KIRLOSKAR PNEUMATIC CO LTD Vs. STATE OF MAHARASHTRA

JUDGEMENT

(1.) THE applicants, who are the assessees, are registered dealers under the Bombay Sales Tax Act, 1959. The assessees sold a refrigeration compressor under the invoice dated 15th October, 1974. In respect of this invoice an application was made by the assessees under section 52 of the Bombay Sales Tax Act, 1959 for determination as to whether the article sold was covered by entry 47(b) of Schedule C to the Bombay Sales Tax Act, 1959 or whether it fell within the residuary entry 22 of Schedule E to the Bombay Sales Tax Act, 1959. It was also contended at one stage that the article was covered by entry 60 of Schedule C. In respect of this application, which ultimately went before the Sales Tax Tribunal, the Tribunal has held that the article in question fell within entry 47(b) of Schedule C to the Bombay Sales Tax Act, 1959. From this decision of the Tribunal, the following question has been referred to us under section 61 of the Bombay Sales Tax, 1959 :

(2.) THE invoice in question is in respect of a kirloskar refrigeration compressor model K 60 X 110 manufactured and sold by the assessees. In respect of this compressor the assessees had produced before the authorities the relevant literature and technical information as also figures relating to sales. According to the assessees, the compressor in question is mainly used in refrigeration plants or systems. It is occasionally used in air -conditioning plants or systems also. The compressor is not designed for being used in a refrigerator not can it be used in an air -conditioner. It is designed for use in a refrigeration plant or a refrigeration system, which may be set up for obtaining and maintaining a very low level of temperature either in a cold room for storage and preservation of goods or for removal of process heat in certain manufacturing processes, e.g., chemical and pharmaceutical processes. Such a plant is not available in the market as a unit. Installation of such a plant at site involves not only alignment and assembly of factory finished units of machinery but also fabrication and use of piping, electrical installations, insulation and the like, which can generally be done only at site. In addition, installation of such a plant also involves a certain amount of civil engineering work relating to foundations and so on. The compressor model in question manufactured by the assessees is required for use in such a refrigeration plant, which is required to be set up at site.

(3.) IN the present case, there is no evidence or finding relating to how such a compressor is regarded in the trade. The entire case was argued before the Tribunal by the assessees on the basis that the primary use of such compressors was in a refrigeration plant. Apart from technical literature which was produced by the assessees, the assessees also relied upon the figures of sales relating to these compressors manufactured by them for a period of 3 years from 1st July, 1975, till 31st March, 1978. Barring these 3 years, out of a total of 29 compressors which were sold, only 4 were sold for use in an air -conditioning plant. The rest were sold for use in a refrigeration plant. If the figures for 5 years were to be taken into account starting from the year 1972 -73 and ending with the year 1976 -77, a total of 101 such compressors were sold by the assessees out of which only 25 were used in the air -conditioning plant. The assessees thus contended that the primary use of the compressor in question was in a refrigeration plant. It was only occasionally used in an air -conditioning plant. Hence, the compressor in question should be classified on the basis of its primary use. It could not, therefor, be treated as a component or part of an air -conditioning plant. The department, on the other hand, did not challenge the factual basis of the submission made by the assessees. The department accepted the contention that the compressor was primarily used in a refrigeration plant. The department, however, submitted that the compressor could be used in an air -conditioning plant and hence it could be classified under entry 47(b) of Schedule C to the said Act. This contention of the department was accepted by the Tribunal.