1970 (11) TMI 92 - HC - VAT and Sales Tax

Issues Involved:
1. Whether the Massey-Ferguson farm tractor sold by the assessee is "agricultural machinery" within the meaning of entry 12 of Schedule C to the Bombay Sales Tax Act, 1959.

Detailed Analysis:

1. Nature of the Tractor and its Classification:
The central issue in this case was whether the Massey-Ferguson tractor sold by the assessee qualifies as "agricultural machinery" under entry 12 of Schedule C of the Bombay Sales Tax Act, 1959. The assessee, a dealer in farm machinery, contended that the tractor in question was specifically designed and manufactured for agricultural purposes, making it liable to be taxed at the rate specified for agricultural machinery.

2. Deputy Commissioner's Decision:
The Deputy Commissioner of Sales Tax initially ruled that the tractor did not fall under "agricultural machinery" but was instead covered by the residuary entry 22 of Schedule E, thus liable to a different tax rate. This decision relied on precedents from the Gujarat Sales Tax Tribunal and the Madhya Pradesh High Court, which had previously determined that such tractors were not exclusively for agricultural use.

3. Tribunal's Findings:
Upon appeal, the Tribunal examined the booklets, pamphlets, and a certificate from the marketing manager of the manufacturer, which described the tractor's agricultural suitability. Despite acknowledging these features, the Tribunal concluded that the tractor could be used for non-agricultural purposes when not attached to agricultural implements. Consequently, it ruled that the tractor's primary use was not agricultural, thus upholding the Deputy Commissioner's decision.

4. High Court's Preliminary Observations:
The High Court noted that tractors are versatile machines used in various fields, including agriculture, industry, and military. The court emphasized that the classification of a tractor as agricultural machinery should depend on its design, mechanism, and adaptability for agricultural use, rather than its occasional non-agricultural applications.

5. Examination of Evidence:
The High Court reviewed the certificate from the marketing manager and various pamphlets, which highlighted the tractor's design for agricultural use, including features like adjustable front axles and hydraulic control systems tailored for farming activities. The court also considered the Government's Price Control Order, which categorized the tractor as an agricultural machinery based on its specifications.

6. Legal Precedents and Tests:
The court discussed different legal tests from previous cases:
- Maharashtra High Court's "principal and primary use" test.
- Madhya Pradesh High Court's "exclusive use" test.
- Mysore High Court's "general use" test.

The High Court found these tests less relevant due to the substantial evidence showing the tractor's special design for agricultural purposes.

7. Conclusion:
The High Court concluded that the Massey-Ferguson tractor, with its distinct agricultural features and design, qualifies as "agricultural machinery" under entry 12 of Schedule C. The court dismissed the revenue's argument that the tractor's features might be present in other tractors, emphasizing that the specific design and adaptability for agricultural use were sufficient for classification.

Judgment:
The High Court answered the referred question in the affirmative, ruling that the Massey-Ferguson tractor sold by the assessee is indeed "agricultural machinery" within the meaning of entry 12 of Schedule C to the Bombay Sales Tax Act, 1959. The court ordered the Commissioner of Sales Tax to pay the costs of the assessee and bear his own.

Reference Answered in the Affirmative.

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