TAURUS EARTHMOVERS PVT LTD Vs. STATE OF KARNATAKA

JUDGEMENT

(1.) THE petitioner is a private limited company engaged in the business of trading tractors and spares. They are also authorised distributors of M/s JCB India Limited and are authorised dealers for safes and servicing and also spare parts for all the JCB products. The petitioner company is registered both under the provisions of the Karnataka Sales Tax Act, 1957 ('kst Act' for short) and the Central Sales Tax Act, 1956 ('cst Act' for short ).

(2.) THE assessee company for the assessment year, namely, 1996-1997 had fifed its annual returns, declaring the gross and net sales of the company at Rs. 6,85,65,062/- and at Rs. 5,90,56,896/- under the provisions of the KST Act and at Rs. 20,569/- under the CST Act respectively. The assessee company effects purchases of JCB 3d backhoe ('jcb 3d' for short) and their parts and accessories exclusively from M/s Escorts JCB Limited, Poona and Ballabgarh in Haryana and mostly effects sales of those goods locally. In the annual returns filed, the assessee company had classified the sales of JCB 3d and its parts and accessories and had admitted the liability of gross turnover on their sale at 1%. The return so filed is not accepted by the assessing authority and therefore, had issued a proposition notice, proposing to levy tax on the goods sold by the assessee company under Entry 1 (i) (a) of Part 'm' of II Schedule appended to the KST Act and not under Entry 1 (i) (e) of Part 'm' of II Schedule to the KST Act as claimed by the assessee company. The assessee company had objected to the proposal made by filing its detailed objections. The assessing authority after considering the objections so filed, has confirmed the proposal made by him in the proposition notice and in that, has concluded that the goods sold by the assessee company, namely, JCB 3d, its parts and accessories thereof are nothing but earth movers and therefore, they would fall under specific Entry 1 (i) (a) of Part 'm' of II Schedule appended to the KST Act.

(3.) THE assessee company being aggrieved by the order of assessment so passed by the assessing authority, had filed first appeal before the Additional Joint Commissioner of Commercial Taxes (Appeal), in Nos. 391 and 392/2000. The first appellate authority, vide its order dated 24. 3. 2000, has allowed the appeals and has remanded the matter to the assessing authority to redo the matter in accordance with law and in the four comers of the observations made in the course of the order. After such remand, the assessing authority vide his order dated 11. 5. 2001, has held that the equipment, namely, JCB 3d cannot be considered as an earth moving equipment and therefore, requires to be classified only as 'tractor' falling under Entry 1 (i) (e) of Part 'm' of II Schedule appended to the KST Act.