1995 (11) TMI 393 - HC - VAT and Sales Tax

Summary

Issues:
Interpretation of Notification No. 1230-878-V-ST regarding tax rate for specific goods under M.P. General Sales Tax Act, 1958.

Analysis:
The case involves a sales tax reference under section 44(1) of the M.P. General Sales Tax Act, 1958, regarding the classification of 'coal tubs' for taxation purposes. The question of law referred to the Court was whether 'coal tubs' should be considered as accessories of machinery and taxed at a concessional rate under Notification No. 1230-878-V-ST. The respondent, a dealer in motor cycles and spare parts of coal tubs, was assessed for sales tax by the Sales Tax Officer, which was upheld by the Appellate Deputy Commissioner but overturned by the Tribunal. The Tribunal based its decision on the inclusion of coal tubs in the certificate of registration of the purchasing dealer, making them eligible for the concessional tax rate. The Tribunal's order was challenged by the Revenue, leading to this reference.

The Court examined Notification No. 1230-878-V-ST, which exempts certain goods from tax under specific conditions. The notification mentions machinery, plant tools, spare parts, and accessories thereof eligible for a reduced tax rate from 1st April, 1968, to 19th June, 1974, subject to conditions like sale between registered dealers for manufacturing or processing goods for sale. The Court emphasized the importance of the declaration in the form provided in the notification, ensuring the purchased goods are used for manufacturing or processing within the state. The selling dealer, in this case, sold coal tubs to a mining company, which used them for transporting coal. Despite the Tribunal considering coal tubs as machinery, the Court focused on the inclusion of coal tubs in the purchasing dealer's registration certificate and the declaration provided, relieving the selling dealer of responsibility once the concessional rate was charged based on the buyer's declaration.

The Court upheld the Tribunal's decision, affirming that the responsibility of the selling dealer ends once the purchasing dealer provides a declaration entitling them to the concessional rate based on the goods' inclusion in the registration certificate. The Court clarified that if the goods do not fall under the exemption notification, the assessing authority can take action against the purchasing dealer for recovering the full tax rate. The Court declined to delve into whether coal tubs could be classified as machinery, as it was unnecessary for resolving the reference. Consequently, the reference was answered in favor of the assessee and against the Revenue.