1972 (11) TMI 84 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Whether water pumping sets are classified as agricultural implements or machinery under the U.P. Sales Tax Act.
2. The efficacy of the alternative remedy under the Act.
3. The applicability of specific notifications under section 3-A of the U.P. Sales Tax Act.
4. The validity of section 3-AB of the U.P. Sales Tax Act.

Issue-wise Detailed Analysis:

1. Classification of Water Pumping Sets:
The petitioner argued that water pumping sets should be classified as agricultural implements and thus taxed at 2% under the U.P. Sales Tax Act. The Sales Tax Department contended that these pumping sets are machinery and taxed their turnover at 6%. Previous decisions by the court, such as Delta Engineering Co. v. Commissioner of Sales Tax and M/s. Chandra Metal Co. v. Commissioner of Sales Tax, held that centrifugal pumps and pumping sets are not agricultural implements. The court, however, reconsidered these decisions and determined that pumping sets are indeed agricultural implements because they are intimately connected with agriculture and commonly used for irrigation, which is an essential agricultural process.

2. Efficacy of Alternative Remedy:
The court examined whether the petitioner had an alternative remedy by way of appeal under the Act. Although the petitioner had already availed of this remedy and the appeal was pending, the court found that the alternative remedy was not efficacious and speedy. The court noted that the petitioner faced a significant tax liability due to ongoing assessment proceedings and previous court decisions that were likely to be unfavorable. Additionally, the petitioner challenged the vires of section 3-AB of the Act, which could not be decided by the authorities under the Sales Tax Act. Thus, the preliminary objection regarding the maintainability of the writ petition was rejected.

3. Applicability of Specific Notifications:
The court analyzed two notifications under section 3-A of the U.P. Sales Tax Act. Notification No. ST-1365/X-9901956, dated 1st April 1960, and its modification by Notification No. ST-6552-X-900(31)-1965, dated 1st September 1965, classified agricultural implements and included pumping sets as agricultural implements. On the other hand, Notification No. ST-7098/X-1012-1965, dated 1st October 1965, related to machinery and its spare parts, taxing them at 6%. The court concluded that if pumping sets are agricultural implements, their turnover would be taxable under the notification of 1st April 1960 at 2%.

4. Validity of Section 3-AB of the U.P. Sales Tax Act:
As the petition succeeded on merits, the court found it unnecessary to address the constitutional question regarding the validity of section 3-AB of the U.P. Sales Tax Act.

Conclusion:
The court allowed the petition, quashed the assessment order for the year 1966-67, and directed the Sales Tax Officer to pass the assessment order for the year 1968-69 in accordance with the clarified law. The court held that water pumping sets are agricultural implements and should be taxed at 2%. The petitioner was entitled to costs, with one set of costs awarded. The connected writ petition for the assessment year 1968-69 was also directed to be decided in line with this judgment.