1974 (7) TMI 115 - HC - VAT and Sales Tax

Summary

Issues:
Interpretation of whether sugarcane crushers constitute machinery for sales tax purposes.

Analysis:
The case involved a dispute regarding the classification of sugarcane crushers for sales tax assessment. The Sales Tax Officer and Assistant Commissioner considered sugarcane crushers as machinery, subject to 7% sales tax. However, the Tribunal, in a second appeal, ruled that sugarcane crushers should not be treated as machinery, reducing the tax liability to 5%. The key question was whether sugarcane crushers fall under the definition of "machinery" as per entry No. 60 of the taxable list.

The term "machinery" was not explicitly defined in the Orissa Sales Tax Act, necessitating an interpretation based on common parlance. Referring to the decision in Corporation of Calcutta v. The Chairman of the Cossipore and Chitpore Municipality, the court highlighted the difficulty in providing a universal definition of machinery. The judgment emphasized that machinery involves mechanical contrivances that generate power or direct natural forces to achieve specific results.

Drawing from precedent, the court cited cases where various contrivances, such as handlooms, humidifiers, and diesel engines, were considered machinery. These decisions underscored that the mode of power application, whether electrical, steam, or human/animal, does not alter the classification of an item as machinery. The court also noted that the Judicial Committee's definition of machinery had been consistently followed in similar cases.

In the context of sugarcane crushers, the court determined that the arrangement of iron rollers to crush sugarcane constitutes a contrivance, irrespective of the source of power used. Therefore, the court concluded that sugarcane crushers qualify as machinery under entry No. 60 of the taxable list, warranting a 7% sales tax rate.

Ultimately, the court answered the reference question in the affirmative, affirming that sugarcane crushers are a type of machinery subject to the higher tax rate. The judgment was delivered unanimously, with Justice B.K. Ray concurring. The reference was accepted without costs, providing clarity on the tax treatment of sugarcane crushers.