1975 (11) TMI 135 - HC - VAT and Sales Tax

Summary

Issues:
Determining whether a lathe operated with electric energy constitutes electrical goods under the Bombay Sales Tax Act, 1959.

Analysis:
The case involved the sale of a lathe that could only be operated with electric energy. The applicants contended that the lathe fell under the residuary entry in Schedule E, while the Commissioner of Sales Tax classified it as electrical goods under entry 20 of Schedule C. The Sales Tax Tribunal upheld the Commissioner's decision based on the precedent set in a previous case. The applicants challenged this decision, leading to a reference to the High Court.

The High Court referred to past judgments, including those of the Madras High Court, emphasizing the importance of the common parlance test in interpreting entries in sales tax statutes. They highlighted that the mere requirement of electric energy for operation does not automatically classify a machine as electrical goods. The Court noted that the Tribunal and Commissioner erred in not applying the common parlance test and failing to gather evidence on how the lathe was perceived in common parlance or by dealers. This lack of evidence led the High Court to conclude that the Tribunal should have either collected the necessary evidence or remanded the case for further examination, as done in a similar Voltas case.

The High Court criticized the approach of solely considering the need for electric energy for operation, as it disregarded the common parlance test endorsed by various High Courts. The Court emphasized the importance of understanding how the machine was perceived in the commercial sense rather than solely relying on technical aspects. The judgment highlighted the error in the Tribunal's decision due to the absence of evidence and reiterated the necessity of applying the common parlance test in such cases.

In conclusion, the High Court found that the Tribunal's decision lacked proper consideration of the common parlance test and evidence collection. The Court held that the Tribunal should have gathered evidence on how the lathe was perceived in common parlance or by dealers before making a decision. Therefore, the High Court answered the reference by stating that the Tribunal erred in deciding the appeal without the necessary evidence and should have either collected it or remanded the case for further examination.