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PETITIONER: M/S. DEWAN ENTERPRISES

       Vs.

RESPONDENT: COMMISSIONER OF SALES TAX, U.P.

DATE OF JUDGMENT:       24/04/1996

BENCH: KIRPAL B.N. (J) BENCH: KIRPAL B.N. (J) VERMA, JAGDISH SARAN (J) G.B. PATTANAIK (J)

CITATION:  1996 AIR 2029            1996 SCALE  (3)789

ACT:

HEADNOTE:

JUDGMENT:                       J U D G M E N T KIRPAL,J.      The appellant  carries on the business of manufacturing and sale of rims of cycles. The Assessing Officer, under the Uttar Pradesh  Sales Tax  Act, made  provisional  assessment treating the  rims as  cycle parts  and taxed the same under the said  Act  @  8%.  Before  the  Assessing  Officer,  the contention  of  the  appellant  was  that  cycle  rims  were declared goods  under clause  (xiv) of  sub-section (iv)  of Section  14  of  the  Central  Sales  Tax  Act  (hereinafter referred to as ‘the Act’) and according to Section 15 of the Act the  tax payable  under the  said law  in respect of any sale or   purchase  of declared goods inside the State could not exceed 4% of the sale or purchase price thereof and such tax shall  not  be  levied  at  more  than  one  stage.  The Assessing Officer,  however,  made  provisional  assessments under the  U.P. Sales  Tax Act  treating these rims as cycle parts @  8% seperately  for each  month from  June, 1990  to March, 1991.  The appellant  then filed  appeals before  the Deputy Commissioner  (Appeals) who  accepted the appellant’s contention  and   come  to  the  conclusion  that  the  rims manufactured by the appellant could not be taxed at the rate higher than  4%. The  respondent then  filed appeal  to  the Tribunal  which   reversed  the   decision  of   the  Deputy Commissioner (Appeals)  and restored  the  decision  of  the Assessing Officer.      The appellant  then filed revision petitions before the Allahabad High  Court. In support of its contention that the rim manufactured  by it  was  a  declared  good,  it  placed reliance on  a decision  of a  Single Judge of the Rajasthan High Court in the case of Assistant Commercial Taxes Officer Vs. Ashok  Tyres 1988  (68) STC 123 wherein it was held that the cycle  rim came  within the  ambit of  ‘wheel’ and was a declared good.  The Single Judge of the Allahabad High Court from which  the appeal  arises, while  dissenting  from  the

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aforesaid judgment  of the Rajasthan High Court, came to the conclusion that a rim and a wheel are different things and a rim could become a wheel only using spokes, hub and/or other things. The  rim manufactured by the appellant, it was held, was not  capable of  revolving by  itself and, therefore, it could not  be called  a wheel.  The High  Court,  therefore, concluded that  cycle rim  was  not  commercially  known  as ‘wheel’ and,  therefore, it  could be  taxed under  the U.P. Sales Tax Act @ 8% and it was not a declared good.      The only  question which  arises for  consideration  in these appeals  is whether  a cycle rim is a declared good or not. Sub-clause  (xiv) of  sub-Section (iv) of Section 14 of the Act reads as follows:      "It is  hereby  declared  that  the      following  goods   are  of  special      importance in  inter-State trade or      commerce:      (iv) iron and  stell,  that  is  to      say,-      (xiv)  wheels,   tyres,  axles  and      wheel sets". It is not in dispute that according to Section 15 of the Act in respect  of the  declared goods  which are  enumerated in Section 14  of the  Act, the  tax on  their sale or purchase inside the State cannot exceed 4%.      Section 14  of the  Act, as  is evident,  specifies the goods which  are of  special importance  in  interestate  or commerce. Sub-section  (iv) enumerates,  in  different  sub- clauses, the  different types  of iron  and  steel  products which  are   declared  goods.   Sub-clause  (xiv)  specifies "wheels, tyres,  axles and  wheel sets". The rim of a cycle, manufactured by  the appellant,  is admittedly  a part  of a wheel. Without a rim the other parts cannot be regarded as a wheel. More over the entry has to be read as a whole and the meaning also  assigned to the words "wheel sets" in the said entry and  a rim  which is  admittedly a part of a wheel set would fall in the said entry.      In ASHOK  TYRES CASE  (SUPRA), this  very entry came up for consideration  before the Rajasthan High Court where the Tribunal held  that the rims and axles fell within the ambit of entry  [xiv] of  clause [iv]  of Section  14 of  the Act. While  dismissing   the  petition  filed  by  the  Assistant Commercial Taxs Officer, it was observed as follows:      "So  far   as   the   ‘axles’   are      concerned the  same  are  expressly      mentioned in the above entry (xiv).      For  this   reason  the  Tribunal’s      decision relating  to axles  cannot      be challenged. The question is only      of the  "rims" used  in  wheels  of      cycles  and  other  vehicles.  This      being so,  the Tribunal’s view that      rims are  an intergral component or      part of a wheel or at least a wheel      set,   cannot    be   treated    as      unjustified.  There   is  no  other      competing entry.  This being so, if      the above  quoted  entry  (xiv)  is      wide enough  to include rims within      its ambit,  then the  applicability      of  the   residuary   entry   would      automatically been excluded. Taking      into account  the ordinary  meaning      of "wheel"  in the  manner in which      it is  understood  amongst  persons

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    dealing  with   the  same,   it  is      reasonable  to  hold  that  rim  is      included  within   the   expression      "wheel"   in   the   above   entry,      particularly when there is no other      competing specific  entry  for  it.      This being a plausible view to take      a construction  which  favours  the      tax-payer must be preferred."      The aforesaid  reasoning of  the Rajasthan  High  Court correctly interprets  the said entry and we affirm the same. Applying the  test  of  common  parlance,  a  rim  which  is admittedly round  and an  essential part of the wheel of the cycle would  come within  the said  entry [xiv]  and being a declared good the same cannot be taxed at the rate in excess of 4%.  The view  taken by the Single Judge of the Allahabad High Court  in the judgment under appeal gives a very narrow meaning to the said entry and cannot be upheld.      For the  aforesaid reasons,  the appeal is allowed, the judgment of  the High Court is set-aside and it is held that the appellant  is only entitled to be taxed @ 4% on the sale price of the cycle rims. The appellant will also be entitled to costs.