1991 (9) TMI 310 - HC - VAT and Sales Tax

Summary

Issues:
Rate of tax leviable on turnover of steam boilers sold to St. John Medical College, Bangalore under Central Sales Tax Act, 1956.

Analysis:
The appellants, dealers in steam boilers, were assessed for the assessment year 1975-76 by the assessing authority. The assessing authority assessed the turnover of steam boilers sold to St. John Medical College at 10%, but the appellants claimed a concessional rate of 5% as per a Government Notification. The Appellate Assistant Commissioner agreed with the appellants, but the Joint Commissioner, on suo motu revision, held that steam boilers cannot be considered scientific equipment, thus denying the concessional rate.

In the appeal, it was argued that the Government Notification dated December 20, 1975, allowed for a 5% tax rate on inter-State sales of "scientific equipment and instruments" to educational institutions for scientific teaching purposes. The appellants contended that steam boilers should be considered scientific equipment based on the dictionary definition of "scientific."

The Court considered the dictionary definition of "scientific" and concluded that a strict interpretation of the exemption notification was necessary. The Court noted that a scientific instrument or equipment should convert a principle of science for common use, which steam boilers do not. The Court emphasized that even if an article is manufactured scientifically, it does not automatically qualify as a scientific instrument. The Court also rejected the argument that the use of steam boilers in a hospital should change their classification, as they are commonly used as household articles as well.

The Court distinguished a previous case involving the installation of an internal telephone system, stating that the facts were not applicable to the current case. The Court highlighted that for an equipment to be considered scientific, it should be related to the application of natural science. Ultimately, the Court upheld the Joint Commissioner's decision, ruling that steam boilers do not fall under the category of "scientific equipment or instrument" for the purpose of the concessional tax rate. The appeal was dismissed with no order as to costs.