1989 (11) TMI 289 - HC - VAT and Sales Tax

Summary

Issues:
Interpretation of the term "machinery" under entry 20 of the Second Schedule to the Karnataka Sales Tax Act, 1957 for the assessment years 1975-76 and 1978-79.

Analysis:
The judgment by the Karnataka High Court, delivered by Justice S. Rajendra Babu, pertains to the classification of door closers as machinery under entry 20 of the Second Schedule to the Act. The assessing authority had initially classified door closers as machinery and levied tax accordingly. The first appellate authority upheld this decision, but the Tribunal disagreed, stating that door closers did not fall under the definition of machinery as per entry 20. The Tribunal remitted the matter to the assessing authority for appropriate tax levy. The Revenue challenged this decision in revision before the High Court.

The crucial issue before the court was whether door closers could be considered machinery under the relevant entry. The court referred to dictionaries and legal precedents to interpret the term "machinery." The court cited the case of Corporation of Calcutta v. Cossipore Municipality and highlighted the Privy Council's observations on defining machinery. The court emphasized that the determination of what constitutes machinery depends on the specific facts of each case.

The court also referenced previous decisions by the Karnataka High Court, such as D.B. Bhandari v. State of Mysore and K.B. Dani v. State of Karnataka, to explain the concept of machinery as a mechanical device with organized parts performing specific functions beyond human physical capabilities. These decisions clarified that power sources, whether natural, human, or electric, do not affect the classification of an item as machinery.

In the present cases, the respondent argued that door closers should be considered hardware, not machinery, based on literature from the Indian Standards Institution. However, the court analyzed the construction and function of door closers, noting the hydraulic components and multiple materials involved in their assembly. The court concluded that door closers, designed to slow down door closing using hydraulic mechanisms, met the definition of machinery under entry 20.

The court rejected the respondent's argument that door closers were merely door hinges, emphasizing the complexity and specific function of the device. The judgment concluded that the door closers sold by the respondent qualified as machinery under the Act's provisions. Consequently, the court allowed the revision petitions, setting aside the Tribunal's decision and reinstating the orders of the assessing and appellate authorities.

In summary, the Karnataka High Court determined that door closers, based on their construction and function, fell within the definition of machinery under entry 20 of the Second Schedule to the Act. The court's analysis relied on legal precedents and specific characteristics of the door closers to establish their classification as machinery for tax purposes.