2012 (8) TMI 868 - HC - VAT and Sales Tax

Summary

Issues involved: Determination of whether vibratory compactors qualify as earth moving machinery for tax benefits under specific notifications.

The Karnataka High Court considered petitions related to the assessment years 1996-97 to 2001-2002, where the petitioner, a manufacturer of vibratory compactors, challenged the assessment by the tax authorities. The assessing officer classified the vibratory compactor as machinery under Part M 1(iii)(a) of the Second Schedule to the Act, rather than an earth mover. The appellate authorities upheld this classification, leading to the revision petitions by the assessee.

The substantial question of law framed for consideration was whether the Karnataka Appellate Tribunal was correct in confirming the order that "compactors" do not qualify as earth moving machinery for benefits under specific notifications. The respondent argued that the vibratory compactor's function differs from traditional earth movers like dumpers and bulldozers, as it crushes solid waste into the ground without moving earth.

The petitioner contended that the definition of "earth mover" is inclusive, not exhaustive, and any machinery similar to those listed should also be considered earth movers. The court noted that the vibratory compactor does put waste vertically into the ground, supporting the petitioner's argument.

The petitioner presented a notification from March 31, 1993, classifying vibratory compactors as earth moving equipment under the KST Act. Although the respondent claimed this notification was withdrawn, the court emphasized that the government's initial classification of vibratory compactors as earth moving machinery in the notification holds significance. The court held that the government's understanding, as reflected in the notification, is binding, and the respondent cannot argue against it. Consequently, the court ruled in favor of the assessee, allowing the petitions.