DY COMMISSIONER ERNAKULAM Vs. EQUIPMENT AGENCIES

JUDGEMENT

(1.) The State has preferred these two Tax Revision cases against a common order passed by the Sales Tax Appellate Tribunal in two appeals preferred before it, one by the assessee and the other by the department, both arising out of the assessment to Kerala General Sales Tax Act made against the assessee (respondent herein) for the year 1974-75. The assessee is a firm dealing in various types of machineries and accessories such as pumpsets, wet grinders, lathes, rotaries, electrical motors etc. While making the assessment to sales tax under the Kerala General Sales Tax Act against the assessee for the year 1974-75 the Sales tax Officer included in the taxable turnover an amount of Rs. 900.27 separately shown in some of the sale bills as "postages collected". He also treated the turnover relating to the sale of polythene pipes as falling within the scope of Entry No. 26A of Schedule.1 to the Act water supply and sanitary fittings and applied the rate of 7 per cent while charging the said portion of the turnover to tax rejecting the contention of the assessee that the polythene pipes sold by it were liable to be taxed only at the general rate of 4 percent. While effecting sales of wet grinders, flour-milling machinery, drilling machines, lathes etc., the assessee had in some instances simultaneously sold also electric motors to the purchasers along with the aforesaid items of machinery. The assessing authority took the view that the machineries in question such as wet grinders, flour-milling machinery, air-compressors, pumpsets, lathes etc , were intended to be worked with the aid of electricity and hence they were liable to be regarded as "electrical goods" falling within Entry No 26 of Schedule I, so as to attract liability to be taxed at the higher rate of 7 per cent which was the ruling rate mentioned in the Schedule against Entry No. 26 at the relevant time. The assessment was finalised on the aforesaid basis.

(2.) The assessee took up the matter in appeal before the Deputy Commissioner of Sales Tax, Kozhikode. The Deputy Commissioner allowed the appeal to the extent of holding that the amount of Rs. 900 29 representing 'postages collected' was not liable to be included in the taxable turnover of the assessee since postage had been separately charged in the sale bills issued by the assessee to its customers. In respect of the other two questions raised by the assessee concerning the rate of tax applicable to the turnover of sale of polythene pipes and of machineries like pumpsets, grinders etc., the Deputy Commissioner confirmed the assessment made by the Assistant Commissioner. Against the said decision rendered by the Deputy Commissioner, second appeals were filed before the Tribunal both by the assessee as well as by the Department. In T. A. No. 920 of 1977 filed by the assessee, the assessee reiterated its contentions that polythene pipes could not be regarded as falling within the scope of Entry 26A, namely, water supply and sanitary fittings that was how the entry stood at the relevant time so as to attract charge of tax at the higher rate of 7 per cent and that likewise pumpsets, wet grinders, lathes and other machineries sold by it to customers were not 'electrical goods' falling within the scope of Entry 26 of the First Schedule. In the appeal T. A. No. 16 of 1978 filed by the Department the contention taken was that the Deputy Commissioner had erred in excluding 'postal charges' from the taxable turnover of the assessee. The Tribunal allowed the appeal filed by the assessee upholding both the contentions taken by the assessee and dismissed the appeal filed by the State affirming the conclusions recorded by the Deputy Commissioner that the postal charges' separately shown in the sale bills were not liable to be included in the taxable turnover of the assessee. The State has brought these two Tax Revision Cases questioning the legality and correctness of the aforesaid decision rendered by the Tribunal in the two appeals.

(3.) The first question urged before us by the learned Government Pleader is whether the Tribunal was right in holding that the 'postal charges' collected by the assessee from the customers were liable to be excluded from the taxable turnover. The expression "turnover" has been defined in S.2(xxvii) in the following terms: