STATE OF GUJARAT Vs. B G BATWARA AND CO

JUDGEMENT

(1.) THIS reference arises before us under section 61 (1) of the Bombay Sales Tax Act, 1959, at the instance of the State of Gujarat. The facts leading to this reference are that the opponents, who are the assessees, are registered dealers and are carrying on business at Ahmedabad in old tyres used in bullock-carts. An application was made by the assessees to the Deputy Commissioner of Sales Tax under section 52 of the Bombay Sales Tax Act, 1959 (hereinafter referred to as the Act) to determine the rate of tax payable by them on the sale of old tyres for bullock-carts as specified in their bill, a copy of which has been annexed to this reference. The assessees contended in the said application that the goods sold by them were covered by entry 6 of Schedule A to the Act which provides that bullock-carts and spare parts thereof are not liable to any tax under the Act since all the items covered by the entries in Schedule A are exempt from the payment of any tax under the Act. The Deputy Commissioner came to the conclusion that the sale of old tyres would be covered by residuary entry 22 of Schedule E and the sale would be liable to tax accordingly subject to the other provisions of the Act. It has been found that the opponents purchased old and worn out tyres of the buses of the State Transport Organization and Ahmedabad Municipal Transport Service. The opponents themselves did not purchase these tyres directly either from the State Transport Organization or from the Ahmedabad Municipal Transport Service; but they purchased such tyres from persons, who in their turn had bid at the auction either from the State Transport Organization or from the Ahmedabad Municipal Transport Service. The Deputy Commissioner observed that the old tyres sold by the opponents were not what are known as "adv" (animal-drawn vehicles) tyres but were tyres which were initially meant for the buses of the State Transport Organization and Ahmedabad Municipal Transport Service and which tyres had been worn out by constant use. According to the Deputy Commissioner such tyres can be used for hand-carts and they could not be said to have been specifically designed for bullock-carts; and, in his view, the sale of the old tyres in question was covered by entry 22 of Schedule E, that being the residuary entry. Against this decision of the Deputy Commissioner, there was an appeal to the Sales Tax Tribunal and the Tribunal held that the tyres sold by the opponents should be treated as bullock-cart tyres and spare parts of bullock-carts and the sale would be covered by entry 6 of Schedule A; and hence no tax could be levied thereon. The Tribunal, therefore, allowed the appeal and set aside the order of the Deputy Commissioner of Sales Tax. Thereafter, at the instance of the State, the following question has been referred to the High Court by the Tribunal : " Whether, on the facts and in the circumstances of the case, the sale of old tyres for bullock-carts as specified in Bill No. 54, dated 2nd May, 1963, is covered by entry 6 of Schedule A ?"

(2.) ONE of the factors which weighed with the Tribunal at the time when it reversed the decision of the Deputy Commissioner was that motor tyres when new would cost Rs. 550 each while the second-hand tyres which were still fit for use as motor tyres after retreading would cost Rs. 250 and the old tyres sold by the opponents were being sold at Rs. 65 each. The Tribunal also observed that once the tyres became unserviceable as motor tyres, the purpose for which they were designed by the manufacturers would not be a relevant factor. The Tribunal in its judgment relied upon the decision of the Allahabad High Court in Bishambar Dayal Shri Niwas v. Commissioner of Sales Tax, Uttar Pradesh ([1963] 14 S. T. C. 184. ).

(3.) THEREFORE, in the particular case, the Supreme Court had resort not to the scientific or technical meaning of the term describing the items for the sales tax in question but had resort to the popular meaning or the meaning attached to them in the commercial sense.