State of Andhra Pradesh vs Gurunanak Engineering Corporation

Syed Shah Mohammad Quadri, J.—In these revisions, filed by the State against the common order of the Tribunal, the question that arises for consideration is :

"Whether biscuit baking oven falls within entry 38(iv) or entry 83 of the First Schedule to the Andhra Pradesh General Sales Tax Act ?"

The assessee is a dealer registered under the Andhra Pradesh General Sales Tax Act, 1957. It is a dealer in biscuit baking ovens, dall mills machinery and oil storing machines. The turnover which relates to sales of biscuit baking machines/ovens, was taxed by the assessing authority under entry 83 of the First Schedule. The Deputy Commissioner of Commercial Taxes revised the order of assessment u/s 20 of the Act and held the same to be taxable under entry 38(iv). On appeal against the order of the revising authority, the Sales Tax Appellate Tribunal restored the order of the assessing authority holding the turnover as taxable under entry 83 of Schedule I by its order dated March 17, 1987.

The learned Government Pleader submits that what was sold was biscuit baking oven and as oven has been specified as one of the goods in entry 38(iv), the Tribunal was not justified in treating it as failing within the meaning of S-97-61 entry 83 and, therefore, the order of the Appellate Tribunal has to be set aside. Sri Qureshi, the learned counsel appearing for the assessee, strenuously contends that biscuit baking oven is used for manufacture of biscuits, which forms part of the machinery and is rather an accessory to the whole unit and therefore, it has to be taxed only under entry 83. His contention is that merely because the oven is an electrical appliance it does not cease to be an accessory of the plant/ machinery for manufacture of biscuits.

The Tribunal came to the conclusion that entry 38(iv), in which oven falls, deals with domestic appliances and so, the oven which is used for baking biscuits does not fall within the said entry as it is used for a commercial purpose, therefore it would be taxable under entry 83.

The taxability of turnover in question depends on the answer to the question as to under what entry of the First Schedule does the oven used for baking biscuits fall ? The Revenue brings it under entry 38(iv) whereas the assessee relies on entry 83. We shall read these entries here.

Entry 38 (iv) is in the following terms :

------------------------------------------------------------------- "All kinds of electrical goods, At the point 10 paise in instruments, apparatus and of first sale the rupee." appliances other than those in the State specifically mentioned elsewhere including - (i) to (iii) .............. (iv) electrical grinders, mixers, blenders, hair drivers, shavers, washing machines, heaters, cooking ranges, boilers, ovens, geysors, generators, transformers and parts and accessories thereof. --------------------------------------------------------------------

From a close reading of this entry, it becomes clear that it deals with electrical goods which are independent items and not part of other plant/machinery or accessories to machinery/plant.

It may be necessary to note entry 83 also :

------------------------------------------------------------------------ "83. All kinds of machinery propelled At the point 6 paise in or operated by (i) electricity, of first sale the rupee." (ii) diesel, (iii) petrol, in the State (iv) furnace oil, (v) kerosene, (vi) coal including charcoal, or (vii) any other fuel or power, including spare parts and accessories of such machinery (other than those specifically mentioned elsewhere). ------------------------------------------------------------------------

Entry 83 embraces all kinds of machinery propelled or operated by electricity, inter alia ''including spare parts or accessories of the said machinery, other than those specifically mentioned elsewhere. Oven which is an assessory to the plant/ machinery for baking of biscuits and the like would fall under this entry where it is adapted for use as a part of the plant/machinery for manufacturing biscuit, etc. On a comparison of these two entries it appears to us that an item of electrical goods in entry. 38(iv) which is independent in itself and is used as such falls in that entry but if it is either a part of or accessory to a plant/machinery and is used only in that form it would fall under entry 83. Merely because articles are electrical goods they need not necessarily be taxed under entry 38(iv). It is the nature of the goods and the use to which they are put, which determine their taxability under the relevant entry in the Schedule. In other words, the test would be the common usage test. This principle finds support from various judgments of this Court and other High Courts.

In State of Andhra Pradesh v. Indian Detonators Ltd. [1971] 28 STC 84 the question was whether electrical detonators manufactured by Indian Detonators Ltd., were electrical goods falling under entry 3 of the First Schedule to the Act. A Division Bench of this Court, having noticed the important features of electrical detonators, observed that a detonator by its nature cannot be said to be an electrical apparatus or appliance or "electrical goods". This judgment was relied upon by the Punjab and Haryana High Court in Karnal Machinery Store v. Assessing Authority, Karnal [1973] 31 STC 3. There the controversy was whether mono-block pumping sets, the main purpose of which was to pump water, can be classified as electrical goods or implements used by agriculturists for agricultural operations, as the pump sets were being used by the agriculturists to irrigate lands. A Division Bench of the Punjab and Haryana High Court held that pump sets were integral part of agricultural operations and merely because the motivation was by electrical energy, it would not fall under the heading "electrical goods".

In The State of Andhra Pradesh Vs. Mayur Crystal Palace, , a Division Bench of this Court had to consider the question whether chandeliers should be treated as "general goods" and tax be levied accordingly or would they fall within the meaning of "glassware" falling under item 123 of the First Schedule. Relying upon the dicta of the Supreme Court in Atul Glass Industries (Pvt.) Ltd. Vs. Collector of Central Excise, the Division Bench held that glassware would mean merchandise made of glass and understood in its primary sense as a glass article like glass bowl, a glass vase, a glass tumbler and applying the test of commercial parlance, the Division Bench held that no one could identify chandeliers as glassware and, therefore, it would fall within entry 123.

We may also refer to Industrial Machinery Manufacturers Pvt. Ltd. v. State of Gujarat [1965] 16 STC 380 where a Division Bench of the Gujarat High Court was concerned with determining the relevant entry under the Bombay Sales Tax Act for taxability of humidifiers used by textile mills to maintain humidity for the purpose of increasing the strength of yarn. It came to the conclusion that humidifiers was machinery used in the manufacture of cloth and would fall under entry 115 of the Bombay Sales Tax Act and not under entry 20 which deals with electrical goods.

From the above discussion, it follows that in the instant case merely because the word "electrical" is prefixed to oven to describe the nature of goods, it will not he taxable under entry 38(iv) as admittedly turnover relates to electrical ovens which were meant or adapted for use as accessory to the biscuit baking plant/ machinery and not as an independent item. Therefore, the turnover in question is taxable under entry 83 but not under entry 38(iv). In this view of the matter, we confirm the judgment of the Tribunal but for different reasons.

The tax revision cases are accordingly dismissed. In the circumstances, we make no order as to costs.

Petitions dismissed.