CTO, ANTI EVASION, CIRCLE III, RAJASTHAN, JAIPURversusM/S PRASOON ENTERPRISES, JAIPUR

                        [2019] 2 S.C.R. 1047                              1047


   CTO, ANTI EVASION, CIRCLE III, RAJASTHAN, JAIPUR                       A
                                  v.
             M/S PRASOON ENTERPRISES, JAIPUR
                (CIVIL APPEAL No. 3198 OF 2019)
                                                                          B
                          MARCH 26, 2019
               [ABHAY MANOHAR SAPRE AND
                 DINESH MAHESHWARI, JJ.]
      Rajasthan Value Added Tax Act, 2003:
       Schedule IV, Entry 155; Schedule V, Residuary Entry – Mobile       C
Crane Wire Ropes – Tax rate applicable – Whether chargeable to
tax at the rate of 4% under Entry 155 of Schedule IV or at the rate
of 12.5% under the Residuary Entry of Schedule V of the Act –
Revenue’s submission was that since the goods in question are not
specified in any of the Entries in Schedule IV and Schedule V nor         D
they are the parts of the Mobile Cranes, the only Entry under which
they can be taxed is the Residuary Entry of Schedule V of the VAT
Act – Held: Mere reading of Entry 155 shows that Hydraulic
excavators (earth moving and mining machinery), Mobile Cranes
and Hydraulic Dumpers (including parts thereof) are chargeable            E
to tax at the rate of 4% – A thing is a part of the other, if the other
cannot function without it – Mere perusal of the literature shows
that the Mobile Cranes are not complete without the wire ropes –
Therefore, the Mobile Crane Wire Rope is an essential part of the
Mobile Crane and would fall in Entry 155 of Schedule IV of the            F
VAT Act and chargeable to 4% tax.
      Dismissing the appeals, the Court
      HELD: 1.1 Mere reading of Entry 155 would go to show
that the goods called Hydraulic excavators (earth moving and
mining machinery), Mobile Cranes and Hydraulic Dumpers                    G
(including parts thereof) are chargeable to tax at the rate of 4%.
The expression “including parts thereof” was inserted in the Entry
155 by an amendment w.e.f. 09.05.2006. It, therefore, indicates
that the parts of the goods specified in the Entry were not
                                                                          H
                                 1047
1048               SUPREME COURT REPORTS                   [2019] 2 S.C.R.


 A     chargeable to tax at the rate of 4% prior to 09.05.2006 but became
       chargeable at the rate of 4% only on and after 09.05.2006.
       [Paras 25, 26][1052-E-G]
             1.2 The test as to whether a particular item is a part of
       other is “a thing is a part of the other if the other is incomplete
 B     without it”. In other words, “a thing is a part of the other, if the
       other cannot function without it”. Applying this principle to the
       facts of the case at hand, the wire ropes used in the Mobile
       Cranes are a part of the Mobile Cranes and thus fall in Entry 155
       of Schedule IV of the VAT Act. A fortiori, it is taxable at the rate
       of 4%. [Para 27-29][1052-G, H; 1053-A-B]
 C
             M/s Annapurna Carbon Industries v. State of Andhra
             Pradesh (1976) 2 SCC 273 : [1976] 3 SCR 561 ;
             Commissioner of Central Excise, Delhi v. Insulation
             Electrical Private Limited (2008) 12 SCC 45 : [2008] 5
             SCR 625 – relied on
 D
              1.3 Mere perusal of the literature filed by the respondent
       to show as to how the Mobile cranes are designed, structured,
       built and operated in the field when it put to its ultimate use by
       the consumer depict that the Mobile Cranes are not complete
       without the wire ropes. It is for this reason, the Mobile Crane
 E     Wire Rope is an essential part of the Mobile Crane and, therefore,
       falls in Entry 155 of Schedule IV of the VAT Act. It is, therefore,
       taxable at the rates prescribed for the goods specified in Entry
       155. [Paras 31 and 32][1053-D-F]
                              Case Law Reference
 F
       [1976] 3 SCR 561               relied on               Para 27
       [2008] 5 SCR 625               relied on               Para 27
             CIVIL APPELLATE JURISDICTION : Civil Appeal No. 3198
       of 2019.
 G           From the Judgment and Order dated 05.01.2017 of the High Court
       of Judicature for Rajasthan at Jaipur Bench, Jaipur in S.B. Sales Tax
       Revision Petition No.114/2016.
                                WITH
       CIVIL APPEAL NOS. 3199-3200, 3201-3202 AND 3203 OF 2019.
 H
         CTO, ANTI EVASION, CIRCLE III, RAJ., JAIPUR v.                         1049
              M/S PRASOON ENTERPRISES, JAIPUR

