TMI Blog1984 (4) TMI 259X X X X Extracts X X X X X X X X Extracts X X X X ..... estions takes care of the second question also and if we decide the first question, it will not be necessary to go to the second question. The assessee is a manufacturer of monoblock centrifugal pumps. The assessee's case is that the pumps so manufactured by him are "agricultural pumps" as opposed to "domestic pumps" or "industrial pumps ". To support this distinction, the assessee relies on two characteristics of the pumps manufactured by him, which characteristics, according to him, are distinct for agricultural pumps. They are (i) that the range of their horse power is from 2 to 10 which is much lower than the range of industrial pumps, and (ii) that whereas in the domestic and industrial pumps suction is limited while delivery is always longer, in the two pumps in question suction is longer while delivery is immediate having regard to the use of those pumps for watering the fields. These proceedings arise out of an application made by the assessee under section 62 of the Gujarat Sales Tax Act, 1969, for determination of the question as to what is the correct rate of tax payable on the sales of the pumps manufactured by him. If they are "agricultural machinery" within the me ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d water pumping sets. Six paise in Six paise in the rupee the rupee." --------------------------------------------------------------------------- Perhaps in regard to water pumps and water pumping sets, the question may not be of relevance now because as it stands today while these are taxable as six paise in the rupee, the tax on goods falling with entry 5 also is taxable at six paise in the rupee. That is not the case with regard to the period with which we are concerned. We have particularly to notice that the words in entry 5 "agricultural machinery and implements" are qualified by the words "exclusively used in agricultural operations". Evidently the entry would apply not to every machinery and implement which happen to be used in agriculture. If such machinery or implement is adaptable for use in industry or for domestic purposes, it may not fall within entry 5, for, then the qualification that it must be "exclusively used in agricultural operations" may not be available. On the facts, there is no dispute in this case. The Sales Tax Tribunal has categorically found in its order: "We have carefully considered the literature produced before us and we are of the view t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d taps, gear cutters and hacksaw blades". It may not be necessary to refer to the proviso to that item. The question was whether the pot motors imported by the appellants as component parts of the machinery falling under item 72(1) of the First Schedule, viz., textile machinery, would fall within item 72(3) or they would fall within item 73(21) which comprised of "electric motors, all sorts, and parts thereof". It was found that the pot motors imported by the party were clearly component parts of rayon spinning machinery. That was not disputed. They were clearly and indubitably essential for the working of the rayon spinning machines and they were specially designed for use in spinning frames for manufacturing rayon thread. Nevertheless they were electric motors falling within item 73(21) of the First Schedule. Though they were electric motors, since they were adapted for use as component parts of machinery as defined in item 72(1), the Supreme Court took the view that the pot motors clearly fall within the description given in item 72(3). Having found so, the Supreme Court went on to say: "There can be no doubt that on a plain grammatical construction, the words 'not otherwise s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ous varieties of tractors used at different places for a variety of purposes. There are farm or agricultural tractors, industrial tractors, road tractors and military tractors. Wherever according to the court, a question arose whether a tractor in a given case was an agricultural machinery or an industrial machinery or machinery of any other type, the question must necessarily be answered by reference to its design, mechanism, distinct features and special adaptability, if any, to any particular use out of the diversity of uses to which a tractor is capable of being put. On the facts before it, the tractors in question were found to be "agricultural machinery" and taxable under entry 12 of Schedule C. It is evident that this case concerned the entry as it stood prior to the commencement of the Gujarat Sales Tax Act, 1969. Entries 5 and 36 in the Act have a legislative history. The Sales Tax Inquiry Committee appointed to report on the question of the sales tax law, in its report to the Government, recommended, inter alia, rationalisation of rates. Paragraph 7.12 deals, among other things, with its recommendation regarding agricultural machinery and since that may be relevant, we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt from the report that even before the decision of this Court in Vicas Tractors' case [1971] 27 STC 203, there were decisions of various courts which had considered the applicability of the entry "agricultural machinery" on the basis of the primary and predominant use of such machinery. It is also evident that the Sales Tax Inquiry Committee noticed that the tractors and water pumping sets have predominant use in agriculture. Evidently because of this, it was suggested by the Sales Tax Inquiry Committee that tractors and water pumping sets also be brought within entry 5 as "agricultural machinery" instead of being left to interpretation as to their being of predominant use. Consequently, when the Bill was prepared in pursuance to the recommendation of the Sales Tax Inquiry Committee, entry 5 stood thus: ------------------------------------------------------------------------------- Sr. No. Description of goods Rate of sales Rate of tax purchase tax 1 2 3 4 ------------------------------------------------------------------------------- 5(1) Agricultural machinery and implements Three paise in Three (other than implements specified in entry the rupee. paise in 19 in Sc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tee suggested that in regard to water pumps and pumping sets, instead of taxing them at three paise by inclusion in entry 5, they must be taxed at six paise in the rupee so as to maintain status quo in respect of the rate of tax as under the earlier provisions of the Bombay Sales Tax Act, 1959. That is the reason behind inclusion of those items which have found a place as items (2) and (3) in entry 5 of the Bill based on the Inquiry Committee's report as entry 36 in Schedule II. In other words, the Select Committee made it clear beyond doubt that there is no need to effect the change in the rate of taxation which would be the consequence if the Bill based on the Sales Tax Inquiry Committee's report was adopted. It is well to remember that status quo was that of "taxing tractors", "water pumps and water pumping sets" which fall within the scope of "agricultural machinery" at a lower rate of tax and not all that rate. If that be the position, then, it was not as if by giving an independent existence for tractors as well as water pumps and water pumping sets in entry 36 of Schedule II all tractors, water pumps and water pumping sets were intended to be taxed at a higher rate. Those wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n found by the Tribunal that, "water pumps and water pumping sets" in question are "agricultural machinery" "exclusively used in agricultural operations" and if that be so, it would be entry 5 that would be applicable and not entry 36(2). Evidently this was the view reflected in the order of reference, but the Judges made the reference because of a decision of this Court which evidently spoke to the contrary. That is an unreported decision in Patel Tractor Company v. State of Gujarat (Sales Tax Reference No. 1 of 1975 decided on 21st June, 1976-Gujarat High Court). The same question arose before this Court in Vicas Tractors' case [1971] 27 STC 203 and had the learned judges followed that decision, the conclusion would have been different. But, on the assumption that the legislative history called for a different approach to an understanding of entry 5, the learned Judges came to a different conclusion and held that all tractors would fall within entry 36 and not entry 5. They also assumed on the basis of the decision of the Supreme Court in Siemens Engineering and Manufacturing Co.'s case AIR 1976 SC 1785 which had not been reported at that time, that the "general" entry in this ..... X X X X Extracts X X X X X X X X Extracts X X X X
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