1955 (12) TMI 31 - HC - VAT and Sales Tax

Issues Involved:

1. Classification of passenger lifts under the Bombay Sales Tax Act, 1946.
2. Determination of whether the installation of lifts constitutes a sale.
3. Applicability of special tax under section 6 of the Bombay Sales Tax Act, 1946.
4. Interpretation of "domestic electrical appliances" in the context of the Act.
5. Division of contracts into sale and installation components.

Detailed Analysis:

1. Classification of Passenger Lifts Under the Bombay Sales Tax Act, 1946:

The applicants, a firm of engineers, were assessed to special tax under section 6 of the Bombay Sales Tax Act, 1946, for the period from January 1, 1950, to March 31, 1951, for passenger lifts installed in Bombay. They were assessed under entry 21 of Schedule I, which includes "Domestic electrical appliances other than torches, torch cells, filament lighting bulbs and fans." The applicants argued that passenger lifts are not specifically mentioned in entry 21 and are not domestic electrical appliances. The Assistant Collector dismissed the appeal, holding that passenger lifts were covered by the said entry.

2. Determination of Whether the Installation of Lifts Constitutes a Sale:

Shri Patel, representing the applicants, contended that the installation of a lift does not amount to a sale, citing the case of Gannon Dunkerley & Co. v. The State of Madras. The Additional Collector rejected this contention, stating that the case involving building materials did not directly apply. The Additional Collector observed that the lift is a finished article supplied and then installed, constituting a sale.

3. Applicability of Special Tax Under Section 6 of the Bombay Sales Tax Act, 1946:

The applicants were charged special tax under clause (b) of sub-section (i) of section 6, which pertains to domestic electrical appliances. The court found it doubtful whether lifts could be regarded as appliances, even though they might be considered "domestic articles" in the sense that they are not for public use. The court concluded that the Legislature likely intended "domestic electrical appliances" to refer to items like electric stoves, irons, and refrigerators, not lifts.

4. Interpretation of "Domestic Electrical Appliances" in the Context of the Act:

The court examined the definitions of "domestic" and "appliance" from dictionaries and found that the term "domestic electrical appliances" likely did not include lifts. The Indian Customs Tariff lists "passenger lifts and component parts and accessories thereof" separately from "electric instruments, apparatus, and appliances," supporting the interpretation that lifts are not domestic electrical appliances.

5. Division of Contracts into Sale and Installation Components:

The court analyzed the correspondence between the applicants and the Jayant Jain Housing Co., Ltd., to determine the nature of the contracts. It found that the contracts could be divided into two parts: one for the delivery of the lift materials and the other for their installation. The court concluded that there was a sale of the component parts of the lifts before installation, subject to sales tax.

Conclusion:

The court allowed the application in part, holding that the case falls under clause (a) and not clause (b) of sub-section (i) of section 6. It directed that the general tax at the rate of half an anna in the rupee be levied on the turnover in respect of sales or supplies of the constituent parts of the lifts, calculated at 80% of the amounts charged by the applicants for the supply and installation of the lifts. The orders of the lower authorities were modified accordingly.

Ordered accordingly.

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