1995 (3) TMI 435 - AT - VAT and Sales Tax

Issues Involved:

1. Interpretation of item 13 of Schedule I to the Bengal Finance (Sales Tax) Act, 1941, as amended by the West Bengal Taxation Laws (Amendment) Act, 1993.
2. Legality and impact of the retrospective amendment effective from October 1, 1982.
3. Whether diesel engine pump sets are considered "implements operated by power" and hence taxable.
4. Constitutionality of the retrospective amendment under Articles 14 and 19(1)(g) of the Constitution of India.

Issue-wise Detailed Analysis:

1. Interpretation of item 13 of Schedule I to the Bengal Finance (Sales Tax) Act, 1941, as amended by the West Bengal Taxation Laws (Amendment) Act, 1993:

The applicant, a registered dealer under the 41 Act, engaged in the import and sale of diesel engine pump sets for agricultural purposes, claimed exemption from sales tax under section 6 of the 41 Act read with serial No. 13 of Schedule I. The amendment in 1993 omitted the words "tractors, power tillers and other" from item 13, thereby changing the exemption status. The applicant contended that diesel engine pump sets are not "implements operated by power" as per the amended law, asserting that "power" should mean electricity, not diesel. The respondents argued that "power" includes any form of energy, including diesel, making the pump sets taxable.

2. Legality and impact of the retrospective amendment effective from October 1, 1982:

The amendment made by the 1993 Act was retrospective, effective from October 1, 1982. The applicant argued that this retrospective application was illegal, arbitrary, and violative of Article 19(1)(g) of the Constitution, as it imposed an unforeseen liability on dealers. The respondents countered that the retrospective amendment was within the legislative competence and aimed to clarify the legislative intent, thereby validating previous tax collections.

3. Whether diesel engine pump sets are considered "implements operated by power" and hence taxable:

The Tribunal had previously ruled in 1992 that diesel engine pump sets for agricultural use were not covered by the term "other implements" and were exempt from tax. The respondents argued that the term "operated by power" includes diesel-operated implements. The applicant maintained that "power" should be interpreted as electricity. The Tribunal, considering common parlance and government usage, concluded that "power" refers to electricity, and diesel engine pump sets are not "implements operated by power."

4. Constitutionality of the retrospective amendment under Articles 14 and 19(1)(g) of the Constitution of India:

The applicant argued that the retrospective amendment violated Articles 14 and 19(1)(g) as it imposed an unreasonable and unexpected burden. The respondents cited Supreme Court judgments upholding the validity of retrospective legislation if it clarifies legislative intent and does not impose a new tax burden. The Tribunal did not find it necessary to delve deeply into this issue, given its conclusion on the interpretation of "power."

Judgment Summary:

The majority of the Tribunal held that diesel engine pump sets are not "implements operated by power" within the meaning of item 13 of Schedule I to the 41 Act, even after the 1993 amendment. Consequently, the assessment order dated June 26, 1991, and the appellate order dated October 8, 1993, were set aside concerning the imposition of sales tax on diesel engine pump sets. The dissenting opinion argued that "power" includes energy from diesel engines, making the pump sets taxable. The application was dismissed by the majority, with no order as to costs. The operation of the judgment was stayed for eight weeks.

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