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Ambica Wood Works v. The State Of Gujarat
Factual and Procedural Background
This reference arises under section 61(1) of the Bombay Sales Tax Act, 1959, made at the instance of the assessee. The assessee is a dealer who manufactures wooden screen print block tables sold to textile mills. For the assessment period corresponding to S.Y. 2023 the Sales Tax Officer levied tax on the sale of these tables under residuary entry 22 of Schedule E of the Act. The assessee contended that the goods fell under entry 15 of Schedule C (covering "machinery" used in manufacture of goods, and spare parts and accessories thereof) and therefore were not taxable under the residuary head. The assessee's appeal to the Assistant Commissioner of Sales Tax failed, and the assessee then appealed to the Gujarat Sales Tax Tribunal. The Tribunal inspected a mill, heard oral explanation of the hand screen printing process, and examined photographs and material on record. The Tribunal found that printing was done manually (with screen print frames and hand-rolls), that the tables were large (dimensions given), that the tables were assembled on site and fitted with buff-leather and steam pipes for instantaneous drying, and that colour-mixing was done mechanically by a machine fixed at a distance from the printing tables. The Tribunal concluded that the tables themselves were not part of "machinery" and dismissed the appeal, confirming the orders below. The following question was referred: "Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that screen print block tables sold by the applicant are not covered by entry 15 of Schedule C to the Bombay Sales Tax Act, 1959?"
Legal Issues Presented
- Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that screen print block tables sold by the applicant are not covered by entry 15 of Schedule C to the Bombay Sales Tax Act, 1959 (i.e., whether the tables are "machinery", or spare parts or accessories of "machinery" used in the manufacture of goods).
Arguments of the Parties
Appellant (Assessee)'s Arguments
- The wooden tables are the main component parts and therefore accessories of the printing process; given their size and use as screen print block tables they should be treated as spare parts/accessories of "machinery".
- The tables are fitted with steam pipes for instantaneous drying and there is a mechanical machine for mixing colours — these elements form part of the manufacturing process and indicate the existence of "machinery".
- The term "machinery" should be understood broadly to include mechanical contrivances and combinations of articles acting together, where force (manual or mechanical) is applied to produce a specified product.
Respondent (Revenue)'s Arguments
- The printing process is carried out entirely by hand; there is no "machinery" in the printing process and thus the tables correctly fall under the residuary entry 22 of Schedule E.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| Corporation of Calcutta v. Chairman of the Cossipore and Chitpore Municipality, A.I.R. 1922 P.C. 27 (Privy Council) | Defines and explains "machinery" as more than a solid structure or mere collection of tools; machinery involves mechanical contrivances whose parts move in interdependent action to produce a definite result; warned that precise definition is difficult and context matters. | The Court relied on the Privy Council to emphasize that "machinery" requires interdependent movement and operation of parts to effect a definite result and that mere stationary structures (like a tank) do not qualify; used the decision as authority for assessing whether the table assembly and associated items constitute "machinery". |
| D. B. Bhandari v. State of Mysore, [1967] 20 S.T.C. 25 (Mysore High Court) | Paraphrases the Privy Council's meaning: '"machinery"' is a contrivance whereby several things are put together so force may be applied conveniently to get particular work done; the mode of application of power (including human power) does not change the character of a machinery. | The Court accepted and endorsed these observations to support the proposition that a machinery can be operated by manual power as well as mechanical sources; this supported the view that parts of a system (tables plus steam pipes and colour-mixing machine) can be regarded as machinery even if some operations are manual. |
Court's Reasoning and Analysis
The Court began by noting that "machinery" is not defined in the Bombay Sales Tax Act and therefore turned to dictionary meanings and judicial authorities to ascertain the correct meaning.
The Court referenced Webster's definitions distinguishing "machine" (a framework with fixed and moving parts for doing work) and "machinery" (component parts of a complete machine; or any combination of persons or things whose harmonious working results in a desired end). From these sources the Court distilled an analytical test: in order to be a "machinery", the following four factors must exist:
- a complete and integrated collection of several objects or articles;
- these objects or articles should interact in unison upon or with each other;
- this interaction is prompted by application of force which may be manual or motive power; and
- the movement should be with a view to do some specific activity or to obtain a specific or definite result.
The Court then examined the factual findings of the Tribunal: the tables were fitted with steam pipes to effect instantaneous drying and there was a mechanical colour-mixing machine (fixed at a distance). The Tribunal had emphasized that the printing proper was done by hand using screen print frames and hand-rolls.
The Court rejected the revenue's contention that manual printing meant there could be no "machinery". It held that the Tribunal had taken too narrow a view. The Court observed that a mere static assembly without moving parts would not be machinery, but where an assembled collection of items interact (and some part of the process involves mechanical assistance or an organized interdependent operation) the four-factor test may be satisfied.
