No.: 7/CDVAT/2005
Date of Order : 08.07.05
M/s. MRF LIMITED
3/4, Asaf Ali Road,
New Delhi-110002.
ORDER
Present for the Applicant
:
Shri Bhagwati Prasad, Advocate
Present for the Department
:
Shri R.S. Gupta, DR
The above named applicant has filed this application for
determination of the under mentioned question u/s 84 of Delhi Value
Added Tax Act, 2004.
Whether the “Tractor tyres, tubes and flaps” are covered by Entry No.
71 of the Third Schedule appended to the Delhi Value Added Tax Act,
2004 and accordingly exigible to tax @4%?
2.
The application for determination has been preferred in the
prescribed format DVAT-42 and the requisite fee of Rs.10,000/- paid
through Demand Draft No.237797 dated 04.05.05.
3.
The case of the applicant is that Entry No.71 of the Third Schedule
appended the Delhi Value Added Tax Act, 2004 mentions “Tractors,
threshers, harvesters and attachments and parts thereof” which all are
taxable @4% and that because the Tractor tyres, tubes and flaps are the
integral parts of the tractors, they fall within the ambit of this Entry and
accordingly chargeable to tax at the same rate at which the tractors are. In
support of his argument, the Counsel appearing for the applicant has
placed on record a clarification issued by the Deputy Commissioner of
Sales Tax (HQ)-I, Maharashtra, Mumbai vide communication
No.DC(HQ)/1/VAT/2005/B-117 dt. 27.04.05 and claimed that because the
relevant Entry No.96 of Schedule-C appended to the Maharashtra Value
Added Tax Act, 2002 is pari materia with the present Entry No.71 of the
Third Schedule of Delhi Value Added Tax Act, 2004 and that the Sales
Tax Department of Maharashtra State has clarified the tyres, tubes and
flaps of Tractors to be covered by Entry No. 96 of Schedule-C of
Maharashtra Value Added Tax Act, 2002 and the rate of tax applicable on
the turnover of sales of these items is 4%, this Department too should
follow suit and hold the tyres, tubes and flaps of Tractors duly covered by
Entry No.71 of the Third Schedule aforesaid attracting tax @ 4% under
the Act. The Counsel for the applicant has also furnished a copy of letter
No.91/PRO/2005/276 dated 14.06.05 of Additional Commissioner of
Sales Tax and PRO of the Commercial Tax Department of the Govt. of
West Bengal. In this communication too, it has been stated that tyres and
tubes of Tractors are covered by the Entry in Column (2) against serial No.
84 reading as “Tractors, threshers, harvesters and attachments and parts
thereof” specified in Part-I of Schedule-C of the West Bengal Value
Added Tax Act, 2003 and therefore, the rate of tax applicable on the sale
of such goods is 4%. Therefore, the submission made on behalf of the
applicant is that here in Delhi also, the sales of tyres, tubes and flaps of
Tractors be held to be covered by Entry No.71 of the Third Schedule
appended to the DVAT Act and thus, exigible to tax at 4%.
4.
The DR for the revenue has however, urged that because tyres,
tubes and flaps of Tractors are neither the attachments nor the parts of the
tractors, they are not covered by the Entry No. 71 aforesaid. In support of
his argument, the DR has cited a judgment of the Hon. Apex Court
delivered on 18.10.76 in the case of M/s. Kores (India) Ltd. in which it has
been held that irrespective of the fact that it might not be possible to type
out any matter without it, the “Ribbon” is an ‘accessory’ and not a ‘part’
of the typewriter. The judgment has been reported at page No. 8 of the
Delhi Sales Tax Cases, Volume 39. Therefore, the contention of the DR is
that the items in question are the general unclassified and unscheduled
goods liable to tax at 12.5% under section 4(l)(e) of the DVAT Act.
5.
I have heard the arguments put up by the Counsel for the dealer
favouring the applicant and by the DR favouring the Department. I have
also gone through the application filed and the documents placed on
record. The relevant Entry No.71 of the Third Schedule reading as
“Tractors, threshers, harvesters and attachments and parts thereof” subject
matter of consideration in this case, has also been seen. Copies of
clarificatory letters placed by the Counsel for the applicant of the Tax
Departments of the Governments of Maharashtra and West Bengal on
record and the judgment of the Hon. Apex Court relied upon by the DR in
support of his arguments have also been noticed with regard. In the
clarificatory letters issued by the Tax Departments of Maharashtra and
West Bengal where the relevant entries are almost identical with that of
Delhi, it has been clarified that the Tractor tyres and tubes are covered by
the Entry reading as “Tractors, threshers, harvesters and attachments and
parts thereof” and attract the same rate of tax as is applicable to the
aforesaid items. However, in the judgment of the Hon. Supreme Court
cited by the DR at the Bar, it has been held that “Ribbon” is an accessory
and not a part of the typewriter and while observing that a “word’ which is
not defined in an enactment has to be understood in its popular and
commercial sense with reference to the context in which it occurs, the
Hon. Supreme Court before whom it was vehemently argued that Ribbon
was not an accessory but an essential part of the typewriter, the Hon.
