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TMI Blog2007 (9) TMI 569X X X X Extracts X X X X X X X X Extracts X X X X ..... tion of law that if a particular practice or position had been accepted by the Revenue for a long number of years, the same cannot be departed from-more so when there is no change in the legal position or classification of goods and the Tribunal's later order for 1997-98 and 1998-99 has been accepted by the Revenue? The brief facts are stated in this order for the purpose of appreciating the rival legal contentions urged by the learned Senior Counsel and Additional Government Advocate for the parties with a view to answer the questions of law raised in this revision petition. The assessee is engaged in the manufacture of engineer's cutting tools like twist drills, reamers, cutters, taps, etc. ("small tools or cutting tools", for short). Its factory is located in Madras with sales offices in some cities including Bangalore. The assessee gets goods on stock transfer for sale in Karnataka. According to the assessee the goods are commercially understood as consumables by their very nature as they need frequent replacement due to wear and tear and breakage and their life is very short and the goods are used for turning out specific jobs like drilling a hole or enlarging an exis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssed the judgment dated August 13, 2002 in Appeal Nos. 1258 and 1259 of 2001, against the common order dated September 25, 2001 passed by the Joint Commissioner of Commercial Taxes (Appeals), Bangalore City Division No. 1, in KTEG Appeal Nos. 16 and 23/2001-2002 by confirming the assessment orders for the years 1997-98 and 1998-99 dated April 3, 2001 and April 9, 2001 by the Deputy Commissioner of Commercial Taxes (Assessment 14) placing reliance upon entry No. 1(iii)(e) of Part M of the Second Schedule to the KST Act, which defined as parts of machinery and the same would be the meaning for the purpose of the entry 52 of the First Schedule to the KTEG Act. He further stated that the description of the goods given in the Schedules grouping the same goods in one entry with special entries could not be held as definition of goods. Therefore, the Tribunal held that the machinery tools are specifically covered by sub-entry (III)(e) of entry No. 1 of Part M of the Second Schedule to the KST Act and not covered by subentry (III)(a) itself. There was no necessity to cover them under another special entry. It is further contended by the learned Senior Counsel that the Revenue accepted the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me point. Therefore, aggrieved by the said order, the present revision is filed by the petitioner framing the aforesaid questions of law. In support of the said legal questions of law, learned Senior Counsel Mr. K.P. Kumar placed reliance upon the following decisions in support of the question of law framed in this petition and contended that if it is settled position of law, that if a position or practice which has been adopted by the Revenue for a long number of years, the Revenue cannot be permitted to detract from it, more so when there is no change in the legal position and classification of goods: (1) [2004] 134 STC 138 (Karn) in the case of Pioneer Enterprises v. Joint Commissioner of Commercial Taxes (Appeals). (2) [2001] 121 STC 611 (SC); [2001] 50 Kar L.J. 92 (SC) in the case of Commercial Tax Officer (Intelligence) No. IV, Enforcement Wing, Hyderabad v. Ki Hi-Tech Secure Print Ltd. (3) [2007] 289 ITR 318 (Delhi) in the case of Commissioner of WealthTax v. Allied Finance P. Ltd. (4) [2004] 136 STC 462 (SC) in the case of Merind Ltd. v. State of Maharashtra. (5) [2001] 251 ITR 50 (Guj) in the case of Lalludas Children Trust v. Commissioner of Income-tax. (6) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... igh Courts referred to supra upon which strong reliance is placed by the learned Senior Counsel who submits that great hardship would be caused if the questions of law framed in this case are not answered in favour of the assessee. Smt. S. Sujatha, the learned Additional Government Advocate has sought to justify the order of the Tribunal by placing reliance upon the entry mentioned at serial No. 52 of the Schedule to the KTEG Act and submits that the assessing officer having regard to the legal position laid down by the Division Bench of this court on the basis of various decisions of the apex court in support of her legal contentions would submit that the accessories after interpretation of the aforesaid phrase and also considering Webster's Comprehensive Dictionary International Volume 1 for the meaning of "accessory", this court has held that accessory or accessories is a machinery as mentioned in the Schedule. Therefore, she submits that the goods in question are not consumable as erroneously held by the Tribunal in its earlier order August 13, 2002 in KTEG 1258 and 1259/2001 for the assessment year 1997-98 and 1998-99 placing reliance upon the entry No. 1(iii)(a) and (iii ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... holding that the goods in question are not machineries by placing reliance on entry 1(III)(e) of Part M under the KST Act ignoring entry 52 of the Schedule to the KTEG Act, which entry should have been considered and interpreted by the Tribunal. In this regard, the Commissioner was directed to file an affidavit and explain under what circumstances the assessment orders were passed and the order dated August 13, 2002 passed by the Tribunal was not challenged. Therefore, she submits that the question Nos. 1 and 3 do not arise for our consideration and the same are not required to be