2011 (12) TMI 477 - HC - VAT and Sales Tax

Whether the Sales Tax Appellate Tribunal was justified in holding that the hydraulic tipping system sold by the petitioner attracts sales tax as an accessory of motor vehicle at the rate of eight per cent under entry 135 of the First Schedule to the Kerala General Sales Tax Act? Held that - As from the leaflet produced in court, the manufacturer whose agent/dealer petitioner is, is Wipro, manufacturing and selling hydraulic tipping system for use only in trucks. So much so, we do not find any merit in the contention of the petitioner that the item falls within the description of components under entry 157(ii) abovestated. In fact, the type of hydraulic system used in trucks and in cranes or other earth moving equipments are different types. If any hydraulic lifting and downing system is used in any crane or earth moving machinery, certainly it can be treated as a component of such item. However, in this case we do not find any scope for considering this issue because the petitioner is an exclusive dealer only in hydraulic tipping system manufactured by Wipro which is engaged in manufacture of the system only for use in truck. Consequently we see no merit in the revision cases and the same are accordingly dismissed.

Summary

Issues:
Classification of hydraulic tipping system under the Kerala General Sales Tax Act.

Analysis:
The main issue in this case was the classification of the hydraulic tipping system under the Kerala General Sales Tax Act. The Sales Tax Appellate Tribunal held that the system sold by the petitioner attracts sales tax as an accessory of a motor vehicle at the rate of eight per cent under entry 135 of the First Schedule to the Act. The petitioner argued that the item falls under entry 157(2) of the First Schedule to the KGST Act.

The petitioner, a dealer of hydraulic tipping systems manufactured by Wipro Infrastructure Engineering, contended that the item should be classified under entry 157(2) instead of entry 135 of the Act. The system is used for attachment beneath the body of trucks for lifting and dumping articles, making the trucks operationally tipper lorries. The advantage of the tipper system is mechanical unloading of goods by lifting the body through the hydraulic tipping system.

The assessing officer, first appellate authority, and the Tribunal all agreed that the hydraulic tipping system sold by the petitioner is an accessory attached to lorries to make them tipper lorries for easy mechanical unloading of goods. The manufacturer's leaflet of the item clearly showed it as a hydraulic system attached to trucks for lifting the body to unload goods. Despite the petitioner's argument that the same hydraulic system can be attached to cranes and other earth moving equipment, the courts found that the system sold was specifically for use in trucks.

The courts also noted that while hydraulic systems may be used in cranes and earth moving equipment, the petitioner did not claim to sell the item for such purposes. The focus was on whether the hydraulic tipping system sold by the petitioner, manufactured by Wipro Infrastructure Engineering, is assessable as an accessory of an automobile. Since the manufacturer exclusively produced the system for use only in trucks, the courts dismissed the petitioner's claims that the item falls under a different category of components for other machinery.

In conclusion, the courts found no merit in the petitioner's arguments and dismissed the revision cases, upholding the classification of the hydraulic tipping system as an accessory of automobiles under entry 135 of the Kerala General Sales Tax Act.