TaxTMI 
TaxTMI 
2023 (7) TMI 630
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....ection 42 of said Act, 2004 read with Rule 49 of the Odisha Value Added Tax Rules, 2005 by the Sales Tax Officer, Bhubaneswar-I Circle, Bhubaneswar pertaining to the tax periods from 01.04.2011 to 31.03.2013. FACTS OF THE CASE: 2. The assessee-petitioner being a registered dealer under the Odisha Value Added Tax Act, 2004 (for short referred to as "OVAT Act"), carries on its business in manufacturing and trading of electrical goods and equipments for industrial use, electric generator, pump sets and its spares and accessories etc. This apart, it is engaged in supply, erection, installation and commissioning of contract work. 2.1. Being selected under Section 41 of the OVAT Act, tax audit was conducted and Audit Visit Report was submitted to the Assessing Authority-Sales Tax Officer, Bhubaneswar-I Circle, Bhubaneswar, consequent upon which Assessment under Section 42 was framed taking into account observation/objection contained in the Audit Visit Report inter alia that the petitioner-dealer had misclassified the item, namely 150 HP Fully Automatic ATS (Auto-Transformer Starter) Control Panel, Motor Starter Panel Board and other Control Panel (hereinafter referred to as "AT....
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....ion and consideration. Entry No. 29 of Part-II of Schedule B of the Act says that 'Centrifugal, Monoblock and Submersible pumps and pump sets for handling water operated electrically or otherwise and parts and accessories thereof' are exigible to VAT @4% / 5% as the case may be." 2.3. Alleging that the Appellate Authority having blindly accepted the explanation of the petitioner, the first appellate order being perverse, the State of Odisha represented by the Commissioner of Sales Tax, Odisha carried the matter before the Odisha Sales Tax Tribunal under Section 78 of the OVAT Act which was registered as S.A. No.188 (VAT) of 2015-16 on the ground amongst others that the ATS attracts levy of value added tax @13.5% as it falls within ken of Part-III of Schedule-B appended to said Act. 2.4. Accepting the plea, the learned Sales Tax Tribunal allowed the second appeal preferred at the behest of the State of Odisha by stating thus: "After going through all the aspects of the case, it is my considered opinion that, in the instant case the demand has been raised on two grounds: (i) Tax was levied @13.5% towards sale of 150HP fully automotive ATS control panel, Motor ....
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....ification and interpretation of goods, whether the above goods are falling under Entry Sl. No. 29 of Part II of Schedule B or are unspecified goods. III. Any other question of law as the Honourable Court deems fit and proper out of the said order of the Division Bench, Odisha Sales Tax, Tribunal, Cuttack? QUESTION OF LAW FRAMED FOR ADJUDICATION: 4. This Court while entertaining revision petition, passed the following Order on 12.03.2018: "Heard Mr. C.R. Das, learned counsel for the petitioner. This Sales Tax Revision is admitted on the following substantial question of law: I. Whether in the facts and circumstances of the case, the Single Bench, Judicial Member-II, Odisha Sales Tax Tribunal was right in law in holding that 150 HP fully automotive ATS control panel, motor starter control panel and other panel are unspecified goods liable to tax at 13.5% and not falling under Entry Serial No. 29, Part-II of Schedule-B of the OVAT Act. Issue notice. ***" 4.1. At the stage of hearing of the matter, Sri Chitta Ranjan Das, learned counsel confined his arguments to the aforesaid question of law as framed by this Court. 4.2.....
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.... within scope of residuary entry as per Part-III, Schedule-B. The Appellate Authority was correct in observing that "neither the STO (Audit) nor the learned Assessing Authority enquired into, at any point of time, the business activities of the selling dealer, M/s. S.L. Associates, TIN 21885600440, Bhubaneswar and other dealers dealing in these goods". 5.3. It is vehemently contended that the Assessing Authority should not have mechanically accepted the version of the STO (Audit) and discarded the explanation of the Assessee-petitioner. It has consistently been the stand of the petitioner-firm that ATS sold by the dealer is nothing but accessories to pump and pump sets. As the term "accessory" is not defined in the statute, reference has been made to the meaning given in Black's Law Dictrionary, Fifth Edition. Sri Chitta Ranjan Das, learned Advocate advancing argument further would submit that though ATS is not indispensable to the main article, for convenient functioning of it, the same is used. Motor Starter and Control Panel consist of electrical goods, like power contactor, thermal overload relays, AMPs, volt meters, etc. Hence ATS is "accessory" for Centrifugal, Monoblock a....
