1973 (6) TMI 58 - HC - VAT and Sales Tax

Summary

Issues:
Interpretation of entry 15 of Schedule C to the Bombay Sales Tax Act, 1959 - Classification of oil engines and spare parts thereof for tax levy purposes.

Detailed Analysis:
The Gujarat Sales Tax Tribunal referred the question of whether oil engines and spare parts prior to specific dates fall under entry 15 of Schedule C or entry 22 of Schedule E to the Bombay Sales Tax Act, 1959. The opponent-firm, a partnership dealing in oil engines and spare parts, was assessed under entry 15 by the Sales Tax Officer, but the Assistant Commissioner revised it under entry 22. The Tribunal, following precedent, held in favor of entry 15. The State contested that actual use in manufacturing is necessary for entry 15, while the opponent argued for a broader interpretation.

The High Court analyzed the scope of entry 15, a residuary entry for machinery not covered elsewhere. Rejecting the State's contention that actual use is mandatory, the Court referred to a previous case involving humidifiers in textile mills to establish that any machinery integral to the manufacturing process falls under entry 15. Applying this principle to oil engines, the Court concluded that their role in energy generation for manufacturing qualifies them under entry 15, irrespective of actual use.

The Court dismissed three decisions cited by the revenue, stating they were not relevant to interpreting entry 15. It highlighted a legislative amendment clarifying entry 15 to include oil engines and electrical motors not for motor vehicles. Consequently, the Court ruled that oil engines and spare parts fall under entry 15 for tax levy purposes, based on the legislative intent and machinery's essential role in manufacturing.

In conclusion, the High Court answered the reference question in favor of entry 15, determining that oil engines and spare parts are classified under Schedule C for tax purposes. No costs were awarded in the reference, and the decision was in line with the interpretation of the relevant law and precedents.

Judgment Outcome:
Oil engines and spare parts thereof prior to specific dates were classified under entry 15 of Schedule C to the Bombay Sales Tax Act, 1959, for tax levy purposes. The reference was answered accordingly, with no order as to costs.