1972 (5) TMI 55 - HC - VAT and Sales Tax

Summary

Issues Involved:

1. Classification of "monoblock pumping sets" under the relevant sales tax schedules.
2. Determination of whether "monoblock pumping sets" are agricultural implements.
3. Assessment of sales tax applicability based on the classification of the goods.

Detailed Analysis:

Classification of "Monoblock Pumping Sets" under Relevant Sales Tax Schedules

The core issue revolves around the classification of "monoblock pumping sets" under the Punjab Sales Tax Act as applicable to Haryana. The petitioners challenged the Assessing Authority's decision to classify these sets under Schedule A, entry 17, which pertains to "Electrical goods other than electrical plants, equipments and their accessories including service meters required for generation, transmission and distribution." The petitioners contended that these sets should fall under Schedule B, entry 34, which includes tax-free agricultural implements.

Determination of Whether "Monoblock Pumping Sets" are Agricultural Implements

The court examined whether "monoblock pumping sets" qualify as agricultural implements. The judgment emphasized that the primary function of these sets is to pump water, which is essential for irrigation, a critical agricultural activity. The court noted, "no agriculture worth the name is possible without irrigation and in that sense pumping sets are an integral part of all agricultural operations." The court referenced several precedents, including The State of Andhra Pradesh v. Indian Detonators Ltd., Hyderabad, to highlight that the classification should consider the common parlance and the primary use of the goods. It was concluded that the sets are indeed agricultural implements when used for irrigation purposes by agriculturists.

Assessment of Sales Tax Applicability Based on the Classification of the Goods

The court found that the Assessing Authority had incorrectly classified the "monoblock pumping sets" as electrical goods, thereby imposing a higher sales tax rate. The judgment clarified that the sets should not be considered electrical goods merely because they operate using electric energy. The court stated, "The electric motor is merely the locomotion to work the pump. If the pumping part is removed, it ceases to be of any use as a pump." Consequently, it was determined that these sets do not fall under the category of luxury goods and should be treated as agricultural implements when used for irrigation.

Conclusion and Directions

The court allowed the petitions and quashed the orders of the Assessing Authority imposing sales tax on the sale of monoblock pumps to agriculturists for irrigation purposes. It directed the sales tax authorities to ascertain how many of such sets were sold to agriculturists and how many to non-agriculturists for other purposes. The court stated, "It will be open to the assessing authority to determine whether any pumping sets have been sold for purposes other than irrigation of agricultural land and if the authority comes to the conclusion that they have been so sold, to levy sales tax thereon."

Final Judgment

Both petitions were allowed, and the orders of the Assessing Authority were quashed with respect to the sales of monoblock pumping sets to agriculturists for irrigation. The court made no order as to costs.