1990 (1) TMI 273 - HC - VAT and Sales Tax

Summary

Issues:
Interpretation of the term "accessories" under entry 65 of Schedule C of the Bombay Sales Tax Act, 1959.

Analysis:

The case involved a reference made by the Commissioner regarding the classification of certain parts used in manufacturing radio sets under the Bombay Sales Tax Act, 1959. The question raised was whether items like knobs, formers, bobbings, threaded sleeves, insulating caps, strips, and p.v.c. feet were considered accessories of wireless reception instruments under entry 65 of Schedule C. The Tribunal had held that these parts were neither spare parts nor accessories, placing them under the residuary entry 22 of Schedule E.

The Tribunal's decision was based on the understanding that these parts were integral and essential components of the radio sets being manufactured by the assessee. The department argued that these parts should be classified as either "spare parts" or "accessories" for tax purposes. The Tribunal rejected this argument, leading to the reference before the High Court.

The Court examined the definitions and interpretations of the term "accessory" in previous judgments, emphasizing that an accessory is an additional item adjunct to the main item, which may enhance performance or provide convenience in use. The Court considered whether the radio sets could be sold in the market without these parts to determine their classification as accessories.

After a detailed analysis, the Court concluded that five out of the seven parts in question were integral to the functioning of the radio mechanism itself. Without these parts, the radio sets would not be able to function as intended. The Court established a test that an accessory is an item without which a radio mechanism can still function and be recognized as a radio set in the consumer market. Since all seven items were deemed essential and integral to the radio sets' operation, the Court ruled in favor of the assessee, placing the parts under the residuary entry of Schedule E.

In light of the above analysis, the Court answered the reference in the affirmative, holding that the items in question were not accessories but integral parts of the radio sets, thus falling under the residuary entry 22 of Schedule E.