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2014 (4) TMI 807 - HC - VAT and Sales TaxRate of Tax - Sale of batteries to Railways - Entry 76 of third Schedule or Residuary Clause – Classification – Interpretation of Statute - Karnataka Value Added Tax Act, 2003 - Levy of penalty - Whether the batteries are part of railway coaches, wagons etc., and fall under Entry 76 of the third schedule - Held that:- Judgment in TATA ENGINEERING AND LOCOMOTIVE COMPANY 1994 (10) TMI 131 - SUPREME COURT OF INDIA] followed- No vehicle can operate or work nor can it be said to have been produced unless tyre, tube and batteries are fixed to it - Use of these items is integrally connected with the ultimate production - They retain their identity as ‘the end product’ - It is the battery, which is the most integral part of the motor vehicle, without which, a motor vehicle could never have driving force - Entry 52 in the third schedule of the KVAT Act was substituted w.e.f 7-6-2005 and renumbered as Entry 76 which includes the word ‘part thereof’, meaning any item like batteries, tyre, tube, etc., which are required in making of railway coaches, wagons, etc. are to be treated as part of railway coaches, wagons etc. - The legislature in its wisdom amended Entry pertaining to the railway coaches, wagons, engines including the word ‘parts thereof'. If the legislature was not intending to tax batteries as part of railway coaches, wagons etc., then perhaps it would have excluded batteries from the Entry and in that situation, Entry would have been railway coach, engine, wagon and part thereof, excluding batteries - Hence, the battery is the part of railway coaches, wagons, engines etc. - The battery being the part of the railway which falls under Entry 76 of the third schedule, would be liable to tax at the rate of 4% u/s 4(1)(a) of the Act and not u/s 4(1)(b) under residuary clause - Further, the Government by notification dated 24-3-2008 invoking its power u/s 4(3) reduced the tax from 12.5% to 4% w.e.f. 1-4-2008 on the sale of batteries to the Indian Railways - Hence, it is clear that the battery is an integral part of the railway coaches, engines and wagons and falls under the ‘part thereof’ under Entry 76 - Hence, it has to be taxed under Section 4(1)(a) – No need found to interfere with the order of Tribunal - Decided in favour of assessees
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