Holding

A belt‑pulley attachment sold as a spare part is not an agricultural implement within the meaning of Entry 34 of Schedule B of the Punjab General Sales Tax Act, 1948, and therefore is not exempt from sales tax.

Summary

The respondent, Hindsons (PJ Ltd.), a dealer in tractors and spare parts, claimed a deduction for sales of belt‑pulley attachments on the ground that they were agricultural implements exempt from sales tax under Entry 34 of Schedule B of the Punjab General Sales Tax Act, 1948. The assessing authority rejected the claim, the appellate authority allowed it, but the Commissioner and the Sales Tax Tribunal restored the rejection. The Punjab and Haryana High Court then held that a belt‑pulley attachment, because it increases a tractor's utility for agricultural work, fell within the meaning of "agricultural implement" and was tax‑free. On special leave, the Supreme Court examined whether a belt‑pulley sold as a spare part could be classified as an agricultural implement under the pre‑1971 amendment entry. It concluded that the pulley is a generic mechanical component used in many machines, not exclusively in agriculture, and therefore cannot be stretched to fit the definition of an agricultural implement. Consequently, the Supreme Court allowed the appeals, reversed the High Court decision, and restored the Tribunal’s order denying the tax exemption.

Issues considered

Whether a belt‑pulley attachment, when sold as a spare part, qualifies as an "agricultural implement" within Entry 34 of Schedule B of the Punjab General Sales Tax Act, 1948 (as it stood before the 1971 amendment).
Whether the exemption under Entry 34 can be extended to items that are used in agricultural machines but are not exclusively agricultural implements.

Legislation cited

Punjab General Sales Tax Act, 1948s. Entry 34 of Schedule B, s. Sec 21(1), s. Sec 22(2)(b), s. Sec 5(2)(a)(i)

Subjects

sales taxagricultural implementexemptionbelt pulleyPunjab General Sales Tax ActSchedule Btax deductionspare partstatutory interpretation

Judgment

'171 A
STATE OF PUNJAB

v•
• HINDSONS (PJ LTD.
B
September 20, 1984

.. [D.A. DESAI AND D.P. MADON, JJ.]

Words and Phrases- 'Belt Pulley Attachment'-Whether an agricultural
implement-Whether /ia'.l/e to be exempted from the levy of sales tax-Entry 34, C
of Schedule 'B'-Punjab General Sales Tax Act, 1948.

"The respondent-assessee, a dealer in tractors, motor-cycles and spare-
parts etc., while filing its quarterly returns, claimed deduction in respect of
tax free goods of Rs. 26, 511. 82 being th; sale pro;::eeds of belt pulley attach-
ment sold along with the tractor or separ<Jtely by itself from its yearly gross
turn over of Rs. 21,65,983.91 for the assessment year 1965-66 on the D
'""" ground that the belt pulley attachment should be treated as an agricultural
implement and therefore it is en:empted from the levy of sales tax under
Entry 34 of Schedule B to the Punjab General Sales Tax Act (the Act for
short). Th~ assessing authority rejected the claim on the ground that the
belt pulley attachment could not be treated as a composite part of the tractor
nor can it be treated as an agricultural implement and it was not one of the
tax free goods as contemplated by Entry 34. The respondent-assessee E
preferred an appeal to the appellate authority against the order of the
assessing authority. The appellate authority allowed the appeal holding that
the sales of belt pulley attachment amounting to Rs. 26, 572. 82 p. was of
tax free goods under Sec. S (2) (al (i) of the Act and that amount should be
deducted from the gross turnover of the assessee. But, the Joint Excise and
Taxation Commissioner suo moto quashed the order of the appellate authority
and res 1ored that of the assessing authority. In revision, Sales Tax F
Tribunal confirmed the decision of the Taxation Commissioner. Thereupon
the respondent-assessee moved the High Court which held that the belt
pulley attachment falls within the meaning of the expression agricultural
implement since it increases the utility of a tractor for an agricultural oper-
tion. Hence this appeal by special leave.

