2014 (2) TMI 342 - HC - VAT and Sales Tax

Court Upholds Tax Classification for 'Motor Graders' under Sales Tax Act

The court rejected the appellant's challenge regarding the classification of 'Motor Graders' under the Pondicherry General Sales Tax Act, 1967. It upheld ... Rate of tax - Classification of transaction - Whether the conclusion of the Appellate Tribunal that Motor graders marketed by the petitioner can be classified under Entry 18 of Part I(a) of the First Schedule to the Pondicherry General Sales Tax Act, 1967, is correct - Held that:- The details on the machinery given therein shows that this is used only for levelling of the ground and by no stretch of imagination, it could be brought under Entry 18 'Hydraulic excavators' (earth moving or mining machinery). Thus, from the details furnished before this Court, we do not find any justification to hold that the item in question viz., 'Motor graders' could be taxed under Entry 18 of Part I(a) to the Pondicherry General Sales Tax Act. However, considering Entry 28 of Part I(a) to the Pondicherry General Sales Tax Act, which covers machineries of all kinds other than those specified elsewhere in the schedules, there being no specific entry to deal with graders, the item in question would fall under Entry 28 of the Part I(a) of the I Schedule to the Pondicherry General Sales Tax Act. Except for this entry head, we do not find that the rate of tax would change since Entry 18 and Entry 28 under Part I(a) of the Schedule I of the Pondicherry General Sales Tax Act, 1967 attract liability at 8% - Decided against assessee. Issues:1. Classification of 'Motor Graders' under the Pondicherry General Sales Tax Act, 1967.2. Interpretation of Entry 18 and Entry 28 of Part I(a) of the First Schedule to the Act.3. Application of ejusdem generis rule and theory of popular parlance in the case.Analysis:1. The primary issue in the case was the classification of 'Motor Graders' under the Pondicherry General Sales Tax Act, 1967. The appellant challenged the Sales Tax Appellate Tribunal's decision regarding the classification of motor graders under Entry 18 of Part I(a) of the Act.2. The court examined Entry 18 and Entry 28 of Part I(a) of the First Schedule to the Act. Entry 18 included 'Hydraulic excavators (earth moving and mining machinery), mobile crane, loaders, dumpers, and hydraulic tippers,' while Entry 28 covered 'Machineries of all kinds (other than those specified elsewhere in the schedules).' The appellant argued that motor graders were distinct from earth movers and should not be classified under hydraulic excavators.3. The court considered the details provided by the respondent, including a brochure on the item in question. It was observed that motor graders were primarily used for leveling the ground and did not fit the description of hydraulic excavators. Therefore, the court concluded that motor graders could not be taxed under Entry 18 but fell under Entry 28 of Part I(a) of the Act, which covers machineries not specified elsewhere.4. Consequently, the court rejected the appellant's Tax Case (Revisions) and upheld the Sales Tax Appellate Tribunal's decision. The court clarified that the item in question, motor graders, would be assessable at 8% under Entry 28 of Part I(a) of the First Schedule to the Pondicherry General Sales Tax Act, as there was no specific entry for graders in the schedules.5. In conclusion, the Tax Case (Revisions) was dismissed, and no costs were awarded. The court's decision was based on the interpretation of the relevant entries in the Act and the specific characteristics of motor graders as presented during the proceedings.