LexM/S. B.P.L. LTD. versus STATE OF A.P.
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MIS. B.P.L. LTD. 'A v. STATE OF A.P. JANUARY 9, 2001 [B.N. KIRPAL, MRS. RUMA PAL AND BRIJESJ-1 KUMAR. JJ.] B Sales Tax: .4ndhra Pradesh Generel Sales Tax Ac/, 19j7-Firsr Schedule-Enll:r 38(iv): 38M-No11fica1ion le1~·ing concessional ra/e oflm on Elecrronic Goods'._ C A1110111a1ic Washing Machines-E111ir/ement to-Held, a11to111a1ic lt'ashing machines are electronic goods and /here/ore enlitled lo benefit of rhe 1101ifica1io11. Appellants are manufacturers and dealers in semi and fully automatic washing machines. Sales tax rate leviable on washing machines was 10% prior to 20-7-1988 under the Andhra Pradesh General Sales Tax Act. 1957. A notification, issued under Section 9 of the Act, reduced the rate of sales tax to 2% on sale of'electronic goods' with effect from 1-7-1988. the term 'electronic goods' is defined in the said notification. The appellants treated D the fully automatic washing machines as 'electronic goods' and paid sales tax E at the rate of 2°1. •. Revenue rejected the benefit of the notification for fully automatic washing machines and raised a demand after making provisional assessments levying a rate of sales tax at 10%. Appellate Assistant Commissioner, Sales Tax Tribunal and High Court concurred with the Revenue. Hence the appeals. The appellants contended that fully automatic washing machines are electronic goods and therefore entitled to benefit of the notification; that such machines work on "Fuzzy Logic Computer Program"; •hat the machines were micro-computer-controlled which actually work on the principal of auto selection of the various parameters. + The respondent State contended that there is a specific entry for washing machines under Entry 38 (iv) of the First Schedule to the Act; and that the notification is not applicable for automatic. washing machines. Allowing the appeals, the Court 195 F G H A 196 SUPREME COURT REPORTS (200 I] I S.C.R. HELD : I. I. The key words which appear in the definition of 'electronic goods' in the notification are "operating on electronic principles". The underlying object for issuing such a notification was to give fillip to modern technology as a result of which consumer electronics or electronic appliances or equipment operating on electronic principles were to be charged a lesser B rate of sales tax. The action of the automatic washing machines can be regarded as being one which runs on centrifugal force but the operation or the running of the machines is completely controlled by the micro process technology involved in such machines. The running of the machine and its functions are controlled by programmed micro chips. These micro-chips control and direct electric current in a programmed manner so as to enable the washing machine C to carry out its functions. The operations which are automatically c·ontrolled in the working of the machines are that of (a) wash cycle, (b) rinse cycle and (c) spin/dry. It has been certified by the Indian Institute of Technology that the automatic washing machine of the appellants has the facility of water level control delay program. It has various programs which are controlled through micro-processor chips. The notification requires that an item can be regarded D as an electronic goods if all its functions which are required to be performed by the equipment or appliance are performed or controlled electronically by micro-processor. Admittedly, the entire functioning of the washing machine is automatic. Data is fed into the machine and thereupon it is the micro processors which control and direct the carrying out of the various functions E of the machine which results in the clothes being washed in the desired manner. (200-E-F-G-H; 201-AI 1.2. On 1-6-1989, the State Government issued a memorandum whereby the attention of the Commissioner of Commercial Taxes was drawn to the list of electronic items prepared by the Electronics Corporation and it was stated F in this memorandum that the State Government had decided that the list may be followed for the purpose of concessional rate of tax on the electronic goods as envisaged by the earlier notification dated 20-7-1988. Under the heading "consumer electronics'', radio receivers, cassette tape-recorders, record changers etc. are mentioned and entry 1.65 reads as follows: "Other consumer G electronic aids/products". The reading of the list clearly shows that even though some of these equipments or appl
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