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2019 (3) TMI 1361 - SC - VAT and Sales TaxClassification of goods - rate of tax - Mobile Crane Wire Ropes - whether the rate of tax chargeable to the goods in question is 12.5% as prescribed in the Residuary Entry in Schedule V under the Act or at 4% as prescribed in Entry 155 of Schedule IV of the VAT Act - Held that - Mere reading of Entry 155 would go to show that the goods called Hydraulic excavators (earth moving and mining machinery), Mobile Cranes and Hydraulic Dumpers (including parts thereof) are chargeable to tax at the rate of 4% - the expression including parts thereof was inserted in the Entry 155 by an amendment w.e.f. 09.05.2006. It, therefore, indicates that the parts of the goods specified in the Entry were not chargeable to tax at the rate of 4% prior to 09.05.2006 but became chargeable at the rate of 4% only on and after 09.05.2006. There is no difficulty in holding that the wire ropes used in the Mobile Cranes are a part of the Mobile Cranes and thus fall in Entry 155 of Schedule IV of the VAT Act. Appeal dismissed - decided against Revenue.
Issues involved:
1. Interpretation of tax rates under the Rajasthan Value Added Tax Act, 2003 for specific goods. 2. Determination of the proper tax entry for "Mobile Crane Wire Ropes" under the VAT Act. 3. Assessment of whether "Mobile Crane Wire Ropes" should be taxed at 4% or 12.5% under the VAT Act. Issue 1: Interpretation of tax rates under the Rajasthan Value Added Tax Act, 2003 for specific goods: The case involved the interpretation of tax rates under the Rajasthan Value Added Tax Act, 2003 for specific goods, particularly focusing on the taxability of "Mobile Crane Wire Ropes." The appellant, the State of Rajasthan (Commercial Tax Department), disputed the tax rate applicable to these goods, arguing for a 12.5% tax rate under the Residuary Entry of Schedule V of the VAT Act. Conversely, the respondent, engaged in trading spare parts, contended that the goods should be taxed at 4% under Entry 155 of Schedule IV of the VAT Act. Issue 2: Determination of the proper tax entry for "Mobile Crane Wire Ropes" under the VAT Act: The central issue revolved around determining the proper tax entry for "Mobile Crane Wire Ropes" under the VAT Act. The taxing authorities, including the Commercial Tax Officer and the Deputy Commissioner, initially assessed the goods at a tax rate of 12.5% under the Residuary Entry of Schedule V. However, the Appellate Authority and the Rajasthan Tax Board ruled in favor of the respondent, concluding that the ropes were integral parts of Mobile Cranes and should be taxed at 4% under Entry 155 of Schedule IV. Issue 3: Assessment of whether "Mobile Crane Wire Ropes" should be taxed at 4% or 12.5% under the VAT Act: The core assessment in this case was whether "Mobile Crane Wire Ropes" should be taxed at 4% or 12.5% under the VAT Act. The Supreme Court analyzed the relevant tax entries, specifically Entry 155 of Schedule IV and the Residuary Entry of Schedule V. Applying the principle that a component is considered a part of the whole if the whole is incomplete without it, the Court determined that wire ropes were essential components of Mobile Cranes, falling under Entry 155 and thus subject to a 4% tax rate. Conclusion: The Supreme Court dismissed the appeal, upholding the lower authorities' decision that "Mobile Crane Wire Ropes" should be taxed at 4% under Entry 155 of Schedule IV of the VAT Act. The Court emphasized the integral role of wire ropes in Mobile Cranes, highlighting that the ropes were indispensable for the cranes to function effectively. This judgment clarified the taxability of specific goods under the VAT Act and provided a detailed analysis of the applicable tax rates for "Mobile Crane Wire Ropes."
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