2005 (5) TMI 685 - HC - VAT / Sales Tax

Classification of the goods - under the category of goods for indoor or outdoor games or sports. - Principles of Interpretation - Rate of taxability of park equipment its accessories spare components etc .- Meaning of word games - HELD THAT - The indoor and outdoor game in their popular meaning comprises such games or sports which develops mental or physical skill off a human being. A game especially one involving bodily exercises is covered within the meaning of word sports as defined in the Chamber s dictionary. To my mind games and sports are qualified by the words indoor and outdoor. In common parlance the indoor and outdoor games and sports conceptually require skill in which fixed rules are followed to win against an opponent. The element of skill and development of physical or mental faculty of a human being is the principle behind indoor and outdoor games and sports. Such activity with goods which provide mere amusement or entertainment will not fall in the category of indoor and outdoor games or sports. The goods manufactured by the applicant such as Striking Car Bhoot Bungalow etc. provide amusement and entertainment only but does not require any skill. They themselves are also not helpful for the purposes of development of mental and physical faculty of the player. No fixed rules are required to be followed in the amusing activity of striking Car etc. The words indoor and outdoor games are not defined either under the U.P. Trade Tax Act or elsewhere. The dictionary meaning of sports and games is very wide. In the context of the Entry in the Notification in question I am of the view that the indoor and outdoor games have been used in popular sense. It has been found as a fact by the Tribunal that the items manufactured by the applicant may i provide recreation but there is no element of competitiveness among the players. This element of competition is always there amongst the players either indoor or in outdoor games or sports which is lacking in the players when the goods in question are in use. They only provide recreation and amusement and there is nothing for competition requiring any skill op physical exercise which ultimately may result in the mental and physical development of the player. The Striking Car Bhoot Bungalow etc. provide entertainment or amusement and lacks any rule to play. The Tribunal has rightly held that the goods and apparatus meant for amusement park do not fall within the category of sport goods under the aforesaid notification. It may be noticed that the applicant realized tax from its customers at the rate of 10% treating the goods in question as unclassified items as mentioned in the assessment order. In the result there is no merit in the revisions. Both the revisions are hereby dismissed.

Summary

Issues:
Rate of taxability of park equipment, its accessories, spare components, etc. under a specific notification.

Analysis:
The case involved two revisions arising from a common order passed by the Trade Tax Tribunal regarding the rate of taxability of park equipment and related items for the assessment year 1989-90. The applicant, a manufacturer of amusement park equipment, claimed tax classification under a specific notification for goods related to indoor and outdoor sports and games. The Assessing Authority initially disagreed, treating the goods as unclassified due to their recreational nature. However, the First Appellate Authority classified the goods under the category of "goods for indoor or outdoor games or sports." The Tribunal, on departmental appeal, reversed this decision, reinstating the Assessing Officer's view.

The key contention revolved around whether the goods manufactured by the applicant fell within the entry for goods meant for indoor or outdoor games or sports under a specific notification. The applicant argued based on the dictionary meaning of "games" and relied on previous judgments regarding the taxation of similar items like baby walkers and balloons. The department, however, argued that the items manufactured by the applicant did not align with the concept of indoor or outdoor games or sports in common parlance.

The Court delved into the interpretation of entries in taxing statutes, emphasizing that goods should be classified based on their popular commercial meaning rather than scientific definitions. It cited various legal precedents to support this principle, highlighting that goods should be understood as they are commonly perceived in the market. The Court also examined the definitions of "games" and "sports" from standard dictionaries to determine the scope of the relevant notification entry.

Ultimately, the Court concluded that the goods manufactured by the applicant, such as Striking Car and Bhoot Bungalow, primarily provided amusement and entertainment without requiring skill or competitiveness typical of indoor or outdoor games or sports. As a result, the Tribunal's decision that the goods did not fall under the category of sports goods in the notification was upheld. The Court dismissed both revisions, noting that the applicant had previously treated the goods as unclassified items for tax purposes.

In conclusion, the judgment clarified the classification of park equipment and related items for tax purposes under a specific notification, emphasizing the importance of interpreting goods based on their commercial understanding rather than technical definitions.