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....Authority for fresh adjudication on the issue raised in the present case inasmuch as none of the authorities below has examined the issue in its proper perspective. To a specific query, Sri Sunil Mishra submitted that no (further) material was placed before the learned Odisha Sales Tax Tribunal to substantiate the issue raised by the Revenue in the second appeal. 8. Having heard counsel for both the sides, this Court proceeds to dispose of the matter on merit basing on the material available on record. ENTRIES IN THE SCHEDULE AND TAX RATES: 9. Entries in the Schedule appended to the OVAT Act, so far as relevant, runs thus: Schedule-B Part-II Serial No. Description of goods Rate of tax 29. Centrifugal, monoblock and submersible pumps and pump sets for handling water operated electrically or otherwise and parts and accessories thereof. *5% * Substituted for "4%" with effect from 01.04.2012 vide Finance Department Notification No. 12277- FIN-CT1-TAX-0025/2012 [SRO No. 126/2012], dated 30.03.2012. Part-III ... All other goods except those specified in Schedule C 13.5% KNOWING ABOUT THE ITEM IN QUESTION, i.e., ATS: 10. As the learned....
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....09062/8 Chartered Engineer (India)" 10.1. In a case of determination of classification of commodity, this Court has laid down modality in State of Odisha Vrs. Rajkumar Agarwalla, ILR 1974 CUT 1367 as follows: "Thus both the aforesaid categories come within the meaning of chuni as used in common parlance. It was the duty of the assessing authorities including the Tribunal to have called upon the dealer to give evidence as to the nature of the goods sold before holding that he was liable to sales tax. The assessing officer and the appellate authorities have merely indicated their subjective view without reference to objective factors which was absolutely necessary to determine the true character of the goods sold. Without materials on record it is not possible to say as to in which category the impugned goods sold would fall." 10.2. Since it is borne on orders of the authorities including that of the learned Tribunal that no enquiry was conducted as regards nature of commodities, i.e., ATS, this Court is inclined to take into consideration the expert opinion as submitted by the petitioner. As the learned Standing Counsel has not placed any other material to co....
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....ontrol Panels and ATS Control Panel are used as accessories to motor pumps to protect the lifespan and for effective use of the motor. During fluctuation of power supply, said ATS protects pump from being damaged. Therefore, ATS is accessory to pumps. 10.5. Thus, taking into account the expert opinion and description of ATS in the webportal, it can be construed that it is understood in common sense and trade parlance as Auto-Transformer Starter Control Panel which is used for effective functioning of pump and in connection with it. ABSENCE OF DEFINITION OF "ACCESSORY" IN THE STATUTE: 11. It transpires from bare reading of Entry Serial No. 29 of Part-II, Schedule-B that "accessories" of Centrifugal, Monoblock and Submersible pumps and pump sets for handling water operated electrically or otherwise are subject to levy of tax @ 4% [prior to 01.04.2012] and @5% [with effect from 01.04.2012]. 11.1. In absence of meaning ascribed to "accessories" in the OVAT Act, dictionary meaning can be resorted to in order to understand the true scope of said term. In State of Orissa Vrs. Titaghur Paper Mills Co. Ltd., (1985) 60 STC 213 (SC) = AIR 1985 SC 1293 = 1985 SCR (3) 26 = 1985 SCC ....
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....C); Pragati Silicons Pvt. Ltd. Vrs. CCE, (2007) 8 VST 705 (SC); Annapurna Carbon Industries Co. Vrs. State of AP, (1976) 2 SCC 273 = (1976) 37 STC 378 (SC); and Commissioner of Central Excise, Delhi Vrs. Insulation Electrical (P) Ltd., 2008 (224) ELT 512 (SC) points out that the term 'accessories' is used in the Schedule to describe goods which may have been manufactured for use as an aid or addition. 11.6. Vide K.V. Narasimulu Vrs. State of Andhra Pradesh, (1971) 27 STC 178 (AP), the meaning of "accessory" in Chamber's Twentieth Century Dictionary by Davidson that "anything additional, secondary, or non-essential item of equipment" and Murray's Dictionary that "something contributing in a subordinate degree to a general result or effect" has been referred to. 11.7. In Black's Law Dictionary, Fifth Edition, 'accessory' has been defined as "anything which is joined to another thing as an ornament, or to render it more perfect, or which accompanies it, or is connected with it as an incident, or as subordinate to it, or which belongs to or with it ... Adjunct or accompaniment ... A thing of subordinate importance. Aiding or contributing in secondary way or assisting in or contri....
