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TMI Blog2015 (8) TMI 498X X X X Extracts X X X X X X X X Extracts X X X X ..... gislature was to tax sale of each commercial commodity and not sale of substance out of which it was made – Therefore Tribunal did not commit any error – Decided in favour of Assessee. - SALES TAX REFERENCE NO.9 OF 2000 - - - Dated:- 12-8-2014 - S.C. DHARMADHIKARI AND B.P. COLABAWALLA, JJ. Mr.S.K.Nair, A Panel Counsel, for the Appellant Mr.P.C.Joshi, Amicus Curiae, present.for the Respondent P.C.: 1 In Reference Application Nos.74 to 78 of 1997 the Applicant/ Commissioner of Sales Tax, Maharashtra State has persuaded the Tribunal to refer the following questions to this Court for it's opinion: 1) Whether on a true and correct interpretation of Entry 6(ix) of ScheduleB appended to the Bombay Sales Tax Act, 1959 and Entry No.14(iv)(ix) of the Central Sales Tax Act, 1956, tools open jaw spanners attract the tax liability @ 4% or should be treated as falling within the scope of residuary Entry No.102 of ScheduleC PartII appended to the Bombay Sales Tax Act, 1959? (2) Whether on the facts and in the circumstances of the case and on a true and correct interpretation of the judgment of this High Court in the case of Ranchhoddas Bhaichand v/s Comm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ellaneous Application Nos.113, 114, 115, 116 and 117 of 1997 is allowed. 2. Each of the Second Appeal Nos.685, 686, 687, 688 and 689 of 1995 is allowed. The matter to go back to the lower Appellate Authority for its action as under: a) To recompute the tax liability of the appellant for all the periods by taxing the sale of jaw spanners and hand tools at 4 per cent as declared goods. (b) Delete additional tax and turnover tax on the said turnover for all the periods. (c) To recalculate interest/ penalty under Section 36(3) of the Bombay Act by holding the tax liability of the appellant at 4 per cent. 3. The appellate authority is also directed to take any other consequential actions as a result of the foregoing actions which are permissible under the law. 4. The appellate authority is directed to complete from the date of receipt of this judgment. 5. The compliance report of the necessary action having been taken is directed to be sent to the Registrar, Maharashtra Sales Tax Tribunal, Mumbai. 5 The Revenue sought reliefs by making five Reference Applications for referring the matters to this Court and on 19.12.1998 the Tribunal passed the order of referen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the case of M/s National Lock Stores and particularly the Commissioner of Sales Tax, Madhya Pradesh v/s National Lock Stores reported in (1996) Vol.101 Sales Tax Cases 83, holding that screwdrivers, saws, pickaxes, etc. should naturally fall in the expression of tool appearing in Item (ix) of clause (iv) of Section 14 of the Central Sales Tax Act, 1956. The Madhya Pradesh High Court held that this item, therefore, be brought to tax at 4% being covered by Entry 1 of Part I of the Second Schedule to the Madhya Pradesh General Sales Tax Act, 1958. That is how when the Appeals were brought and styled as Second Appeals before the Tribunal against the decision of the first Appellate Authority that the Assessee made the above Miscellaneous Applications. The Miscellaneous Applications were allowed and the additional grounds were raised so as to dispute the tax liability itself. 10 Mr.Nair, therefore, submits that the Tribunal has erred in law in allowing the additional grounds to be raised and for the first time at the second appellate stage. That was not permissible firstly because no foundation for the same was laid either during the course of the assessment orders or before the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed. The Madhya Pradesh High Court had not discussed the matter completely and in its true and proper perspective. There are several aspects which have gone unnoticed. In that regard, Mr.Nair submits that the Madhya Pradesh High Court has proceeded on the footing that the Entry is in plural and not singular. No argument whether the Entry is plural or singular seems to have been canvassed before the Madhya Pradesh High Court. The aspect of the matter and which is fundamental, according to Mr.Nair, is that the declared goods are raw material. There is a comma between the words tool and alloy and thereafter, there is conjunction and between the words alloy and special . These three words, namely, tool, alloy and special and each one of them is qualifying the word steel which means the whole clause should be read as tool steel, alloy steel and special steel . There are different kinds of steels which are used for specific purposes, according to Mr.Nair. Therefore, the word tool used in the Entry is adjective and not noun. It cannot be read in isolation and must be read in conjunction with the word steel . 12 In these circumstances that Mr.Nair placed reliance upon the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the case of I.P. Rings Limited v/s Tamil Nadu Taxation Special Tribunal reported in (2007) 5 VST 476 (Mad), the Punjab and Haryana High Court in the case of State of Punjab v/s Federal Gogul Goetze (India) Limited reported in (2011) 43 VST 100 (P H) and the Honourable Supreme Court in the case of Dewan Enterprises v/s Commissioner of Sales Tax, U.P. reported in (1996) 102 STC 67 (SC). The attempt of Mr.Joshi is to submit that the view taken by the Tribunal is in accordance with law. There is no merit in the contentions of Mr.Nair because the Madhya Pradesh High Court as also the Division Bench of this Court in the case of M/s Raymond Limited (supra) have held that singular or plural word tool and the words appearing thereafter in the Entry would denote the items of iron and steel independently. There is no merit, according to Mr.Joshi, in the contentions of Mr.Nair that the raw material or semifinished goods are referred to in the Entry and not finished goods such as screwdrivers, saws, pickaxes, etc.. Therefore, according to Mr.Joshi, any tool of iron or steel referred in the item is chargeable to tax at 4%. No other meaning can be assigned as that would make the Entry redund ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as under: tool, alloy and special steels of any of the above categories Similarly, section 14(iv)(ix) of the Central Sales Tax 1956 reads as under: tool, alloy and special steels of any of the above categories The comma after the word tool must mean that the expression is to be read independent of the words alloy and special steels of any of the above categories as all of them fall under the heading iron and steel . As long as a tool is made of iron and steel it would fall within that entry including tools. It is also not possible to accept that we must apply the principle of ejusdem generis in interpreting the aforesaid entries as the word tool is independent of alloy and special steel in any of the above categories and do not take colour from each other. The argument therefore advanced on behalf of the Revenue has to be rejected. 