1975 (2) TMI 121 - HC - Service Tax

High Court affirms Tribunal decision on oil-engines classification as agricultural machinery. Costs awarded to respondents.

Commissioner of Sales Tax Versus Shetkari Sahakari Sangh Limited

The High Court upheld the Tribunal's decision, confirming that the oil-engines sold by the respondents were classified as agricultural machinery under ... - Issues Involved:1. Whether oil-engines used for working pumping sets for drawing out water are agricultural machinery under entry No. 12 of Schedule C to the Bombay Sales Tax Act, 1959.Detailed Analysis:Issue 1: Classification of Oil-Engines as Agricultural MachineryBackground and Contention:The respondents, an agricultural co-operative society, argued that sales of oil-engines used for drawing water should be classified as sales of agricultural machinery under entry No. 12 of Schedule C to the Bombay Sales Tax Act, 1959, and thus subject to a sales tax rate of 3%. The Sales Tax Officer disagreed, classifying the oil-engines under the residuary entry No. 22 in Schedule E, thereby subjecting them to a combined sales tax and general sales tax rate of 5%. The Assistant Commissioner of Sales Tax upheld this decision. However, the Tribunal reversed this, accepting the respondents' contention, leading to the present reference.Relevant Legal Provisions and Amendments:- Entry No. 12 of Schedule C (pre-amendment): 'Agricultural machinery and implements (other than implements specified in entry 1 in Schedule A) and parts of such machinery and implements.'- Amended Entry No. 12 (post-11th May 1973): Excludes 'tractors, oil-engines and electric motors.'- Entry No. 15 (pre-15th March 1960): 'Machinery used in the manufacture of goods, and spare parts and accessories thereof.'- Entry No. 15(2) (post-15th March 1960): Included 'Electric motors and oil-engines other than those adapted for use as component parts of motor vehicles.'Arguments and Evidence:- The applicant's counsel argued that oil-engines must be exclusively designed for agricultural purposes to be classified as agricultural machinery. He cited the case Pashabhai Patel & Co. (P.) Ltd. v. Collector of Sales Tax, where tractors were not considered agricultural machinery due to their diverse uses.- The Tribunal found that the oil-engines sold by the respondents were commonly used by agriculturists for agricultural purposes, supported by documentary evidence, including resolutions from the Government of Maharashtra and transactions involving tagai loans for agricultural use.Tribunal's Findings:- The Tribunal concluded that the oil-engines in question were recognized by both co-operative land mortgage banks and the Government of Maharashtra as being used by agriculturists for drawing water, thus fitting the definition of agricultural machinery under entry No. 12.- The Assistant Commissioner's view that watering fields had no direct connection to agriculture was dismissed as lacking understanding of agricultural needs.Supporting Case Law:- The Full Bench of the Allahabad High Court in Engineering Traders v. State of Uttar Pradesh held that an appliance need not be exclusively used for agriculture to be considered an agricultural implement; it suffices if it is commonly used and intimately connected with agricultural operations.Conclusion:The High Court upheld the Tribunal's decision, affirming that the oil-engines sold by the respondents during the assessment period were indeed agricultural machinery within the meaning of entry No. 12 of Schedule C to the Bombay Sales Tax Act, 1959. The question referred was answered in the affirmative, and costs were awarded to the respondents.Final Judgment:Reference answered in the affirmative. The applicant is to pay the respondents' costs.