2000 (7) TMI 949 - HC - VAT and Sales Tax

Court rules hardware items like pickaxe, shovel, crow-bar as agricultural implements under tax exemption

Joseph Chandy Versus State of Kerala

The Court ruled in favor of the assessee in a tax revision case concerning the exemption from sales tax on hardware items claimed as agricultural ... - Issues:1. Exemption from sales tax on hardware items claimed as agricultural implements.2. Interpretation of agricultural implements under Notification S.R.O. No. 342 of 1963.3. Consideration of belt pulley attachment as an agricultural implement.4. Treatment of sugarcane crushers as agricultural implements.5. Tribunal's error in excluding pickaxe, shovel, and crow-bar from agricultural implements.Issue 1: Exemption from sales tax on hardware items claimed as agricultural implements:The assessee, a dealer in hardware items, claimed exemption from sales tax on items like pickaxe, shovel, crow-bar as agricultural implements under S.R.O. No. 342 of 1963. The assessing authority, first appellate authority, and Tribunal rejected the claim. The key question was whether these items qualified as agricultural implements under the said notification.Issue 2: Interpretation of agricultural implements under Notification S.R.O. No. 342 of 1963:The Court analyzed the notification and its exemption for 'agricultural implements worked by hand.' Despite subsequent notifications specifying such implements, the Court emphasized evaluating pickaxe, shovel, and crow-bar's status as agricultural implements independently. The Court referred to legal precedents to interpret the term 'agricultural implement' and concluded that the items in question were indeed agricultural implements.Issue 3: Consideration of belt pulley attachment as an agricultural implement:Drawing from a Supreme Court case, the Court discussed the classification of belt pulley attachment as an agricultural implement. The Court highlighted the need for a direct connection to agricultural activities for an item to qualify as an agricultural implement, ultimately determining that the belt pulley attachment did not meet this criteria.Issue 4: Treatment of sugarcane crushers as agricultural implements:The Court referenced a Supreme Court decision regarding sugarcane crushers to establish the distinction between agricultural implements and post-agricultural operation tools. The Court clarified that implements used after the agricultural process for manufacturing purposes do not fall under the category of agricultural implements.Issue 5: Tribunal's error in excluding pickaxe, shovel, and crow-bar from agricultural implements:The Tribunal erroneously excluded pickaxe, shovel, and crow-bar from the list of agricultural implements entitled to exemption. The Court disagreed with this assessment, emphasizing that these items, despite having other uses like road work, are indeed agricultural implements based on their primary function of preparing land for cultivation. The Court directed the assessing authority to modify the assessment and exclude these items from sales tax.In conclusion, the Court allowed the tax revision case, ruling in favor of the assessee and directing the exclusion of pickaxe, shovel, and crow-bar from sales tax payment as they qualified as agricultural implements under Notification S.R.O. No. 342 of 1963.