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PETITIONER: STATE OF PUNJAB

       Vs.

RESPONDENT: HINDSONS (P) LTD.

DATE OF JUDGMENT20/09/1984

BENCH: DESAI, D.A. BENCH: DESAI, D.A. MADON, D.P.

CITATION:  1984 AIR 1803            1985 SCR  (1) 771  1984 SCC  415            1984 SCALE  (2)399

ACT:      Words and  Phrases-‘Belt Pulley  Attachment’-Whether an agricultural implement-Whether  liable to  be exempted  from the levy  of sales  tax-Entry  34,  of  Schedule  ‘B’-Punjab General Sales Tax Act, 1948.

HEADNOTE:      The respondent-assessee,  a dealer  in tractors, motor- cycles and  spare-parts etc.,  while  filing  its  quarterly returns, claimed  deduction in  respect of tax free goods of Rs. 26,  572.82 being  the  sale  proceeds  of  belt  pulley attachment sold  along with  the tractor  or  separately  by itself from  its yearly  gross turn over of Rs. 21,65,983.91 for the  assessment year 1965-66 on the ground that the belt pulley attachment  should  be  treated  as  an  agricultural implement and  therefore it  is exempted  from the  levy  of sales tax under Entry 34 of Schedule B to the Punjab General Sales Tax  Act (the  Act for short). The assessing authority rejected the  claim on  the  ground  that  the  belt  pulley attachment could  not be  treated as a composite part of the tractor nor  can it  be treated as an agricultural implement and it  was not one of the tax free goods as contemplated by Entry 34. The respondent-assessee preferred an appeal to the appellate authority  against  the  order  of  the  assessing authority.  The   appellate  authority  allowed  the  appeal holding that  the sales  of belt pulley attachment amounting to Rs. 26, 572. 82 p. was of tax free goods under Sec. 5 (2) (a) (i)  of the  Act and that amount should be deducted from the gross  turnover of  the assessee.  But, the Joint Excise and Taxation  Commissioner suo moto quashed the order of the appellate authority  and  restored  that  of  the  assessing authority. In  revision, Sales  Tax Tribunal  confirmed  the decision  of   the  Taxation   Commissioner.  Thereupon  the respondent-assessee moved the High Court which held that the belt pulley  attachment falls  within  the  meaning  of  the expression agricultural  implement since  it  increases  the utility of  a tractor  for an  agricultural operation. Hence this appeal by special leave.      Allowing the appeal, ^      HELD : (1) Belt pulley means a pulley over which a belt may pass  to transmit power to other part of the machine. It

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is indeed  true that  the belt pulley when used in a tractor may increase  the utility  of the  tractor for  agricultural operations  but   that  by  itself  does  not  lead  to  the inevitable conclusion  that belt  pulley  attachment  is  an agricultural implement. It is not only used in a tractor but it is  also used in various other machines such as motor car engines, water pumps, threshers etc. Therefore, when sold as a spare 772 part it  cannot by  itself become an agricultural implement. To  comprehend   it  in   the  generic   term  "agricultural implement," the  court would have to stretch the language to impermissible limit of breaking it.                                            [773 H, 774 A-G]      In the  instant case,  the  assessee  is  selling  belt pulley attachment  as spare  part which  can be used in many machines. Therefore, the belt pulley attachment which can be used in  various mechanical  appliances or devices by itself cannot be said to be an agricultural implement.

JUDGMENT:      CIVIL APPELLATE  JURISDICTION : Civil Appeal Nos. 1817- 19 of 1984      Appeal by  Special leave  from the  judgment and  Order dated the  6th November, 1981 of the Punjab and Haryana High Court in Sales Tax Ref. Nos. 4-5 of 1978 and C.W.P. No. 3095 of 1973.      S.K. Bagga for the Appellant.      Vineet Kumar for the Respondent.      The Judgment of the Court was delivered by      DESAI, J.  On a  direction given  by the  High Court of Punjab and  Haryana at  Chandigarh, the  Sales Tax Tribunal, Punjab, Chandigarh  (’Tribunal’ for  short)  referred  under Section 22(2)(b)  of the  Punjab General Sales Tax Act, 1948 (’Act’ for  short) the following question of law to the High Court for its opinion:      "Whether a  belt pulley  attachment was an agricultural      implement within  the meaning  of entry  34 of Schedule      ’B’ of  Punjab General  Sales Tax  Act,  prior  to  the      amendment made on April 15, 1971"?      This question  came to be referred to the High Court at the instance  of the  assessee, the  respondent herein.  The respondent firm  deals in  tractors,  motor-cycles,  cycles, spare-parts etc.  The assessee  filed its  quarterly returns declaring a  gross yearly  turnover  of  Rs.  21,65,983.91p. Deductions were  claimed in  respect of  sales  of  tax-free goods, sales made to registered dealers etc. Among the sales claimed in  respect of  tax-free goods, a commodity known as belt  pulley   attachment  was   included  valued   at   Rs. 26,572.82p. It  was admitted that the belt pulley attachment was sold  alongwith tractor  or separately by itself. It was contended by  the assessee  that the  belt pulley attachment should  be   treated  as   an  agricultural   implement  and therefore, it is exempted under Entry 34 of Schedule ’B’ 773 to the  Act from  the  levy  of  sales  tax.  The  assessing authority came  to  the  conclusion  that  the  belt  pulley attachment could  not be  treated as a composite part of the tractor nor  can it  be treated as an agricultural implement and it  was not one of the tax-free goods as contemplated by Entry 34.  He accordingly,  rejected the claim for deduction and completed  the assessment  for the assessment year 1965- 66. The  assessee preferred  an  appeal  before  the  Deputy

