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2012 (5) TMI 559 - HC - VAT and Sales TaxWhether the word plant and machinery and tools should be understood in popular sense not in technical sense ? Held that - No hesitation in rejecting the contention of Mr. Chakraborty that smoke meter and gas analyzer can be treated to be plant and machinery as because those are used by the automobile industries for keeping the automobile for checking of the pollution, because the manufacturers of automobiles used the same it should be treated as plant and machinery. We are of the view that the aforesaid two machines are not required for manufacturing automobile in any sense. The plant and machinery mentioned in that entry are essentially used for manufacturing something else. The smoke meter and gas analyzer are used only to examine whether the engines of the automobiles conform to the norms of pollution and these instruments and/or machines are pressed into operation before the automobiles are put on sale or for use on road. Therefore, the reasoning given by the learned Tribunal and the contention of Mr. Majumder are absolutely appropriate and rational. The machines which are used for measuring purposes will come within the fold of the aforesaid words tools irrespective of method of operation. Thus the contention of Mr. Chatterjee is upheld and judgment and order of the learned Tribunal is set aside and we hold that the aforesaid smoke meter and gas analyzer will come within the purview of entry 83, Schedule C of the VAT Act and attract the levy of four per cent in stead of 12.5 per cent as wrongly held by the learned Tribunal and the assessing officer.
Issues:
Classification of goods under the West Bengal Value Added Tax Act - Entry 54B of Schedule C vs. Schedule CA Interpretation of "plant and machinery" and "tools" under the VAT Act Applicability of the principle of ejusdem generis in statutory interpretation Analysis: 1. Classification of goods under the West Bengal Value Added Tax Act: The petitioner, engaged in retail distribution of goods including scientific equipment, filed returns for diesel smoke meters and gas analyzers under the VAT Act. The assessing officer classified these items under Schedule CA, attracting a higher tax rate. The petitioner contended that these items should fall under entry 54B of Schedule C, taxed at a lower rate. The Tribunal initially rejected this classification, leading to a writ petition. The High Court intervened, directing the Tribunal to rehear the matter. The Tribunal, upon rehearing, maintained its decision, prompting the current appeal. The Court upheld the Tribunal's decision, ruling that smoke meters and gas analyzers are not essential for manufacturing automobiles but are used for pollution checks before vehicle sale or usage, falling under entry 54B and subject to a 4% levy. 2. Interpretation of "plant and machinery" and "tools" under the VAT Act: The petitioner argued that smoke meters and gas analyzers should be considered "plant and machinery" under entry 54B or "tools" under entry 83(c) of Schedule C, both taxed at 4%. The State, however, contended that these items did not qualify as plant and machinery and cited Supreme Court decisions to support its stance. The Court agreed with the State, emphasizing that the machines were not essential for automobile manufacturing but for pollution checks, aligning with the Tribunal's findings. The Court further analyzed the definition of "tools" under entry 83, noting that the Tribunal's restrictive interpretation based on manual operation was outdated. It ruled that modern measuring instruments, even if not manually operated, fell under the broad definition of "tools," overturning the Tribunal's decision and subjecting the items to a 4% levy. 3. Applicability of the principle of ejusdem generis in statutory interpretation: The State argued that the principle of ejusdem generis, limiting the interpretation of general words by specific words in a list, did not apply in this case. The Court concurred, stating that the principle could not be universally applied and must have a foundation. It emphasized that statutory words should not lead to absurd results and upheld the Tribunal's interpretation based on the specific context and functionality of the goods in question, disregarding a rigid application of ejusdem generis. In conclusion, the High Court upheld the Tribunal's decision regarding the classification of goods under the VAT Act, clarified the interpretation of "plant and machinery" and "tools," and discussed the limited application of the principle of ejusdem generis in statutory interpretation. The judgment favored a contextual and functional analysis of statutory provisions to ensure a fair and rational application of tax laws.
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