Court was pleased to rule that just as Aviation Petrol was not a part of the
Aeroplane nor the Diesel was a part of a Bus, the Ribbon unlike a spool,
was not a part of the typewriter though it might not be possible to type out
any matter without it. In the case of “Annapurna Carbon industries Vs.
State of Andhra Pradesh” (37 STC 378) too where the Hon. Supreme
Court was concerned with the question as to whether the “arc carbons”
used mainly in projectors in Cinema were “accessories” of
cinematographic equipments including Cameras, projectors and sound
recording, while dealing with the expression “accessory”, the Hon. Apex
Court was pleased to hold that “arc carbons” which were mainly used in
projectors and were accessories to them, could also be the accessory to
more than one kind of instruments. Likewise, in the case of “Mehra Bros.
Vs. Joint Commercial Tax Officer (80 STC 233) also, the Hon. Supreme
Court had ruled that “car seat covers” and “upholstery” were accessories
to motor vehicles and while holding so, the Hon. Court was pleased to
define on the word “accessory” as below :“Thus, this Court accepted the meaning of “accessories” as an
object or device that is not essential in itself but that adds to
the beauty or convenience or effectiveness of some thing else or
is supplementary or secondary to something of greater or
primary importance which assists in operating or controlling
or may serve as aid or accessories”
6.
Therefore, after giving anxious consideration to the question
posed, looking into the position of the articles in question as it then existed
under the DST Act, 1975 i.e. tyres and tubes of Tractors did not appear
alongwith the Tractors in Entry No. 40 reading as “Tractors, tractor chasis
and spare parts thereof” of the Second Schedule appended to the DST Act,
1955 and thus, taxable at a different and higher rate of 8% under the Act
of 1975 and the observations made and the rulings given by the Hon. Apex
Court above, this Court is of the considered view that tyres and tubes of
Tractors could be the ‘accessories’ of the Tractors but never the parts
thereof. Nor these items as mentioned in the Entry, are the attachments of
the Tractors. This view finds support from the judgment of the Hon.
Orissa High Court delivered on May 14, 1992. In this case of “Madras
Rubber Factory Ltd. Vs. State of Orissa & Others” (92 STC 171), the
Division Bench of the Hon. Orissa High Court which was concerned with
the question as to whether the tyres and tubes of a Tractor fell or not
within the Entry reading as “Motor vehicles including chasis of motor
vehicles and spare parts, components of motor vehicles, cars, tractors and
its trailers” after considering the arguments of both the parties, was
pleased to hold that tyres and tubes of a tractor and its trailer did not fall
under “Spare parts of tractors and trailers” but were covered under the
entry “Automobile tyres & tubes”. To put it other way, in terms of this
judgment of the Hon. Orissa High Court, the tyres and tubes were not the
spare parts of the Tractors and their trailers. Moreover, it has also been
noticed that the automobile manufacturing Companies who manufacture
various automobiles like Buses, Cars and Scooters etc., also manufacture
the parts thereof but they do not manufacture the tyres and tubes of these
automobiles. The Tractors are not exception to this. Thus, this bare fact
too goes to establish that the tyres and tubes of a motor vehicle or say of a
Tractor in this case, are not the spare parts thereof. Further, in so far as the
next item “Flap” is concerned, this Court recollects of a judgment of the
Hon. Apex Court in the case of “United Copiex (India) Private Ltd., Vs.
Commissioner of Sales Tax” reported as 101 STC 536 in which it has
been ruled by the Hon. Supreme Court that flaps which are used between
the tubes and the rims to protect the tubes from overheated rims on long
drives, could be the accessories of tyres and tubes but not of the motor
vehicles. As such, this Court has no hesitation in coming to the conclusion
that tyres, tubes and flaps of Tractors are not covered by Entry No.71 of
the Third Schedule annexed to the Delhi Value Added Tax Act, 2004 so as
to attract tax at the rate of 4%. Rather, in the present state of law as it
exists on date, the items in question are unscheduled goods liable to tax at
the general rate of 12.5% under section 4(1)(e) of the Act. Ordered
accordingly.
(R.K. VERMA)
Commissioner, VAT, Delhi
No. 09
Dated: 12/07/05
Copy to :
1.
Applicant
2.
STO, Policy
3.
Bar Association
4.
Guard File
(R.K. VERMA)
Commissioner, VAT, Delhi