1976 (1) TMI 159 - HC - VAT and Sales Tax

Issues Involved:
1. Whether the tractors sold by the assessee were entitled to be treated as agricultural machinery and thus excluded from entry 44 of Part II of Schedule II to the M.P. General Sales Tax Act, 1958.
2. The period of limitation for revision proceedings under section 39(2) of the M.P. General Sales Tax Act, 1958.

Detailed Analysis:

Issue 1: Classification of Tractors as Agricultural Machinery
The primary issue was whether the tractors sold by the assessee could be classified as agricultural machinery and thus excluded from entry 44 of Part II of Schedule II to the M.P. General Sales Tax Act, 1958. The Tribunal found that the tractors were designed and manufactured for agricultural purposes but were also used for non-agricultural purposes in a small fraction of cases.

Relevant Legal Precedents and Interpretations:
1. State of Mysore v. Santoomal Kishnomal (1962): A crow-bar was held to be an agricultural implement because it was "generally used" as such.
2. Pashabhai Patel & Co. v. Collector of Sales Tax (1963): The principal and primary use of a tractor was not for agriculture, distinguishing it on facts but accepting the principle of primary use.
3. Agrawal Bros., Satna v. Sales Tax Commissioner (1965): Tractors were not considered agricultural machinery because they were not exclusively used for agriculture.
4. Commissioner of Sales Tax, M.P. v. Pathak Agricultural Machinery Corporation (1966): Reiterated the need for exclusive use for agriculture.
5. Commissioner of Sales Tax v. R.M.E. Works, Raipur (1969): Followed the earlier decisions requiring exclusive use for agriculture.
6. Vicas Tractors v. Commissioner of Sales Tax (1970): Held that Massey-Ferguson farm tractors were agricultural machinery based on ample material.
7. Karnal Machinery Store v. Assessing Authority (1972): Determined that it is the intrinsic nature and purpose of a tool that defines its classification.
8. Engineering Traders v. State of Uttar Pradesh (1972): Water pumping sets were considered agricultural implements due to their common use in agriculture.
9. Commissioner of Sales Tax v. Shetkari Sahakari Sangh Ltd. (1975): Held that oil-engines used by agriculturists were agricultural machinery, emphasizing that exclusive use is not necessary.

Court's Analysis and Conclusion:
The court found that the tractors were designed and predominantly used for agricultural purposes. The Board of Revenue's decision was influenced by previous decisions that required exclusive use for agriculture, which the court found incorrect. The court emphasized that the principal and primary use of the tractors was for agriculture, even if they were occasionally used for non-agricultural purposes. The determining factor should be the tractor's design, mechanism, and suitability for agricultural use. The court concluded that the tractors should be classified as agricultural machinery and thus excluded from entry 44.

Final Judgment:
The court answered the first question in the negative, stating that the tractors sold by the assessee were entitled to be treated as agricultural machinery and excluded from entry 44.

Issue 2: Period of Limitation for Revision Proceedings
The second issue was whether the period of limitation for revision proceedings under section 39(2) of the M.P. General Sales Tax Act, 1958, runs up to the date of issue of the notice by the Commissioner or up to the date when the notice is served on the assessee.

Division Bench Decision:
The Division Bench had already answered this question, stating that the period of limitation runs up to the date of issue of the notice by the Commissioner, not up to the date when the notice is served on the assessee.

Final Judgment:
The court upheld the Division Bench's decision, confirming that the period of limitation for revision proceedings runs up to the date of issue of the notice by the Commissioner.

Conclusion:
The court provided a comprehensive analysis of the legal precedents and the intrinsic nature of the tractors sold by the assessee. It concluded that the tractors were agricultural machinery and thus excluded from entry 44. The period of limitation for revision proceedings was confirmed to run up to the date of issue of the notice by the Commissioner.

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