1987 (3) TMI 506 - HC - VAT and Sales Tax

Summary

Issues Involved: Taxability of "double plated rims" under the U.P. Sales Tax Act and the Central Sales Tax Act for the assessment years 1977-78, 1978-79, and 1976-77.

Issue-wise Detailed Analysis:

1. Classification of "Double Plated Rims" under U.P. Sales Tax Act:
The primary issue was whether "double plated rims" should be classified as "agricultural implements" or as "unclassified items" under the U.P. Sales Tax Act. The Sales Tax Officer initially classified them as unclassified items, leading to a higher tax rate. However, the Assistant Commissioner (Judicial) reversed this decision, classifying them as agricultural implements. The Sales Tax Tribunal later reinstated the original classification by the Sales Tax Officer, prompting the assessee to file the present revisions.

2. Relevant Notifications and Legal Provisions:
The judgment extensively discusses various notifications issued under sections 3-A and 4 of the U.P. Sales Tax Act. Notifications under section 4 grant total exemption to specified agricultural implements, while those under section 3-A impose single-point tax on agricultural implements not worked by human or animal power. The court examined notifications from 1956, 1964, 1967, 1960, 1965, 1971, 1972, and 1979 to determine the taxability of "double plated rims."

3. Findings and Precedents:
The Tribunal's reliance on the case of Anil Industries was found misplaced as that case dealt with total exemption under section 4, not relevant to the current dispute under section 3-A. The Assistant Commissioner (Judicial) and the Tribunal had previously found that "double plated rims" are used in power-driven vehicles, making them agricultural implements under section 3-A notifications. The court also cited a Full Bench decision in Engineering Traders, which held that an item need not be exclusively used for agriculture to be classified as an agricultural implement, but it should be commonly used and directly connected with agricultural operations.

4. Errors in Tribunal's Judgment:
The court found that the Tribunal's decision to classify "double plated rims" as unclassified items was erroneous in law. The Tribunal failed to consider that the rims are used in power-driven agricultural vehicles, thus falling under the category of agricultural implements as per the relevant notifications under section 3-A.

5. Taxability under Central Sales Tax Act:
The same issue arose under the Central Sales Tax Act for the assessment year 1976-77. The relevant notification dated October 1, 1975, classified agricultural implements (other than those worked by human or animal power) and their parts as taxable at 4%. The court held that "double plated rims" fall under this category and should not be taxed as unclassified items.

Conclusion:
The court set aside the Tribunal's order, holding that "double plated rims" are agricultural implements under the U.P. Sales Tax Act and the Central Sales Tax Act. The items are liable to tax at the specified rates under the relevant notifications, not as unclassified items. The revisions were allowed with costs awarded to the assessee.

Petitions allowed.