1991 (7) TMI 307 - HC - VAT and Sales Tax

Summary

Issues:
Interpretation of entries 32 and 33 under the U.P. Sales Tax Act, 1948 regarding taxation of ammeter, voltmeter, and service meter.

Analysis:
The primary issue in this case was to determine whether the disputed items, namely ammeter, voltmeter, and service meter, should be classified as "electrical goods" or "electrical equipment required for generation, distribution, and transmission of electrical energy" for taxation purposes under entries 32 and 33 of the U.P. Sales Tax Act, 1948.

Classification of Ammeter and Voltmeter:
The court referred to previous decisions where it was established that ammeter and voltmeter do not qualify as electrical equipment required for generation, distribution, and transmission of electrical energy. Instead, they were categorized as "electrical goods" under entry 32, subject to a tax rate of 12 per cent. The court upheld this classification based on the nature and function of these items, which do not play a role in the mentioned activities.

Classification of Service Meter:
Regarding the service meter, the court relied on a previous decision that clarified such meters are essential electrical equipment for the distribution of electrical energy. The court agreed that service meters are used by distributors to measure the amount of electrical energy supplied to consumers, making them necessary for distribution purposes. Therefore, service meters fall under the category of electrical equipment required for distribution of electrical energy, taxable at a rate of 7 per cent under entry 33.

Interpretation of Exclusionary Clause:
The court rejected the argument that the service meter should be classified as electrical goods under the main part of entry 32, emphasizing that once an item falls under the exclusionary clause of entry 32, it should be taxed under entry 33. Consequently, the service meter was correctly reclassified for taxation at the lower rate of 7 per cent.

Conclusion:
In conclusion, the court partially allowed the petition, modifying the tax rate for the service meter from 12 per cent to 7 per cent based on its classification as electrical equipment required for distribution of electrical energy. The rest of the assessment order remained unchanged, and each party was directed to bear their own costs.