R.K Patra, J.:— On applications made by the State of Orissa under section 24(1) of the Orissa Sales Tax Act, 1947 (hereinafter referred to as “the Act”), the Orissa Sales Tax Tribunal has stated these cases and referred the following common question for opinion of the court:
“Whether, on the facts and in the circumstances of the case, the learned Sales Tax Tribunal (Division Bench) is correct to hold that flap is not a component part of the motor vehicle subject to levy of tax at 13 per cent during 1981-82 and 16 per cent and 12 per cent, as the case may be, during 1982-83 but an unspecified goods to be taxed at 7 per cent for the year 1981-82 and at 8 per cent for the year 1982-83?”
Flash-back of the cases:
2. The periods of assessment relate to 1981-82 and 1982-83.
3. The opposite party is a wholesaler of automobile tyres, tubes and flaps and is having its business at Cantonment Road, Cuttack. Assessments under section 12(4) of the Act had been completed. The Accountant-General, Orissa, in course of audit took objection saying that flap being a component part of motor vehicle, should have been taxed at 13 per cent; but the opposite party had collected and paid tax at 10 per cent on sale of flaps. On the basis of the said objection, the Sales Tax Officer, Cuttack-I, Central Circle, Cuttack, reopened the assessment proceedings under section 12(8) of the Act and by taking the view that the flap is a component part of the motor vehicle raised extra demand of Rs. 16,848 and Rs. 12,331 for the years 1981-82 and 1982-83, respectively. The opposite party carried two appeals, i.e, Sales Tax Appeals Nos. 1639 and 1640 of 1986-87 against the orders of assessment made under section 12(8) of the Act and the Assistant Commissioner of Sales Tax, Orissa, allowed the appeals and reduced the assessment by holding that flap is a component part of tyres and tubes only and as such it is liable to be taxed at 10 per cent and 12 per cent as it stood then for the relevant periods. Being aggrieved by the common appellate order passed in the aforesaid two appeals, the petitioner filed two Second Appeals Nos. 2117 and 2118/87-88. Cross-objections were filed by the opposite party. The Sales Tax Tribunal by the common order dated December 24, 1988, dismissed the appeals filed by the petitioner and allowed the cross-objection filed by the opposite party and has held that flap is neither component to motor vehicle nor accessory to tyres and tubes and the rate of tax of flap having not been specified in the rate chart, the same would come under the category of unspecified goods taxable at 7 per cent and 8 per cent as it stood then for both the years. Undaunted by the dismissal of the appeals, the petitioner made applications under section 24(1) of the Act and the Full Bench of the Tribunal by majority vide Reference Case Nos. 10 and 11 of 1989 allowed the reference applications and that is how these matters have come.
4. There is no dispute that by the Orissa Sales Tax (Second Amendment) Rules, 1979, rule 93-I came to be inserted by which automobile tyres/tubes/flaps became the first point taxable goods with effect from April 1, 1979. In the list of goods subject to sales tax as per serial No. 9, automobile tyres and tubes were taxable at 10 per cent up to March 31, 1982 and at 12 per cent from April 1, 1982 to May 31, 1982 and again at 10 per cent from June 1, 1982.
5. Flap is used inside the tyre but over the tube to keep it steady on the rim of a motor vehicle. The purpose of using the flap is to prevent greater friction between the tube and tyre and to increase the longevity of the tube. Component is one of the parts or elements of which anything is made up or is essential for completing it. In other words an article is said to be a component part of another when with it (component part) another article is made up. A motor vehicle cannot run without fittings of wheels with tyres and tubes whereas without fitting of flaps a motor vehicle can very well run. Thus in no circumstances flap can be said to be a component of a motor vehicle. Is it then a component or accessory to tyres and tubes? As the user of the flap being limited for the purpose indicated above, it cannot be said to be a component part of tyres and tubes. It is also not an accessory to tyres and tubes in view of the test laid down by the apex Court in the case of Mehra Brothers v. Joint Commercial Officer, Madras [1991] 80 STC 233 (SC); (1991) 1 SCC 514 : AIR 1991 SC 1017. The court has observed in paragraph 5 of the judgment (page 237 of STC; 1020 of AIR) that the correct test would be whether an 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 user of the motor vehicle or a supplementary or secondary to the main or primary importance. Whether an article or a part is an accessory cannot be decided with reference to its necessity to its effective use of the vehicle as a whole.
6. Flap is commercially a distinct identifiable commodity available for sale in automobile market. The framers when issued the notification with regard to automobile tyres and tubes indicating the rate of tax payable as such goods, it has to be assumed that they were aware of the fact that flap was one of the items of goods determined as the first point taxable goods and it having not been mentioned in the notification as to the rate of tax payable on it, it cannot be said that the framers of notification intended or intend to charge the rate of tax on flap as payable on automobile tyres and tubes. In the absence of any rate of tax payable on flap it has to be taken under the residual item of goods mentioned in the list of goods subject to sales tax and as such it is exigible to tax at the rate of 7 per cent and 8 per cent as it stood then for both the years in question.
7. We would accordingly answer the question referred to us by saying that on the facts and in the circumstances of the case, the Tribunal was right in holding that the rate of tax on flap having not been specified in the rate chart, it would come under the category of unspecified goods taxable at the rate of 7 per cent and 8 per cent as it stood then for both the years in question.
8. However, we find from the records that there is material to show that the assessees collected tax at the rate of 10 per cent in respect of the concerned goods and has deposited the same. If that be so, notwithstanding our conclusion that the residual rate is applicable, the assessee shall not be permitted to take refund of the amount which may be found due by application of the residual rate. This aspect shall be indicated by the Tribunal when it takes up the matter for disposal in terms of section 24(5) of the Act.
9. There shall be no order as to costs.
A. Pasayat, J.:— I agree.
11. Reference answered in the affirmative.