Allowina the appeal, G

HELD : (!) Belt pulle1 means a pulley over which a belt may pass to
transmit power to other part of the machine. It is indeed true that the beJt
pulley when used in a tractor may increase the utility_ of the tractor for agri~
cultural operations but that by itself does not lead to the inevitable conclu-
sion that belt-pu1ley attachment is an agricultural implement. It is not only
used in a tractor but it is also used in various other machines such as motor
car engines, water pumps. threshers etc. Therefore, when sold as a spare
8
772 SUPREME COURt REPORTS (1985] l s.C.R,

part it cannot by itself become an agricultural implement. To comprehend
it in the generic term "agricultural implement," the court would have to
•stretch the language to impermissible limit of breaking it.
[773 H, 774 A-G]
In the instant case, the assessee is selling belt pulley attachment as
spare part which can be used in many machines. Therefore, the belt pulley
B attachment which can be used in various mechanical appliances or devices by
itself cannot be said to be an agricultural implement.

C1v1L APPELLATE Ju&1s01cnoN: Civil Appeal Nos. 1817-19 "
of 1984

C Appeal by Special leave from the judgment and Order dated
the 6th November, 1981 of the Punjab and Haryana High Court in
Sales Tax Ref. Nos. 4-5 of 1978 and C.W.P. No. 3095 of 1973.

S.K. Bagga for the Appellant.
•

D Vineet Kumar for the Respondent.

The Judgment of the Court was delivered by •
DESAI, J. On a direction given by the High Court of Punjab
and Haryana at Chandigarh, the Sales Tax Tribunal, Punjab,
Chandigarh ('Tribunal' for short) referred under Section 22(2)(b) of
E
the Punjab General Sales Tax Act, 1948 ('Act' for short) the
following question of law to the High Court for its opinion :
"Whether a belt pulley attachment was an agricultural im-
plement within the meaning of entry 34 of Schedule 'B' of
Punjab General Sales Tax Act, prior to the amendment
F made on April 15, 1971"?
This question came to be referred to the High Court at the
jnstance of the assessee, the respondent herein. The respondent
firm deals in tractors, motor-cycles, cycles, spare-parts etc. The
assessee filed its quarterly returns declaring a gross yearly turnover
of Rs. 21,65,983.9 l p. Deductions were claimed in respect of sales of
G tax-free goods, sales made to registered dealers etc. Among the sales
claimed in respect of tax-free goods, a commodity known as belt
pulley attachment was included valued at Rs. 26,572.82p. It was
admitted that the belt pulley attachment was sold alongwith tractor
or separately by itself. It was contended by the assessee that the
belt pulley attachment should be treated as an agricultural imple-
H ment and therefore, it is exempted under Entry 34 of Schedule 'B'
PUNJAB v. HINDSONS (Desai, i.) 773

to the Act from the levy of sales tax. The assessing authority came A
to the conclusioa that the belt pulley attachment. co11ld not be
treated as a composite part of the tractor nor can it be treated as an
agricultural implement and it was not one of the tax-free goods as
contemplated by Entry 34. He accordingly, rejected the claim for
B
deduction and completed the assessment for the assessment year
1965-66. The assessee preferred an appeal before the Deputy
Excise and Taxation Commissioner raising various confentions, one
. of them being that the assessing authority was in error in holding
that belt pulley attachment was not an agricultural implement so as
to be exempt from the payment of sales tax. The appellate authority c
held that the belt pulley attachment should be treated as an agri-
cultural implement and allowed the appeal to that extent holding
that the sales of belt pulley attachment amounting to Rs. 26,572.82p.
• was of tax-free goods under Sec. 5(2)(a)(i) and that amount should
be deducted from the gross turnover of the assessee. The Joint
Excise and Taxation Commissioner exercising the powers of Com- D
missioner initiated suo moto proceedings under Sec. 21(1) of the Act
• and concluded that the appellate authority was in errer in holding
that the belt pulley attachment was an agricultural implement. He
accordingly quashed the order of the appellate authority and
restored the order of the assessing authority. The assessee carried
E
the matter in revision to the Sales Tax Tribunal raising the same
contention. The Sales Tax Tribunal by its order dated October 21
. '
1972 upheld the order of the Joint Excise and Taxation Com.
missioner and dismissed the revision petition. The assessee moved
an application under Sec. 21(1) of the Act requesting the Tribunal
to state the case and refer the question of law as hereinbefore set F
out to the High Court. The Tribunal rejected the application.
Thereupon the assessee moved the High Court as herein above
mentioned. The High Court held that 'belt pulley attachment, as a
matter of fact, increases the utility of a tractor for an agricultural
operation' and concluded 'that belt puiley attachment falls within
the meaning of agricultu1 al implement'. The High Court accordingly
answered the question in the affirmative that is against the revenue G
and in favour of the assessee. Hence this appeal by special leave.

