1971 (8) TMI 214 - HC - VAT and Sales Tax

Court rules motors as component parts, granting concessional rate under

The court held that once the buyer declares the goods as component parts in the prescribed form, no further proof is needed for the concessional rate ... - Issues:Interpretation of section 3(3) of the Tamil Nadu General Sales Tax Act for concessional rate on sales of electrical motors as component parts.Analysis:The petitioners, dealers in electrical motors, sold goods to a company that provided form XVII declarations stating the goods were purchased as component parts for manufacturing inside the State. The petitioners claimed a concessional tax rate under section 3(3) of the Act based on these declarations. However, the assessing authority denied the concession, arguing that the motors were accessories providing motive power, not components as required by the section. The court held that once the buyer declares the goods as component parts in the prescribed form, no further proof is needed for the concessional rate. The court disagreed with the assessing authority's classification of the motors as accessories, stating that if the motors became part of the manufactured product, they automatically qualified as components. The court cited a previous case emphasizing that the seller's obligation is only to produce the prescribed declaration form for concessional rate eligibility.The court found the assessing authority's denial of the concessional rate to be erroneous and illegal. The court made the rule nisi absolute, allowing the writ petition and remitting the matter back to the assessing authority to verify the declarations and grant the concession to the petitioners in accordance with the law and court's observations. The judgment clarifies the interpretation of section 3(3) and highlights the importance of buyer declarations in determining eligibility for concessional tax rates on sales of goods as component parts for manufacturing.