    Dr. Manish Singhvi, AAG, D.K. Devesh, Satyendra Kumar, Irshad               A
Ahmad, Advs. for the Appellant.
     Ms. Jyoti Mendiratta, Ravinder Pal Singh, Advs. for the
Respondent.
      The Judgment of the Court was delivered by
                                                                                B
      ABHAY MANOHAR SAPRE, J.
      In C.A. @ S.L.P.(c) No.11937/2017
      1. Leave granted.
       2. This appeal is filed against the final judgment and order dated
                                                                                C
05.01.2017 passed by the High Court of judicature for Rajasthan at Jaipur
Bench, Jaipur in S.B. Sales Tax Revision Petition No.114 of 2016 whereby
the High Court dismissed the revision petition filed by the appellant herein.
      3. The appeal involves a short point as would be clear from the
undisputed facts stated infra.
                                                                                D
       4. The appellant herein-State of Rajasthan (Commercial Tax
Department) is the revision petitioner whereas the respondent herein is
the respondent of the revision petition before the High Court out of which
this appeal arises.
       5. The respondent is engaged in the business of trading of spare         E
parts of mining machinery, steel wire ropes, standard wires, wire rods
etc. These goods are subjected to payment of Value Added Tax (VAT)
under the Rajasthan Value Added Tax Act, 2003 (hereinafter referred to
as “VAT Act”). The respondent is a registered dealer under the VAT
Act.
                                                                                F
      6. The Commercial Tax Officer (AE) [hereinafter referred to as
“CTO”] conducted a survey in the respondent’s business premises on
16.03.2009 and it was noticed therein that the respondent was charging
VAT at the rate of 4% on “Mobile Crane Wire Ropes”.
      7. It is with this background fact, the question arose before the         G
taxing authorities under the VAT Act as to which is the proper Entry
under the VAT Act for charging tax on “Mobile Crane Wire Ropes”.
       8. The aforementioned question arose before the CTO in the
assessment proceedings, which were initiated against the respondent in
their business premises as a result of the survey conducted by the CTO
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1050                 SUPREME COURT REPORTS                      [2019] 2 S.C.R.


 A     and also arose before the Deputy Commissioner, Commercial Tax
       Department to seek his advance ruling on the aforementioned question.
              9. The CTO and the Deputy Commissioner were of the view that
       the rate of tax chargeable to the goods in question is 12.5% as prescribed
       in the Residuary Entry in Schedule V under the Act and not 4% as
 B     prescribed in Entry 155 of Schedule IV of the VAT Act.
              10. In other words, both the taxing authorities were of the view
       that the proper Entry for payment of tax on these goods is the Residuary
       Entry of Schedule V, which prescribes the rate of tax as 12.5%.
               11. The CTO accordingly initiated the assessment proceedings
 C     against the respondent for the Assessment Year 2007-2008. By
       assessment order dated 16.03.2009, it was held that the respondent was
       liable to pay VAT at the rate of 12.5% under the Residuary Entry of
       Schedule V of the VAT Act. Since the respondent had deposited the tax
       at the rate of 4% treating the goods in question as falling in Entry 155 of
 D     Schedule IV, the notice was issued to the respondent to pay the difference
       amount of VAT along with penalty and the interest payable under the
       VAT Act.
              12. The respondent felt aggrieved and filed appeal before the
       Deputy Commissioner (Appeals). By order dated 02.12.2010, the
 E     Appellate Authority allowed the appeal and set aside the order of the
       CTO (AE). The Appellate Authority held that the ropes in question were
       essentially used in Mobile Cranes as part of the Mobile Cranes. It was
       held that a Mobile Crane is not complete and nor it can effectively function
       without the use of the rope. It was, therefore, held that the rope is a part
       of a Mobile Crane and chargeable to VAT in accordance with rates
 F     prescribed in the Entry 155 of Schedule IV of the Act.
              13. The State (CTO) felt aggrieved and filed appeal before the
       Rajasthan Tax Board under Section 83 of the VAT Act. By order dated
       06.01.2016, the Board dismissed the appeal and affirmed the order of
       the Deputy Commissioner. The State (CTO) felt aggrieved and filed
 G     revision petition in the High Court of Rajasthan Bench at Jaipur.
             14. By impugned order, the High Court dismissed the revision and
       upheld the order of the Board, which has given rise to filing of this appeal
       by way of special leave by the State (CTO) in this Court.

