State of Andhra Pradesh vs Sahney Steel and Press Works Ltd.

Syed Sham Mohammed Quadri, J.—In this revision, fled by the State u/s 22 of the Andhra Pradesh General Sales Tax Act, 1957, for short, "the Act", the question that arises for consideration is, whether "stampings" and "laminations" are electrical goods within the meaning of entry 38 of the first Schedule to the Act; if not, whether they have to be classified as general goods, liable to be taxed u/s 5 of the Act.

The assessing authority and the first appellate authority treated the said goods as electrical goods, falling under clauses (iii) and (iv) of item 38 of the First Schedule, and lived tax at the rate of 8 per cent of the turnover. On further appeal, the Sales Tax appellate Tribunal vide its order dated January 20, 1987, allowed the appeal of the assessee, holding that the said goods are general goods, liable to be taxed u/s 5 of the Act, at the rate of 4 per cent of the turnover. It is the correctness of that view that is assailed in this T.R.C.

It would be useful to read clauses (iii) and (iv) of item 38 of the First Schedule, under which, according to the respondent, these goods are taxable, which are as follows :

"All kinds of electrical goods, instruments, apparatus and appliances, that is to say :

(i) to (ii).........

(ii) electrical fans, lighting bulbs, torches, fluorescent tubes and their fittings, like chokes and starters and other parts and accessories thereof;

(iv) electrical grinders, mixers, blenders, hair-driers, shavers, washing machines, heaters, cooking ranges, boilers, ovens, geysers, generators, transformers and parts and accessories thereof."

Before we consider this aspect, it would be appropriate to note the findings recorded by the Tribunal in respect of "stampings" and "laminations". "Stampings" are used for making electrical motors of various types including motors for fans and "laminations" are used in the electrical transformers; the physical, mechanical and electrical properties of the components made out of these goods are entirely different from those of the "stampings" and" laminations" simpliciter. They cannot be used as such without further processes. If motor of fan or transformers needs repair of these goods they cannot be simply replaced; they can only be used as raw material. For these reasons, the Tribunal concluded that they cannot be treated even as parts of electrical motors which are goods by themselves in their own right. The Tribunal applied the test that, if the character and the properties of the goods in question have to undergo change due to further processing and usage of some other materials, then they cannot be classified as component parts which can simply be replaced and that such goods will be only a raw material. The Tribunal also held that a dealer in fans does not sell "stampings" as the replacement part of a fan. It is also noted that if a transformer needs repair, it is just not possible to take out one of the "stampings" (laminations) used and replace it with another and that in any component part the property of replacement per se is an essential feature. Even the Indian Manufacturers Association classified the "stampings" and "laminations" as raw material.

Keeping these findings of the Tribunal in view, we shall now read clauses (iii) and (iv) of item 38 of the First Schedule. Item 38 includes all kinds of electrical goods, instruments, apparatus and appliance and under the caption "that is to say" enumerates certain specified goods. It only means that the electrical goods, instruments, apparatus and appliances, as specified under clauses (i) to (iv), fall under item 38. On a perusal of clauses (iii) and (iv) in the light of the findings of the Tribunal, it cannot be said that the "stampings" and "laminations" fall under any one of these clauses. If that be so, in our view, the Tribunal is right in coming to the conclusion that they fall under the general category and are taxable as such u/s 5 at the rate of 4 per cent.

In this view of the matter, we confirm the order of the Tribunal. Accordingly, the revision field by the State is dismissed. No costs.

7.Petition dismissed.