Applying the four-factor test to the facts found by the Tribunal, the Court concluded that the entire assembly — the tables, the steam pipes used for instantaneous drying, the screen prints and the rolls, and the mechanically operated colour-mixing machine as part of the overall printing setup — constituted "machinery". Consequently the tables used in that assembly were accessories of the machinery.
The Court therefore held that the Tribunal erred in law by construing "machinery" too narrowly and by giving undue emphasis to the manual aspects of the printing operation while discounting the role of steam pipes and the colour-mixing machine in the integrated process.
Holding and Implications
Core Ruling: The reference was answered in the negative — i.e., the Tribunal was not right in holding that the screen print block tables sold by the applicant are not covered by entry 15 of Schedule C. The Court accepted the reference in favour of the applicant-assessee and against the revenue.
Direct consequences specified in the opinion:
- The Tribunal's conclusion that the tables were not "machinery" (or accessories/spare parts thereof) was held to be an error of law.
- The tables, in the factual context found by the Tribunal (size, fitted steam pipes for instantaneous drying, and the presence of a mechanical colour-mixing machine), were held to be accessories of "machinery" used in manufacture.
- The Commissioner of Sales Tax was ordered to pay the costs of the reference to the applicant-assessee (costs awarded to the assessee).
Broader implications: The opinion applies and clarifies the meaning of "machinery" for purposes of the statute in line with earlier authorities (Privy Council and Mysore High Court) and establishes the four-factor conceptual test as applied to these facts. The Court did not purport to lay down an absolute definition applicable to all circumstances; it reiterated that determination in each case depends largely on its special facts.
1. A short but interesting point arises in this reference made at the instance of the assessee under section 61(1) of the Bombay Sales Tax Act, 1959, as to what should be the correct meaning of the term ""machinery"", its spare parts and accessories. The point arises in the following facts and circumstances :
The applicant herein is a dealer manufacturing screen print block tables of wood which are sold to the various textile mills. In the course of the assessment period corresponding to S.Y. 2023, the Sales Tax Officer had levied tax on the sales of these tables under residuary entry 22 of Schedule E to the Bombay Sales Tax Act, 1959, rejecting the contention advanced on behalf of the applicant that the goods in question were covered by entry 15 of Schedule C to the said Act pertaining to "machinery" used in the manufacture of the goods, spare parts and accessories thereof other than the specified "machinery" in any of the schedules to the said Act.
2. Against the aforesaid order of assessment, the applicant went in appeal before the Assistant Commissioner of Sales Tax, but with no avail. The applicant, therefore, carried the matter in further appeal before the Gujarat Sales Tax Tribunal. On behalf of the applicant, the whole process of hand screen printing was explained orally at the time of hearing of the appeal as well as the time when the Tribunal went for inspection in one of the city mills for the purposes of understanding the process in question. It was pointed out to the Tribunal that the wooden tables supplied by the applicant were of 42 metres in length and 60 inches in width (that is, about 146 ft. x 5 ft.). The tables were covered with buff-leather after they were fixed on the site so that there would be an even printing on the cloth. The tables are brought in loose condition and assembled on the site by the suppliers. In the present case, the buff-leather was fixed on the tables by the applicant under a separate labour contract. The steam pipes are fitted below the tables so as to supply the necessary heat for the purposes of drying the prints instantaneously. The Tribunal also found that there was a machine for mixing colours mechanically so as to obtain the necessary consistency of colours. The cloth is spread on the tables, and with the help of screen print frames by moving hand-rolls, necessary designs are imprinted and there is an instantaneous drying of the printing on the cloth. It is in the back-ground of this process that a question was posed before the Tribunal as to whether these tables can be said to be spare parts or accessories of the "machinery" for printing. The Tribunal found as a matter of fact during the inspection that the printing was done manually and not with the aid of any "machinery".
3. On behalf of the assessee it was contended before the Tribunal that the goods in question, namely, the wooden tables were the main component parts and, therefore, accessories of this process of printing and inasmuch as these tables were fixed up with the steam pipes which serve the purpose of instantaneous drying and also because there is a "machinery" for mixing up the colour so as to have consistency in the composition of colours, it must be held, particularly having regard to the dimensions of these tables which have been sold to the various mills as screen print block tables, that they were spare parts and/or accessories of the "machinery" which only means mechanical contrivance for producing a specified product by collection or assembling of different articles or things acting independently of each other and where force is applied either manually or mechanically.
4. On behalf of the revenue, the only contention which was urged was that there was no "machinery" in the printing which was entirely done by hand and, hence, the articles were rightly held as falling under the residuary entry 22 of Schedule E to the said Act.
