2009 (1) TMI 824 - HC - VAT and Sales Tax

Whether the instructions issued by the Excise and Taxation Commissioner, Patiala, vide communication dated January 8, 1974, to all the Assessing Authorities (Excise and Taxation Officer) in the State of Punjab for charging tax at the rate of six per cent sales tax on the bus bodies instead of 10 per cent were not binding on the sales tax authorities? Held that - The matter is not res integra. In the case of Ambala Coach Builders v. State of Haryana 1976 (9) TMI 157 - PUNJAB AND HARYANA HIGH COURT a fundamental issue was raised, namely, whether the expression motor vehicle included component parts thereof as per the expression used in entry No. 1 of Schedule A of the Haryana General Sales Tax Act, 1973. This court placed reliance on the judgments of Annapurna Carbon Industries Co. v. State of Andhra Pradesh 1976 (3) TMI 156 - SUPREME COURT OF INDIA , Commissioner of Sales Tax, Uttar Pradesh, Lucknow v. Pritam Singh 1968 (8) TMI 168 - ALLAHABAD HIGH COURT and Bajoria Halwasiya Service Station v. State of Uttar Pradesh 1969 (12) TMI 100 - ALLAHABAD HIGH COURT and came to the conclusion that bus bodies mounted on motor chassis cannot be regarded as accessories or spare parts but are necessarily to be regarded as component parts of motor vehicle. Accordingly, the bus bodies have to be regarded as component parts of the motor vehicle.Once the aforesaid factual position is clear then it follows that it has to be assessed at six per cent as per entry 9 of Schedule A to the Act.In favour of the dealer and against the Revenue.

Summary

The High Court of Punjab and Haryana issued a judgment under the Punjab General Sales Tax Act, 1948, directing the Sales Tax Tribunal to refer a question of law regarding the tax rate on bus bodies. The dealer, engaged in manufacturing bus bodies, had a dispute over the tax rate. The Excise and Taxation Commissioner's instructions on the tax rate were examined, leading to a series of assessments and appeals. The Tribunal upheld the 10% tax rate, prompting the dealer to file a reference application, which was initially declined. However, upon review, the court found in favor of the dealer, citing precedent that bus bodies are component parts of a motor vehicle and should be taxed at 6%. The judgment ruled in favor of the dealer and against the Revenue.