1979 (7) TMI 215 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Whether a tractor-trailer is considered "machinery" or an "accessory of machinery" for the purpose of tax levy under the Karnataka Sales Tax Act, 1957.

Summary:

Issue 1: Whether a tractor-trailer is considered "machinery" under the Karnataka Sales Tax Act, 1957.

The appellant, an assessee under the Act, was subjected to a 3% tax on the sales turnover of tractor-trailers as non-scheduled goods. The Commissioner of Commercial Taxes, exercising suo motu power u/s 22A of the Act, reclassified tractor-trailers as "machinery" under item 20 of the Second Schedule, thereby increasing the tax rate to 6%. The appellant contended that tractor-trailers are neither machinery nor accessories of machinery.

The Court referred to the definition and criteria laid down by the Privy Council in Corporation of Calcutta v. Chitpore Municipality A.I.R. 1922 P.C. 27, which emphasized that "machinery" must be more than a collection of tools and involve interdependent parts producing a specific result. The Court also reviewed relevant High Court decisions, including Industrial Machinery Manufacturers Pvt. Ltd. v. State of Gujarat [1965] 16 S.T.C. 380 and State of Mysore v. M.N.V. Rao [1964] 15 S.T.C. 540, which applied similar criteria to determine what constitutes machinery.

Applying these principles, the Court concluded that a tractor-trailer does not meet the definition of "machinery" as it is merely a receptacle dragged by a tractor without any interdependent parts functioning to produce a specific result. Therefore, the tractor-trailer is not "machinery" under item 20 of the Second Schedule to the Act.

Issue 2: Whether a tractor-trailer is an "accessory of machinery" under the Karnataka Sales Tax Act, 1957.

The State argued that even if a tractor-trailer is not machinery, it should be considered an accessory of a tractor. The Court examined the definition of "accessory" as something that adds to the beauty, convenience, or effectiveness of another object. Referring to previous decisions, such as N.A.V. Naidu v. State of Mysore [1970] 25 S.T.C. 381 and State of Mysore v. V.G. Patil S.T.R. No. 61 of 1970, the Court held that items necessary for the use of machinery but not enhancing its beauty, convenience, or effectiveness are not accessories.

The Court concluded that a tractor-trailer, like ploughs and harrows, is not an accessory to a tractor as it does not enhance the tractor's beauty, convenience, or effectiveness. It is merely used for carrying loads and is not meant to be fitted into the tractor. Therefore, a tractor-trailer is not an accessory of a tractor.

Additional Consideration:

The Court noted that the Karnataka Sales Tax (Amendment) Act, 1973, specifically included "tractor-trailer" as an independent item in the Second Schedule, indicating that it was not previously considered under the term "machinery" or "accessory" in item 20.

Conclusion:

The Court held that a tractor-trailer is neither "machinery" nor an "accessory of machinery" and thus not liable to tax under item 20 of the Second Schedule to the Karnataka Sales Tax Act, 1957. The appeal was allowed, the order of the Commissioner of Commercial Taxes was set aside, and the original order of the Commercial Tax Officer was restored.

No costs were awarded.

Appeal allowed.