1969 (12) TMI 99 - HC - VAT and Sales Tax

Summary

Issues:
Interpretation of the term "hardware" in a sales tax notification for taxation purposes.

Analysis:
The judgment pertains to the assessment of tax on knives by an assessee under the U.P. Sales Tax Act for the assessment year 1962-63. The Assistant Sales Tax Officer initially taxed the turnover of knives at 7%, treating them as cutlery. Upon appeal, the rate was reduced to 3% for table-knives and 2% for penknives and kitchen-knives by the Assistant Commissioner (Judicial) Sales Tax. Subsequently, the Additional Judge (Revisions) Sales Tax held that table-knives were cutlery taxable at 7%, while penknives and kitchen-knives should be categorized as "hardware" and taxed at 3%. The reference was made to determine whether kitchen-knives and penknives should be taxed as "hardware" at 3% or as unclassified items at 2%.

The central issue in the case revolved around the interpretation of the term "hardware" within the context of a specific sales tax notification. The notification in question referred to the turnover of "mill-stores and hardware" to be taxed at 3% per rupee. The court analyzed the notification and concluded that the term "hardware" should not be interpreted in isolation but in conjunction with "mill-stores." The court emphasized that each entry in the notification represented a distinct category of goods, and "hardware" should be understood within the scope of the category it belonged to. Referring to a previous case, the court clarified that "hardware" typically encompassed items made of base metal like nuts, bolts, hinges, rivets, and latches, distinct from kitchen-knives and penknives.

Based on the interpretation of the notification and the nature of the goods in question, the court held that kitchen-knives and penknives did not fall under the category of "hardware" as intended in the notification. Therefore, the general tax rate of 2% under section 3 of the U.P. Sales Tax Act applied to these items. The court answered the reference accordingly, ruling in favor of the assessee. The assessee was granted costs amounting to Rs. 100, including counsel's fee.

In conclusion, the judgment provides a detailed analysis of the interpretation of the term "hardware" in a sales tax notification and its application to specific goods, clarifying the tax treatment of kitchen-knives and penknives under the U.P. Sales Tax Act.