[Bio-Manure Products Association of Maharashtra, M/s. Ajay Bio-Tech India Ltd., M/s. Ajay Farm-Chem Pvt. Ltd., M/s. Satyam Bio-Fertilizers (P) Ltd. and M/s. Borax Morarji Ltd., DDQ No. DDQ-1199/Adm-5/43-83-84/B-4 & DDQ-2001/Adm-5/4-58 dated 8-2-2003]

The applicant explained chitin is cellulose like polymer, which is obtained in the processing of prawn shell along with protein. Further it was stated that both the products are obtained while processing prawn waste and the same can be used as poultry feed as well as in agriculture as organic nutrients/fertilizers. They contended that the products be treated as poultry feed.

The Commissioner observed that chitin had diverse applications and therefore the functional utility of the product and the perception of the product by the trade who distribute and those who use the same would constitute the main factor in determining the classification of the given product. As the product under consideration was being used as poultry feed constituent only on experimental basis as stated by the dealer it was clear that this is not the general use and hence chitin could not be held as poultry feed supplement. Relying the case of M/s. Omkarnath Jagdish Prasad (48 STC 59) and the usage of the product, the Commissioner was of the view that the same is akin to ‘fertiliser’ and would be covered in schedule entry C-I-4.

As regards fish protein, the Commissioner observed as per the literature that the item is rich in minerals like phosphorus and calcium, which are useful to poultry birds, hence could qualify to "poultry feed supplement" which is covered by entry A-8(2).

Cases relied: M/s. Omkarnath Jagdish Prasad (48 STC 59) and M/s. Balaji Poultry Agency (82 STC 353)

The applicant contended that the product be classified in schedule entry C-I-23(1) meant for non-ferrous metal and thus liable to be taxed @ 4%. The applicant while explaining the manufacturing process stated that for producing the said product various items such as tungsten ore and concentrates, calcium tungstate, sintered scrap etc. are used. The dealer further relied upon the contents of the finished goods, which contained 93.9% of tungsten metal powder and 6.10% of carbon black. The dealer also relied on two DDQs meant for "Tungsten Black Wire" and "Tungsten Metal Rods"

The Commissioner observed that in the process of manufacturing "Tungsten Carbide" the input "Tungsten Metal" gets used up thus changing the character of the product substantially, hence it could be said that Tungsten Carbide is a compound of Tungsten Metal. As regards the earlier two DDQs the Commissioner observed that Tungsten Wire & Tungsten Rod were Tungsten Metal in different forms and hence rightly covered in C-I-29 as it stood then. The same ratio could not be applied because Tungsten Metal was not under consideration but it was Tungsten Carbide powder.

Hence, it was held liable to be taxed under Schedule Entry C-II-152 and taxed @ 13% sales tax and other consequential levies.

Cases relied: DDQ-1181/Adm-5/N-232/B2 dated 25-1-1981 and DDQ-1196/Adm-5/124/B-1 dated 8-9-1999

The applicants are manufacturers of escavators and their spare parts. They contended that in absence of any specific classification for the items under consideration they have been classified as parts or machinery under entry C-II-135. However, the applicants contended that "motor vehicles" as defined in section 2 of the Motor Vehicles Act, 1939 includes motor cars, …… motor lorries, and chassis of motor vehicles and bodies or tankers built or meant for mounting on chassis of motor vehicles but excluding tractors, whether on wheels or on tracks. Relying on this definition the applicant contended that it includes any mechanically propelled vehicle adapted for use on roads but it does not include a vehicle running upon fixed rails or special type of vehicles adapted for use in factories, therefore escavators be treated as motor vehicles. In support of its claim, the dealer cited various High Court and Supreme Court judgments. The dealer also cited an old DDQ in which it was held that the sales of escavators and its parts are covered by C-II-135, the applicant contended should be overruled.

The Commissioner on going through the Supreme Court and High Court judgements which were on similar issues concurred with the same and held the items under consideration to be covered by Schedule Entry C-II-102(1); i.e.,"components, parts and accessories of motor vehicles" exigible to sales tax @ 12%. However, by virtue of notification A-62 u/s. 41 the sales tax payable is 8%. The order was issued with prospective effect.

Cases relied: Shri Popatlal Mohanlal Chordia vs. Union of India, W.P. No. 685/1985/1988 (Bom), M/s. Bose Abraham vs. State of Kerala, 121 STC 615 (SC) and M/s. New Bombay Earthmovers Pvt. Ltd.; DDQ dated 13-11-1996

The applicants after explaining the process in which the "germs" are produced contended that an earlier determination order classifies "maize germs" as "oil cakes" covered by then Schedule entry C-I-13 meant for oil cakes.

The Commissioner on going through the earlier DDQ and observing the process and contents of the "maize germs" tried to analyse different Schedule Entries. Schedule Entries A-8, A-9, B-8 and C-I-18 were analysed. However, as the product under consideration could not fit into any of the entries, it was held liable to be taxed under Schedule Entry C-II-152 @ 13%.