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Excise   and    Taxation   Commissioner    raising   various contentions, one  of them being that the assessing authority was in  error in holding that belt pulley attachment was not an agricultural  implement so  as  to  be  exempt  from  the payment of  sales tax. The appellate authority held that the belt pulley  attachment should be treated as an agricultural implement and allowed the appeal to that extent holding that the  sales  of  belt  pulley  attachment  amounting  to  Rs. 26,572.82p. was  of tax-free goods under Sec. 5(2)(a)(i) and that amount  should be  deducted from  the gross turnover of the assessee.  The Joint  Excise and  Taxation  Commissioner exercising the  powers of  Commissioner initiated  suo  moto proceedings under  Sec. 21(1)  of the Act and concluded that the appellate  authority was  in error  in holding  that the belt pulley  attachment was  an agricultural  implement.  He accordingly quashed the order of the appellate authority and restored the  order of the assessing authority. The assessee carried the  matter in  revision to  the Sales  Tax Tribunal raising the  same contention.  The Sales Tax Tribunal by its order dated  October 21,  1972 upheld the order of the Joint Excise and  Taxation Commissioner and dismissed the revision petition. The assessee moved an application under Sec. 21(1) of the  Act requesting  the Tribunal  to state  the case and refer the  question of  law as  hereinbefore set  out to the High Court. The Tribunal rejected the application. Thereupon the assessee moved the High Court as herein above mentioned. The High  Court held  that ’belt  pulley  attachment,  as  a matter of  fact, increases  the utility  of a tractor for an agricultural operation’  and  concluded  ’that  belt  pulley attachment  falls   within  the   meaning  of   agricultural implement’. The High Court accordingly answered the question in the affirmative that is against the revenue and in favour of the assessee. Hence this appeal by special leave.      The narrow  question is  whether belt pulley attachment is an  agricultural implement  so as  to be  exempt from the levy of  sales tax  under the Act. It is indeed true as held by the  High Court  that the  belt pulley  when  used  in  a tractor  may   increase  the  utility  of  the  tractor  for agricultural operations but that by itself does not lead to 774 the inevitable  conclusion that belt pulley attachment is an agricultural implement. The Tribunal in this connection, has rightly held that not only belt pulley attachment is used in the tractor  but it  is also  used in water pumps, thrashers etc.  The  High  Court  unfortunately  overlooked  the  most obvious fact that belt pulley is also sold as separate spare part. It is used in various other machines such as motor car engines. Belt  pulley means  a pulley  over which a belt may pass to  transmit power to other part of the machine. Common sense tells us that even in a motor-car there is belt pulley and the rotational movement is transmitted from the rotating fan via  the belt  on the pulley to the pulley of the dynamo for  charging  it.  The  assessee  is  selling  belt  pulley attachment as  spare-part which  can thus  be used  in  many machines. If it is so then it is difficult to understand how belt pulley  attachment by  itself becomes  an  agricultural implement. When  used in  a motor  engine, how  can one ever assure that  it is an agricultural implement. It may as well be used  in many  agricultural instruments  where mechanised farming takes place. But by itself when sold as a spare part it cannot  by itself  become an  agricultural implement. The exemption was  with regard  to an  agricultural implement as contemplated by  Entry  34  in  Schedule  ’B’  to  the  Act. Undoubtedly, later  on by amendment to Entry 34 on April 15, 1971, belt  pulley attachment  has been  introduced in Entry

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34. On  this account  alone it  cannot however, be contended that the  amendment merely  makes explicit what was implicit in the  entry as  it  stood  prior  to  the  amendment.  The Tribunal rightly  held that  if belt  pulley is  used  in  a tractor and  sales tax  is levied  on the sale of tractor no separate sales-tax  is levied  on belt  pulley.  We  do  not propose to  view the matter from this angle. We must examine whether a  belt pulley  attachment when sold as a spare-part would  be   comprehended  in   Entry  34   which  sets   out agricultural implements exempted from the levy of sales tax. Obviously as stated earlier belt pulley attachment which can be used  in various  mechanical  appliances  or  devices  by itself cannot  be said  to be  an agricultural implement. To comprehend it  in the generic term "agricultural implement", we would have to stretch the language to impermissible limit of breaking it.      The High Court merely observed that:      "A belt  pulley, as  a matter  of fact,  increases  the      utility of  a tractor  for agricultural  operation  and      therefore a  belt pulley falls within the meaning of an      agricultural implement." 775      The conclusion  on the face of it without anything more is incorrect and cannot be accepted as an ipse dixit.      Accordingly, these  appeals succeed and are allowed and the judgment of the High Court is reversed and set aside and the reference  invited before the High Court is rejected and the decision  of  the  Tribunal  is  restored.  But  in  the circumstances of  the case  there will  be no  order  as  to costs.      M.L.A.    Appeals allowed 776