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TMI Blog2014 (4) TMI 807X X X X Extracts X X X X X X X X Extracts X X X X ..... are involved in these revision petitions and different orders passed by the Tribunal are challenged in these revision petitions, all these petitions are clubbed together and disposed of by this common order. 3. The respondents-assessees are the Private Limited Companies incorporated under the Companies Act, 1956 and dealers registered both under the KVAT Act, 2003 and Central Sales Tax Act, 1956 (for short 'the CST Act'). The assessees are carrying on the business of manufacture and sale of varieties of batteries which include low maintenance lead acid batteries manufactured as per the specifications give by the Ministry of Railways, Government of India and supplied to Railways for use in rail engines, wagons, coaches, etc. They filed return of turnover in VAT No.100 for the relevant period. During the said period, the assessees had charged and collected VAT @ 4% on sale of batteries to Railways. The Deputy Commissioner of Commercial Taxes (Audit) (hereinafter referred to as the 'Assessing Officer') visited the business premises of the respondents-assessees for inspection and audit of books of account. On verification of the books of account, it was noticed that the assessees had ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed the appeals and set aside the order passed by the First Appellate Authority as well as the Assessing Authority, holding that the levy of tax on inter-State sales turnover of batteries to Railways as determined at 12.5% under residuary entry by the Assessing Authority which was confirmed by the First Appellate Authority is contrary to law and directed the Assessing Authority to assess the said turnovers at 4% as per Entry 76 of the third Schedule of the KVAT Act and also quashed the levy of interest as well as penalty. Being aggrieved by the order passed by the Karnataka Appellate Tribunal, the State Government has preferred these revision petitions. 5. Sri.Omkumar, learned counsel appearing for the State Government contended that the order passed by the Karnataka Appellate Tribunal is erroneous and unsustainable in law. Section 3 of the KVAT Act is the charging provision prescribing levy of tax on sale of goods. Section 4 read with Schedule appended to the Act prescribes the rate of tax in respect of the goods specified in the schedule. Admittedly, the KVAT Act has not provided specific entry for batteries for levy of tax and therefore, the batteries are to be regarded as falli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tax applicable to the batteries sold to the Railways. The Commissioner of Commercial Taxes, by its order dated 10-07-2007, has clarified that the said goods are not covered under Entry 76 of the third Schedule to the KVAT Act, and they are liable to pay tax at 12.5% under Section 4(1)(b) of the KVAT Act. Pursuant to the order made in W.A.No.2168/2007 passed by the Division Bench of this Court, the Commissioner re-examined the matter and after giving opportunity to the respondent, passed fresh order on 12-11-2009 holding that the batteries sold to the Indian Railways are unscheduled goods under Section 4(1)(b) of the KVAT Act. It was taxable at 12.5% from 1-4-2007 to 31-3-2008. Subsequently, a representation was also made by the traders to reduce tax in respect of supply of batteries to the Indian Railways from 12.5% to 4%. However, the Commissioner by an order dated 11-09-2008, rejected the same. Subsequently, the State Government by its notification dated 24-03-2008, in exercise of its power conferred by sub-Section (3) of Section 4 of the Act, reduced the tax in respect of batteries sold to Indian Railways from 12.5% to 4% w.e.f 1-4-2008 onwards. The traders of the batteries once ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ence, the batteries are part of the engines, wagons and coaches. Hence, the respondents are liable to levy tax only at the rate of 4% under Entry 76 even though the batteries have a separate identity as batteries. Without the batteries, the railway engine cannot operate. The batteries have to be treated as part of the railways. Just like a car cannot run without tyre and tube, the railway engines/wagons railways also cannot run without the batteries. Hence, the respondents are liable to levy tax at the rate of 4% under entry 76 of the third schedule. He strongly relied upon the judgment of the Hon'ble Supreme Court in TATA ENGINEERING AND LOCOMOTIVE COMPANY v/s STATE OF BIHAR AND OTHERS reported in (1995) 96 STC 211 (cited supra). The Appellate Tribunal after considering the matter in detail held that the batteries manufactured and supplied to the railways attract VAT at the rate of 4% as it falls under Entry 76 of the third Schedule of the KVAT Act, since it constitutes a part of the railways. Accordingly allowed the appeals and set aside the levy of interest as well as penalty. There is no infirmity in the said order and sought for dismissal of the revision petitions. 8. We have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o collect tax more than 4% for the supply of batteries to the Railways. The question that arose for consideration is whether the batteries are the part of railway coaches, engines and wagons, and fall under Entry 76 of the third schedule. The batteries are manufactured by the dealers as per the specifications of Indian Railways. The BEML is the sole manufacturer of railway coaches, wagons, etc. The batteries are the essential parts of the railway coaches, engines and wagons. Without the batteries the railway engines cannot work and there cannot be air conditioning and lighting, if the railway coaches are not fitted with the batteries. The batteries are the integral part of the railways. In view of that, while substituting Entry 52 it was brought under Entry 76 and included the word "part thereof" to Entry 76 i.e. Railway coaches, engines and wagons. Any part of railways falls under Entry 76. The Hon'ble Supreme Court in the case of TATA ENGINEERING AND LOCOMOTIVE COMPANY (supra) held that no vehicle can operate or work nor can it be said to have been produced unless tyre, tube and batteries are fixed to it. Use of these items is integrally connected with the ultimate production. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iod from 1-4-2007 to 31-3-2008. Further, the Government itself by its notification dated 24-3-2008 invoking its power under sub-Section (3) of Section 4, reduced the tax from 12.5% to 4% w.e.f. 1-4-2008 on the sale of batteries to the Indian Railways. Hence, it is clear that the battery is an integral part of the railway coaches, engines and wagons and falls under the 'part thereof' under Entry 76 of the third schedule. Hence, it has to be taxed under Section 4(1)(a) of the KVAT Act. The batteries sold to the Railways form part of railway coaches as per Entry 76 of the third schedule of the KVAT Act and is exigible to levy tax at 4% and not at 12.5%. Hence, the batteries sold to railways is part within the expression "part thereof" and liable to be taxed at the rate of 4%. Some of the judgments relied upon by the appellant are not applicable to the facts of the case on hand. 12. Accordingly, the question formulated in these revision petitions is held in favour of the assessees. The appellant has not made out a case to interfere with the order passed by the Karnataka Appellate Tribunal. Accordingly, we pass the following ORDER The revision petitions are dismissed. The order pass ..... X X X X Extracts X X X X X X X X Extracts X X X X
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