answered in favour of the assessee. The learned AGA rebutted the learned Senior Counsel's submission in support of question No. 2 with reference to regulation 54, clause (1), of the Regulations contending that in view of the specific entry in the Schedule to the KTEG Act and the decision of the Supreme Court upon which strong reliance is placed by the two Division Bench decisions of this court in the case of Pioneer Enterprises v. Joint Commissioner of Commercial Taxes (Appeals) reported in [2004] 134 STC 138 and in the case of Premier Irrigation Equipments Pvt. Ltd. v. Assistant Commissioner of Com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e goods in question form part of the machinery or not, require due consideration by referring to the fact whether the machinery in question could be operated or is complete in itself without these small tools; or whether when the machinery is put to a particular use, it is absolutely necessary to use these small tools and without which, such operation cannot be carried out; or whether these small tools are used as consumables and whether that fact has any relevance to the question in issue, will have to be considered with reference to the factual situation." The contention advanced on behalf of the petitioner whether the goods in question form part of the machinery or not requires due consideration by referring to the fact whether the machinery in question could be operated without the goods in question or is complete in itself without these small tools or when the machinery are to put to a particular use, it is absolutely necessary to use these small tools and without which such operation cannot be carried out or whether these small tools are used as consumables and whether that fact has any relevance to the question in issue, will have to be considered with reference to the fact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s tax revision petition/civil revision petition before this honourable court and submits the file to the Additional Commissioner of Commercial Taxes (Policy and Law). The Additional Commissioner of Commercial Taxes (Policy and Law) records his opinion and in turn submits the file to the Commissioner who takes a decision about filing the sales tax revision petition/civil revision petition, etc. 7.. It is respectfully submitted that entry No. iii(a) of entry 1 (iii)(e) of Part M to II Schedule to the KST Act, is not applicable for interpreting the entry under KTEG Act. Entry No. 52 of the First Schedule to the KTEG Act, 1979 and the relevant entries as they stood during the relevant assessment years are very clear and unambiguous. For the assessment year 2000-01, the assessing authority Sri. S.A. Manvi had held that the cutting tools dealt by the assessee were parts and accessories of machinery and subjected the same to tax liability. This was confirmed by the first appellate authority vide order dated July 21, 2004 [S. Nataraj, Joint Commissioner of Commercial Taxes (Appeals) (retired)]. The same was challenged by the assessee before the Karnataka Appellate Tribunal in S.T.A. No. 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Accepting the above legal proposition laid down in the aforesaid case by the Supreme Court and various decisions of High Courts at paragraph 6, the Division Bench of this court has held thus: "6. As could be seen from the aforesaid decisions in order to categorise the product as an accessory or component it is essential to see, whether the product is an essential integral part of the final product and without which the final product is not capable of use, then the item is held to be an accessory, when it is used only for obtaining enhanced efficiency of performance of the main product and does not form an essential integral part of the main product it is an accessory. In the light of the said proposition, if, we consider the case on hand, a T.V. antenna can be considered only an accessory and not a component of T.V. set, since the T.V. set has multi-purpose use . . ." For the reasons recorded in paragraphs 4 and 6 in the above Division Bench decision of this court, the aforesaid questions are answered by this court against the assessee. In another decision of this court in Premier Irrigation Equipments Pvt. Ltd. v. Assistant Commissioner of Commercial Taxes (Assessment-II), Ba ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by the Revenue by assigning valid and cogent reasons in the impugned judgment. The said finding and reason recorded by the KAT in the impugned judgment are in conformity with entry 52 of the Schedule to the KTEG Act and the two Division Bench decisions of this court referred to supra wherein this court has followed various decisions of the Supreme Court and other High Courts, which are extensively discussed and recorded its reasons by following the decisions. The relevant paragraphs of the same court are extracted in the said judgment which are sufficient for us to accept the legal submissions made on behalf of the Revenue and we are not inclined to accept the submissions made by the learned Senior Counsel, Mr. Kumar, on behalf of the assessee, though it is contended by him placing reliance upon the aforesaid decisions, which are referred to in the earlier paragraphs of this judgment. We cannot accept the submissions made on behalf of the assessee which are referred to in the earlier paragraphs of this judgment where the submissions of the learned Senior Counsel on behalf of the assessee are indeed in support of the proposition that it would be unreasonable to accept the view ta ..... X X X X Extracts X X X X X X X X Extracts X X X X
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