2014 (5) TMI 256 - HC - VAT and Sales Tax

Rate of Tax - Classification of Fasteners - Item 2 or Item 3 of the Fifth Schedule to the Tamil Nadu General Sales Tax Act, 1959 As part of motor vehicle - Held that - Judgment in Mukesh Kumar Aggarwal & Co., Vs. State of Madhya Pradesh 1987 (12) TMI 55 - SUPREME COURT OF INDIA followed - with the finding of the fact that they are automobile parts, there is no ground to accept the plea of the assessee that the item in question would fit in to fall under only Entry 119 and not under Entry 3 - The concept of specific entry under Entry 119 in the face of Entry 3 fails in its application in this case, since a reading of the Entry 119 would show that it applies to all nuts and bolts of general nature - When Entry 3 makes a specific reference to articles (excluding batteries), used as spares of motor vehicles, one has to give the necessary emphasis to this phrase the parts and accessories , which are adapted for the use in automobiles - Even though bolts and nuts generally might have fallen in under Entry 119 of I Schedule, once customised for use in motor vehicles as parts and accessories, the same would only fall under Entry 3 of the First Schedule. The Sub Entry is a user oriented entry for the purpose of fixing the liability - In contrast to the normal theories available in the matter of interpretation of the entry, particularly, the entries relating to the general goods, when Entry 3 under I Schedule is clear that nuts and bolts as part and accessory are manufactured for use in automobiles excluding batteries and brought under Entry 3, this court do not subscribe to the contention of the assessee that Entry 119 is a specific entry and hence, nuts and bolts, parts manufactured by the assessee, even though they are automobile parts, would nevertheless fall under Entry 119 Thus, there is no hesitation in rejecting the assessee s appeal - Accordingly, Revision No.2308/2008 stands dismissed. Rate of Tax - Classification of bolts and nuts - Sl.No.35(iii) of Part D or Entry 13(ii) of Part DD or Entry 6 of Part D of the First Schedule to the Tamil Nadu General Sales Tax Act, 1959 - As part of motor vehicle - Held that - Question raised is identical one as raised before this Court as that of the earlier mentioned tax case - Tribunal in the said cases, following the earlier order in assessee s own case rejected the assessee s appeal - Hence, following the order passed by us in T.C.(R).No.2308 of 2008, we have no hesitation in rejecting the revisions - Accordingly, T.C(R).Nos.64 and 65 of 2011 are also dismissed Decided against assessee.

Summary

Issues Involved:
1. Classification of bolts and nuts under the Tamil Nadu General Sales Tax Act, 1959.
2. Determination of the applicable tax rate for bolts and nuts.
3. Interpretation of specific and general entries under the Tamil Nadu General Sales Tax Act, 1959.

Detailed Analysis:

1. Classification of Bolts and Nuts:
The primary issue revolves around the classification of bolts and nuts sold by the petitioner. The petitioner contended that these items should be classified under Entry 119 of the First Schedule to the Tamil Nadu General Sales Tax Act, 1959, which pertains to bolts and nuts. The Sales Tax Appellate Tribunal, however, classified them under Entry 2 of the Fifth Schedule and subsequently under Entry 3 of the First Schedule as parts and accessories of motor vehicles.

The Tribunal noted that the bolts and nuts were manufactured specifically for use as motor vehicle parts and were sold to automobile manufacturers and dealers in automobile spares. The Tribunal rejected the argument that these items should be classified as 'common bolts and nuts' under Entry 119 of the First Schedule, emphasizing that they were designed and manufactured specifically for automobiles.

2. Determination of the Applicable Tax Rate:
The tax rate applicable to the bolts and nuts was another significant issue. The Assessing Officer initially levied a higher tax rate of 12% under Entry 3 of the First Schedule, applicable to parts and accessories of motor vehicles. The Tribunal upheld this classification but noted that for the period from 01.04.1988 to 06.10.1988, parts and accessories of motor vehicles were assessable at 12% for sales to unregistered dealers, 8% for sales to registered dealers, and 4% on the last sale under Entry 2 of the Fifth Schedule.

The Tribunal directed that for the assessment year 1988-89, the rate of tax would be 8% since the purchasers were registered dealers. The Tribunal also noted that there was no difference in the tax rate between Entry 119 and Entry 3, and thus, no penalty was imposed.

3. Interpretation of Specific and General Entries:
The Tribunal emphasized the need to interpret the entries in the schedules of the Tamil Nadu General Sales Tax Act, 1959, in a manner that reflects their specific and general nature. The Tribunal pointed out that Entry 119 is a general entry for bolts and nuts, while Entry 3 specifically pertains to parts and accessories of motor vehicles.

The Tribunal rejected the petitioner's argument that the items should be classified under Entry 119 solely based on their description as bolts and nuts. It emphasized that since the bolts and nuts were manufactured specifically for use in motor vehicles, they should be classified under Entry 3, which deals with parts and accessories of motor vehicles.

Conclusion:
The Tribunal concluded that the bolts and nuts sold by the petitioner, being specifically manufactured for use in motor vehicles, should be classified under Entry 3 of the First Schedule as parts and accessories of motor vehicles. The applicable tax rate for the assessment year 1988-89 was determined to be 8% for sales to registered dealers. The Tribunal's decision was based on a detailed interpretation of the relevant entries in the Tamil Nadu General Sales Tax Act, 1959, and the specific nature of the items in question. The petitioner's appeals were dismissed, and the Tribunal's classification and tax rate determination were upheld.