JAY INDUSTRIES v. STATE OF GUJARAT. — 1991 DIGILAW 147 (GUJ)

JUDGMENT G. T. Nanavati, J. - The question referred to this Court by the Gujarat Sales Tax Tribunal under section 69 of the Gujarat Sales Tax Act, 1969 is as under : Whether on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the sales of P.V.C. wires and cables set out at serial Nos. 1 to 33 (both inclusive) in annexure A1 were covered by entry 41 of Schedule II, Part A to the Gujarat Sales Tax Act, 1969, and not entry 16(2) of Schedule II, Part A to the said Act ? M/s. Jay Industries is a registered dealer both under the Central Sales Tax Act, 1956 and the Gujarat Sales Tax Act, 1969. It applied under section 62 of the Gujarat Sales Tax Act, 1969 to the Deputy Commissioner for determination of the rate of tax payable on certain sales of P.V.C. wires and cables the details of which are to be found in annexure II of the paper book (and not in annexure A1 as stated in the question). Annexure II is the order dated May 31, 1980, passed by the Deputy Commissioner. The assessee had made two applications - one in respect of eight sales and the other in respect of 25 sales. The Deputy Commissioner held that the P.V.C. wires and cables sold by the assessee were electrical goods falling under entry 41 of Schedule II, Part A to the Act. As the said view was taken by the Deputy Commissioner by relying upon a certificate obtained by the Commissioner from the Deputy Engineer of the Public Works Department behind the back of the assessee, the two orders passed by him were set aside by the Tribunal in appeals and the eases were remanded to the Deputy Commissioner for deciding them afresh after giving an opportunity to the assessee to lead additional evidence. The Deputy Commissioner again held that the goods sold by the assessee were electrical goods and not accessories of electric motors as contemplated by entry 16(2). Aggrieved by the common order passed by the Deputy Commissioner, the assessee preferred two appeals to the Tribunal. The Tribunal agreed with the conclusion of the Deputy Commissioner and dismissed the appeals. Thereupon the assessee moved the Tribunal for referring the abovestated question to this Court. Aggrieved by the common order passed by the Deputy Commissioner, the assessee preferred two appeals to the Tribunal. The Tribunal agreed with the conclusion of the Deputy Commissioner and dismissed the appeals. Thereupon the assessee moved the Tribunal for referring the abovestated question to this Court. The assessee is manufacturing different types of P.V.C. wires and cables under the brand name "Bintex cables". In this case we are concerned with the sales of P.V.C. unsheathed 660/1100V wires, P.V.C. armoured cables 660/1100V. In the price list published by the assessee, these wires and cables are described as useful for electric motors only. It is further stated therein that these items are used by the agriculturists and industrialists as accessories to electric motors. It appears that the assessee was of the view that the said wires and cables were really accessories of electric motors and the sales thereof would be covered by entry 16(2) of the Schedule to the Act and not by entry 41 of the Schedule dealing with electrical goods but with a view to avoid any complication it applied to the Deputy Commissioner for determination of the rate of tax payable on the sales of such articles. Before the Deputy Commissioner, it was contended by the assessee that the aforesaid wires and cables are used for the purpose of supplying electricity to electric motors and they have been adapted for that purpose and for that reason they should be regarded as accessories of electric motors. In support of his contention, the assessee had produced one certificate issued by Government run Shri A.V. Parekh Technical Institute, its pamphlet and certain affidavits to show that the aforesaid wires were stored and marketed as accessories of electric motors and they were sold and purchased by persons using electric motors. It was submitted that the said wires and cables are suitably insulated, sheathed and armoured for medium pressure or medium voltage and are generally used for industries ordinarily for supply of power to electric motors. The Deputy Commissioner, after referring to some decisions explaining when an article can be said to be an accessory, held that only that article which increases the effectiveness, usefulness or convenience of the principal article can properly be described as accessory and an article which has a distinct use of its own cannot be regarded as an accessory. The Deputy Commissioner, after referring to some decisions explaining when an article can be said to be an accessory, held that only that article which increases the effectiveness, usefulness or convenience of the principal article can properly be described as accessory and an article which has a distinct use of its own cannot be regarded as an accessory. On merits he held that even though the said wires and cables were in fact used in electric motors, they cannot be described as accessories of electric motors, as they cannot be said to have increased the convenience or effectiveness of an electric motor. The Tribunal also referred to the dictionary meaning and the decisions of the Supreme Court and other High Courts explaining when an article can be regarded as an accessory and, after considering the true nature and character of the article held that : "...... Their function in relation to electric motors is not in nature of something which is performed by an adjunct, or one which can be attributed to something which is additional or subsidiary. The function of the electric cable is, therefore, in the nature of that of an essential commodity. The cables do not add to or contribute to the beauty or convenience or performance of electric motors; in their absence the electric motor cannot operate at all. We have, therefore, no hesitation to support and confirm the view taken by the learned Deputy Commissioner that the electric cables do not constitute accessories but are electric goods covered by entry 41 in Schedule II, Part A to the Act and are taxable as such." What is contended by the learned advocate for the assessee is that the Tribunal has narrowly construed the word "accessory" and erroneously applied the test of addition to beauty or convenience or performance and come to a wrong conclusion. He submitted that the word "accessory" has various meanings and not only a thing which adds to the beauty, convenience or effectiveness but which can be said to be appurtenant or accompaniment to or connected with a thing as an adjunct or as subordinate to it can also properly be called an "accessory". He submitted that the word "accessory" has various meanings and not only a thing which adds to the beauty, convenience or effectiveness but which can be said to be appurtenant or accompaniment to or connected with a thing as an adjunct or as subordinate to it can also properly be called an "accessory". Therefore, even though the