1991 (4) TMI 428 - HC - VAT and Sales Tax

Summary

Issues:
1. Interpretation of entry 41 of Schedule II, Part A to the Gujarat Sales Tax Act, 1969 versus entry 16(2) of the same schedule regarding sales of P.V.C. wires and cables.
2. Determination of whether P.V.C. wires and cables are accessories of electric motors or electrical goods for tax classification purposes.

Detailed Analysis:
The Gujarat Sales Tax Tribunal referred a question to the High Court regarding the classification of sales of P.V.C. wires and cables under entry 41 of Schedule II, Part A or entry 16(2) of the Gujarat Sales Tax Act, 1969. The Deputy Commissioner initially classified the goods as electrical goods under entry 41 based on a certificate obtained without the assessee's knowledge. The Tribunal set aside the Deputy Commissioner's decision for reassessment with the assessee's input. The Deputy Commissioner reaffirmed the classification as electrical goods, leading to the assessee appealing to the Tribunal, which upheld the decision, prompting the reference to the High Court.

The assessee contended that the wires and cables were accessories of electric motors, citing their use in supplying electricity and being marketed as such. However, the Deputy Commissioner ruled that for an article to be considered an accessory, it must enhance the effectiveness or convenience of the principal article, which the wires and cables did not. The Tribunal concurred, emphasizing that the wires' function was essential for electric motors to operate, making them electrical goods under entry 41.

The High Court analyzed the definition of "accessory" based on previous court decisions, particularly the Supreme Court's ruling in Mehra Bros. v. Joint Commercial Tax Officer. The Supreme Court clarified that an accessory need not enhance beauty or convenience but must serve as an accompaniment or addition to the principal article. The High Court criticized the Tribunal's narrow interpretation of "accessory" and failure to determine if the wires and cables were specifically or generally adapted for electric motors.

The High Court emphasized that an article must be specially adapted for a principal article to be considered an accessory, regardless of general adaptability. Since the Tribunal did not ascertain if the wires and cables were specially or generally adapted for electric motors, the High Court directed the Tribunal to make a conclusive finding on this point before deciding the tax classification. The High Court concluded that the wires and cables were not definitively accessories of electric motors but disagreed with the Tribunal's classification as electrical goods, requiring further assessment based on the specific adaptation of the goods.