1991 (9) TMI 319 - HC - VAT and Sales Tax

Summary

Issues:
Interpretation of the term "machinery" for sales tax purposes and determination of whether a sprayer falls under the category of machinery taxable at a specific rate.

Analysis:
The case involved a dispute regarding the classification of sprayers for sales tax purposes under the Orissa Sales Tax Act, 1947. The assessee sold sprayers during the assessment year 1980-81 and paid tax at 7%, considering the item as unclassified. However, the assessing officer classified sprayers as machinery under serial 65 of taxable goods, subjecting them to a 10% tax rate. The Tribunal upheld this classification, leading to the reference to the High Court.

The crux of the issue revolved around the definition of "machinery" and whether sprayers qualified as such. The assessee contended that sprayers did not fall under the category of machinery, while the department argued the contrary. The Court delved into the meaning of "machinery," emphasizing that it involves the transmission and modification of power, force, and motion to achieve specific results. The Court highlighted that machinery encompasses appliances and instruments that utilize natural forces to produce or assist in production.

In determining whether sprayers constituted machinery, the Court considered the dictionary definitions of "spray" and "sprayer." It noted that a sprayer is an instrument that transmits force from one point to another, aligning with the concept of machinery as a functioning unit designed to apply power efficiently. The Court agreed with the Tribunal's conclusion that sprayers qualified as machinery based on accepted concepts and factual findings. Consequently, the Court upheld the Tribunal's decision, ruling that sprayers were taxable at the rate applicable to machinery under serial No. 65 of the taxable goods list.

In conclusion, the High Court answered the reference in favor of the Revenue and against the assessee, affirming that sprayers were classified as machinery for sales tax purposes. The judgment highlighted the broad definition of machinery and its application to devices like sprayers that facilitate the transmission of force to achieve specific outcomes.