said wires and cables may not be described as additions or adjuncts and such as would add or contribute to the beauty, convenience or performance of electric motors, they can still be regarded as accessories, as they accompany electric motor or are required to be connected with it as an adjunct or as subordinate to it. He submitted that the Tribunal was wrong in describing them as articles in the nature of essential commodity and performing a subsidiary or subordinate role. In our opinion, the learned advocate's criticism of the Tribunal's view is quite correct, but it is not possible for us to agree with him that the aforesaid wires and cables are really accessories of electric motors. Even though we are not inclined to agree with the learned advocate for the assessee, it will have to be held that the Tribunal went wrong in holding that the aforesaid electric wires and cables are electrical goods covered by entry 41 of the Schedule. We say so because the Tribunal has taken that view without recording the necessary finding on the material question whether these wires and cables are specially or even generally adapted for electric motors. In our view, it was really necessary for the Tribunal to first record a finding on this point as in absence thereof, it cannot definitely be said whether they are accessories of electric motors or are electrical goods. Even though many decisions were cited before us, it is not necessary to refer to them as the decision of the Supreme Court in the case of Mehra Bros. v. Joint Commercial Tax Officer [1991] 80 STC 233 is the only decision which can be of help in deciding the question. Moreover some of those decisions have been considered by the Supreme Court in the case of Mehra Bros. [1991] 80 STC 233. The Supreme Court, in that case, was concerned with an entry dealing with "motor vehicles including motor cars, motor-taxi cabs ........ and articles (excluding batteries) adapted for use generally as parts and accessories of motor vehicles". Moreover some of those decisions have been considered by the Supreme Court in the case of Mehra Bros. [1991] 80 STC 233. The Supreme Court, in that case, was concerned with an entry dealing with "motor vehicles including motor cars, motor-taxi cabs ........ and articles (excluding batteries) adapted for use generally as parts and accessories of motor vehicles". The question which had arisen for its consideration was, whether car seat covers are articles adapted generally as parts and accessories of the motor vehicle. After referring to the dictionary meaning of the word "accessory" and its decision in the case of Annapurna Carbon Industries Co. v. State of Andhra Pradesh [1976] 37 STC 378, the Supreme Court has observed that it accepted the meaning of "accessories" as an object or device that is not essential in itself but that adds to the beauty or convenience or effectiveness of something else or is supplementary or secondary to something of greater or primary importance which assists in operating or controlling or may serve as aid or accessories. The Supreme Court further held that the test which was laid down by the Karnataka High Court that the accessories as a part must contribute to convenience or effectiveness in the use of the car as a whole is not a correct test, and it further held that the correct test would be "whether the article or articles in question would be an adjunct or an accompaniment or an addition for the convenient use of another part of the vehicle or adds to the beauty, elegance or comfort for the use of the motor vehicle or a supplementary or secondary to the main or primary importance. Whether an article or part is an accessory cannot be decided with reference to its necessity to its effective use of the vehicle as a whole. General adaptability may be relevant but may not by itself be conclusive". It appears that the Tribunal mechanically applied this test without appreciating that the nature and function of the article with which the Supreme Court was concerned was quite different. Since it was concerned with car seat covers, the Supreme Court referred to the relevant aspect of adding to the beauty, elegance or comfort. It appears that the Tribunal mechanically applied this test without appreciating that the nature and function of the article with which the Supreme Court was concerned was quite different. Since it was concerned with car seat covers, the Supreme Court referred to the relevant aspect of adding to the beauty, elegance or comfort. What the Tribunal really missed is that an accompaniment or a thing which is connected with the principal thing can also be regarded as accessory, if it is made for the purpose of being used in that fashion and is adapted either specially or even generally for the principal article. If an article is important for the purpose of being used in or with the principal article and is specially adapted for that article and is of such a nature that it can be used for that purpose alone, then it can be said without any hesitation that it is an accessory of the principal article. But even if the article is such that it can be used as an accessory in more than one kind of principal articles, it can still be regarded as an accessory of each one of them depending upon its predominant or ordinary purpose. That would be a case of general adaptability and, as pointed out by the Supreme Court, it would be very relevant though not conclusive by itself. It is necessary for a thing to be described as an accessory that it should really be accessory of a principal thing. It should not be of general use. If it is an article which can be used for various purposes, then it will be difficult to describe it as an accessory of a particular thing. In order to apply this relevant test, it was necessary for the Tribunal to record a definite finding whether the aforesaid P.V.C. wires and cables were also, apart from being manufactured and sold for that purpose, adapted specially for electric motors, or whether they can be said to be generally adapted in the sense that they were made useful for electric motors and for some other principal articles. As the Tribunal has not recorded this finding, we do not decide as to under which entry the sales would fall, i.e., whether they can be rightly described as accessories of electric motors covered by entry 16(2) or electrical goods covered by entry 41. As the Tribunal has not recorded this finding, we do not decide as to under which entry the sales would fall, i.e., whether they can be rightly described as accessories of electric motors covered by entry 16(2) or electrical goods covered by entry 41. We merely decide that the Tribunal was wrong in deciding that the aforesaid wires and cables were taxable as electrical goods and not as accessories of electric motors. We direct the Tribunal to decide the case in accordance with this judgment after recording a finding on the point whether the aforesaid wires and cables can be said to be specially or generally adapted for electric motors. No order as to costs.