1974 (10) TMI 88 - HC - VAT and Sales Tax

Summary

Issues: Assessment of sales of car seat covers at a higher tax rate, classification of car seat covers as automobile accessories, constitutionality of different tax rates for accessories of different vehicles.

Analysis:
The writ petitions were filed by the same assessee for different assessment years challenging the assessment of sales of car seat covers at a rate of 13%, contending that they should be taxed at 3 1/2% multi-point instead of 13% single point. The assessing authority treated the car seat covers as automobile accessories under the Tamil Nadu General Sales Tax Act. The Appellate Assistant Commissioner upheld this classification, leading to appeals to the Sales Tax Appellate Tribunal. The main argument raised was that car seat covers should not be taxed as automobile accessories. The court referred to previous decisions and held that car seat covers are indeed taxable as accessories of cars at the rate of 13%.

Regarding the contention of discriminatory tax rates for different types of seat covers, the petitioner argued that it violates Article 14 of the Constitution. The petitioner claimed that seat covers made of the same material but used for different vehicles are taxed at different rates, which is discriminatory. However, the court rejected this argument, stating that the tax rates are based on the use of the seat covers, not the material. The court emphasized that the legislature has the authority to determine tax objects and rates, as long as the classification is rational and does not lead to obvious inequality. The court concluded that there was no violation of Article 14 in adopting different tax rates for various types of accessories like seat covers.

In summary, the court dismissed the petitions, upholding the assessment of car seat covers as automobile accessories taxable at 13%. The court also rejected the argument of discriminatory tax rates for different types of accessories, stating that the legislature has the power to determine tax objects and rates as long as the classification is rational and does not lead to inequality.