2017 (3) TMI 53 - HC - VAT and Sales Tax

Classification of goods - bearings - whether goods are covered by Entry C-II-146 of the Bombay Sales Tax Act, 1959 and not by Entry C-II102(2) as auto parts and C-II- 135 as tractor parts read with Entry A-35 of the Notification issued under Section 41 of the Bombay Sales Tax Act, 1959? Held that - As far as the bearings are concerned, there is special Entry which deals with bearings of all types including Ball or Roller bearings. This Entry is Schedule Entry C-II-146. There being a specific / special Entry for bearings (Entry C-II-146), it is not correct to hold that the bearings sold by the applicant would fall either under Entry C-II-102(2) as a components, parts of a motor vehicle or under Entry C-II-135 read with the Notification Entry A-35 as a components and/or parts of tractors specifically designed for agricultural use - When there is a specific Entry in the schedule to a Taxing Statute, the same would override a general Entry. The Schedule Entry C-II-135 categorically states but excluding machinery and components, parts and accessories thereof specified in any other entry in this Schedule . This would clearly go to show that the Schedule Entry C-II-135 read with Notification Entry A-35, as far as bearings are concerned would be the general Entry and C-II-146 would be the specific Entry - the authorities below have correctly classified the bearings sold by the applicant under Schedule Entry C-II-146. Notification Entry A-35 talks about sale or purchases by a registered dealer of tractors specifically designed for agricultural use and components, parts and accessories thereof covered by Entry C-II-135. From a plain reading of the said Notification Entry, it is clear that it applies to sales or purchases only by a registered dealer of tractors specifically designed for agricultural use and the components, parts and accessories thereof. The bearings sold by the applicant would fall under Schedule Entry C-II-146 - application disposed off - decided against applicant-assessee.

Summary

Issues Involved:
1. Classification of bearings sold by the applicant under the appropriate entry of the Bombay Sales Tax Act, 1959.
2. Applicability of specific versus general entries in the tax schedule.
3. Interpretation of Notification Entry A-35 in relation to bearings sold as parts of agricultural tractors.

Issue-wise Detailed Analysis:

1. Classification of Bearings:
The core issue was whether the bearings sold by the applicant were covered by Entry C-II-146 of the Bombay Sales Tax Act, 1959, or by Entry C-II-102(2) as auto parts and C-II-135 as tractor parts read with Entry A-35 of the Notification under Section 41 of the BST Act. The applicant contended that the bearings were parts of motor vehicles and agricultural tractors, thus falling under entries C-II-102(2) and C-II-135, respectively. The Assessing Officer, however, classified these bearings under Entry C-II-146, which levied a higher tax rate.

2. Specific vs. General Entries:
The applicant argued that bearings, being manufactured as per specific designs for motor vehicles and tractors, should be classified under the entries for auto parts and tractor parts. The Revenue countered that Entry C-II-146 specifically covered all types of bearings, making it the appropriate classification. The court agreed with the Revenue, citing the principle that a specific entry in a taxing statute overrides a general entry. The court referenced the Supreme Court's decision in the State of Maharashtra Vs. Bradma of India Ltd., which reinforced that specific entries take precedence over general ones.

3. Interpretation of Notification Entry A-35:
The applicant argued that prior to the amendment on 15th August 1998, Notification Entry A-35 included bearings as parts of agricultural tractors, thus attracting a lower tax rate. However, the court noted that Notification Entry A-35 applied to sales or purchases by a registered dealer of tractors specifically designed for agricultural use and their parts. Since the applicant did not sell or purchase tractors for agricultural use, this entry was deemed inapplicable. The court further stated that the amendment excluding bearings from Entry A-35 was irrelevant because the entry did not apply to the applicant in its original or amended form.

Conclusion:
The court concluded that the bearings sold by the applicant should be classified under Schedule Entry C-II-146, which specifically deals with all types of bearings. The question of law was answered in the affirmative, in favor of the Revenue, and against the applicant. The court held that the specific entry for bearings (Entry C-II-146) overrides the general entries for auto and tractor parts (Entries C-II-102(2) and C-II-135 read with Notification Entry A-35). As a result, the bearings sold by the applicant were subject to the tax rates specified under Entry C-II-146 for the relevant financial years.