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CTO, ANTI EVASION, CIRCLE III, RAJ., JAIPUR v. M/S PRASOON                   1051
     ENTERPRISES, JAIPUR [ABHAY MANOHAR SAPRE, J.]

      15. So, the short question, which arises for consideration in this     A
appeal, is whether the High Court was justified in dismissing the
appellant’s (State/CTO) revision and thereby justified in upholding the
view taken by the Board that the “Mobile Crane Wire Ropes” are
chargeable to tax @ 4% under Entry 155 of Schedule IV of the VAT
Act.
                                                                             B
      16. Heard Dr. Manish Singhvi, learned AAG for the appellant and
Ms. Jyoti Mendiratta, learned counsel for the respondent.
       17. Learned counsel for the appellant (CTO) while assailing the
legality and correctness of the impugned order reiterated the same
submissions, which were urged before the High Court.                         C
       18. In substance, his submission was that the goods in question
are chargeable to tax at the rate of 12.5%, which is the rate prescribed
in the Residuary Entry of Schedule V of VAT Act because, according to
the learned counsel, there is no specific Entry under which the goods in
question fall for being taxed at a specified rate.                           D
      19. In other words, the submission was that since the goods in
question are not specified in any of the Entries in Schedule IV and
Schedule V of the VAT Act and nor they are the parts of the Mobile
Cranes, the only Entry under which they can be taxed is the Residuary
Entry of Schedule V of the VAT Act.                                          E
       20. In reply, the learned counsel for the respondent (dealer)
supported the impugned order and contended that it does not call for any
interference.
       21. Having heard the learned counsel for the parties and on perusal
of the record of the case including the written submissions, we find no      F
merit in this appeal.
      22. As taken note of supra, the question, which arises for
consideration in this case, is whether the “Mobile Cranes Wire Ropes”
are chargeable to tax at the rate of 4% or 12.5% under the VAT Act.
      23. In other words, the question arises is whether the goods “Mobile   G
Cranes Wire Ropes” fall under Entry 155 of Schedule IV or under the
Residuary Entry of Schedule V of the VAT Act.
      24. At the relevant time, there were two relevant Entries which
read as under:
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1052                 SUPREME COURT REPORTS                             [2019] 2 S.C.R.


 A                                 SCHEDULE IV
                                    [See section 4]
                                 Goods Taxable at 4%
          S.No.    Des cr iption of Goods                Rate of Conditions, if any
                                                         Tax %
          1.       2.                                    3.      4.
 B        155.     Hydr aulic excavators (ear th         4
                   moving and mining
                   machinery ), mobile cra nes
                   and hydraulic dumpers
                   (including parts th ereof).
                   Br acketed portion was inser ted by
                   Notific ation
                   No.F.12(63)FD/Tax/2005-51 dated
 C                 08.05.2006 vide S.O . No.99 dated
                   09.05.2006

