Rajasthan High Court - Jaipur
Addl Commissioner(Vat And It) Jaipur vs M/S Sukirti Vyapar on 7 October, 2016
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IN THE HIGH COURT OF JUDICATURE FOR RAJASTHAN AT JAIPUR
BENCH, JAIPUR
1. S.B. SALES TAX REVISION PETITION NO.449/2011
ADDITIONAL COMMISSIONER, (VAT & IT), JAIPUR
V.
M/S. SUKIRTY VYAPAR, A-4-49, AUTOMOBILE NAGAR, JAIPUR
2. S.B. SALES TAX REVISION PETITION NO.99/2013
CTO, ANTI EVASION, CIRCLE-III, RAJASTHAN, JAIPUR
V.
M/S. PRASOON ENTERPRISES, 2121, BENI BHAWAN, NAGARPADE
KA RASTA, GANGAURI BAZAR, JAIPUR
3. S.B. SALES TAX REVISION PETITION NO.100/2013
CTO, ANTI EVASION, CIRCLE-III, RAJASTHAN, JAIPUR
V.
M/S. PRASOON ENTERPRISES, 2121, BENI BHAWAN, NAGARPADE
KA RASTA, GANGAURI BAZAR, JAIPUR
4. S.B. SALES TAX REVISION PETITION NO.101/2013
CTO, ANTI EVASION, CIRCLE-III, RAJASTHAN, JAIPUR
V.
M/S. PRASOON ENTERPRISES, 2121, BENI BHAWAN, NAGARPADE
KA RASTA, GANGAURI BAZAR, JAIPUR
5. S.B. SALES TAX REVISION PETITION NO.106/2013
CTO, ANTI EVASION, CIRCLE-III, RAJASTHAN, JAIPUR
V.
M/S. PRASOON ENTERPRISES, 2121, BENI BHAWAN, NAGARPADE
KA RASTA, GANGAURI BAZAR, JAIPUR
Reserved on : 14th September, 2016
Pronounced on : 7th October, 2016
HON'BLE MR. JUSTICE JAINENDRA KUMAR RANKA, J.
Ms. Tanvi Sahai, counsel for petitioner
Mr. Vivek Singhal, counsel for respondent
ORDER
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1. These petitions raise common question of law and being identical, by common order are being disposed of with the consent of the parties. The assessment years involved are 2006-07 and 2008-09. The question of law raised by the Revenue reads as under:- 2
"whether in the facts and circumstances of the case the Rajasthan Tax Board was justified in law in holding the goods namely "Mobile Cranes wire ropes" liable to tax @ 4% under schedule IV despite of the facts that there is no specific entry of the same and they are liable for tax as per rate prescribed under schedule-V."
2. In so far as STR No. 449/2011 is concerned, the respondent assessee moved an application to the Additional Commissioner for advance ruling on the following question:-
"Whether the goods namely mobile crane wire ropes are part of the goods as mentioned in Entry No. 155 and accordingly taxable at the rate of 4%. If not, then at what rate the said goods are taxable."
3. The Additional Commissioner by its order dated 27-10-2009 held that the Mobile Crane Wire Ropes cannot be said to be part of Mobile Cranes and since it was not notified anywhere in Schedule I, II, III, IV or VI of the Rajasthan Value Added Tax Act, 2003, as such shall be taxable at the rate notified in Schedule V of the Act 2003.
4. The matter was assailed before the Tax Board.
5. In the connected petitions, STR Nos.99, 100/2013, 101/2013 and 106/2013, a survey took place on 16.12.2008 wherein it was noticed that the said assessee had sold Wire Ropes/Strained Wires, however, paid tax @ 4% whereas as per the Assessing Officer it ought to have been 12.5% and in assessment the differential tax of 8.5% was charged.
6. The matter was assailed before the Deputy Commissioner (Appeals) who allowed the appeals in favour of the respondent assessee.
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7. The further appeal by Revenue before the Tax Board also resulted into dismissal of the appeals.
8. Thus, taking into consideration the brief facts, the issue raised by the Revenue is that Mobile Crane Wire Ropes are distinct and separate and by no stretch of imagination it could be said to be part of Mobile Cranes and contends that plain and simple meaning is required to be looked into and the item in which the dispute has been raised, being distinct and separate, the claim of Revenue is just and proper.
