While dismissing a Sales Tax reference, the division bench of Bombay High Court has confirmed 13 percent Sales Tax on Bearing of Automobiles and Agricultural Tractors.
M/s Kirloskar Oil Engines Ltd is engaged in the business of manufacture and sale of oil engines, and parts thereof. It also undertakes manufacture of bearings required by the manufacturer of automobiles and agricultural tractors. These bearings are manufactured as per the drawings and designs supplied by the said manufacturers.
The Petitioner had challenged Assessing Officer’s order levied sale tax on these bearings at 13% by classifying them under Entry C-II-146. This was done on the basis that bearings fell under Entry C-II-146 whether they were supplied as parts of a motor vehicle or parts of an agricultural tractor.
The division bench comprising of Justice S.C Dharmadhikari and Justice B.P Colabawalla held that, bearings sold by the Applicant were covered by Entry C-II-146 of the Bombay Sales Tax Act, 1959 and not by Entry C-II102(2) as auto parts and C-II- 135 as tractor parts read with Entry A-35 of the Notification issued under Section 41 of the Bombay Sales Tax Act, 1959.
The bench also observed that, “As far as the bearings are concerned, there is special Entry which deals with bearings of all types including Ball or Roller bearings. This Entry is Schedule Entry C-II-146. There being a specific / special Entry for bearings (Entry C-II-146), we are unable to hold that the bearings sold by the applicant would fall either under Entry C-II-102(2) [as a components, parts of a motor vehicle] or under Entry C-II-135 read with the Notification Entry A-35 [as a components and/or parts of tractors specifically designed for agricultural use]. When there is a specific Entry in the schedule to a Taxing Statute, the same would override a general Entry”.
“As far as bearings sold by the applicant are concerned, it can hardly be disputed that Entry C-II-102(2) and C-II-135 read with the Notification Entry A-35 would be general entries in comparison to Entry C-II-146 which specifically deals with all types of bearings”, the bench said.
The proposition that where there is a specific Entry in the schedule to a Taxing Statute, the same would override a general Entry, is very well settled and in this regard Mr Sonpal has correctly laid stress on the decision of the Supreme Court in the case of Bradma of India Ltd.
The bench also noted that, “Notification Entry A-35 talks about sale or purchases by a registered dealer of tractors specifically designed for agricultural use and components, parts and accessories thereof covered by Entry C-II-135. From a plain reading of the said Notification Entry, it is clear that it applies to sales or purchases only by a registered dealer of tractors specifically designed for agricultural use and the components, parts and accessories thereof. Admittedly, the applicant does not sell or purchase tractors for agricultural use and neither is it a registered dealer thereof as contemplated under Notification Entry A-35. We, therefore, additionally find that the bearings sold by the applicant to tractor manufacturers could never be classified under Notification Entry A- 35 and have to be classified only under Schedule Entry C-II-146”.
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