MIS. UNITED COPIEX (INDIA) PVT. LTD. v. COMMISSIONER OF SALES TAX

The .Judgment of the Court was delivered by F

SEN, J. Special leave granted.

In this case we have to decide whether 'robber flaps' manufactured by the appellant can be classified under sub-entry (2) of Entry 43 in the G . Schedule to the Uttar Pradesh Sales Tax Act, 1948. The relevant Entry in the Schedule has been set out in the judgment of the High Court as under:

"(l) Motor vehicles including motor cars, motor taxi cabs, motor cycles, motor cycle combinations, motor scooters, mopeds, motorettes, motor omni-buses, motor vans, motor lorries, motor H

p. 828

A trucks, jeeps, station wagons and chassis of motor vehicles and bodies or tankers or motor caravans built or meant for mounting on cha<sis of motor vehicles, but excluding tractors whether on wheels or on tracts.

(2) Components, parts and accessories of vehicles specified in sub-entry (1) above, including tyres and lubes, batteries and trailers adapted for use along with the said vehicles, other than such trailers as are predominantly used along with any other vehicles."

The appellants are manufacturers of rubber flaps which are used for giving support to the rubber tubes used in the tyres of motor vehicles. The contention of the appellant is that such rubber flaps do not fall under any of the items specified in the Schedule and, therefore, they should be taxed as unclassified items for which the rate of tax is 8%. The Assessing Officer, however, taxed the turnover of the rubber flaps under sub-entry (2) of Entry 43 of the said Schedule, treating the rubber flaps to be an accessory of motor vehicles.

The assessee's first appeal to the Statutory Appellate Authority failed. The assessee thereafter appealed to the Tribunal. The Tribunal + noted the argument of the assessee that the flaps were used between the wheel rim and the tyre tube of bus, trucks and other heavy vehicles, rubber flaps were manufactured from rubber and that the assessee had treated flaps taxable as unclassified item in the category of rubber products. The Tribunal also fook note of the two judgments placed before it but distin- guished them on facts. It was pointed out that in the case of Modi Rubber Ltd. v. State of Kera/a Government, (1991) 81 STC 225, Kerala High Court F held that rubber flaps came under the category of 'rubber products'. But in the 0 tier Pradesh Act, there was no separate classification ·of rubber products as taxable goods. Hence no decision about taxability of rubber flaps could be taken in the light of the Kerala Judgment.

The case came before the Allahabad High Court for Revision under G Section 11 of the U.P. Sales Tax Act. The High Court held that "in the face of the undisputed fact that the article in question is used for the protection and support of· rubber tubes in the wheels of heavy automobiles there seems to be no escape from the conclusion that the rubber flap has to be treated as accessory of motor vehicle. Although there is no direct evidence about the sale of the rubber flap in automobile market yet in view of its

UNITED COPIEXv. COMMR. OF S.T. [S.C. SEN, J.] 829.

exclusive use it can be presumed that it is an item which is sold in the automobile market." In the case of State of Orissa v. Dunlop India Ltd., (1993) 91 STC 379, it has specifically been mentioned· that flap is commer- ciaJiy· a distinct ideniifiable commodity available for sale in the automobile niatkef. The High Court upheld the· decision of the Tribunal that the rubber· flaps were taxable as 'accessory' of motor vehicle. · B This judgmeril is riow under appeal in this Court. ·' Under sub-section (d) of Section 3kof the U.P. Sales Tax Act, 1948. a dealer has to· pay tax on the turnover in respect of goods specified in the Scheduie to· the Ad at such rate as the State Goverruhent may by notifica- . fion declare. Sub-section (e) of Section 3A provides for goods other than c those ref.erred to in clauses (a); (b), ( c), (d) of Seciion 3A Will be charged the tax ai the rate of 8%. The conteritiori of the' assessee is that rubber flaps manufactured by it do n~(faii uµder :U,y of the specifit heads i~ the Schedule arid, therefore, the only way. to tax rubber flaps is by tak.ing recourse to sub-ciause ' (e) of Section 3A(l). ,,.., · D · Entry 43 of the Schedule is in' two pai'tsc The first part (sub- entry 1) deals witlicmotot vehicles. Motor cais,.mcitor taxi, cabs, motor cycles, motor 'cyCle''conibinations, motor scooters, mopeds, motor trucks, jeeps, station wagons, · chassis of. motor vehicles etc. have· all been· included in this · sub-entry. The second' part (sub'eniry 2)' relates to compone~ts, parts and E accessories of vehicles mentioned' iii sub'eiitry (1)' including t}'res, tubes, batteries' and certain types of trailers~- '· ' ' "I· •.

whether 'rubber. flap', can af all be treated: as an· accessory is a , ,,. debatable issue. From what has been brotighr on record' rubber flap is a F prot~ctive d'evice.' It is placed be!Ween1 the'. ttibe and th~ rim, possibly to save ihe tube from· coming· iiito• direct contact with .overheat~d rims on long drives. In' the Central EXciS~ & Tariff. Act,. flaps have ~ot been ireated as accessories of motor vehicles. f'!aps ar¢. taxabfo under, Tariffltem· 40.12 under the Heading. Solid or Cushion :ryres, Interchangeable Tyre .Treads :, a~d:Tyre Flaps of Rubber. Thai means the flaps wil(not .come und~~ the. G "t heading "parts and accessories" of motor vehicles in Eritry 87 .05 in Chaplet 87 of tliat Act. It is well accepted that t~e entries in the Schedule to the Excise Act have been stated in the language of the market place and are to be understood as the market-people understand them. ·If the flaps are treated as Car accessories in market parlance, then-. there is no reason to H ·

p. 830

A treat it separately and independently as an item of rubber product in Chapter 40.

