1981 (5) TMI 126 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Taxability rate of batteries under different notifications.
2. Proper procedure for referring cases to larger benches.
3. Interpretation of various notifications regarding tax rates on batteries.
4. Classification of batteries as electrical goods or components of motor vehicles.

Detailed Analysis:

1. Taxability Rate of Batteries:
The primary issue was whether the turnover of batteries was taxable at 7% under Notification No. ST-7096/X-1012-1965 or at 3% under Notification No. ST-3503/X dated 10th May, 1966. The assessing authority initially held that batteries were taxable as electrical goods at 10%, but this was set aside on appeal, with the court holding that batteries were taxable at 3%. The Commissioner later claimed they were taxable at 7% as electrical equipment.

2. Proper Procedure for Referring Cases to Larger Benches:
The Division Bench, instead of deciding the reference, sent the case back for framing an 'appropriate question.' The judgment clarified that a single judge referring a case exercises his power as the High Court, and his direction under the rules cannot be challenged. The Division Bench or a larger bench under the rules of the court could not refuse to decide the case. The direction issued by the Division Bench to send the case back was contrary to the rules and not proper.

3. Interpretation of Various Notifications:
The court examined various notifications to ascertain the legislative intention and objective. The notifications issued on 1st July, 1978, under Section 3-A of the Act, levied tax on motor vehicles and their components, including batteries. The court noted that the 1956 notification continued to be in operation and that motor batteries were taxable under it. The court also considered the 1958 and 1960 notifications, which indicated that motor vehicles, their chassis, tyres, tubes, and spare parts became taxable at different rates over time. The court concluded that the 1956 notification was not obliterated by the 1958 notification, and motor batteries remained taxable under the 1956 notification.

4. Classification of Batteries:
The court discussed whether batteries could be considered electrical goods or components of motor vehicles. It was held that a battery is a component part of a motor vehicle, as a vehicle is not complete without it and cannot operate without a battery. Therefore, motor batteries were not taxable under Notification 7996 of 1965 as electrical goods but were taxable under the 1956 notification as components of motor vehicles.

Conclusion:
The revision was dismissed, and it was decided that motor vehicle batteries were taxable at 3% under Notification No. 3503 of 1956, substituted by Notification No. 3478 of 1956, for the assessment year 1966-67. The assessee was entitled to costs assessed at Rs. 200.