9. Learned counsel for Revenue contended that Mobile Cranes can be operated without Wire Ropes and it is not necessary that Wire Ropes are required to be used only in Cranes, but can be used for diverse purposes and no material has been placed by the assessee respondent to show that it was being used only for Mobile Cranes and not for other purposes. No material having been placed by the respondent assessee about its user, the claim of Revenue is just and proper and the Additional Commissioner rightly opined. The learned counsel also relied upon judgment rendered in State of Uttar Pradesh and Anr. v. Kores (India) Ltd. [1977] 39 STC 8 (SC), and contended that so far as the appeal of M/s. Sukirti Vyapar is concerned, the order of Additional Commissioner is required to be upheld and in the other appeals, of M/s. Prasoon Enterprises, the order of Assessing Officer is required to be upheld.
10. Per contra, learned counsel for the assessee vehemently contended that Wire Ropes are indeed part of Mobile Cranes and nothing else. It has been contended 4 that had the Assessing Officer or the Additional Commissioner has taken a different view, they could have said something additional, but merely to say that it is distinct from Mobile Cranes, is not sufficient. 10.1 Learned counsel further contended that the Tax Board has gone elaborately on the issue and the learned counsel has also placed for perusal of this Court a catalogue which shows along with photographs that such items are required to be used as a parts of Mobile Cranes. He also contended that plain and simple meaning is required to be taken into consideration and there could be no other use of the Wire Ropes other than placing/putting in Mobile Cranes, and thus contended that the finding of Tax Board is just and proper and is not required to be interfered with. He relied upon judgments rendered in Annapurna Carbon Industries Co. v. State of Andhra Pradesh [1976] 37 STC 278 (SC), Commissioner of Central Excise, Delhi v. Insulation Electrical (P) Ltd. [2008] 30 STT 01 15 (SC), Tata Engineering & Locomotive Company Ltd. v. State of Bihar & Anr. [1995] 96 STC 211 (SC), The Deputy Commissioner of Agricultural Income-Tax and Sales Tax (Law), Board of Revenue (Taxes), Ernakulam v. Union Carbide India Limited, Madras [1976] 38 STC 198 (Ker), ACTO v. M/s Swastik Agencies [2015] 12 RGSTR 01 P.394 CTO v. M/s Mack Springs Pvt. Ltd. [2006] 15 TUD 01 P.9 (Raj.), and CTO v. P.P. Rubber Products (Pvt.) Ltd. [2016] 25 VAT Reporter 189 (Raj.).
11. I have considered the arguments advanced by the learned counsel for the parties and perused the 5 impugned orders, so also the judgments cited at the Bar. In my view the claim of the assessee appears to be well justified. It is a Wire Rope and is mainly put in the Mobile Cranes whenever such wire, either becomes loose or breaks, and nothing more. It may be that few people may use it for some other purposes, that does not mean that it becomes a different commodity. It should be part & parcel of Mobile Cranes and nothing more.
12. The apex court in the case of Insulation Electrical (P) Ltd. (supra) considered a case wherein the assessee was engaged in the manufacture of Rail Assembly front Seat (Omni), Adjuster Assembly slider Seat, YE-2 Rear Back Lock Assembly and 1000 CC Rear Back Lock Assembly and classified its product under chapter heading 8708.00 as parts and accessories of motor vehicle which attracted 15% rate of duty, however, the officers gathered information on the inspection of the factory that the items manufactured by the assessee was classifiable under chapter heading 9401.00 attracting central excise duty at the rate of 18% ad valorem and not under Chapter heading 8708.00 and the assessee paying less duty at the rate of 15% only. Terming the assessee had been mis-classifying its products. It was the claim of assessee that the items manufactured by it are only adjuncts, additions to the seats for the better utilization of the seats for comfort and convenience of the passengers and they are not essentially components or parts of seats, and the claim of the Revenue before the apex court was that 6 the products manufactured by the assessee are parts of the seats because assessee was supplying these products to M/s Bharat Seats Limited and M/s Krishna Maruti Limited which were manufacturing seats classifiable under chapter heading 9401.00. It would be appropriate to quote relevant paras, which read ad infra :-
"11. In Mehra Brothers (supra), this court observed in para 6 as follows-
6. In Supreme Motors v. State of Karnataka case (supra), the Karnataka High Court has taken different view. It held that the car seat covers, at best could make the seat more comfortable, but do not serve as aids to the vehicle as a whole, and therefore, they must fall outside the ambit of Entry 73 of the Second Schedule to the Karnataka Sales Tax Act, 1957 and was not exigible to sales tax at 13 per cent. Undoubtedly this ratio would help the appellant. The learned judges laid emphasis thus--
"Every part is useful to the car for its effective operation. Likewise should be the aid of other accessories in order to fall within the said entry. The accessory to a part which has no convenience of effectiveness to the entire car as such cannot in our opinion fall within the said entry. The accessory to a part which has no convenience of effectiveness to the entire car as such cannot in our opinion fall within Entry 73."
