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TMI Blog2023 (7) TMI 630X X X X Extracts X X X X X X X X Extracts X X X X ..... sha Value Added Tax Rules, 2005 by the Sales Tax Officer, Bhubaneswar-I Circle, Bhubaneswar pertaining to the tax periods from 01.04.2011 to 31.03.2013. FACTS OF THE CASE: 2. The assessee-petitioner being a registered dealer under the Odisha Value Added Tax Act, 2004 (for short referred to as "OVAT Act"), carries on its business in manufacturing and trading of electrical goods and equipments for industrial use, electric generator, pump sets and its spares and accessories etc. This apart, it is engaged in supply, erection, installation and commissioning of contract work. 2.1. Being selected under Section 41 of the OVAT Act, tax audit was conducted and Audit Visit Report was submitted to the Assessing Authority-Sales Tax Officer, Bhubaneswar-I Circle, Bhubaneswar, consequent upon which Assessment under Section 42 was framed taking into account observation/objection contained in the Audit Visit Report inter alia that the petitioner-dealer had misclassified the item, namely 150 HP Fully Automatic ATS (Auto-Transformer Starter) Control Panel, Motor Starter Panel Board and other Control Panel (hereinafter referred to as "ATS"), as a result of which there was a short levy of value add ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that 'Centrifugal, Monoblock and Submersible pumps and pump sets for handling water operated electrically or otherwise and parts and accessories thereof' are exigible to VAT @4% / 5% as the case may be." 2.3. Alleging that the Appellate Authority having blindly accepted the explanation of the petitioner, the first appellate order being perverse, the State of Odisha represented by the Commissioner of Sales Tax, Odisha carried the matter before the Odisha Sales Tax Tribunal under Section 78 of the OVAT Act which was registered as S.A. No.188 (VAT) of 2015-16 on the ground amongst others that the ATS attracts levy of value added tax @13.5% as it falls within ken of Part-III of Schedule-B appended to said Act. 2.4. Accepting the plea, the learned Sales Tax Tribunal allowed the second appeal preferred at the behest of the State of Odisha by stating thus: "After going through all the aspects of the case, it is my considered opinion that, in the instant case the demand has been raised on two grounds: (i) Tax was levied @13.5% towards sale of 150HP fully automotive ATS control panel, Motor starter panel pump and other control panel as unspecified goods. Whereas the First Appellate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... edule B or are unspecified goods. III. Any other question of law as the Honourable Court deems fit and proper out of the said order of the Division Bench, Odisha Sales Tax, Tribunal, Cuttack? QUESTION OF LAW FRAMED FOR ADJUDICATION: 4. This Court while entertaining revision petition, passed the following Order on 12.03.2018: "Heard Mr. C.R. Das, learned counsel for the petitioner. This Sales Tax Revision is admitted on the following substantial question of law: I. Whether in the facts and circumstances of the case, the Single Bench, Judicial Member-II, Odisha Sales Tax Tribunal was right in law in holding that 150 HP fully automotive ATS control panel, motor starter control panel and other panel are unspecified goods liable to tax at 13.5% and not falling under Entry Serial No. 29, Part-II of Schedule-B of the OVAT Act. Issue notice. ***" 4.1. At the stage of hearing of the matter, Sri Chitta Ranjan Das, learned counsel confined his arguments to the aforesaid question of law as framed by this Court. 4.2. Therefore, this Court is called upon to consider whether on the facts and in the circumstances of the case, the tax periods involved in the assessment being ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Authority enquired into, at any point of time, the business activities of the selling dealer, M/s. S.L. Associates, TIN 21885600440, Bhubaneswar and other dealers dealing in these goods". 5.3. It is vehemently contended that the Assessing Authority should not have mechanically accepted the version of the STO (Audit) and discarded the explanation of the Assessee-petitioner. It has consistently been the stand of the petitioner-firm that ATS sold by the dealer is nothing but accessories to pump and pump sets. As the term "accessory" is not defined in the statute, reference has been made to the meaning given in Black's Law Dictrionary, Fifth Edition. Sri Chitta Ranjan Das, learned Advocate advancing argument further would submit that though ATS is not indispensable to the main article, for convenient functioning of it, the same is used. Motor Starter and Control Panel consist of electrical goods, like power contactor, thermal overload relays, AMPs, volt meters, etc. Hence ATS is "accessory" for Centrifugal, Monoblock and Submersible pumps and pump sets for handling water. For this purpose, the learned counsel for the petitioner has placed reliance on the ratio of Mehra Bros. Vrs. Joi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ific query, Sri Sunil Mishra submitted that no (further) material was placed before the learned Odisha Sales Tax Tribunal to substantiate the issue raised by the Revenue in the second appeal. 8. Having heard counsel for both the sides, this Court proceeds to dispose of the matter on merit basing on the material available on record. ENTRIES IN THE SCHEDULE AND TAX RATES: 9. Entries in the Schedule appended to the OVAT Act, so far as relevant, runs thus: Schedule-B Part-II Serial No. Description of goods Rate of tax 29. Centrifugal, monoblock and submersible pumps and pump sets for handling water operated electrically or otherwise and parts and accessories thereof. *5% * Substituted for "4%" with effect from 01.04.2012 vide Finance Department Notification No. 12277- FIN-CT1-TAX-0025/2012 [SRO No. 126/2012], dated 30.03.2012. Part-III ... All other goods except those specified in Schedule C 13.5% KNOWING ABOUT THE ITEM IN QUESTION, i.e., ATS: 10. As the learned Appellate Authority proceeded on the basis of the fact that neither the Sales Tax Officer (Audit) nor the Assessing Authority conducted enquiry with respect to the nature of business activities/commodities i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the Tribunal to have called upon the dealer to give evidence as to the nature of the goods sold before holding that he was liable to sales tax. The assessing officer and the appellate authorities have merely indicated their subjective view without reference to objective factors which was absolutely necessary to determine the true character of the goods sold. Without materials on record it is not possible to say as to in which category the impugned goods sold would fall." 10.2. Since it is borne on orders of the authorities including that of the learned Tribunal that no enquiry was conducted as regards nature of commodities, i.e., ATS, this Court is inclined to take into consideration the expert opinion as submitted by the petitioner. As the learned Standing Counsel has not placed any other material to controvert the opinion of the expert furnished by way of Affidavit sworn to by the Managing Partner of petitioner-firm, the suggestion of Sri Sunil Mishra, learned Standing Counsel during the course of hearing for relegating the matter back for adjudication afresh is not accepted as doing so would serve no purpose at this distance of time and tantamount to giving scope for fishi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ffective functioning of pump and in connection with it. ABSENCE OF DEFINITION OF "ACCESSORY" IN THE STATUTE: 11. It transpires from bare reading of Entry Serial No. 29 of Part-II, Schedule-B that "accessories" of Centrifugal, Monoblock and Submersible pumps and pump sets for handling water operated electrically or otherwise are subject to levy of tax @ 4% [prior to 01.04.2012] and @5% [with effect from 01.04.2012]. 11.1. In absence of meaning ascribed to "accessories" in the OVAT Act, dictionary meaning can be resorted to in order to understand the true scope of said term. In State of Orissa Vrs. Titaghur Paper Mills Co. Ltd., (1985) 60 STC 213 (SC) = AIR 1985 SC 1293 = 1985 SCR (3) 26 = 1985 SCC Supl. 280 = 1985 SCALE (2) 410 = (1985) TaxLR 2948 (SC) it has been laid down that the dictionary meaning of a word cannot be looked at where the word has been statutorily defined or judicially interpreted. But where there is no such definition or interpretation, the Courts may take aid of dictionaries to ascertain the meaning of a word in common parlance. In doing so the Court must bear in mind that a word is used in different senses according to its context and a dictionary gives all ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g of "accessory" in Chamber's Twentieth Century Dictionary by Davidson that "anything additional, secondary, or non-essential item of equipment" and Murray's Dictionary that "something contributing in a subordinate degree to a general result or effect" has been referred to. 11.7. In Black's Law Dictionary, Fifth Edition, 'accessory' has been defined as "anything which is joined to another thing as an ornament, or to render it more perfect, or which accompanies it, or is connected with it as an incident, or as subordinate to it, or which belongs to or with it ... Adjunct or accompaniment ... A thing of subordinate importance. Aiding or contributing in secondary way or assisting in or contributing to as a subordinate." 11.8. The correct test would be whether the article or articles in question would be an adjunct or an accompaniment or an addition for the convenient use of another part of the vehicle or adds to the beauty, elegance or comfort for the use of the motor vehicle or a supplementary or secondary to the main or primary importance. Whether an article or part is an accessory cannot be decided with reference to its necessity to its effective use of the vehicle as a whole. Ge ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which they may serve as aids. The same item may be an accessory of more than one kind of instrument." 