This revision filed under Section 11 of the U.P. Trade Tax Act, 1948 arises out of an order of the Trade Tax Tribunal dated 30.10.2001 pertaining to the assessment year 1990-91.
The short point for consideration in this revision is whether welding rods and welding electrodes would be liable to tax at 12% under the Notification dated 7.9.1981 under Item-3 as electrical goods "the use of which cannot be had except with the application of electrical energy" or whether it would be subject to tax at 8% under Entry-73 of the said Notification which includes welding rods and welding electrodes. The authorities below have held welding rods and welding electrodes manufactured by the company to be electrical goods, "the use of which cannot be had except with the use of electrical energy" falling under Item-3 and liable to be tax at 12%. This controversy is no longer res integra and has been settled by a Division Bench of the Allahabad High Court in the case of Commissioner, Sales Tax, Lucknow vs. B.C.M. Franklin & Co. reported in 1973 (XXX1) STC 251 wherein it has been held that electrical equipment must be such as are required for generation, distribution and transmission of electrical energy. Electrodes do not perform any of these functions. Neither can it be said that they are electrical goods on account of the mere fact that electrical energy is used for melting them.
Similar view was taken by the Madaras High Court in a matter relating to the revisionist company in J. B. Advani-Orelikon, Electrodes, Pvt. Ltd. vs. Commissioner of Sales Tax, M.P. [1972] 30 S.T.C. 337. In the case of State of Madaras v. Indian Oxygen Limited [1968] 22 S.T.C. 476 (Mad.) it was held that wielding rods were capable of user without electrical energy. In the said case the Sales Tax Tribunal had held that wielding rods do not fall within the ambit of electrical goods and the order of Tribunal was affirmed by the High Court.
In Deputy Commissioner of Commercial Taxes, Madurai Division v. Ravi Auto Stores, [1968] 22 S.T.C. 172 (Mad.) the Madras High Court was considering a provision which was identical in language to that of Item-3 of the Notification dated 7.9.1981. The Madras High Court held that the goods in question namely electrodes cannot be said to be electrical goods "the use of which cannot be had except with the application of electrical energy."
Further more the Supreme Court in the case of Mauri Yeast India Ltd. vs. State of U.P. and another,[2008] 14 VST 259 (SC) (para 67) has held that if there is a conflict between two entries one leading to an opinion that it comes within the purview of the tariff entry and another the residuary entry the former should preferred. Since welding rods and welding electrodes are included in Item-73 of the Notification dated 7.9.1981, therefore, they cannot be held to be electrical goods and subjected to tax at 12% prescribed in Item-3 of the said Notification. They would instead be liable to tax at 8% mentioned at Item-73.
In this view of the matter, the order of the Tribunal is based upon a misconceived notion that wielding rods and wielding electrodes are electrical machinery or electrical goods. The order of the Tribunal dated 30.10.2001 is therefore set aside.
The revision is allowed.
Dt.18th September, 2014 Asha