To the same effect are the judgments of this Court in the case of Pragati Silicons Pvt. Ltd. v. Commissioner of Central Excise, Delhi, 2007 (211) ELT 534 (SC) and Annapurna Carbon Industries Co. v. State of Andhra Pradesh (1976) 2 SCC 273. After considering in detail, the difference between the 'accessories' and 'parts', this Court in the case of Pragati Silicons (supra) came to the conclusion that 'accessory' is something supplementary or subordinate in nature and need not be essential for the actual functioning of the product. Chapter 9401 covers all types of seats and not only the seats of a car and a seat is complete even without the rail assembly front seat, adjuster/assembly slider seat and rear back lock assembly. They are not essential parts of the seat. Chapter heading 9401 covers only the parts of seats and not accessories to the seats. A 'part' is an essential component of the whole without which the whole cannot function.
12. We agree with the view taken by the Tribunal that the products manufactured by the assessee cannot be the 'parts' of seats, as claimed by the revenue. Chapter heading 8708 covers both the 'parts' as well as 'accessories'. The items manufactured by the assessee are only adjuncts. These are to be affixed on the floor of motor vehicles. When seats are affixed on these rails, seats can slide back and forth with the operation 7 of a lever forming part of other rail assembly front seat adjuster. This enables the driver or the passenger, to adjust the position of the seat to suit his comfort and convenience. These are merely to improve the efficiency and convenience of the seat and does not form part of seat. The seats are complete in themselves without these mechanisms and therefore it cannot be held that the parts manufactured by the assessee merit classification under chapter 9401. Rather the same would be accessories to the motor vehicle as claimed by the assessee and would merit classification under chapter heading 8708, because they are fitted in the motor car for adjustment of the seats for the convenience and comfort of the passengers. The Rail Assembly front seat (Omni), Adjuster/assembly slider seat, YE-2 rear back lock assembly and 1000cc rear back lock assembly being manufactured by the assessee can at best be termed as accessories to the motor vehicle for better convenience of the passengers/drivers travelling in the car."
In Tata Engineering & Locomotive Company Ltd. (supra), the apex court was considering a case of Tata Company which is manufacturing and processing motor vehicles, trucks and bus chassis, excavators and other engineering products, purchased commodities including such commodities as tyres, tubes, batteries and other various other items which are used for producing the goods and making them salable commodities, and it was claimed that they are entitled to concessional rate of tax. The apex court observed ad infra :-
"Raw material has been further explained by using the word "inputs", which dictionarily means, "what is put in", "enter", "enter system". The concessional rate of tax is thus applicable to that raw material that is put in the manufacture or use of the goods. In Collector of Central Excise, Calcutta v. Jay Engineering Works Ltd. (1989) 75 STC 313 (SC); a question arose whether name-plates used by manufacturer of fans being, "input" were exempt from payment of excise duty which provided that duty of excise leviable on such goods falling under Item 1-A of Serial No. 68 as used "inputs" would be exempt. It was held that name-plate affixed on the fan was not a piece of decoration and the fan without name-
plate could not be marketed, therefore, it was exempt as provided in the notification and the assessee was entitled to exemption. The tyres, 8 tubes and batteries were purchased for being put in the vehicle, which could not be operative without it. They were thus "input". The use of this word was indicative that the benefit was intended for every item which was raw material in the widest sense made wider by using the expression, "input". The purpose was for broadening the meaning of raw material by including in it even those items which could be placed in the vehicle, to make it marketable as vehicles."
