BIMETAL BEARINGS LIMITED Vs. STATE OF TAMIL NADU

JUDGEMENT

(1.) THE petitioner, an assessee on the file of the Assistant commissioner (Commercial Taxes), Central Assessment Circle I, Coimbatore, under the Tamil Nadu General Sales Tax Act, 1959 (hereinafter referred to as "the Act"), aggrieved by the order of the Tamil Nadu Sales Tax appellate Tribunal (Additional Bench), Coimbatore, in C. T. A. No. 459 of 1981 dated January 27, 1982, has filed this revision.

(2.) THE assessment year in question is 1978-79. THE disputed turnover amounting to Rs. 33, 11, 816. 85 represents sales of bearings for diesel engines sold to various dealers. According to the petitioner/assessee, sales of bearings for diesel engines will squarely fall under entry 111 of the First Schedule to the Act, and as such, liable to tax at 8 per cent in the absence of production of form 17, and on production of the declaration under form 17, concessional rate of tax alone will have to be levied. On the other hand, the Revenue levied tax on a turnover of Rs. 29, 52, 596. 38 at 13 per cent single point treating the turnover falling under entry 3 of the First Schedule and the balance of the turnover of Rs. 3, 59, 220. 41 at 9 per cent treating that turnover falling under entry 55 of the First Schedule. THE Tribunal accepted the levy of tax at 13 per cent and 9 per cent as levied by the Revenue rejecting the case of the assessee that the turnover must be taxed only under entry 111 of the First Schedule. Hence the present revision petition.

(3.) THE Revenue as well as the Tribunal mainly placing reliance on a judgment of this Court in State of Tamil Nadu v. Sha Maggajee saremal and Brothers reported in 1976 (5) CTR 205, 1976 (38) STC 118, held that the bearings sold by the assessee will fall under entry 3 or entry 55, as the case may be. In 1976 (5) CTR 205, 1976 (38) STC 118 (State of Tamil Nadu v. Sha maggajee Saremal and Brothers), a Division Bench of this Court, while considering the sales of spare parts for diesel engines for the assessment year prior to the introduction of entry 111, held as follows :" * Entries in the First Schedule to the Tamil Nadu General sales Tax Act, 1959, being specific goods in respect of which a single point levy is prescribed, though they might be goods which come under the description of goods in section 3, they could be taxed only to single point and not to multi-point under the general provision of section 3. THE assessee imported tractor parts under an import licence which authorised the assessee to import only spare parts for agricultural tractors. THE assessee also paid customs duty as for spare parts for agricultural tractors. But in most of the transactions, the assessee had sold the articles as'spare parts for diesel engines'. THE question for consideration was whether the tax was leviable under entry 55 of the First schedule or under the general provision contained in section 3 : Held, that entry 55 of the First Schedule mentioned all tractors and spare parts for those tractors as being liable for single point levy at the point of first sale in the State. As the goods sold by the assessee being parts of tractors, they would squarely come under entry 55 of the First schedule and would be liable to tax under that entry. "as rightly contended by the learned counsel for the petitioner, that decision being one related to the assessment year prior to the introduction of entry 111 and also prior to the judgment of the Supreme Court in Porritts & Spencer (Asia) Ltd. v. State of Haryana reported in 1979 air (SC) 300, 1979 (1) SCR 545, 1979 (1) SCC 82, 1989 (25) ECR 443, 1983 (13)ELT 1607, 1978 (42) STC 433, 1978 UJ 697, 1979 Taxlr 1692, 1979 UPTC 866, 1979 scc (Tax) 38, 1980 Supp (SCC) 174 (SC), cannot be pressed into service in the facts and circumstances of the case. In 1979 AIR (SC) 300, 1979 (1) SCR 545, 1979 (1) SCC 82, 1989 (25) ECR 443, 1983 (13) ELT 1607, 1978 (42) STC 433, 1978 uj 697, 1979 Taxlr 1692, 1979 UPTC 866, 1979 SCC (Tax) 38, 1980 Supp (SCC) 174 [porritts & Spencer (Asia) Ltd. v. State of Haryana], the Supreme Court has held as follows :" * THE use to which it may be put is also immaterial and does not bear in its character as a textile. It may be used for making wearing apparel, or it may be used as a covering or bed-sheet or it may be used as tapestry or upholstery or as duster for cleaning or as towel for drying the body. A textile may have diverse uses and it is not the use which determines its character as textile. It is, therefore, no argument against the assessee that'dryer felts'are used only as absorbents of moisture in the process of manufacture in a paper manufacturing unit. That cannot militate against'dryer felts'falling within the category of'textiles', if otherwise they satisfy the description of'textiles'. "this judgment of the Supreme Court has been followed by the Karnataka High Court in R. N. Dongare v. State of Karnataka reported in 1990 (77) STC 462,wherein the learned Judges held as follows :" * In Porritts & Spencer (Asia) Ltd.'s case 1979 AIR (SC)300, 1979 (1) SCR 545, 1979 (1) SCC 82, 1989 (25) ECR 443, 1983 (13) ELT 1607, 1978 (42) STC 433, 1978 UJ 697, 1979 Taxlr 1692, 1979 UPTC 866, 1979 SCC (Tax)38, 1980 Supp (SCC) 174 : 1979 AIR (SC) 300, 1979 (1) SCR 545, 1979 (1) SCC 82, 1989 (25) ECR 443, 1983 (13) ELT 1607, 1978 (42) STC 433, 1978 UJ 697, 1979 taxlr 1692, 1979 UPTC 866, 1979 SCC (Tax) 38, 1980 Supp (SCC) 174, the Supreme court had to consider the meaning of'textiles'under similar entries in Punjab general Sales Tax Act. Cotton and woollen'dryer felts'manufactured by the dealer which were woven textile felts of a kind commonly used in paper-making machinery were held as textile fabrics. THEse dryer felts were used as absorbents of moisture in the process of manufacture of paper, but it was held that this peculiar use of the article would not militate against'dryer felts' falling within the category of textiles if otherwise they satisfy the description of'textiles'. THE'entry'to be interpreted here is in a taxing statute; full effect should be given to all the words used therein. If a particular article would fall within a description, by the force of words used, it is impermissible to ignore that description, and denote the article under another entry, by a process of reasoning. In the instant case, entry No. 78 is attracted by the Revenue, only by a process of interpretation of the words'and the like'in the said entry. But, entry No. 110 is clearly attracted by the application of a simple and direct test of giving full meaning to the words used therein, that is to say, by giving due weight and effect to the meaning conveyed by the words'all articles made of plastics. . . . . .'. THErefore, we are of the view that the approach of the revising authority as well as of the tribunal in applying entry No. 78 was not proper. Further, if there is any doubt as to which entry a particular article would fall, the benefit of doubt should be extended to the assessee in view of the well-established principle governing the interpretation of a taxing statute. "in Girja Shanker Dubey v. Commissioner of Sales Tax reported in 1968 (21) STC 127, the Allahabad High Court has observed as follows :" * We doubt the correctness of the proposition that the purpose for which an article is sold by a vendor or the use to which it is put by the purchaser determines its classification for purposes of sales tax in every case. "from the above decisions as well, it is clear that the Revenue as well as the Tribunal went wrong in placing reliance on the user theory to fix the rate of tax on the commodities sold by the assessee.