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of <h1>Rajasthan Sales Tax: Axles Taxed at 4% Not 7% - Commercial Identity Key</h1> The court upheld the Board's decision that axles fitted with hubs and bearings should be taxed at 4% under the Rajasthan Sales Tax Act, 1954, rather than ... - Issues:Determining the correct tax rate for axles fitted with hubs and bearings under the Rajasthan Sales Tax Act, 1954.Analysis:The judgment was delivered by S.K. Mal Lodha, J., regarding an application under section 15(3A) of the Rajasthan Sales Tax Act, 1954. The issue revolved around the tax rate applicable to axles fitted with hubs and bearings, specifically whether they should be taxed at 4% as per the Central Sales Tax Act or at 7% under a notification issued by the State Government. The dealer-assessee, a partnership firm manufacturing axles and agricultural implements, sought clarification on the tax rate. The Additional Commissioner initially held that the axles should be taxed at 7%, but the Board of Revenue later overturned this decision, stating that the axles fitted with hubs and bearings should still be considered axles and taxed at 4%. The application under section 15(1) of the Act was not decided within 180 days, leading to the filing of the application under section 15(3A) for direction from the Board.The judgment discussed the interpretation of the term 'axle' and its classification under the Central Sales Tax Act. The Board's decision was based on the premise that the addition of hubs and bearings to the axles did not change their primary nature, and therefore, they should continue to be taxed at 4%. The judgment cited relevant legal precedents, including the case of State of Tamil Nadu v. Pyare Lal Malhotra, to support the argument that goods should be taxed based on their commercial identity and not on minor modifications or additions. The court emphasized that the efficiency of a product should not be a basis for higher taxation, as it could hinder economic growth.Ultimately, the court upheld the Board's decision and dismissed the application under section 15(3A) of the Act, affirming that the axles fitted with hubs and bearings should be taxed at the rate of 4%. The judgment highlighted the importance of maintaining consistency in tax classification based on the nature of the goods and their intended use, rather than penalizing improvements that enhance efficiency.
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