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....ccessory" contained in Webster's Third New International Dictionary: "an object or device that is not essential in itself but that adds to the beauty, convenience or effectiveness of something else". Other meanings given there are: 'supplementary or secondary to something of greater or primary importance'; 'additional', 'any of several mechanical devices' that assist in operating or controlling the tone resources of an organ'. 'Accessories' are not necessarily confined to particular machines for which they may serve as aids. The same item may be an accessory of more than one kind of instrument." 11.10. Adaptability and importance are also relevant tests. An accompaniment or a thing which is connected with the principal thing can also be regarded as accessory, if it is made for the purpose of being used in that fashion and is adapted either specially or even generally for the principal article. If an article is important for the purpose of being used in or with the principal article and is specially adapted for that article and is of such a nature that it can be used for that purpose alone, then it can be said without any hesitation that it is an accessory of th....
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....has held in Union of India Vrs. Delhi Cloth and General Mills Co. Ltd. [AIR 1963 SC 791] at p. 794 para 12 that the view of the Indian Standards Institute as regards what is refined oil as known to the market in India must be preferred in the absence of any other reliable evidence. It must be emphasised in view of the arguments advanced in this case that the meaning should be as understood in the particular trade. In this case, we are construing not paper as such but a particular brand of paper with a meaning attributed to it. Sub-item (2) of Item 17 as was the position in 1979 paper referred to all kinds of paper including paper or paper boards which have been subjected to various treatments such as coating, impregnating. So, therefore, if all kinds of paper including coated paper is the goods, we have to find out the meaning attributed to those goods in the trade of those kinds of paper where transactions of those goods take place. 12. It is a well-settled principle of construction, as mentioned before, that where the word has a scientific or technical meaning and also an ordinary meaning according to common parlance, it is in the latter sense that in a taxing s....
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.... facts and circumstances of each case. No test or tests can be said to be applicable to all cases. There may be cases where the interpretation may be tested by applying more than one rule of interpretation. See, Chittaranjan Saha Vrs. State of Tripura, (1990) 79 STC 37 (Gau). 11.13. Regard may be had to CCE Vrs. Fenoplast Pvt. Ltd., (1994) 72 ELT 513 (SC); and CCE Vrs. Champdany Industries Ltd., (2010) 1 GSTR 52 (SC), wherein it has been observed that while interpreting statutes like the Excise Tax Acts or the Sales Tax Acts where the primary object is to raise revenue and for such purpose the various products and goods are classified, the common parlance test can be accepted, if any term or expression is not properly defined in the Act 'if any term or expression has been defined in the enactment then it must be understood in the sense in which it is defined but in the absence of any definition being given in the enactment the meaning of the term in common parlance or commercial parlance has to be adopted.' It has also been stated in Indian Aluminium Cables Ltd. Vrs. Union of India, (1987) 64 STC 180 (SC) that commercial parlance assumes importance when goods are marketable. The....
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....to the identity of the commodity- ATS with reference to Entry 29 of Part-II of Schedule-B. The Assessing Authority mechanically discarded the explanation rendered by the petitioner and shifted the onus on the dealer. In Collector of Customs Vrs. Hindalco Industries Ltd., 2007 (217) ELT 343 (Cal) it has been stated thus: "10. The subject consignment admittedly falls within the category 2708. While making further classification under different sub-heading subject consignment could come within sub-heading 11 or 19 or 20. The respondent on the basis of the information received from their overseas seller imported the consignment under sub-heading 11. If the Customs Authority was not satisfied with such classification they must atleast prima facie show the reason for such dissatisfaction. Law permits the statutory authorities to question the conduct of a party within the framework of the said statute. Such statutory authority is also under obligation to satisfy itself that there are reasons for questioning such conduct. Before issuance of show cause notice the authority should have investigated into the matter and after prima facie satisfaction the authority should have issued t....