5. In these circumstances, in our opinion, there is no merit in the question raised. Accordingly, reference rejected. 17 We have carefully read this order and we do not see how Mr.Nair urges before us that all shades and aspects of the controversy have not been noted and duly considered. His complaint is that the counsel for the S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tely redundant or superfluous. 21 Even otherwise we do not find how a different conclusion than one reached by the Division Bench can be arrived at in this case. We must note that the Division Bench judgment of the Madhya Pradesh High Court apart, this Court had before it a complete Entry. It had also dealt with similar and identical argument that expression tool must be read in conjunction with alloy and special steel, therefore, the conclusions contrary arrived at by the Tribunal cannot be supported. The entire foundation and basis of Mr.Nair's argument is the manner of reading of the Entry in question. That is dealt with in paragraph 3 of the order. Then the very argument of comma appearing after singular word tool would not mean that it should be read independently of other words appearing in the Entry and that is an argument which has been stated and rejected as above by the Division Bench. 22 Now with the aid of a distinct entry the argument of Mr.Nair is that the Tribunal relied on the judgment of the Madhya Pradesh High Court in the case of National Lock Stores (supra). What we find from reading of the said judgment is that the Madhya Pradesh High Court had be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ys have some purpose or object to accomplish whose sympathetic and imaginative discovery is the surest guide to their meaning. 9. In exercise of clearing doubts and mitigating hardships, we find that articles, as detailed, are nothing but tools within the provision of law and are thus, exigible at concessional rate. 10. The Government Advocate was unable to point out any infirmity in the conclusion reached by the Tribunal. We are satisfied with the correctness of the conclusion recorded by the Tribunal and do not find any error in the matter of interpretation. 11. As screwdrivers, saws and pickaxes do come within the definition of tools , we answer the stated question in the affirmative i.e. against the department and in favour of the Assessee. 23 Upon careful perusal of the Entry in question, we are respectfully in agreement with the view taken by the Division Bench of this Court. That the Central Sales Tax Act and the Bombay Sales Tax Act has identical entry is not disputed. 24 What remains to be noted is the reference to the judgments in the case of Bengal Iron Corporation and Vasantham Foundry (supra). In Bengal Iron Corporation, the Honourable Supreme Court h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by the expression tool as appearing in the subject Entry and those covered are only items in the raw material form and not finished goods. For the reasons that we have noted above we have already rejected such argument. 27 Then, we find that reliance placed on the judgment of the Honourable Supreme Court in the case of State of Tamil Nadu v/s Pyare Lal Malhotra reported in 1976 (37) STC 319 (SC), would not carry the case of the Revenue any further. There is no dispute that the Entry No.(iv) in Section 14 of the Central Sales Tax Act, 1956, as originally worded prior to it's amendment by Amendment Act 61 of 1972, was meant to enumerate separately taxable goods and not just to illustrate what was just one taxable substance, namely, iron and steel . Each subitem in Entry No.(iv) is a separately taxable commodity for the purpose of sales tax and each of them forms a separate species for each series of sales although they may all belong to the genus, iron and steel . That is how the Honourable Supreme Court has laid down the principle of reading the tax entry and held that the object of the Legislature is to tax the sale of each commercial commodity and not sale of substanc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ers passed separately for the period 01.01.1985 to 31.12.1985. The original assessment order was never subject matter of challenge before the lower Appellate Authority and that is how the Revenue objected to the inclusion or permission to raise an additional ground. However, finding that in relation to the same Assessee and pertaining to the separate periods there was consensus amongst the parties and a permission was given to raise an additional ground that merely by following the course in relation to two Appeals the Tribunal did not commit any error of law or perversity. Having found that the question of taxability goes to the root of the case and raises a vital issue of interpretation of the Entry in question that the Tribunal permitted the additional ground to be raised. Since no prejudice has been caused as all arguments have been noted not only at the stage of Appeal, but even at the stage of deciding the Reference Application that we are of the opinion that any larger question or controversy need not be addressed or decided. Suffice it to state that Question No.2 need not be answered in favour of the Revenue as in the given facts and circumstances the Tribunal did not commi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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