Case Law Details

Case Name : M/s Kirloskar Oil Engines Ltd. Vs The Commissioner of Sales Tax (Bombay High Court)
Appeal Number : Sales Tax Reference No. 8 of 2009
Date of Judgement/Order : 28/02/2017
Related Assessment Year :
Courts : All High Courts (2924) Bombay High Court (511)

In this case on the applicability of VAT Rate under Bombay Sales Tax Act, 1959 it was held by Bombay High Court that Tribunal was justified in holding that the bearings sold by the Applicant were covered by Entry C-II-146 of the Bombay Sales Tax Act, 1959 and not by Entry C-II102(2) as auto parts and C-II135 as tractor parts read with Entry A-35 of the Notification issued under Section 41 of the Bombay Sales Tax Act, 1959.

The proposition that where there is a specific Entry in the schedule to a Taxing Statute, the same would override a general Entry, is very well settled.

Relevant Extract of the Judgment

14. Having noted aforesaid entries, in the facts of the present case, it is the case of the applicant that these bearings are manufactured by the applicant as per the particular drawing and design of the motor vehicle and tractor manufacturers and can be used exclusively in the said motor vehicles or tractors. They are auto parts or tractor parts of motor vehicles and tractors respectively. These bearings have exclusive use or application in the motor vehicle, or as the case may be in the tractor and they have no general application in practice other than in motor vehicles and/or tractors. It is, in these circumstances, that the applicant would contend that these bearings would classify as auto parts or as the case may be, tractor parts for the purpose of levy of sales tax.

15. We are unable to agree with the submissions of the applicant on this point. As far as the bearings are concerned, there is special Entry which deals with bearings of all types including Ball or Roller bearings. This Entry is Schedule Entry C-II-146. There being a specific / special Entry for bearings (Entry C-II-146), we are unable to hold that the bearings sold by the applicant would fall either under Entry C-II-102(2) [as a components, parts of a motor vehicle] or under Entry C-II-135 read with the Notification Entry A-35 [as a components and/or parts of tractors specifically designed for agricultural use]. When there is a specific Entry in the schedule to a Taxing Statute, the same would override a general Entry. In fact, resort should be taken to the general Entry only when a liberal construction of the specific Entry would not cover the goods in question. As far as bearings sold by the applicant are concerned, it can hardly be disputed that Entry C-II-102(2) and C-II-135 read with the Notification Entry A-35 would be general entries in comparision to Entry C-II-146 which specifically deals with all types of bearings.

16. The proposition that where there is a specific Entry in the schedule to a Taxing Statute, the same would override a general Entry, is very well settled and in this regard Mr Sonpal has correctly laid stress on the decision of the Supreme Court in the case of Bradma of India Ltd. 1 In this decision the Respondent before the Supreme Court manufactured electronic cash registers. In addition to the usual functions of a cash register, the Respondent’s models
performed various other functions. The question before the Supreme Court was whether such cash registers are classifiable under Entry 90 or under Entry 97(b) of part II of Schedule C of the BST Act. It is whilst construing these entries that the Supreme Court held thus:-

“6. The High Court answered the questions framed in favour of the assessee. Contrary to the opinion expressed by the Tribunal, the High Court was of the view that Entry 90 was the general entry and Entry 97(b) the special entry. Since there was no controversy that the electronic registers sold by the assessee were operated electronically, the High Court thought that it would more appropriately fall under Entry 97(b) and not under Entry 90. In arriving at this conclusion, the High Court relied upon a Bench decision of the Andhra Pradesh High Court in State of A.P. v. Apex Agencies[(1997) 104 STC 44 (AP)].

7. We are of the opinion that the High Court was wrong. Both the Tribunal and the High Court commonly enunciated the principle that a specific entry would override a general entry. In addition we would add, and as has been held in CCE v. Wood Craft Products Ltd. [(1995) 3 SCC 454] , SCC at p. 462, resort has to be had to the residuary heading only when by a liberal construction the specific heading cannot cover the goods in question. The language of Entry 97(b) clearly shows, by use of the phrase “other than those specified elsewhere” that it is not only a residuary entry but also that electronic systems, instruments, etc. may be classified under other entries. Entry 90 on the other hand does not contain any words of limitation. The items mentioned therein would cover every species thereof irrespective of the mode of their operation. Cash registering machines are specifically mentioned. In the absence of any limitation or qualification as to the different kinds of cash registering machines, there is no reason to read in any such qualification and limit the entry to particular kinds of cash registering machines. It is significant that by contrast, data processing machines have expressly excluded computers. Were it not so excluded, computers would have also fallen within Entry 90. In fact computers are separately dealt with in Entry 97(a). But the exclusion of computers from data processing machines would indicate that the items mentioned in Entry 90 are generic covering all species of such items. Given the language of the two entries we fail to understand how the High Court could have come to the conclusion that Entry 97(b) was the specific entry and that Entry 90 was the general entry. Such an interpretation goes against the express language of the two entries.”

17. To our mind, the ratio of this judgment would apply to the facts of the present case with full force. Even in the facts of the present case, the Schedule Entry C-II-135 categorically states “but excluding machinery and components, parts and accessories thereof specified in any other entry in this Schedule”. This would clearly go to show that the Schedule Entry C-II-135 read with Notification Entry A-35, as far as bearings are concerned would be the general Entry and C-II-146 would be the specific Entry. We, therefore, find that the authorities below have correctly classified the bearings sold by the applicant under Schedule Entry C-II-146.

18. There is yet another reason why we have come to the aforesaid conclusion. Notification Entry A-35 talks about sale or purchases by a registered dealer of tractors specifically designed for agricultural use and components, parts and accessories thereof covered by Entry C-II-135. From a plain reading of the said Notification Entry, it is clear that it applies to sales or purchases only by a registered dealer of tractors specifically designed for agricultural use and the components, parts and accessories thereof. Admittedly, the applicant does not sell or purchase tractors for agricultural use and neither is it a registered dealer thereof as contemplated under Notification Entry A-35. We, therefore, additionally find that the bearings sold by the applicant to tractor manufacturers could never be classified under Notification Entry A- 35 and have to be classified only under Schedule Entry C-II-146.

19. Once we have taken this view, then the amendment that was done to the Notification Entry No.A-35 in 1998 pales into insignificance. Once we find that the said Entry A-35 cannot apply to the bearings sold by the applicant, the effect of the amendment is irrelevant because the said Notification Entry itself does not apply as it stood in its original form or even after the amendment.

20. In view of the foregoing discussions, we have no hesitation in holding that the bearings sold by the applicant would fall under Schedule Entry C-II-146. The question of law, as framed by us earlier, is therefore, answered in affirmative and against the applicant and in favour of the Revenue. All the three Sales Tax References are, therefore, answered in the aforesaid terms. However, in the facts and circumstances of the case, there shall be no order as to costs.

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