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1980 Supreme(All) 11
IN THE HIGH COURT OF ALLAHABAD
R. M. Sahai, J.
COMMISSIONER, SALES TAX - Appellant
Versus
KOHINOOR INDIA PVT.LTD. - Respondents
S. T. R. 131 Of 1978
Decided On : 01/04/1980
BHARATJI AGARWAL
Spare parts of machinery are taxable, but only if they are integral parts of the machinery and not merely used to make the running of the machinery convenient and smooth.
Headnote:
SALES TAX - Spare parts of machinery - Windscreen wipers and oil gauge - Taxability.
Fact of the Case:
The assessee manufactured and sold various articles used in machinery, including windscreen wipers and oil gauges, to Diesel Locomotive Works, Varanasi. The department claimed that these items were taxable as spare parts of machinery, while the assessee claimed they were unclassified items.
Finding of the Court:
The court held that windscreen wipers were not taxable as machinery parts, but oil gauges were taxable as spare parts of machinery.
Issues: Whether windscreen wipers and oil gauges supplied to Diesel Locomotive Works, Varanasi, were taxable as spare parts of machinery.
Ratio Decidendi: The court held that windscreen wipers were not taxable as machinery parts because they were not integral parts of the machinery and were used only to make the running of the automobile convenient and smooth. On the other hand, the court held that oil gauges were taxable as spare parts of machinery because they were parts of the machinery that could be replaced or substituted.
Final Decision: The revisions were allowed in part. The question of law raised was decided by saying that windscreen wipers were not taxable as machinery parts but oil gauge supplied by the assessee to Diesel Locomotive Works, Varanasi, was taxable as spare part of the machinery.
( 1 ) THE following question of law was referred for the opinion of this Court under Section 11 of the U. P. Sales Tax Act, as it stood before its amendment: whether, in the facts and circumstances of the case, windscreen wipers and oil gauge manufactured and sold by the assessee and utilised in diesel locomotive were spare parts of machinery liable to be taxed at the rate of 6 per cent under Notification No. ST-7098/x -1012-1965 dated 1st October, 1965?
( 2 ) AS the law has been amended, this reference is being decided as revision. The facts in brief are as follows: The assessee manufactured and sold various articles used in machinery in the assessment years 1970-71, 1971-72 and 1972-73. The dispute in this revision is in respect of windscreen wipers and oil gauges supplied to Diesel Locomotive Works, Varanasi. It was claimed by the department that they are taxable as spare parts of machinery whereas the assessee claimed its taxability as unclassified item. The windscreen wiper is used to remove the rain-water or water falling on the windscreen of the automobile whereas oil gauge is used to measure the level of oil. The relevant notification read as under: in exercise of the powers under Section 3-A of the U. P. Sales Tax Act, 1948 (U. P. Act No. 15 of 1948), the Governor of Uttar Pradesh is pleased to declare that with effect from October 1, 1965, the turnover in respect of machinery and spare parts of machinery not being such machinery or spare parts thereof as are taxable under, any other notification issued under the aforesaid section, shall not be liable to tax except.
( 3 ) THE question is whether these items can be considered to be spare parts of machinery. According to the learned counsel for the assessee, a spare part of a machinery is an integral part without which the machinery cannot work. It was submitted that windscreen wiper or oil gauge were not integral parts of machinery and were used to make running of the automobile convenient and smooth only. They could not therefore be considered to be spare parts. The learned counsel produced a wiper to demonstrate that unless force is generated in it through a knob which rotates, it cannot function by itself. Reliance in this connection was placed on commissioner of Sales Tax v. Amar Radio Cabinet Works [1968] 22 S. T. C. 63, Sujan Singh v. Appellate Assistant Commissioner, Sales Tax [1969] 24 S. T. C. 504, and Vithal Chhagan and Sons v. State of Gujarat [1966] 17 S. T. C. 96. The dictionary meaning of the spare parts was also placed as a part of the argument. On the other hand, the learned standing counsel argued that no factual foundation has been laid and therefore these controversies cannot be raised for the first time in revision. According to him, the scope of revision under Section 11 is the same as that of reference under Section 11 (4 ). Reliance has been placed on Engineering Traders v. State of Uttar pradesh 1973 U. P. T. C. 91 (F. B. ). and Shyam Enamel Works v. Commissioner of Sales Tax 1974 u. P. T. C. 586.
( 4 ) SO far as the objection of the standing counsel is concerned it is a reference of the commissioner and if relevant facts are not on record or have not been found then the revision can either be dismissed under the new law or it could be returned unanswered under the old law. But, as, apart from the facts found, no other fact is necessary, it is not necessary to decide this controversy although it may not be out of place to mention that the scope of revision is not the same. It is much wider than the power exercised by this Court in advisory jurisdiction under the old law. Apart from it, the assessee is respondent and it is entitled to support the order on any ground except the grounds which necessitate investigation of facts.
( 5 ) COMING to the merits of the controversy "spare part" has been defined in Websters international Dictionary as "an extra part of a vehicle or machine kept for use in emergency or replacement. " In the Lit
