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2017 (10) TMI 426 - HC - VAT and Sales TaxClassification of goods - levy of sales tax - Brake Fluid - The petitioner's contention is that Brake Fluid cannot be categorized as Lubricant and therefore, Sales Tax / Commercial Tax cannot be charged by treating as a Lubricant - whether the tax can be charged in respect of Brake Fluid by treating it under Entry No.9 Part-III of Schedule-II which prescribes the rate of tax in respect of description of goods as Lubricant @ 15% or tax has to be charged by treating the Brake Fluid under the residuary entry being Entry No.1 of Part-VII of Schedule-II which is @ 8%? Held that: - Brake Fluid is a different kind of liquid altogether which is never used for the purpose of lubrication. Earlier the braking system in vehicles used to be mechanical braking system, like the braking system which we have in bicycle and the moment the pressure is applied to liver of the brake, it is transmitted mechanically to the brake pads which were fixed to the wheel of the vehicle as they are fixed at the wheel of the bicycle - With passage of time Hydraulic Brake System came into existence and the Brake Fluid was introduced. The Brake Fluid perform the same job which was being performed by the mechanical system and it transfers the force on the brake pads fixed on the brake drums (Brake Shoe). It is not at all lubricating either the brake or any part which is under the braking system. Today we have pressure brake also which exclusively work on air pressure and if the logic canvassed by the State Government is considered then the State Government will charge Sales Tax on air also as lubricants because air is again being used in braking system in some of the modern age braking system. Reliance placed in the case of Commissioner, Trade Tax, U. P., Lucknow Vs. H. C. S. Comnet System Ltd. [2014 (1) TMI 1648 - ALLAHABAD HIGH COURT], where the Allahabad High Court was dealing with an issue relating to VSAT and the issue before the Court was whether VSAT (Very Small Aperture Terminals) and Satellite Receiver can be treated as one entry or the two item separately - The High Court has held that The functioning of “VSAT” and “Satellite receiver” is different, their actual use is different, they are differently known by the people who deal therein, and work differently. It would not be correct to treat a “VSAT” as a “satellite receiver”, so as to attract tax-ability under entry 75(i) of Notification dated January 29, 2000 issued under section 3A(1)(d) of the U. P. Trade Tax Act, 1948. Since it is not separately mentioned in entry 75(i) and 75(ii), it would be covered by entry 75(iii), being an item of electronic goods, not covered by any other item in entry 75 and would be taxable under entry 75(iii). By no stretch of imagination, Brake Fluid and Lubricant can be treated as under one entry - petition allowed - decided in favor of petitioner.
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