11.10. Adaptability and importance are also relevant tests. An accompaniment or a thing which is connected with the principal thing can also be regarded as accessory, if it is made for the purpose of being used in that fashion and is adapted either specially or even generally for the principal article. If an article is important for the purpose of being used in or with the principal article and is specially adapted for that article and is of such a nature that it can be used for that purpose alone, then it can be said without any hesitation that it is an accessory of the principal article. But even if the article is such that it can be used as an accessory in more than one kind of principal articles, it can still be regarded as an accessory of each one of them depending upon its predominant or ordinary purpose That would be a case of general adaptability and, it would be very relevant though not conclusive by itself. It is necessary for a thing to be described as an accessory that it should really be accessory of a principal thing. It should not be of general use. If it is an ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... em (2) of Item 17 as was the position in 1979 paper referred to all kinds of paper including paper or paper boards which have been subjected to various treatments such as coating, impregnating. So, therefore, if all kinds of paper including coated paper is the goods, we have to find out the meaning attributed to those goods in the trade of those kinds of paper where transactions of those goods take place. 12. It is a well-settled principle of construction, as mentioned before, that where the word has a scientific or technical meaning and also an ordinary meaning according to common parlance, it is in the latter sense that in a taxing statute the word must be held to have been used, unless contrary intention is clearly expressed by the legislature. This principle is well settled by a long line of decisions of Canadian, American, Australian and Indian cases. Pollock, J. pointed out in Grenfell Vrs. IRC [(1876) 1 Ex D 242, 248 = 34 LT 426 = 24 WR 582] that if a statute contains language which is capable of being construed in a popular sense, such a statute is not to be construed according to the strict or technical meaning of the language contained in it, but is to be construed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bject is to raise revenue and for such purpose the various products and goods are classified, the common parlance test can be accepted, if any term or expression is not properly defined in the Act 'if any term or expression has been defined in the enactment then it must be understood in the sense in which it is defined but in the absence of any definition being given in the enactment the meaning of the term in common parlance or commercial parlance has to be adopted.' It has also been stated in Indian Aluminium Cables Ltd. Vrs. Union of India, (1987) 64 STC 180 (SC) that commercial parlance assumes importance when goods are marketable. There is no gainsaying that the commercial meaning has to be given to the expressions in tariff items and that where definition of a word is not given it must be construed in its popular sense. Refer, Asian Paints India Limited Vrs. CCE, (1988) 35 ELT 3 (SC). 11.14. It is also pertinent to bear in mind another test for the purpose of classification of commodity. The test commonly applied to ascertain whether a marketable product falls within a specific entry is: how is the product identified by the class or section of people dealing with or using t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... information received from their overseas seller imported the consignment under sub-heading 11. If the Customs Authority was not satisfied with such classification they must atleast prima facie show the reason for such dissatisfaction. Law permits the statutory authorities to question the conduct of a party within the framework of the said statute. Such statutory authority is also under obligation to satisfy itself that there are reasons for questioning such conduct. Before issuance of show cause notice the authority should have investigated into the matter and after prima facie satisfaction the authority should have issued the show cause notice. We have perused the show cause notice. From the tenor of the show cause notice it appears that the Customs Authority put the burden on the respondent that they would have to show that the subject consignment was not manufactured by cut back method to come out of the mischief of sub-heading 19. This is not the right approach. 12.2. For ascertaining the true nature of ATS, the petitioner has brought on record the expert opinion and this Court on visiting web portal of manufacturers of such commodities found that in trade parlance ATS is tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce produced by the appellant before the authorities in the shape of letters from consumers, from doctors and from Ayurvedic physicians satisfies the common parlance test. On the other hand the revenue led no evidence of any sort to rebut the evidence led by the assessee. It is settled law that burden of showing correct classification lies on the revenue. The Revenue has done precious little in this case to discharge this burden." 