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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 ..... be treated as part of railway coaches, wagons etc. - The legislature in its wisdom amended Entry pertaining to the railway coaches, wagons, engines including the word ‘parts thereof'. If the legislature was not intending to tax batteries as part of railway coaches, wagons etc., then perhaps it would have excluded batteries from the Entry and in that situation, Entry would have been railway coach, engine, wagon and part thereof, excluding batteries - Hence, the battery is the part of railway coaches, wagons, engines etc. - The battery being the part of the railway which falls under Entry 76 of the third schedule, would be liable to tax at the rate of 4% u/s 4(1)(a) of the Act and not u/s 4(1)(b) under residuary clause - Further, the Government by notification dated 24-3-2008 invoking its power u/s 4(3) 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 - Hence, it has to be taxed under Section 4(1)(a) – No need found to interfere with the order of Tribunal - Decided in favour of assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er issued proposition notice for reassessment under Section 39(1) of the KVAT Act, 2003 and under Section 9(2) of the CST Act, 1956. The assessees filed objections to the said proposition notice. The Assessing Officer, after considering the objections found that the assessees had manufactured and sold batteries to the Indian Railways, on which, taxes are charged and collected at 4% instead of 12.5%. The tax invoices raised by the assessees were verified and found that in certain invoices, taxes are charged and collected at 12.5% and in certain invoices taxes are charged and collected at 4% in contravention of the provisions of the KVAT Act. In view of withdrawal of the D-Form facility, the assessees had to levy tax at 12.5% for sale of batteries to the Indian Railways and other Departments. Accordingly, concluded the reassessment order holding that the assessees are liable to pay tax at the rate of 12.5% on the sale of batteries to Indian Railways both under the KVAT Act and CST Act for the relevant period and also imposed interest and penalty under Sections 36(1) and 72(2) of the KAVT Act. 4. The assessees being aggrieved by the reassessment order passed by the Assessing Author ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ting of Rail engines and also for air conditioning or lighting. The lead acid batteries are also used in the motor vehicles, ships, submarines, and used as backup power supplies for telephone and computer centers and also used in UPS system, factory lighting, medical equipment, hotel and house lighting etc. The Dry Cell and Dry Cell batteries which are of different make are also used in watches, torches, TV remote controllers. Thus, these verities of batteries of different make and designs can be grouped and classified as batteries with an intention that all these belong to one category. The batteries do not fall under any of the entries of the KVAT Act, they are unscheduled goods falling under Section 4(1)(b) of the Act. In common parlance, battery is an equipment to store electrical energy and cannot be treated as a part of the vehicle or device in which it is ultimately used. The batteries are made for the purpose of supply of electrical energy. Even though the batteries are manufactured by the respondents-assessees as per the specifications and design given by the Railways, they are still to be considered as batteries only. Hence, it cannot be treated as part of rail engines. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted the request to give retrospective effect to the notification dated 24-03-2008. Hence, having failed to get a favourable order from the State Government, it is not open to the respondents to contend that batteries are the part of railway engines. In support of his contention, learned counsel for the appellant relied upon the judgments reported in (1976) 37 STC 163 (Guj) in the case of (VIKAS TRADERS v/s GUJARATH); (2009) 23 VST 204 (All) in the case of COMMISSIONER, TRADE TAX, U.P., LUCKNOW v/s HCL LIMITED; (2009) 20 VST 136 (Madras) in the case of RELIANCE GENERATORS PVT. LTD. v/s SPECIAL COMMISSIONER COMMISSIONER OF COMMERCIAL TAXES, CHEPAUK, CHENNAI AND ANOTHER; (1995) 96 STC 211 in the case of TATA ENGINEERING AND LOCOMOTIVE COMPANY LIMITED v/s STATE OF BIHAR AND ANOTHER. 7. On the other hand, Sri.T.N.Keshavamurthy, learned counsel appearing for the respondents argued in support of the order passed by the Karnataka Appellate Tribunal and contended that as per the agreement entered into between the respondents with the Indian Railways for manufacture and supply of the lead acid batteries which are used by the Railways to be fitted into the wagons coaches, as per the sp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsideration in these revision petitions is: Whether the batteries manufactured as per the specifications of the Railways and sold to them by the assessees can be treated as part of Railway coaches, wagons etc., and the batteries fall under Entry 76 of the third schedule of the KVAT Act and are liable to be taxed at the rate of 4%? 10. The assessees are the dealers registered under the KVAT and CST Acts, carrying on the business of manufacturing and selling of varieties of batteries including low maintenance lead acid batteries as per the specifications of Ministry of Railways, Government of India supplied to Railways for the use of railway engines and railway coaches. Prior to 31-3-2007, the Railways were authorized to purchase the batteries against D-Forms at concessional rate of tax at 4% under the provisions of CST Act. With effect from 1-4-2007, Section 8 of the CST Act was amended withdrawing the facility to the Government Departments and Railways to purchase the goods against D-Forms. Consequent upon the withdrawal of D-Forms, Railways has to purchase the goods as per the rate of tax prescribed under the KVAT Act and CST Act. Sub-Section (1) of Section 3 of the KVAT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tor vehicle is a vehicle propelled by the motor, it may be mechanically or electrically propelled. But it is the battery, which is the most integral part of the motor vehicle, without which, it could never have driving force. Entry 52 in the third schedule of the KVAT Act was substituted w.e.f 7-6-2005 and renumbered as Entry 76 which includes the word part thereof , meaning any item like batteries, tyre, tube, etc., which are required in making of railway coaches, wagons, etc. are to be treated as part of railway coaches, wagons etc. The legislature in its wisdom amended Entry pertaining to the railway coaches, wagons, engines including the word parts thereof . If the legislature was not intending to tax batteries as part of railway coaches, wagons etc., then perhaps it would have excluded batteries from the Entry and in that situation, Entry would have been railway coach, engine, wagon and part thereof, excluding batteries. However, the intention of the State Government is not to exclude batteries under the part thereof. Hence, it has to be held that the battery is the part of railway coaches, wagons, engines etc. As stated earlier, without the batteries, the engines of the rai ..... X X X X Extracts X X X X X X X X Extracts X X X X
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