1984 (3) TMI 359 - HC - VAT and Sales Tax

Oil engines in agricultural pumping sets qualify as agricultural machinery under tax law

Koel Sales and Service Versus State of Maharashtra

The court determined that oil engines used as prime movers in pumping sets for agricultural purposes qualify as agricultural machinery under the Bombay ... - Issues:1. Determination of whether an oil engine is agricultural machinery or only a component of agricultural machinery under the Bombay Sales Tax Act, 1959.Analysis:The case involved a reference under section 61 of the Bombay Sales Tax Act, 1959, to determine if an oil engine qualifies as agricultural machinery or merely a component of such machinery. The applicant, a manufacturer of diesel oil engines used as prime movers of pumping sets, sought clarification on the tax classification of the oil engine sold to agriculturists. The Commissioner of Sales Tax and the Tribunal considered the oil engine as a component of agricultural machinery, subjecting it to tax under entry No. 12 of Schedule C instead of the residuary entry No. 22 of Schedule E.The amended entry No. 12, effective from 11th May 1973, explicitly included tractors, oil engines, and electric motors as agricultural machinery, along with their components, parts, and accessories. The applicant argued that an oil engine is solely a part of a pumping set, which constitutes agricultural machinery under the amended entry. However, the court noted that the legislature's intention was to exclude oil engines from entry No. 12, emphasizing that the amendment specifically aimed to differentiate these items from agricultural machinery.The court highlighted that the classification of machinery depends on individual case facts, citing precedents to define machinery as mechanical contrivances generating power or directing natural forces to achieve specific results. Referring to a previous case where oil engines were considered agricultural machinery, the court affirmed that oil engines used in pumping sets for agricultural purposes qualify as agricultural machinery, distinct from being mere components.Ultimately, the court answered the reference question in the affirmative, ruling against the applicant-dealer and directing them to bear the costs. This decision clarified that oil engines, when used as prime movers in pumping sets for agricultural purposes, are deemed agricultural machinery under the Bombay Sales Tax Act, 1959.