12.4. Such being the position borne on record, on due consideration of the material available and the contentions of the advocate for the petitioner, this Court does not find force in the argument of Sri Sunil Mishra, learned Standing Counsel for the Commercial Tax & Goods and Services Tax Organisation, more so when the Revenue has not chosen to file any objection to the Expert Opinion supported by Affidavit sworn to by Managing Partner of the petitioner-firm. This Court, hence, feels it expedient to show indulgence in the Order-in-Second Appeal of the learned Odisha Sales Tax Tribunal in exercise of power of revision under Section 80 of the OVAT Act. 13. This Court may have regard to principle as set out by the Hon'ble Supreme Court in Agarwal Oil Refi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has jumped to the following conclusion without assigning cogent reason: "*** It is pertinent to mention here that, the First Appellate Authority himself has not made any inquiry before arriving such a conclusion of taxing of aforesaid items at a lower rate. Therefore, the findings given by Assessing Authority is now sustained." 13.3. In view of the consistent stand of the petitioner-firm before the authorities below that ATS is nothing but accessory to pumps and non-availability of any contrary evidence on record nor did the Revenue bring forth material to contradict such claim of the petitioner, taking into consideration the clinching expert opinion furnished by the petitioner, this Court finds that no reason has been assigned by the learned Odisha Sales Tax Tribunal to restore the observation of the Assessing Authority by reversing the conclusion of the Appellate Authority, as such it committed error in allowing the second appeal preferred by the opposite party- Commissioner of Sales Tax. This Court refers to the following observation of the Hon'ble Supreme Court in the case of Steel Authority of India Limited Vrs. Sales Tax Officer, (2008) 16 VST 181 (SC) made in the contex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Civil Procedure, 1908." 13.5. Where the fact finding authority has acted without any evidence or upon a view of the facts which could not reasonably be entertained or the facts found were such that no person acting judicially and properly instructed as to the relevant law could have found, the Court is entitled to interfere. See, Lalchand Bhagat Ambica Ram Vrs. CIT, (1959) 37 ITR 288 (SC). 13.6. With reference to Omar Salay Mohamed Sait Vrs. CIT, (1959) 37 ITR 151 (SC) the Hon'ble Andhra Pradesh High Court in Spectra Shares & Scrips Pvt. Ltd. Vrs. CIT, (2013) 354 ITR 35 (AP), has been pleased to make the observation that Income-tax Appellate Tribunal is a fact finding Tribunal and if it arrives at its own conclusions of fact after due consideration of the evidence before it, the Court will not interfere. It is necessary, however, that every fact for and against the assessee must have been considered with due care and the Tribunal must have given its finding in a manner which would clearly indicate what were the questions which arose for determination, what was the evidence pro and contra in regard to each one of them and what were the findings reached on the evidence on recor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... leads to show that only such goods as cannot be brought under the various specific entries in the tariff should be attempted to be brought under the residuary entry. In other words, unless the Department can establish that the goods in question can by no conceivable process of reasoning be brought under any of the tariff items, resort cannot be had to the residuary item. The entry which provides the most specific description shall be preferred to entry providing a more general description. Priority has to be given to the main entry and not the residual entry. The residuary entry is meant only for those categories of goods which clearly fall outside the ambit of specified entries. In Mega Enterprises Vrs. State of Madhya Pradesh, (2012) 53 VST 422 (MP) referring to Mauri Yeast India Pvt. Ltd. Vrs. State of UP, (2008) 14 VST 259 (SC), it is observed that in interpreting different entries, attempts should be made to find out as to whether the same answers the description of the contents of the basic entry. Only in the event if it is not possible to do so, recourse to the residuary entry should be made as a last resort. If there is a conflict between two entries, one leading to an opin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erial No. 29 of Part-II of Schedule-B appended to the OVAT Act, which attracts rate of tax @ 4% for the tax periods prior to 01.04.2012 and @5% for the tax periods commencing from 01.04.2012 pertaining to the periods of assessment. 15. For the discussions made above and the reasons stated supra, the question of law as framed by this Court vide Order dated 12.03.2018 which fell for consideration is answered in the negative, i.e., in favour of the petitioner-assessee and against the Revenue. 16. In the result, the Order dated 20.06.2017 passed by the Odisha Sales Tax Tribunal, Cuttack in S.A. No. 188 (VAT) of 2015-16 so far as it relates to issue of classification of ATS is set aside and the determination of tax liability by applying rate of tax @13.5% as specified in Part-III of Schedule-B is held to be erroneous. The Assessing Authority is, thus, requested to recompute the tax liability by applying rate of tax @4% for the tax periods from 01.04.2011 to 31.03.2012 and @5% for the tax periods from 01.04.2012 to 31.03.2013. 17. As a sequel to the above observation, the sales tax revision petition succeeds to the extent indicated above, but, in the circumstances, with no order as to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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