M/S DEWAN ENTERPRISESversusCOMMISSIONER OF SALES TAX, U.P.

                      MIS DEWAN ENTERPRISES                                       A
                                v.
               COMMISSIONER OF SALES TAX, U.P.

                              APRIL 24, 1996

      [J.S. VERMA, B.N. KIRPAL AND G.B. PATTANAIK, JJ.J                           B

      Central Sales Tax Act, 1956: Sections 14(iv)(xiv) and !~Declared
goods-Levy of Sales Tia-Whether cycle rim a declared good within the
meaning section 14(IV)(XIV)-Held: Yes, Cycle-rim is part of wheel and thus
a declared good.                                                                  c
      The appellant carried on the business of manufacturing and sale of
cycle-rims. The assessing officer taxed it @ 8% treating the rims as cycle
parts. Though the appellant contended before the Assessing officer that
cycle rims were declared goods under Section 14(iv) (xiv) of the Central          D
Sales Tax Act and according to Section 15 of the said Act, it was liable to be
taxed at the rate which could not exceed 4% of the sale or purchase price
thereof. The assessee's appeal to the Depnty Commissioner was allowed.
The respondent then filed an appeal before the Tribunal which restored the
decision of the Assessing officer. The appellant then went in revision to the
High Conrt. The High Court held that cycle-rim was not commercially               E
known as 'wheel' and, therefore, could be taxed nnder the U.P. Sales Tax Act
@ 8% and it was not a declared good.

      Being aggrieved, the appellant company preferred an appeal before
this Court.
                                                                                  F
      Allowing the appeal, this court

       HELD : 1.1. The appellant is only entitled to be taxed @ 4% on the
sale - price of the cycle-rims. According to section 15 of the Central Sales
Tax Act, in respect of the declared goods which are enumerated in section         G
14 of the Act, the tax on their sale or purchase inside the State cannot
exceed 4%. [706-G; 705-G]

       1.2. Section 14 of the Act specifies the goods which are of special
importapce in inter-state trade or commerce. Sub-section (IV) enumerates,
in different sub-clauses, the different types of iron and sic.el products which   H
                                      703
    704                   SUPREME COURT REPORTS [1996] SUPP. 1 S.C.R.

A are declared goods. Sub-clause (XIV) specifies 'wheels, tyres, axles and wheel
    sets". The rim of a cycle, manufactured by the appellant, is admittedly a part
    of a wheel. Without a rim the other parts cannot be regarded as a wheel.
    Moreover the entry has to be read as a whole and the meaning also assigned
    to the words 'wheel sets" in the said entry and a rim which is admittedly a
    part of a wheel set would fall in the said entry. [705-G-H; 706-F]
B
           1.3. Applyi.ig the test of common parlance, a rim which is admitteldy
    round and an essential part of the wheel of the cycle would come within the
    said entry (XIV) and being a declared good the same cannot be taxed at the
    rate in excess of 4% [706-F]
c        Assistant Commercial Taxes Officerv.Ashok Tyres, (1988) 68STC123,
    approved.

          CIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 900-909
    of 1994.
D
         From the Judgment and Order dated 7.1.94 of the Allahabad High
    Court in S.T.R. Nos. 1822-31 of 1993.

          Raja Ram Agarwal, Dhruv Agarwal, Sunil Kr. Jain and J.K. Bhatia
    for the Appellant.
E
          T.N. Singh for the Respondent.

          The Judgment of the Court was delivered by

          KIRPAL, J. The appellant carries on the business of manufacturing
    and sale of rims of cycles. The Assessing Officer, under the Uttar Pradesh
F   Sales Tax Act, made provisional assessment treating the rims as cycle parts
    and taxed the same under the said Act @ 8%. Before the Assessing
    Officer, the contention of the appellant was that cycle rims were declared
    goods under clause (xiv) of sub-section (iv) of Section 14 of the Central
    Sales Tax Act (hereinafter referred to as 'the Act') and according to
G   Section 15 of the Act the tax payable under the said law in respect of any
    sale or purchase of declared goods inside the State could not exceed 4%
    of the sale or purchase price thereof and such tax shall not be levied at
    more than one stage. The Assessing Officer, however, made provisional
    assessments under the U.P. Sales Tax Act treating these rims as cycle parts
    @ 8% separately for each month from June, 1990 to March, 1991. The
H   appellant then 1iled appeals before the Deputy Commissioner (Appeals)
        DEWAN ENTERPRISES. v. COMMR. OF S.T. [KJRPAL, J.]                705

who accepted the appellant's contention and came to the conclusion that         A
the rims manufactured by the appellant could not be taxed at the rate
higher than 4%. The respondent then filed appeal to the Tribunal which
reversed the decision of the Deputy Commissioner (Appeals) and restored
the decision of the Assessing Officer.

