JOSEPH CHANDY Vs. STATE OF KERALA

JUDGEMENT

(1.) THE matter arises under the Kerala General Sales Tax Act. THE assessee is the revision petitioner. THE assessment year concerned is 1984-85. THE assessee is a dealer in hardware items. In the assessment year 1984-85, the assessee claimed exemption from sales tax on the sales turnover of pickaxe, shovel, crow-bar, etc. , as agricultural implements exempted from tax under S. R. O. No. 342 of 1963. THE said claim was rejected by the assessing authority. THE same was confirmed by the first appellate authority and by the Tribunal. THE question, therefore, is as to whether pickaxe, shovel and crow-bar dealt with by the assessee are agricultural implements worked by hand liable to be exempted under Notification S. R. O. No. 342 of 1963. In order to answer the said question, it is necessary to refer to the notification s. R. O. No. 342 of 1963. S. R. O. No. 342 of 1963 as it stood during the assessment year 1984-85, item 8 thereof exempted "agricultural implements worked by hand'. Though the Government by S. R. O. No. 1542 of 1987 with effect from November 19, 1987 had added an explanation whereby the agricultural implements which are worked by hand are specified, the said notification as such has no application to the present case. In other words, S. R. O. No. 342 of 1963 as it stood at the relevant time did not specify the agricultural implements which are exempted from payment of sales tax under the Act. So, the question as to whether pickaxe, shovel and crow-bar are agricultural implements has to be considered independent of the subsequent notifications. THE question whether a belt pulley attachment was an agricultural implement within the meaning of entry 34 of Schedule B to the punjab General Sales Tax Act, 1948 prior to its amendment made on April 15, 1971 came up for consideration before the Supreme Court in State of Punjab v. Hindsons (P.) Ltd. 1985 58 STC 20. In that case, the assessing authority took the view that belt pulley attachment could not be treated as a composite part of the tractor nor can it be treated as an agricultural implement. THE appellate authority took the view that belt pulley attachment should be treated as an agricultural implement. THE Joint Excise and Taxation Commissioner in exercise of the suo motu powers vested in him concluded that the appellate authority was in error in holding that the belt pulley attachment was an agricultural implement and restored the order of the assessing authority. This was upheld by the Sales Tax Appellate Tribunal. On reference the High Court held (See Hindsons (P.) Ltd. v. State of Punjab 1982 49 STC 136 (P&h)) that "belt pulley attachment, as a matter of fact, increases the utility of a tractor for an agricultural operation" and concluded "that belt pulley attachment falls within the meaning of agricultural implement". THE supreme Court observed that the High Court unfortunately overlooked the most obvious fact that belt pulley is also sold as a separate spare part and it is used in various other machines such as motor-car engines. THE court further observed that belt pulley means a pulley over which a belt may pass to transmit power to other part of the machine and common sense tells us that even in a motor-car there is belt pulley and the rotational movement is transmitted from the rotating fan via the belt on the pulley to the pulley of the dynamo for charging it. It was also noted that the assessee is selling belt pulley attachment as spare part which can thus be used in many machines. If it is so, then it is difficult to understand how belt pulley attachment by itself becomes an agricultural implement. THE court further observed thus :". . . . . . . . . . . . . . . . . . . We must examine whether a belt pulley attachment when sold as a spare part would be comprehended in entry 34 which sets out agricultural implements exempted from the levy of sales tax. Obviously as stated earlier belt pulley attachment which can be used in various mechanical appliances or devices by itself cannot be said to be an agricultural implement. To comprehend it in the generic term 'agricultural implement', we would have to stretch the language to impermissible limit of breaking it. " It was thus held that the conclusion on the face of it without anything more is incorrect and cannot be accepted. THE Supreme Court considered the question as to whether sugarcane crushers can be treated as an agricultural implement exempt from sales tax under the notification issued by the U. P. Government in D. H. Brothers pvt. Ltd. v. Commissioner of Sales Tax, U. P. 1992 84 STC 267 (SC); AIR 1991 SC 1992. THE court referred to its earlier decision in Commissioner of Income-tax, west Bengal, Calcutta v. Raja Benoy Kumar Sahas Roy 1957 32 ITR 466 (SC); AIR 1957 SC 768, where it was held as follows : "agriculture is the basic idea underlying the expressions 'agricultural purposes' and 'agricultural operations' and it is pertinent therefore to enquire what is the connotation of the term 'agriculture'. As we have noted above, the primary sense in which the term agriculture is understood is agar-field and cultra-cultivation, i. e. , the cultivation of the field, and if the term is understood only in that sense agriculture would be restricted only to cultivation of the land in the strict sense of the term meaning thereby, tilling of the land, sowing of the seeds, planting and similar operations on the land. THEy would be the basic operations and would require the expenditure of human skill and labour upon the land itself. THEre are however other operations which have got to be resorted to by the agriculturist and which are absolutely necessary for the purpose of effectively raising the produce from the land. THEy are operations to be performed after the produce sprouts from the land, e. g. , weeding, digging the soil around the growth, removal of undesirable undergrowths and all operations which foster the growth and preserve the same not only from insects and pests but also from depredation from outside, tending, pruning, cutting, harvesting, and rendering the produce fit for the market. THE latter would all be agricultural operations when taken in conjunction with the basic operations above described, and it would be futile to urge that they are not agricultural operations at all. . . . . . . . . . . . . . . . . "the Supreme Court relying on the above observation held that since sugarcane crushers were used only for the manufacture of gur from sugarcane which is a post agricultural operation which cannot be treated as an agricultural implement. THE court observed that an agricultural implement is an implement that is used in agriculture; any implement that is used after the agricultural process comes to an end and a manufacturing process commences is not an agricultural implement. In the instant case, the Tribunal has held that pickaxe, shovel and crow-bar are not entitled to exemption as they are not items mentioned in item 8 of the First Schedule to the Notification S. R. O. No. 342 of 1963 and that these items were included in the notification only with effect from November 5, 1998. It must be noted that the Tribunal has missed the fact that the explanation specifying 37 items of agricultural implements was added to the Notification S. R. O. No. 342 of 1963 only with effect from November 19, 1987. It cannot be disputed that pickaxe, shovel and crow-bar are items which are generally used for making the land fit for cultivation. Applying the test laid down by the Supreme Court in the aforementioned decision, it has to be held that the above three items are agricultural implements. It may be that pickaxe, shovel and crow-bar are used for other purpose, such as road work, etc. , also. That does not mean that the said item ceases to be agricultural implements. THE fact that these three items are not included in the explanation, which are added in 1987 or that they were included in 1998 has no relevance for the purpose of this case. According to us, the Tribunal erred in holding that the three items dealt with by the assessee are not agricultural implements entitled to exemption from payment of sales tax under Notification s. R. O. No. 342 of 1963. We accordingly direct the assessing authority to exclude the turnover of pickaxe, shovel and crow-bar from payment of sales tax and to modify the assessment accordingly. THE tax revision case is allowed as above. Petition allowed. . .