5. The Tribunal considered the various decisions of different High Courts and also its own and it was held that the tables supplied, though can form part of screen print block tables, but since by themselves they cannot form part of printing "machinery" as such, the claim of the assessee could not be accepted. The Tribunal was of the view that the tables in question could be said to be parts of screen print tables. In that view of the matter, therefore, the Tribunal dismissed the appeal of the assessee and confirmed the orders of the authorities below. At the instance of the assessee, therefore, the following question has been referred to us for our opinion :
"Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that screen print block tables sold by the applicant are not covered by entry 15 of Schedule C to the Bombay Sales Tax Act, 1959 ?"
6. In our opinion, this reference at the instance of the assessee should be accepted obviously for the following reasons : Entry 15 of Schedule C to the Bombay Sales Tax Act, 1959, so far as relevant for our purposes, reads as under :
"15. (1) Machinery used in the manufacture of goods, and spare parts and accessories thereof, but not "machinery" and spare parts and accessories thereof specified in any other entry in this or any other schedule."
7. The word ""machinery"" is not defined in the Act and, therefore, we have to consider what is the dictionary meaning of the term ""machinery"". In Webster's New Twentieth Century Dictionary, Unabridged, Second Edition, the meanings of the terms "machine" and ""machinery"" are to be found at page 1080. The relevant meaning of the term "machine" is to be found at item No. 3 in the said meaning, which reads as under :
"3. a structure consisting of a framework and various fixed and moving parts, for doing some kind of work; mechanism; as, a sewing machine."
8. Similarly, the relevant meaning of the term ""machinery"" is to be found at items Nos. 1 and 3 in the said meaning, which reads as under :
"1. the component parts of a complete machine ............
3. any combination of persons or things, the harmonious working of which result in a desired end; as, the "machinery" of government."
9. In other words, if there is a combination of things, the harmonious working of which results in a desired end, that collection of things would be known as ""machinery"". It was urged on behalf of the revenue that the Tribunal has found as a result of personal inspection by its members and also as a result of the material produced before it on the record, namely, photographs, etc., of the process in question, that there was no "machinery" at all for the purpose of printing and if there was no "machinery" for printing the cloth, in the very nature of things, there cannot be any question of any spare parts or accessories thereof since the entire process of printing, as its very name suggests, is hand-printing with the held of screen print frames by moving hand-rolls.
10. We are afraid that this contention advanced on behalf of the revenue in view of the observation of the Tribunal is not well-founded. In the first place, the Tribunal has found as a matter of fact that these tables are fitted with steam pipes below them with a view to have instantaneous drying of the print. The Tribunal has further found that mixing of colours is done mechanically by a machine which is fixed at a distance from the job of printing which is carried on the tables. It is no doubt true that the prints on the cloth are made by application of screen prints and by applying the colours by hand-rolls and the prints are being dried instantaneously by the steam emanating out of the steam pipes fixed below the tables. The emphasis, therefore, which has been sought to be placed on behalf of the revenue on the fact that by and large the printing work is done manually, cannot have such a conclusive bearing on the question which we have to determine, whether the tables in question are spare parts and/or accessories of the "machinery" for printing ? It is no doubt true that mere assembly of articles or things would not amount to a "machinery". Some solid structure with no moving parts cannot be termed as "machinery". It would be "machinery" only if such structure, complete in itself, has moving parts in relation with others when they move interdependently by application of force - mechanical or manual - with an avowed object to produce a given product. In other words, in order to be a "machinery", the following four factors must exist, namely : (1) a complete and integrated collection of several objects or articles; (2) these objects or articles should interact in unison upon or with each other; (3) this interaction is prompted by application of force which may be manual or motive power; and (4) the movement should be with a view to do some specific activity or to obtain specific or definite result.