      The appellant then filed revision petitions before the Allahabad High B
Court. In support of its contention that the rim manufactured by it was a
declared good, it placed reliance on a decision of a Single Judge of the
Rajasthan High Court in the case of Assistant Commercial Taxes Officer v.
Aslwk Tyres, (1988) 68 STC 123 wherein it was held that the cycle 1i111 came
within the ambit of 'wheel' and was a declared good. The Single Judge of
the Allahabad High Court from which the appeal arises, while dissenting C
from the aforesaid judgment of the Rajasthan High Court, came to the
conclusion that a 1im and a wheel are different things and a rim could
become a wheel only by using spokes, hub and/or other things. The rim
manufactured by the appellant, it was held, was not capable of revolving
by itself and therefore, it could not be called a wheel. The High Court,
therefore, concluded that cycle rim was not commercially known as 'wheel' D
and, therefore, could be taxed under the U.P. Sales Tax Act @ 8% and it
was not a declared good.

       The only question which arises for consideration in these appeals is
whether a cycle rim is a declared good or not. Sub-clause (xiv) of sub-Sec-
tion (iv) of Section 14 of the Act reads as follows :                           E

        "It is hereby declared that the following goods are of special
        importance in inter-State trade or commerce :

        (iv) iron and steel, that is to say, -
                                                                                F
         (xiv) wheels, tyres, axles and wheel sets".

      It is not in dispute that according to Section 15 of the Act in respect
of the declared goods which are enumerated in Section 14 of the Act, the
tax on their sale or purchase inside the State cannot exceed 4%.
                                                                                G
      Section 14 of the Act, as is evident, specifies the goods which are of
special importance in inter-state or commerce. Sub-section (iv)
enumerates, in different sub-clauses, the different types of iron and steel
products which are declared goods. Sub-clause (xiv) specifies "wheels,
tyres, axles and wheel sets'. The rim of a cycle, manufactured by the
appellant, is admittedly a part of a wheel. Without a rim the other parts H
    706                   SUPREME COURT REPORTS (1996] SUPP. 1 S.C.R.

A   cannot be regarded as a wheel. Moreover the entry has to be read as a
    whole and the meaning also assigned to the words "wheel sets" in the said
    entry and a rim which is admittedly a part of a wheel set would fall in the
    said entry.

           In ASHOK TYRES CASE (SUPRA), this very entry came up for
B consideration before the Rajasthan High Court where the Tribunal held
    that the 1ims and axles fell within the ambit of entry (xiv) of clause (iv) of
    Section 14 of the Act. While dismissing the petition filed by the Assistant
    Commercial Taxes Officer, it was observed as follows :
             1
             'So far as the 'axles' are concerned the same are expressly men-
c            tioned in the above entry (xiv). For this reason the Tribunal's
             decision relating to axles cannot be challenged. The question is
             only of the "rims" used in wheels of cycles and other vehicles. This
             being so, the Tribunal's view that lims are an intergral component
             or part of a wheel or at least a wheel set, cannot be treated as
             unjustified. There is no other competing entry. This being so, if
D            the above quoted entry (xiv) is wide enough to include 1im within
             its ambit, then the applicability of the residuary entry would auto-
             matically been excluded. Taking into account the ordinary meaning
             of "wheel" in the manner in which it is understood amongst persons
             dealing with the same, it is reasonable to hold that rim is included
             within the expression "wheel" in the above entry, particularly when
E
             there is no other competing specific entry for it. This being a
             plausible view to take a construction which favours the tax-payer
             must be preferred."

          The aforesaid reasoning of the Rajasthan High Court correctly inter-
F   prets the said entry and we affirm the same. Applying the test of common
    parlance, a rim which is admittedly round and an essential part of the wheel
    of the cycle would come within the said entry (xiv) and being a declared
    good the same cannot be taxed at the rate in excess of 4%. The view taken
    by the Single Judge of the Allahabad High Court in the judgment under
    appeal gives a very narrow meaning to the said entry and cannot be upheld.
G
           For the aforesaid reasons, the appeal is allowed the judgment of the
    High Court is set-aside and it is held that appellant is only entitled to be
    taxed @ 4% on the sale price of the cycle rims. The appellant will also be
    entitled to costs.

    S.S.                                                         Appeal allcwed.