Cases relied: Universal Starch Chem Allied Ltd., DDQ No. DDQ-1189/Adm-5/314/B-27 dated 19-12-1991 and M/s. Unique Sugars Ltd., DDQ No. DDQ-1189/Adm-5/313/B-26 dated 19-12-1991

The applicant contended that they are registered under the Society Registration Act and Public Charitable Trust. They further contended that the objectives of the activity undertaken of recording of audio and video cassettes and selling them to public was charitable one and not commercial. They relied various judgements of Supreme Court, Maharashtra Sales Tax Tribunal and DDQ orders passed by the Commissioner. The dealer further contended that the main activity undertaken by the applicant is not a business activity and therefore secondary activity of recording of cassettes, supply thereof is not in the course of business, and therefore the transactions are not liable to sales tax. The dealer also claimed that society is not a dealer qua their ancillary activity.

The Commissioner on going through the objects of the society as per its Memorandum of Association observed that there was no inextricable link or nexus between the objects of the society and the activity of supply of audio cassettes and CDs. The Commissioner further distinguished the case under consideration with the Supreme Court judgment in the case of M/s. Sai Publication on the grounds that the objects of the Sai Publication Trust was to spread the message of Sai Baba for which it published books and other literature; which was not in the present case. Similar distinction was made with the other cases cited by the applicant.

Therefore, the applicant was held to be a dealer.

Cases relied: Sai Publication, 126 STC 288; M/s. Ramkrishna Math (Appeal No. 107 of 1990 dt. 31-3-1994 and Pauline Sisters Bombay Society DDQ No. DDQ/A-96/Adm-5/B-200 dated 19-8-2000

The applicants explained the activity of blending/formulating pesticides as mere dilution of concentrates by using emulsifiers. They further contended that in the context of functional utility of the product that the concentrates or technical grade pesticides do contain active ingredients in concentrated form. They are not suitable for direct use whereas diluted pesticides are nothing but formulated pesticides prepared by dilution of technical grade pesticides through the process of mixing/ blending. The applicants relied upon DDQ orders issued by the Commissioner.

The Commissioner on going through the earlier Determination orders, the arguments forwarded and relying a Supreme Court judgment concurred with the earlier decisions and held that the activity of mixing/blending does not amount to manufacture.

Cases relied: M/s. Yawalkar Pesticides Pvt. Ltd., DDQ No. DDQ-118/Adm-5/38/B-3 dated 2-3-1983, M/s. Maharashtra Insecticides Ltd., DDQ order passed by Dy. Comm. of Sales Tax (Adm.), Nagpur Divn., Nagpur dated 5-7-1991 and M/s. Shivdatta & Sons (84 STC 496)

The applicants explained the process of making "Holographic Image Master".

The Commissioner on going through the literature provided and the submissions of the applicant observed that the item under consideration seems akin to chemically treated exposed negative film, which is generally used for developing a photograph on a paper. This master hologram contains the image of the hologram; i.e., required to be produced in large quantities but very much identical to the object. In the process of preparing the "master hologram", the object whose hologram is required to be obtained is illuminated with laser beam. The scattered light wave then produces an impression on a photographic plate, which is called as a ‘master hologram’. The Commissioner after looking into description of sub-entry (1) of C-II-111, held the item to be covered by C-II-111.

The applicant, vide its earlier determination application was held liable to pay tax on the transfer of right to use taking the actual use of the equipment as an event attracting levy of tax. The applicant then filed writ petition challenging the constitutional validity of the Lease Act and imposition of tax on the transaction where agreements to lease the goods were executed prior to 1-10-1986.

The Hon’ble Court disposed the Writ Petition with a direction that the order passed by Addl. Commissioner is set aside and directed the department to pass fresh order after taking into consideration the ratio of the Supreme Court judgment in the case of M/s. 20th Century Finance Corporation vs. State of Maharashtra (119 STC 182)(SC).

Accordingly the applicant was heard, wherein it was contended that since the contract of transfer of right to use goods was concluded before the commencement of the Maharashtra Sales Tax on the Transfer of Right to use any goods for any purposes Act, the question of attracting any tax under the Lease Act does not arise. The applicant relied the ratio of Supreme Court judgment (supra) the dealer further contended that the taxable event is complete where the lessor transfers of right to use goods in favour of lessee. The taxable event does not occur each time the rental become due.

Based on the ratio of Supreme Court judgment the Commissioner observed that if the goods are available, the transfer of right takes place when the contract in respect thereof is executed, the right is vested in the lessee. However, in case of an oral or implied transfer of the right to use goods it may be effected by the delivery of the goods.

Hence it was held that the transactions of leasing where an agreement has been executed prior to 1-10-1986 shall be out of the purview of the Maharashtra Sales Tax on the Transfer of right to use any Goods for any Purpose Act, 1985 (Lease Act).

Cases relied: 20th Century Finance Corporation vs. State of Maharashtra (119 STC 182) (SC).