2014 (8) TMI 617 - HC - VAT and Sales Tax

Whether the Tribunal was correct that the product Electric Control Panel and Transformer manufactured by the appellant is a plant and machinery - Eligibility for benefit of reduced rate of tax on production of A-Form issued under Notification Entry No.A88 u/s 41 of the BST Act, 1959 - Held that - Articles were used in the manufacture as plant and machinery. From the record as it stands, it is difficult to hold that the finding is incorrect or perverse. No material to the contrary has been indicated. In these circumstances, the issue is not one of law but only of fact. It may in a given case even raise the question of law. In the present case, however, no substantial question of law arises in this regard. - Under the second proviso of section 41(2) of the BST Act, the issue does not raise any substantial question of law in the facts and circumstances of the case. It is important to note that the Assessing Authority had accepted the Respondent s case. The order which was ultimately challenged before the Tribunal arose from the order passed in revision under section 57 of the BST Act. Even in the revisional order, it is merely stated that the Respondent would not be entitled to the benefit if it is found that the registered dealer who had given declaration had not complied with any of the recitals or contrary to the conditions of the declaration. Whether there has been a contravention or not is a question of fact which is not even gone into. Hence, no question of law arises - Decided against revenue.

Summary

Issues:
1. Interpretation of Schedule Entry No.CII135 and Notification Entry No.A88 under the Bombay Sales Tax Act 1959 regarding the classification of 'Electric Control Panel and Transformer' as plant and machinery.
2. Eligibility of the sale of the impugned product for a reduced rate of tax under Notification Entry No.A88 irrespective of its classification as plant and machinery.

Issue 1: Interpretation of Schedule Entry No.CII135 and Notification Entry No.A88
The applicant sought an order to direct the Maharashtra Sales Tax Tribunal to refer the case to the High Court on questions of law regarding the classification of 'Electric Control Panel and Transformer' as plant and machinery. The Tribunal held that the products fell under Entry 88 of Group A of the Notification as plant and machinery. The items in question included electrical components like SFU in Sheet Steel Construction Control Panel, MCCB in Sheet Steel Construction Control Panel, Outdoor Type Distribution Transformer, and L.T. Control Panel. The Tribunal found that these items were used in manufacturing as plant and machinery, and the decision was based on factual findings. It was noted that no material contrary to this finding was presented, making it a question of fact rather than law. The High Court concluded that no substantial question of law arose in this regard, and the issue was dismissed without costs.

Issue 2: Eligibility for Reduced Rate of Tax under Notification Entry No.A88
The second proviso of section 41(2) of the BST Act was invoked to determine the eligibility for a reduced rate of tax under Notification Entry No.A88. The Assessing Authority had accepted the Respondent's case, and the order challenged before the Tribunal stemmed from a revision under section 57 of the BST Act. The revisional order stated that the Respondent would lose the benefit if the registered dealer providing the declaration had not complied with the conditions. However, the question of whether there was a contravention was not explored, making it a factual issue rather than a legal one. As a result, the High Court found no substantial question of law arising from this aspect and dismissed the Sales Tax Application without imposing costs.

In summary, the High Court's judgment addressed the interpretation of Schedule Entry No.CII135 and Notification Entry No.A88 under the Bombay Sales Tax Act 1959 regarding the classification of specific electrical components as plant and machinery. The Court found that the Tribunal's decision was based on factual findings, not raising substantial questions of law. Additionally, the issue of eligibility for a reduced tax rate under the same notification was deemed a factual matter, leading to the dismissal of the application without costs.