1999 (8) TMI 926 - AT - VAT and Sales Tax

Summary

Issues:
1. Interpretation of the term "hoists" under the Tamil Nadu General Sales Tax Act.
2. Classification of goods as "lifts" or "machinery" under specific entries of the First Schedule.
3. Application of common parlance theory in tax assessment.
4. Comparison of definitions and uses of "hoists" and "lifts" in trade circles.
5. Impact of subsequent amendment on the classification of goods.

Issue 1: Interpretation of the term "hoists" under the Tamil Nadu General Sales Tax Act:
The case involved a dispute regarding the interpretation of the term "hoists" under the Tamil Nadu General Sales Tax Act. The assessing officer initially classified the goods as "lifts," but the Sales Tax Appellate Tribunal disagreed, considering the specific use of the items in the engineering industry for moving articles. The Tribunal concluded that the items should be taxed as machinery at 8 per cent, not as lifts at 15 per cent.

Issue 2: Classification of goods as "lifts" or "machinery" under specific entries of the First Schedule:
The primary contention revolved around whether the goods, namely "hoists" and "high raised platform," should be classified as lifts under entry 133 of the First Schedule or as machinery under entry 81. The assessing authority and the first appellate authority initially favored classification as lifts, but the Sales Tax Appellate Tribunal disagreed, emphasizing the industrial use of the goods for moving articles rather than traditional lift functions.

Issue 3: Application of common parlance theory in tax assessment:
The absence of specific definitions for "lifts" or "hoists" in the Act led to the application of the common parlance theory. The Tribunal determined that in common parlance, lifts are understood as mechanical devices for vertical transportation in buildings, while hoists are primarily used in industries to lift workers and goods horizontally and vertically for operational convenience.

Issue 4: Comparison of definitions and uses of "hoists" and "lifts" in trade circles:
The arguments presented by the assessee highlighted the distinctions between "hoists" and "lifts" based on their common understanding in trade circles. The Tribunal considered the operational characteristics and intended uses of the goods to differentiate between the two categories, ultimately siding with the assessee's classification of hoists as machinery rather than lifts.

Issue 5: Impact of subsequent amendment on the classification of goods:
The subsequent amendment adding "hoists" to entry 133 of the First Schedule was a focal point in the argument. Both parties contended that the amendment supported their respective classifications. However, the Tribunal concluded that the legislative intent behind the amendment was to exclude hoists from entry 133 at the relevant assessment period, reinforcing the classification of hoists as machinery.

In conclusion, the Tribunal dismissed the revisions filed by the Revenue, upholding the classification of the goods as machinery rather than lifts under the specific entries of the First Schedule. The application of the common parlance theory, consideration of industry-specific uses, and the legislative intent behind the subsequent amendment played crucial roles in determining the appropriate tax assessment for the items in question.