                                   SCHEDULE V
                                   [See section 4]
                               Goods Taxable at 12.5%
 D       S.No     Description of Goods           Rate of Tax       Conditions, if any
                                                 %
         1        2                              3                 4
         1.       Goods not covered in any other 12.5
                  Schedule under the Act or
                  under any notification issued
                  under section 4 of the Act.
 E
              25. Mere reading of Entry 155 quoted above would go to show
       that the goods called Hydraulic excavators (earth moving and mining
       machinery), Mobile Cranes and Hydraulic Dumpers (including parts
       thereof) are chargeable to tax at the rate of 4%.
 F           26. It may be mentioned here that the expression “including parts
       thereof” was inserted in the Entry 155 by an amendment w.e.f.
       09.05.2006. It, therefore, indicates that the parts of the goods specified
       in the Entry were not chargeable to tax at the rate of 4% prior to
       09.05.2006 but became chargeable at the rate of 4% only on and after
       09.05.2006.
 G
             27. This Court has laid down the test as to how the Court should
       decide the question as to whether a particular item is a part of other.
       The test is “a thing is a part of the other if the other is incomplete
       without it”. In other words, “a thing is a part of the other, if the
       other cannot function without it”. [See M/s Annapurna Carbon
 H
CTO, ANTI EVASION, CIRCLE III, RAJ., JAIPUR v. M/S PRASOON                     1053
     ENTERPRISES, JAIPUR [ABHAY MANOHAR SAPRE, J.]

Industries vs. State of Andhra Pradesh [(1976) 2 SCC 273 and                   A
Commissioner of Central Excise, Delhi vs. Insulation Electrical
Private Limited (2008) 12 SCC 45)]
      28. When we apply this principle to the facts of the case at hand
then we find no difficulty in holding that the wire ropes used in the Mobile
Cranes are a part of the Mobile Cranes and thus fall in Entry 155 of           B
Schedule IV of the VAT Act.
       29. A fortiori, it is taxable at the rate of 4%. The reasons are not
far to seek.
       30. The respondent has filed (Annexure R-1), the complete
literature with a view to show as to how the Mobile cranes are designed,       C
structured, built and operated in the field when it put to its ultimate use
by the consumer. They have also filed the details of the specification
issued by the Bureau of Indian Standards specifying therein the strength
of each wire rod/rope, which is used in the manufacture of different
kind of Cranes.                                                                D
       31. Mere perusal of the literature would go to show that the Mobile
Cranes are not complete without the wire ropes. In other words, in order
to use the Mobile Cranes and make them operational, the use of wire
ropes is essential. If wire ropes are not fitted in the Mobile Cranes, they
will not function much less effectively.                                       E
      32. It is for this reason, we are of the considered opinion that the
Mobile Crane Wire Rope is an essential part of the Mobile Crane and,
therefore, falls in Entry 155 of Schedule IV of the VAT Act. It is,
therefore, taxable at the rates prescribed for the goods specified in Entry
155.                                                                           F
      33. We, however, make it clear that we have examined only the
question of taxability of the “wire ropes” in the context of its use in
Mobile Cranes as would be clear from the question posed by the High
Court in Para one of the impugned order.
      34. In view of the foregoing discussion, the appeal is found to be       G
devoid of any merit and it thus fails and is accordingly dismissed.
     In C.A.Nos. @ S.L.P.(c) Nos.4837-4838/2017, 4839-4840/
2017 and 5981/2017
      1. Leave granted.
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1054                   SUPREME COURT REPORTS               [2019] 2 S.C.R.


 A           2. These appeals are directed against the common final judgment
       and order dated 07.10.2016 passed by the High Court of Judicature for
       Rajasthan, Jaipur Bench at Jaipur in S.B. Sales Tax Revision Petition
       Nos.106, 101, 99, 100/2013 and 449/2011 whereby the High Court
       dismissed the revision petitions filed by the appellant herein.
 B          3. In view of the order passed above in C.A. @ S.L.P.(C)
       No.11937/2017, these appeals are dismissed.

       Devika Gujral                                         Appeals dismissed.



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