11. In this connection, our attention has been invited on behalf of the applicant to the decision of the Privy Council is Corporation of Calcutta v. Chairman of the Cossipore and Chitpore Municipality (A.I.R. 1922 P.C. 27.), where a question arose whether a raised reservoir for storing water by erecting a solid steel tank with supporting structure is "machinery" within the meaning of the third proviso to section 101 of the Bengal Municipal Act, 1884. The steel tank with supporting structure was put up by the Corporation of Calcutta on a plot of land bearing No. 2 supported by steel columns and girders. The tank was styled as balancing tank and was capable of holding when full about 90,00,000 gallons of water. It was connected by pipes with the pumping house which was situate at a place named Pulta about 15 miles from Calcutta and the Municipal Pumping and Distribution Station was at Tallah. The pump and the engine used were situate on a plot of land bearing No. 1 at 71, Barrackpore Road, Tallah. A very large underground reservoir had been constructed on the said plot from which water is pumped into the mains continuously. The respondent-municipality assessed the aforesaid properties of the Calcutta Municipal Corporation, which contended that the tank and its supporting structures are, within the meaning of the third proviso to section 101 of the Bengal Municipal Act, 1884, "machinery" and, being so, the respondent was bound by the provisions of that section to exclude them from consideration in making the assessment of plot No. 2 and in including the said holding in the assessment, the municipality acted ultra vires the Act. The tank was for all intents and purposes a receptacle for water which is poured into it as long as it was desired. It was stationary. It did not move nor did any of its parts move the one upon the other. While water was in it the force of gravity acted upon the water; but the strength and rigidity of its sides counteracted that force and prevented the escaped or movement of the water. When this water was allowed to escape through a hole or holes in its side into pies, the same force of gravity acted upon the water and pushed or drew it down into pipes, but this force of gravity acting on the unimprisoned water was neither generated, modified, directed nor applied by the tank. In this state of affairs, the question which arose was whether the solid tank with its structure was a "machinery" or not. The Judicial Committee observed in this connection as under at pages 31 and 32 :
"... A completed machine or a number of completed machines may, of course, according to the ordinary use of language, be properly described as '"machinery"', so may those parts or members of a machine which when assembled, as it is styled, form a complete machine so also may some such of those parts, which when assembled with the other necessary parts, would form a complete machine be styled '"machinery"' but none of these conditions exists in the present case ...
The word '"machinery"' must mean something more than a collection of ordinary tools. It must mean something more than a solid structure built upon the ground, whose parts either do not move at all or, if they do move, do not move the one with or upon the other in interdependent action with the object of producing a specific and definite result.
Their Lordships concur with Lord Davey in thinking that there is great danger in attempting to give a definition of the word '"machinery"' which will be applicable in all cases. It may be impossible to succeed in such an attempt. If their Lordships were obliged to run the hazard of the attempt, they would be inclined to say that the word '"machinery"' when used in ordinary language, prima facie, means some mechanical contrivances which, by themselves or in combination with one or more other mechanical contrivances, by the combined movement and interdependent operation of their respective parts, generate power, or evoke, modify, apply or direct natural forces with the object in each case of effecting so definite and specific a result. The tank and its supporting structure do not satisfy this definition.
But their Lordships think that, however skilful definitions of '"machinery"' may be framed, the determination in any given case of what is or is not '"machinery"' must, to a large extent, depend upon the special facts of that case."
12. Another decision to which our attention was invited is of the Mysore High Court in D. B. Bhandari v. State of Mysore ([1967] 20 S.T.C. 25.), where a question arose whether parts of handloom fall under entry 20 of Schedule II of the Mysore Sales Tax Act, 1957. The Mysore High Court referred to this decision of the Privy Council in Calcutta Corporation's case (A.I.R. 1922 P.C. 27.) and paraphrased the meaning given by the Privy Council to the word
"machinery"in the following terms :
"In simpler language '"machinery"' is a contrivance whereby several things are put together to work in such a way that force may be applied at a most convenient point in a most convenient way to get a particular work or an item of work done or to produce a specific article or manufactured goods.
If this is the essential feature of a "machinery" which distinguishes it from other things, the mode or the manner in which power is fed into it or force is applied, need not and should not make any difference. It is conceded, for example, that a "machinery" would be a "machinery" whether it is fed by electrical power or other form of power applied by a steam or generated by burning combustible oils. If the mode or the manner in which the power is applied makes no difference in these specified cases, it should make no difference either if the source of power is either human or animal."
13. We are in respectful agreement with the above observations as they fortify the view which we have taken above. In that view of the matter, therefore, it cannot be gainsaid that having regard to the size of the tables supplied and also having regard further to the object for which they have been sold and the use to which they have been put to, which we have extracted as above from the order of the Tribunal, and, more particularly, having regard to the fact that these tables have been fitted with steam pipes which act as instantaneous driers, the entire assembly of the tables, pipes, screen prints and the rolls is nothing else but a "machinery" and, consequently, therefore, the tables which have been used therein are accessories of the "machinery". In our opinion, therefore, the Tribunal has committed an error of law in construing the term ""machinery"", its spare parts and accessories by taking a very narrow view of the same. The Tribunal, it appears, was impressed undoubtedly with the fact that the entire printing work is done with manual labour. In our opinion, here also the Tribunal has erred because it did not attach sufficient importance to the fact that part of the drying work which is done instantaneously was carried out with the aid of steam pipes which are fitted below the tables and the mixing of colours is done mechanically by a machine which is fixed at a distance from the job of printing which is carried on the tables. In that view of the matter, therefore, we must accept this reference.
14. In the result, we answer the question referred to us in the negative, that is, in favour of the applicant-assessee and against the revenue. The Commissioner of Sales Tax shall pay costs of this reference to the applicant-assessee.
15. Reference answered in the negative.
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