This, however, cannot conclude the dispute raised in this case but is a good indication of the legislative intent. The flaps have not been under- stood or treated as accessories of motor vehicles by the legislature in B another central revenue Act.

Be that as it may, the short question in this case is, having regard to Entry 43 in the Schedule to the U.P. Sales Tax Act, can it be said that the 'rubber flaps' manufactured by the assessee can come within the phrase · C 'components, parts and accessories of vehicles specified in sub-entry (1) ? 'Rubber flaps' can hardly be described as an accessory of a vehicle. Meaning of 'accessory', according to the Webster Comprehensive Diction- ary, International Edition, is 'a person or thing that aids subordinately; an adjunct; appurtenance; accompaniment'. The 'rubber flap', which is used D to protect the tubes of tyres, is not an adjunct, appurtenance or accom- paniment to a motor vehicle. At the highest, it can be said that it increases the life of a, tube by keeping it away from direct contact with the rim of a wheel. Sub-entry (1) does not include tyres and tubes or any other com- ponents, part or accessory within the description of 'motor vehicles'. Tyres and tubes have been specifically and separately mentioned in sub-entry (2) E alongwith 'components, parts and accessories of vehicles specified in sub- entry (1). The flap may be used as an adjunct to the tyre or an extra piece of rubber to give additional protection to the tubes. It may, at the highest, be an accessory of an item falling under sub-entry (2) of Entry 43, but it cannot be treated. as an accessory of the motor vehicle itself which falls in F sub-entry (1). Even on the basis of facts as found, il cannot be said that the 'tyre flaps' will fall within the description of 'components, parts and accessories of vehicles specified in sub-entry (1}'.

This distinction was .pointed out in the case of Modi Rubber Ltd. v. G Stale of Kera/a, (1991} 81 STC 225. In that case, Kerala High Court had to · deal with the following two Entries :

"THE FIRST SCHEDULE

Goods in. respect of which single point tax is leviable under sub- H section (1) or sub-section (2) of Section 5.

UNITED COPIEX v. COMMR. OF S.T. [S.C. SEN, J.] 831

SI. Description of goods Point of levy Rate of tax A

39. Rubber products other At the point of first sale 8 than _, those ... specifically. in the State by a· dealer mentioned Ill this who is liable to tax under " Schedule. - section 5.

138. Motor vehicles, motor At the point of first sale 15." B vessels, motor ·engines, in the State by a dealer : chassis of motor vehicles, 'who is liable to tax under trailers, motor bodies section 5. built on the chassis of .. inotor vehicles, bodies c ' ;,.'! built for ·motor vessels, or

engines, and spare· parts .. . ' " and accessories thereof. ' .. .

Dealing with Entry 138, it was observed by the Court : - - .~· ·~ ~ ., D «Counsel for the Revenue submitted that rubber flaps manufac- · ·' · , tured and sold ·by the revision-petitioner are accessories ·of the spare parts of motor vehicles, specified in entry 138 of the First

. .. ' -·' . Schedule to the KGST Act. We are.of the view that entry 138 refers . ( ' ,. . to niOtor vehicles, ffiotor .vessels, motor engines, etc., ~nd spare E " ' . . . ' ., -~' I ' • . parts and accessories thereof, which means spare parts of moto~ vehicles, motor vessels, motor engines, etc. The words 'accessories , thereor in entry 138 of the First Schedule have reference to motor vehicles, ·motor engines,·etc., an_d nOt the 'spare-parts', immediately_ preceding the words occurring in· the entry. The Appellate F ·>( Tribunal was in error in holding that rubber flaps manufactured and sold by the revision- petitioner are accessories of spare parts . ' of '.motor yehicles, •. coming . I ~ , under- entry 138 of the. First. - . . Schedule . ' to the KGST Act." ·.. ., . ·

In the instant case, Entry 43 has been split up into two parts. The G first part deals with motor vehicles etc. and the sec0nd part deals with components, part and accessories of vehicles mentioned in the first part. Tyres and tubes are included in the phrase 'components, parts and acces- sories of vehicles'. A protective cover like a rubber flap may be treated as an accessory of something which is an accessory of the motor vehicle. But H

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A that will not make the protective cover an accessory of the motor vehicle itself.

A question may arise whether the accessory of a tyre tube can be anything but accessory of the motor vehicle itself. In other words the accessory of a part must of necessity be the accessory of the composite whole which is the motor vehicle in this case. This interesting question need not be pursued in this case. 'Tyres and Tubes' and 'Motor Vehicles' have been classified separately under Entry 37. That means tyres and tubes have not been included in motor vehicles. A rubber flap will be, if at all, an accessory of the tyre or the tube falling in sub-entry (2) and not of motor vehicles in sub-entry (1). The Legislature in its wisdom has classified the tyres and tubes separately in sub- entry (2) and not along with motor vehicles in sub-entry (1). A flap being an accessory of an article falling under sub-entry (2) cannot be classified as an accessory of an article falling in sub-entry (1).

D At the conclusion of the hearing of the case, we were referred to some amendments made in sub-entry (1) which does not have any material bearing on the dispute raised in this case. It is not necessary to refer to these amendments.

We are of the view that this appeal must succeed and is allowed. The E judgment cif the High Court dated January 18, 1994 is set aside. There will be no orde.r as to costs.

CIVIL APPEAL NOS. 4822-25196 OF 1996 (ARISING OUT OF S.L.Ps. (C)WOS. 11306, 11307, 11308 AND 11309 OF 1994). F Special leave granted.

In view of our judgment in Civil Appeal No ..... of 1996 ( arising out of S.L.P. (C) No. 11305 of 1994), the above appeals are allowed. There will be no order as to costs. G T.N.A. Appeals allowed.