1974 (9) TMI 85 - HC - VAT and Sales Tax

Summary

Issues:
1. Classification of sewai-ki-machine as brassware taxable at 3% or machinery taxable at 6%.
2. Interpretation of notifications under the U.P. Sales Tax Act regarding the taxation of brassware and machinery.

Analysis:

The judgment by the High Court of Allahabad addressed the issue of whether sewai-ki-machines should be classified as brassware taxable at 3% or machinery taxable at 6%. The assessee claimed that sewai-ki-machines were brasswares and should be taxed at 3%, but the Sales Tax Officer disagreed. The judge (Revisions) held that sewai-ki-machine should be taxed as brassware, not machinery, as it is not commonly considered machinery in the general sense. However, the Court found this conclusion lacking evidence and stated that in common parlance, mechanical contrivances are understood as machinery.

Regarding the notifications under the U.P. Sales Tax Act, the Court analyzed the notifications dated 1st December, 1962, and 1st October, 1965. The notification from 1962 levied a 3% tax on brasswares, while the 1965 notification imposed a 6% tax on machinery and spare parts at the point of import or manufacture. The Court emphasized that if a machinery item was specifically made liable to tax at the point of import or manufacture, it would cease to be taxable under the 1962 notification for brasswares.

In determining whether sewai-ki-machines were machinery or brassware, the Court referred to previous cases. In Engineering Traders v. State of U.P., it was held that machinery includes all appliances transmitting energy, and in Commissioner, Sales Tax, U.P., Lucknow v. Chandok Traders, hair clippers were considered machinery. Applying this reasoning, the Court concluded that the instrument for making sewai was machinery as it transmitted and transformed force, making it taxable at 6%.

Ultimately, the Court answered the first question in the negative, favoring the department's view that sewai-ki-machines should be taxed as machinery. The second question was answered affirmatively in favor of the department. Since no representation was made by the assessee, no costs were awarded.

In conclusion, the judgment clarified the classification of sewai-ki-machines as machinery taxable at 6% based on the interpretation of relevant notifications under the U.P. Sales Tax Act, emphasizing common understanding and previous legal precedents in determining the tax liability of the assessed items.