1977 (3) TMI 141 - HC - VAT and Sales Tax

Summary

Issues:
Interpretation of entry 56 of Schedule C to the Bombay Sales Tax Act, 1959 regarding motorised elevator mobile copper roller storage racks.

Analysis:
The judgment by the Bombay High Court, delivered by Justice Kania, pertains to a reference under section 61(1) of the Bombay Sales Tax Act, 1959. The central question raised was whether motorised elevator mobile copper roller storage racks fall under entry 56 of Schedule C to the Act. The case originated from the assessment of a registered dealer, a manufacturer of textile machinery, for the period from November 1969 to October 1970. The Sales Tax Officer levied sales tax on the sale of motorised mobile iron and steel racks under entry 56 of Schedule C. The Commissioner of Sales Tax upheld this decision, leading to appeals to the Sales Tax Tribunal and subsequently to the High Court.

The applicant described the article in question as a power-operated storage rack used in the printing department for storing and shifting rolls efficiently. The applicant argued that these racks should be classified under the residuary entry 22 of Schedule E. The descriptions of the article indicated its functionality in maximizing floor space utilization and customizability for various storage applications. The patent specifications highlighted its unique design for efficient storage with minimal space requirements.

The court analyzed the interpretation of "furniture" in entry 56 of Schedule C in light of previous legal precedents. It referenced cases like State of Uttar Pradesh v. Kores (India) Ltd. and Commissioner of Sales Tax v. Associated Dental & Medical Supply Co. to emphasize interpreting terms based on trade parlance and common understanding. The court differentiated between ordinary furniture and specialized equipment, considering the presence of elaborate machinery in the storage racks in question.

The court scrutinized the amended description of entry 56 post-May 1973, expanding the scope to include various types of metal furniture. The applicant argued that the machinery integrated into the storage racks disqualified them from being classified as furniture. In contrast, the respondent contended that the primary function of the article being storage rendered it as furniture, irrespective of attached machinery.

Considering the nature of the article, which combined storage racks with mechanized conveyors for vertical and horizontal movement, the court concluded that such specialized equipment could not be categorized as furniture. It highlighted the distinction between standard storage racks and those with intricate machinery, emphasizing the common-sense understanding and trade perception of "furniture."

In conclusion, the court answered both reframed questions in the negative, determining that the motorised elevator mobile copper roller storage racks did not fall under entry 56 of Schedule C. The court also waived the costs for the reference, acknowledging the novel interpretation of the legal issue presented in the case.