The narrow question is whether belt pulley attachment is an
agricultural implement so as to be exempt from the levy of sales tax
under the Act. It is indeed true as held by the High Court that the
belt pulley when used in a tractor may increase the utility of the
tractor for agricultural operations but that by itself does not lead to H
SUPREME COURT RliPORTS [198)j 1 s.c.R.
A the inevitable conclusion that belt pulley attachment is an agri-
cultural implement. The Tribunal in this connection, has rightly
held that not only belt pulley attchment is used in the tractor but
it is also used in water pumps, thrashers etc. The High Court
unfortunately overlooked the most obvious fact that belt pulley is '
also sold as separate spare part. It is used in various other machines
B
such as motor car engines. Belt pulley means a pulley over which a
belt may pass to transmit power to other part of the machine.
Common sense tells us that even in a motor-car there is belt pulley ...
and the rotational movement is transmitted from the rotating fan
via the ·belt on the µulley to the pulley of the dynamo for charging
c it. The assessee is selling belt pulley attachment as spare-part which
can thus be used in many machines. If .it is so the.n it is difficult to
understand how belt pulley attachment by itself becomes an agri-
cultural implement. When used in a motor engine, how can one •
ever assure that it is an agricultural implement. It may as well be
used in many agricultural instruments where machanised farming
D takes place. But by itself when sold as a spare part it cannot by
itself become an agricultural implement. The exemption was with ..
regard to an agricultural implement as contemplated by Entry 34 in
Schedule 'B' to the Act. Undoubtedly, later on by amendment to
Entry 34 on April 15, 1971, belt pulley attachment has been intro-
duced in Entry 34. On this account alone it cannot however, be
E contended that the amendment merely makes explicit what was
implicit in the entry as it stood prior to the amendment. The
Tribunal rightly held that if belt pulley is used in a tractor and sales
tax is levied on the sale of tractor no separate sales-tax is levied on
belt pulley. We do not propose to view the matter from this angle.
We must examine whether a belt pulley attachment when sold
F
as a spare-part would be comprehended in Entry 34 which sets out
agricutural implements exempted from the levy of sales tax. Obvi·
ously as stated earlier belt pulley attachment which can be used in
various mechanical appliances or devices by itself cannot be said to
be an agricultural implement. To comprehend it in the generic term
"agricultural implement", we would have to stretch the language to
G impermissible limit of breaking it.
The High Court merely observed that :
"A belt pulley, as a matter of fact, increases the utility of a
tractor for agricultural operation and therefore a belt
pulley falls within the meaning of an agricultural imple-
H ment."
- /
/
/
-7
' !

PUNJAB v. HINDSONS (Desai, J.) 775
The conclusion on the face of it without anything more is -A
incorrect and cannot be accepted 0;s ari ipse dixit.

Accordingly, these appeals .ucceed and are allowed and the
judgment of the High Court is reversed and set aside and the
reference invited before the High Court is rejected and the decision B
of the Tribunal is restored. But in the circumstances of the case
t_here will be no order as to costs .
.>

M.L.A_. Appeals allowed ·__ C