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....he Commercial Tax & Goods and Services Tax Organisation, this Court is of the considered view that the ATS is accessory of "Centrifugal, Monoblock and Submersible pump and pump set" as the same satisfies the common parlance test. In this regard the following observation made by the Hon'ble Supreme Court in Puma Ayurvedic Herbal P. Ltd. Vrs. CCE, (2006) 6 RC 328 (SC) = (2006) 145 STC 200 (SC) = (2006) 3 SCC 266 is relevant: "This opinion coming from a competent and authorised source, is of great relevance so far as the case in hand is concerned. Besides this the evidence produced by the appellant before the authorities in the shape of letters from consumers, from doctors and from Ayurvedic physicians satisfies the common parlance test. On the other hand the revenue led no evidence of any sort to rebut the evidence led by the assessee. It is settled law that burden of showing correct classification lies on the revenue. The Revenue has done precious little in this case to discharge this burden." 12.4. Such being the position borne on record, on due consideration of the material available and the contentions of the advocate for the petitioner, this Court does not find force....
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.... the learned Odisha Sales Tax Tribunal in objection to what was observed by the Appellate Authority and it is also submitted that no contrary material is available neither on the Audit Record nor the Assessment Record to justify that ATS falls within the ambit of residuary entry as per Part-III of Schedule-B so as to levy value added tax @13.5%. 13.2. Though the learned Odisha Sales Tax Tribunal noticed that the Appellate Authority allowed the appeal of the petitioner-dealer on the ground that "the Fora below has not inquired into the veracity of the items dealt by the dealer", it has jumped to the following conclusion without assigning cogent reason: "*** It is pertinent to mention here that, the First Appellate Authority himself has not made any inquiry before arriving such a conclusion of taxing of aforesaid items at a lower rate. Therefore, the findings given by Assessing Authority is now sustained." 13.3. In view of the consistent stand of the petitioner-firm before the authorities below that ATS is nothing but accessory to pumps and non-availability of any contrary evidence on record nor did the Revenue bring forth material to contradict such claim of the petit....
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.... other words, a speaking-out. The "inscrutable face of the sphinx" is ordinarily incongruous with a judicial or quasi-judicial performance." 13.4. In SAP Labs India Private Limited Vrs. Income Tax Officer, (2023) 4 SCR 430 it has been laid down that: "Unless perversity in the findings of the Tribunal is pleaded and demonstrated, by placing material on record, no substantial question of law can arise and, therefore, there can be no interference by the High Court. To the extent there can be no dispute between the parties, in view of the settled legal proposition dealing with Sections 260A of the Act and Section 100 of the Code of Civil Procedure, 1908." 13.5. Where the fact finding authority has acted without any evidence or upon a view of the facts which could not reasonably be entertained or the facts found were such that no person acting judicially and properly instructed as to the relevant law could have found, the Court is entitled to interfere. See, Lalchand Bhagat Ambica Ram Vrs. CIT, (1959) 37 ITR 288 (SC). 13.6. With reference to Omar Salay Mohamed Sait Vrs. CIT, (1959) 37 ITR 151 (SC) the Hon'ble Andhra Pradesh High Court in Spectra Shares & Scrips Pvt. Ltd. Vrs. C....
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....commodity to fall in residuary entry, the learned Tribunal as also the Assessing Authority failed to bear in mind the enunciation in the matters of Bharat Forge & Press Industries P. Ltd. Vrs. CCE, AIR 1990 SC 616 = 1990 SCR (1) 60 = (1990) 1 SCC 532 = (1992) 84 STC 414 (SC); Indian Metals & Ferro Alloys Ltd. Vrs. CCE, (1991) Supp. 1 SCC 125; Speedway Rubber Co. Vrs. CCE, (2002) 5 SCC 527; Commissioner of Customs Vrs. Gujarat Perstorp Electronics Ltd., (2005) 5 RC 537 (SC); CCE Vrs. Maharshi Ayurveda Corporation, (2006) 6 RC 13 (SC); Hindustan Poles Corporation Vrs. CCE, (2006) 6 RC 403 (SC) = (2006) 145 STC 625 (SC), conspectus of which leads to show that only such goods as cannot be brought under the various specific entries in the tariff should be attempted to be brought under the residuary entry. In other words, unless the Department can establish that the goods in question can by no conceivable process of reasoning be brought under any of the tariff items, resort cannot be had to the residuary item. The entry which provides the most specific description shall be preferred to entry providing a more general description. Priority has to be given to the main entry and not the resi....