2009 (12) TMI 905 - HC - VAT and Sales Tax

Court Upholds Tax Classification for Hydraulic Crane

State of Tamil Nadu Versus Coimbatore Alcohol and Chemicals Limited

The Court upheld the Tribunal's decision that the hydraulic mobile crane should be taxed at 5% under entry 33 of Part C of the Tamil Nadu General Sales ... Whether the crane sold by the assessee is taxable at 16 per cent under entry 8 of Part F of the First Schedule to the Tamil Nadu General Sales Tax Act, 1959 or at five per cent under entry 33 of Part C of the First Schedule? Held that:- The hydraulic mobile crane cannot be encom-passed within entry 8 'lifts and hoists', which are only for the purpose of raising or lifting something to a higher position and the user would also know the way as stated above. Though specifically mobile crane has not been included, the phraseology used in entry 33 'similar varieties of machinery of which a mechanically propelled vehicle forms an integral part which is subsidiary to their main function' would definitely encompass with it mobile crane, if we read the provision in ejusdem generis principle. In our view, the Tribunal has taken a correct view with a clear and cogent finding. We do not find any irregularity in the finding of the Tribunal having regard to enumeration of goods stated in entry 33 of Part C of the First Schedule to the TNGST Act, during 1994-95. Appeal dismissed. Issues:1. Determination of the applicable tax rate for the sale of a crane under the Tamil Nadu General Sales Tax Act, 1959.Analysis:The primary issue in this case was to ascertain whether the crane sold by the assessee should be taxed at 16% under entry 8 of Part F of the First Schedule or at 5% under entry 33 of Part C of the First Schedule to the Tamil Nadu General Sales Tax Act, 1959. The assessee had initially treated the crane as machinery and collected tax at 8% under entry 35, Part D1. However, the assessing authority considered the crane to fall under entry 8 of Part F and levied tax at 16%. The appellate authority upheld this decision, but the Tribunal reversed it, determining that the crane should be taxed at 5% under entry 33 of Part C. The Revenue challenged this decision in revision.The Tribunal's decision was based on the detailed examination of the characteristics and functions of the hydraulic mobile crane in question. The crane, as described by the assessee, had features such as hydraulically extendable telescopic boom, hydraulic controls for defrocking and hoisting, articulated chassis design, and operation using high-speed diesel oil. These features indicated that the crane was more aligned with the description in entry 33 of Part C, which covers a wide range of machinery including mobile work-shops, ambulances, and similar varieties where a mechanically propelled vehicle is integral to their main function.The Court analyzed the definitions of 'lift' and 'hoist' to determine whether the crane could be classified under entry 8, which pertains to lifts and hoists operated by electric or hydraulic power. It was concluded that the crane's functions and structure did not align with the typical characteristics of lifts and hoists, as defined in standard dictionaries. Therefore, the Tribunal's decision to classify the crane under entry 33 was deemed appropriate, applying the principle of ejusdem generis to interpret the relevant provisions.Ultimately, the Court upheld the Tribunal's decision, dismissing the tax case revision and ruling that the hydraulic mobile crane fell under entry 33 of the First Schedule. Consequently, the levy of penalty was deemed unnecessary, and the Tribunal's deletion of the penalty was upheld. The judgment provided a detailed analysis of the machinery's features and functions to determine its proper classification for tax purposes.