2012 (8) TMI 880 - HC - VAT and Sales Tax

Whether the Karnataka Appellate Tribunal was right in law in confirming the order dated June 29, 2004 of the JCCT (Appeals), Bangalore City Division-II, Bangalore, holding that compactors are not earth moving machinery entitled for benefit under Notification Nos. FD 117 CSL 2001 (I) and FD 117 CSL 2001 (II) dated July 26, 2001 ? Held that - Find no good reason to reject the contention of the petitioner, because, the vibratory compactor does the function of putting waste vertically into the ground. Counsel for the petitioner has produced copy of the notification dated March 31, 1993 under KST Act. In the said notification, the vibratory compactor has been classified as earth moving equipment. However it is the contention of the respondent that the said notification has been with drawn. It is to be noted that withdrawing of the notification would be of no consequence, when it was the stand of the Government in the notification dated March 31, 1993 that vibratory compactor has been classified as earth moving machine. Therefore, it is the understanding of the Government that vibratory compactor is an earth moving machinery. In fact, in the said notification the vibratory compactor is shown in brackets to make it specific that it is in the category of earth moving machinery. In that view, it is untenable for the respondent to contend that vibratory compactors are not earth moving machineries. The understanding of the Government with regard to the vibrating compactor as earth moving machinery and issuing notification to that effect would be binding on the Government because the notification has statutory force and now the respondent cannot argue contrary to the stand taken in the notification. In that view of the matter, the question of law is answered in favour of the assessee. Accordingly, the petitions are allowed.

Summary

Issues: Classification of vibratory compactor under sales tax law

Analysis:
1. Issue: Classification of vibratory compactor under sales tax law.

Analysis: The petitioner, a manufacturer of vibratory compactors, claimed concessional tax tariff under a notification. However, the assessing officer classified the vibrators under a general category of machinery, leading to a dispute. The Tribunal upheld the assessing officer's view, prompting the petitioner to file revision petitions. The key contention was whether vibratory compactors should be classified as earth moving machinery based on the relevant provisions of the Karnataka Sales Tax Act, 1957.

2. Legal Arguments:

a. Respondent's Argument: The respondent argued that the vibratory compactor did not fall under the definition of earth movers as per the Act. The Joint Commissioner of Commercial Taxes (Appeals) provided a detailed explanation distinguishing between earth movers and the function of a compactor, emphasizing the lack of earth movement in the compaction process.

b. Petitioner's Argument: The petitioner contended that the definition of earth mover in the Act was illustrative and inclusive, not exhaustive. They argued that the compactor, by compressing material into the earth and causing vertical movement, should be considered an earth mover, especially in light of a previous notification classifying vibratory compactors as earth moving equipment.

3. Court's Decision:

The Court framed a substantial question of law regarding the classification of compactors as earth moving machinery. After considering the arguments, the Court found merit in the petitioner's contentions. The Court highlighted a previous notification classifying vibratory compactors as earth moving machinery, emphasizing the government's understanding and intention in issuing such notifications. The Court held that the government's classification in the notification was binding and conclusive, rendering the respondent's argument invalid. Consequently, the Court ruled in favor of the petitioner, allowing the petitions and establishing that vibratory compactors should be classified as earth moving machinery for tax purposes.

This detailed analysis of the judgment showcases the legal arguments, interpretations of relevant provisions, and the Court's reasoning leading to the final decision in the case regarding the classification of vibratory compactors under sales tax law.