1995 (7) TMI 392 - HC - VAT and Sales Tax

Court affirms lower tax rate for scientific instruments, rejects higher classification. Legislative intent favors assessee.

Commissioner, Sales Tax, UP., Lucknow Versus Doon Engineering (P) Ltd.

Commissioner, Sales Tax, UP., Lucknow Versus Doon Engineering (P) Ltd. - [1996] 100 STC 356 (All) Issues: Classification of items as scientific instruments for tax purposes.In this case, the revision under section 11 of the U.P. Sales Tax Act, 1948 was brought against the judgment and order passed by the Sales Tax Tribunal. The main issue raised was whether automatic water level recorder, snow gauge, and rain gauge fall under the classification of 'scientific instruments' for tax purposes at a rate of 3 per cent or if they are unclassified items taxed at 7 per cent. The learned Standing Counsel argued that these items were not used by students and thus should not be classified as scientific instruments. However, the court disagreed, noting that the legislative intention was to include scientific instruments irrespective of their user. The court applied the principle that interpretations favoring the assessee should be adopted in fiscal provisions. The Tribunal's decision to classify the items under entry No. 31 for a lower tax rate was upheld based on a correct interpretation of the law.Additionally, the Standing Counsel contended that the items could be classified under 'weights and measurements made of metal or alloy' for a 7 per cent tax rate. However, this argument was rejected as the department had consistently maintained that the items were unclassified throughout the proceedings, and this new plea was not raised at any earlier stage. The court upheld the Tribunal's decision that the items fell under the classification of scientific instruments and were to be taxed at the lower rate of 3 per cent. Consequently, the revision was dismissed, and the judgment of the Tribunal was upheld, confirming the classification of the items under entry No. 31 for tax purposes.