1997 (12) TMI 610 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Classification of "theodolite" under Entry 8 of the First Schedule to the Tamil Nadu General Sales Tax Act, 1959 (TNGSTA).
2. Applicability of tax rate for "theodolite" in the absence of "C" and "D" forms.

Detailed Analysis:

1. Classification of "theodolite" under Entry 8 of the First Schedule to the TNGSTA:

The primary issue is whether "theodolite," a survey instrument, falls under Entry 8 of the First Schedule to the TNGSTA, which includes "binoculars, telescopes, and opera glasses." The assessee-dealers contended that "theodolite" does not fall under this entry and should be taxed at a multi-point rate under Section 3(1) of the TNGSTA. The assessing officer, however, treated "theodolite" as falling under Entry 8 and levied tax at 15% due to the absence of "C" and "D" forms.

The court examined the definitions and distinctions between "telescope" and "theodolite" using various dictionaries and commercial literature. The Shorter Oxford English Dictionary defines a "telescope" as an optical instrument for making distant objects appear nearer and larger, while a "theodolite" is a portable surveying instrument for measuring horizontal and vertical angles, often equipped with a telescope.

The New Encyclopaedia Britannica and The New Lexicon Webster's Dictionary further clarify that a "telescope" is used to view distant objects, whereas a "theodolite" is specifically designed for surveying purposes, measuring angles with a sighting tube in the form of a telescope.

The court noted that "theodolite" is essentially a survey instrument with several components, including a metallic base, vertical scales, and a telescope. Despite the presence of a telescope, the "theodolite" is a distinct and different object from a telescope, as understood in commercial parlance.

The court referenced various precedents to emphasize that the interpretation of goods in a taxing statute should be in a commercial or popular sense, not a technical or scientific sense. It concluded that "theodolite" cannot be construed to fall within Entry 8 of the First Schedule to the TNGSTA.

2. Applicability of tax rate for "theodolite" in the absence of "C" and "D" forms:

The assessing officer levied tax at 15% on the sales turnover of "theodolite" due to the absence of "C" and "D" forms. The Appellate Assistant Commissioner (AAC) accepted the assessee's claim and allowed the appeal, but the Joint Commissioner (SMR) of Commercial Taxes set aside the AAC's order and restored the assessing officer's order.

The court examined the interpretative approach for including goods under various entries in the TNGSTA. It referred to several cases where the courts construed the meaning of articles or goods listed in an entry for levying tax or duty of excise. The guiding principle is to interpret goods in a commercial or popular sense, as understood by people in the market.

The court determined that "theodolite," an instrument used for survey purposes, is distinct from a telescope and cannot be included under Entry 8 of the First Schedule to the TNGSTA. Therefore, the order of the Joint Commissioner (SMR) of Commercial Taxes, construing "theodolite" under Entry 8 and levying tax at the appropriate rate for want of "C" and "D" forms, is not sustainable in law.

Conclusion:

The appeal is allowed, and the order of the Joint Commissioner (SMR) of Commercial Taxes, Madras-5, setting aside the AAC's order and restoring the assessing officer's order, is set aside. The order of the AAC is restored. There is no order as to costs.