of the Act for the assessment years 1963-64 and 1964-65.

The sales tax authorities contended that the items fell within the purview of the notification dated 5th April, 1961, which categorized them as "mill-stores and hardware" taxable at 3 paise per rupee. However, the assessee argued that the items did not fall under the notification and should be taxed as unclassified items at the general rate of 2 paise per rupee. The judge (Revisions) ruled in favor of the assessee, holding that the steel trays and steel calendars were not covered by the notification but should be taxed as unclassified items under section 3 of the Act.

The court referred to a previous case where the interpretation of the term "hardware" in the same notification was discussed. It was established that the term should be understood in a commercial sense rather than a dictionary meaning. Hardware was defined to include small items of base metals like nuts, bolts, hinges, rivets, latches, curtain railings, and window grills, distinct from machinery and spare parts of machinery. Since machinery and spare parts were separately listed in the notification, it indicated that items made of base metals were not automatically considered hardware.

Based on this interpretation, the court concluded that tin trays and tin calendars could not be classified as hardware under the notification and should be taxed as unclassified items at the rate of 2 per cent under section 3 of the Act. The court answered both questions in favor of the assessee, awarding costs of Rs. 100.