The Kerala High Court in the case of Union Carbide India Limited (supra), has opined thus :-
"...The principle which can be drawn from the above decisions appears to be that a thing is a part of the other only if the other is incomplete without it. A thing is an accessory of the other only if the thing is not essential for the other but only adds to its convenience or effectiveness. Based on this principle the courts held that a typewriter ribbon was not a part of a typewriter as a typewriter was complete without the ribbon. A typewriter could function even without the ribbon when cutting stencils, but whether the ribbon could be treated as an accessory was not, as already stated, considered by the courts. In the case of printing types, the Court held that they were not accessories of a printing machine, for the machine could not function without the types. The types were not accessories in the sense of something which merely added to the convenience or effectiveness of the principal thing, namely, the machinery. Although it was not considered by the Mysore High Court whether the printing types were part of the printing machinery, it would appear that, in the light of its decision in State of Mysore v. Kores (India) Ltd., it would have, had the question arisen, held that the printing types were not part of the printing machinery, for the machinery was complete without the types.
7. To restate the principle : A thing is a part of the other, if the other is incomplete without it. A thing is not an accessory of the other, if the other, although complete in itself, cannot function without the thing.
8. Looking at the leakpoof batteries or the arc carbons, one is not likely to say that they are either parts or accessories. A transistor is complete without the battery; but, unless the transistor can be connected to the mains, it cannot function without the battery. The batteries are indispensable for the functioning of the transistors. They are not accessories for they do not merely add to the convenience or effectiveness of the transistors, but they make them work. Nevertheless they are not parts of the transistors, for the transistors are complete without them. Same is the position with the arc carbons vis-a-vis the cinematographic equipments."9
A coordinate Bench of this court in the case of ACTO v. Industrial Instruments (supra), was considering the case of "CVT & UPS" and this court held that the "CVT & UPS" are essential part of the computer because without them the computer cannot be used, accordingly rejected the petition of Revenue, and SLP filed by the State was also dismissed by the apex court.
This court in the case of M/s Mack Springs Pvt. Ltd. (supra) was considering a case of Leaf Springs sold by the assessee as Auto Vehicle Parts, and as to whether they were taxable @ 6% or 10% in residuary or general category, and held thus :-
"9. The Tax Board also noticed in para 8 of its judgment that the facts of the case on record showed that the appellant being the manufacturers of Automobile Leaf Springs, leaves and accessories are registered as such with the Govt. of Maharashtra and they have been granted ISO certificate as manufacturers of Automobile Leaf Springs and Assemblies. They manufacture leaf springs for exclusive use in various types of motor vehicles like Tata. Telco. Mahindra & Mahendra etc. and sell it only to auto dealers for use in motor vehicles. Their published price List for leaf springs also indicates that they offer leaf spring for various auto vehiles only. Therefore all these facts on record predominantly establish that the leaf springs manufactured and marketed by the appellants were available for exclusive use for motor vehicles only.
10. The Tax board also rightly relied upon the judgments of the Hon'ble Supreme Court in Atul Glass Industries' case (supra) where the Apex Court held that the screens, although commonly known as wind screens,-rear screens and door screens, manufactured according to the specific shape and measurement indicated in the orders for different vehicles could "only be considered as motor vehicle parts" and not "glass or glass- wares".
11. The Division Bench of Andhra Pradesh High Court in T.V. Sundram's case (supra) also held that the motor bulbs "cannot be treated as ordinary electrical goods nor are they generally 10 or normally available in shops selling electrical goods and therefore, they were taxable as motor parts and Accessories"."
This court in the case of M/s Swastik Agencies (supra), considering a case of Battery, after taking into consideration several judgments of the apex court as well as this court, has held that Battery is meant for motor cars is liable to tax at the same rate applicable that of motor car.
13. Taking into consideration the aforesaid judgments of the various courts and view expressed earlier and taking into consideration the facts noticed hereinbefore,in my view the user of Wire Ropes being mainly to put in the Mobile Cranes, is certainly integral part of the Mobile Cranes and was entitled to the same rate of tax. The judgment relied upon by the learned counsel for the petitioner in the case of Kores (India) Ltd. and Indian Aluminium Cables Ltd. (supra), is distinguishable on facts and is not applicable in the instant case.
14. Consequently, the petitions are dismissed.
(JAINENDRA KUMAR RANKA) J.
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