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2010 (7) TMI 893 - HC - VAT and Sales TaxWhether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the machinery sold by the applicant was not agricultural machinery covered by entry 1, Part I of Schedule C but it was covered by entry 135, Part II of Schedule C to the BST Act as held by the Commissioner of Sales Tax, Maharashtra State, Mumbai? Held that - A reading of the Schedule entry 1, Part I of Schedule C makes it clear that tractors, trailers, semitrailers are excluded from the purview of the agricultural machine and implements. If that be so, then one thing is clear that the tractor, trailer, etc., are directly used in agricultural operations. If these types of machineries are excluded from the purview of the Schedule entry 1, Part I of Schedule C then the bio-fertilizer producing machine by no stretch of imagination can be said to be a machine falling under Schedule entry 1, Part I of Schedule C. The Tribunal has rightly observed that the purchaser was interested in purchase of composting machine and not soil treatment machine as now claimed by the applicant-assessee. What is sold is composting machine. It is, thus, nothing but a machine falling under the Schedule entry 135, Part II Schedule C attracting 13 per cent sales tax. The view taken by the Tribunal cannot be faulted. Against assessee.
Issues:
Interpretation of Schedule entries for taxation of machinery under the Bombay Sales Tax Act, 1959. Detailed Analysis: Issue 1: Classification of Machinery The main issue in this case revolved around determining the classification of a specific type of machinery for taxation purposes under the Bombay Sales Tax Act. The applicant, a manufacturer of bio-fertilizer equipment, claimed that the machinery sold was agricultural machinery and should be taxed at a lower rate of four percent under entry 1, Part I of Schedule C. On the other hand, the Commissioner of Sales Tax classified the machinery under entry 135, Part II of Schedule C, attracting a higher tax rate of 13 percent. The Tribunal upheld the Commissioner's classification, stating that the machinery was not an agricultural machine but a general machine. The court analyzed the descriptions provided by both parties and concluded that the bio-fertilizer producing machine, although usable for agricultural purposes, was primarily sold to sugar factories and did not directly serve agricultural operations. Therefore, the court agreed with the Tribunal's decision that the machinery fell under entry 135, Part II of Schedule C. Issue 2: Interpretation of Schedule Entries The court delved into the interpretation of the relevant Schedule entries, namely entry 1, Part I of Schedule C and entry 135, Part II of Schedule C. Entry CI-1 of Schedule C pertains to agricultural machinery and implements excluding certain items like tractors and trailers. The court highlighted that since tractors and trailers, directly used in agricultural operations, were excluded from entry 1, the bio-fertilizer producing machine could not be classified under this entry. The court emphasized that the machine was essentially a composting machine, as indicated by the purchaser's interest in composting technology rather than soil treatment. Therefore, based on the definitions and exclusions provided in the Schedule entries, the court determined that the machinery in question fell under entry 135, Part II of Schedule C, subject to a 13 percent sales tax. Conclusion After considering the arguments presented by both parties and examining the nature and usage of the machinery in question, the court ruled in favor of the Revenue and against the assessee. The court upheld the classification of the machinery under entry 135, Part II of Schedule C for taxation purposes, affirming the Tribunal's decision.
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