LexM/S. B.G. SHIRKE CONSTRUCTION TECHNOLOGIES (P) LTD. versus THE ADDL. COMMISSIONER OF COMMERCIAL TAXES
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A
MIS. B.G. SHIRKE CONSTRUCTION TECHNOLOGIES (P) LTD.
v.
THE ADDL. COMMISSIONER OF COMMERCIAL TAXES
FEBRUARY 2, 2007
B
[DR. ARJJIT PASA Y AT AND S.H. KAPADIA, JJ.]
Sales Tax:
Karnataka Sales Tax Act, 1957: ss. 8-A(5)(a), 20(5), 22(A)(l) and 24
C and Notification No. FD.43, CSL 94(iv) dated 31.3.94:
Exemption Notification-Assessee-dealer engaged in manufacture of
prefabricated pillars, column etc. purchasing Tower Cranes availing rebate
in tax in terms of the Notification-Applicability of Notification-Held: A
D crane is a hoisting machine used to lift and move heavy loads-Tower cranes
a have built in jacks to raise the crane through opening in the floor as
building goes up-Cranes are taken apart and lowered after completion of
buildings-High Court rightly observed that Tower cranes could not be
considered as industrial inputs either as component or as raw materials of
any other goods-Hence the claim made by the assessee untenable and not
E sustainable-However, in the facts and circumstances of the case, levy of
penalty of rupees jive lakhs would suffice.
Appellant-assessee is a dealer engaged in the construction of houses
for Karnataka Housing Board. It manufactures pre-fabricated pillars,
columns, beams etc., and then used them for the execution of the civil works
F contract. During the assessment year 1995-96 the assessee had purchased
Tower Cranes from another registered dealer and had availed concessional
rate of tax at 4% on the purchases by producing declaration in Form No.37.
However, the assessing authority found that the assessee company had not
fulfilled all the conditions prescribed under the exemption Notification
G No.FD.43.CSL 94(iv) dated 31.3.1994, therefore, it was not eligible to claim
any benefit under the Notification. The Authorities had initiated proceedings
under Section 8-A(S)(a) of the Karnataka Sales Tax Act and came to the
findings that the nature of the business activity carried on by the assessee is
not manufacturing or processing of goods for sale and, therefore, it has
contravened the specified conditions of the Notification. Thus, the authorities
H
248
j
B.G. SHIRKE CONSTRUCTION TECHNOLOGIES {PJ LTD. 1' THE ADDL COMMNR. OF COMMERCIAL TAXES
249
held the assessee liable to pay differential amount of tax and also penalty in A
terms of Section 8A(S)(a) of the Act. Aggrieved, the assessee filed an appeal
before the first appellate authority. The authority allowed the appeal. The
revisional authority reversed the orders passed by the first appellate authority,
however, the amount of penalty was reduced by 50%. Appellant filed an appeal
under Section 24(1) of the Act before the High Court. The High Court held B
that the order passed by the authorities did not warrant any interference.
Hence the present appeal.
Appellant-assessee contended that the authority empowered to issue the
Notification had made it abundantly clear that the dealer who effects the sale
of machinery can take the benefit of the said Notification only after fulfilling C
the other two conditions mentioned therein i.e. (1) that the dealer should
produce a declaration in Form 37 duly filled in and signed by the
manufacturing industrial unit, the purchasing dealer and (2) satisfactorily
prove that what has been sold to a registered 1ealer is an industrial input for
use by it as a component part of raw material or packing material for
manufacture and sale inside the State; and that a narrow construction has D
been put on the expression "industrial input". By giving a broader
interpretation, it should have been held that the assessee was entitled to get
the benefit of the Notification.
Partly allowing the appeal, the Court
HELD: I. A crane is a hoisting machine used to lift and move heavy
loads. There are different types of cranes and Tower Crane is one such crane
which is mostly nsed to construct high rise buildings. It has been noted by
E
the High Court that most Tower Cranes also called "Climbing Cranes", have
built in jacks that raise the cranes through openings in the floor as the F
building goes up. The cranes are taken apart and lowered after completion of
the buildings. As rightly observed by the High Court the Tower Cranes cannot
be considered as industrial inputs for use either as a component part or as a
raw material of any other goods. [Para - 13) (253-G-H; 254-AJ
2. Assessee had purchased the Tower Cranes in the year 1995 and had G
availed concessExcerpt shown. Read the full judgment & AI analysis in Lexace.