1996 (1) TMI 393 - HC - VAT and Sales Tax

Summary

Issues:
Interpretation of entry 18 of Schedule "A" to the Haryana General Sales Tax Act, 1973 regarding the liability to pay sales tax on fluorescent tubes, starters, chokes, and phatties when sold as individual items instead of a complete appliance.

Detailed Analysis:

The case involved a dispute regarding the classification of certain electrical items for the purpose of sales tax under entry 18 of Schedule "A" to the Haryana General Sales Tax Act, 1973. The assessee, a dealer in electrical goods, had sold fluorescent tubes, chokes, phatties, and starters separately, and the Assessing Authority had levied tax at the rate of 10 per cent on these items under the mentioned entry. The assessee contended that these items, when sold individually, should not be considered as electrical appliances and should not attract the higher tax rate.

The Deputy Excise and Taxation Commissioner (Appeals) initially ruled in favor of the assessee, stating that items like chokes, phatties, and starters were not electrical appliances themselves but rather accessories or component parts of electrical appliances like fluorescent tubes. However, the Joint Excise and Taxation Commissioner later overturned this decision, emphasizing that these items were integral parts of electrical tubes and, even when sold separately, should be taxed at 10 per cent.

Upon further appeal, the Tribunal relied on a previous judgment by the Gujarat High Court and concluded that component parts of an electrical appliance, when sold separately, should not be considered as electrical appliances themselves. The department then sought a reference to the High Court for the opinion on the matter.

The High Court, after considering the arguments and relevant legal interpretations, concurred with the Gujarat High Court's reasoning. It held that for an article to be classified as an electrical appliance, it must be capable of rendering the desired service on its own. In this case, it was established that the fluorescent tube, choke, and starter were interdependent and, when sold separately, did not qualify as complete electrical appliances. Therefore, the items in question, when sold individually, did not fall under entry 18 of Schedule "A" and were not liable for the higher tax rate of 10 per cent.

In conclusion, the High Court answered the reference in the negative, stating that fluorescent tubes, starters, chokes, and phatties sold separately were not covered under the relevant entry of the Sales Tax Act, and the dealer was not obligated to pay sales tax at the rate of 10 per cent on these items when sold individually.