1986 (8) TMI 436 - HC - VAT and Sales Tax

Summary

Issues Involved:

1. Classification of dry-cells under the A.P. General Sales Tax Act.
2. Applicability of entries 3, 38, and 137 to dry-cells.
3. Interpretation of the term "accumulator".
4. Determination of the correct tax rate for dry-cells.

Issue-wise Detailed Analysis:

1. Classification of dry-cells under the A.P. General Sales Tax Act:

The primary issue was to determine under which entry in the First Schedule to the A.P. General Sales Tax Act, the "dry-cells" fall. The petitioners, manufacturers of dry-cells, contended that dry-cells should not be classified under entry 3 as accessories to radios or under entry 137 as accumulators but rather under entry 38 as electrical goods.

2. Applicability of entries 3, 38, and 137 to dry-cells:

Prior to the amendment in 1985, dry-cells were not specifically listed in the Schedule. The court analyzed the legislative history and the relevant entries before and after the 1976 amendment. Entry 3 pertained to wireless reception instruments and accessories, entry 38 covered all electrical goods, and entry 137 introduced in 1976 specifically mentioned electrical storage batteries. The court referred to a previous decision (T.R.C. Nos. 18 and 19 of 1973) where dry-cells were considered accessories to radios under entry 3 and accumulators under entry 137.

3. Interpretation of the term "accumulator":

The court revisited the interpretation of "accumulator" from the previous decision. It examined various scientific and technical definitions, concluding that dry-cells are distinct from storage batteries (accumulators) which are rechargeable. The court found that dry-cells, being non-rechargeable, should not be classified as accumulators under entry 137. The court stated, "The above material makes it abundantly clear that dry-batteries or dry-cells are different and distinct from the storage batteries."

4. Determination of the correct tax rate for dry-cells:

The court acknowledged that dry-cells could be used for multiple purposes, including in radios and flashlights. However, it emphasized that the primary use should determine the tax classification. The court held that multipurpose dry-cells and those described for flashlights should fall under entry 38, which had a lower tax rate of 8 paise in the rupee, as opposed to entry 3's 12 paise. The court reasoned, "Thus, the situation is that these cells do fall both under entry 38 and entry 3... it is obvious that we have to hold that these goods have to be taxed at a lower rate, i.e., under entry 38."

Conclusion:

The court concluded that dry-cells manufactured by the petitioners do not fall within entry 137 but under entry 38 as accessories to torches and other electrical gadgets. For dry-cells described as meant for radios, they fall under entry 3. With the introduction of entry 152 in 1985, all dry-cells would be taxed under this new entry. The court allowed the petitions and directed the authorities to take appropriate consequential action. The judgment stated, "For the above reasons, we are of the opinion that the dry-cells manufactured by the petitioners (excepting those which are described as meant for being used in transistor-radios/radios) are exigible to tax under entry 38 of the First Schedule to the Andhra Pradesh General Sales Tax Act, till the date of coming into force of entry 152."