2006 (8) TMI 561 - HC - VAT and Sales Tax

Summary

Issues:
Interpretation of tax entry classification for electronic push button telephone under Kerala General Sales Tax Act, 1963.

Analysis:
The main issue in this judgment revolves around the classification of electronic push button telephones under the Kerala General Sales Tax Act, specifically whether they fall under entry 49 (later renumbered as entry 55) or entry 120 (later renumbered as entry 134) of the First Schedule to the Act. The petitioner argued that electronic push button telephones are electronic instruments falling under entry 49, as supported by a government notification reducing tax rates on electronic goods, which specifically included electronic push button telephones. The petitioner contended that telephones in entry 120 are ordinary telephones not electronically operated. The Special Government Pleader, on the other hand, argued that all types of telephones, electronic or not, should be classified under entry 120 (later renumbered as entry 134) as it is a specific entry for telephones. The petitioner relied on a Supreme Court decision regarding classification of goods under similar circumstances to support their argument.

The court analyzed the legislative intention behind the classification of goods under the tax entry and referred to the Supreme Court decision in BPL Ltd. v. State of Andhra Pradesh [2001] 121 STC 450, where it was held that specific entries should not restrict the classification of goods if they fall under a broader category. The court noted that the Supreme Court had granted a lower tax rate for automatic washing machines classified as "electronic goods" despite a specific entry for electrically operated washing machines. Drawing parallels, the court concluded that electronic push button telephones, being electronically programmed devices, should be classified under entry 49 (later renumbered as entry 55) for electronic goods. The court emphasized that all electronic goods and instruments are covered under entry 49, except those specifically mentioned elsewhere in the Schedule.

In light of the above analysis, the court allowed the tax revisions in favor of the petitioner, stating that electronic push button telephones should be considered electronic instruments falling under entry 49 (later renumbered as entry 55) of the First Schedule to the Kerala General Sales Tax Act. The petitioner was deemed entitled to the concessional tax rate applicable during the period when the government notification was in force. For periods outside the notification's scope, the petitioner would be assessed based on the entry provided for electronic goods.