Commissioner Of Trade Tax, U.P vs M/S. Kartos International Etc

4. In order to answer the aforesaid issue which arises for our consideration, it would be necessary to set out some facts leading to filing of the present appeals.

5. The assessee/respondent is a proprietorship firm, which is engaged in the manufacture and sales of various "scientific and biological equipments/instruments, which are used mainly by 3 biological scientists for research purposes for which the assessee is duly registered under the provisions of U.P. Act as well as the Central Act. The assessee/respondent was issued a notice by the assessing authority and the assessee appeared before the assessing authority and claimed that the goods sold by it are exempted from tax in view of the notification no. 1166 dated 10.4.2000 and also claimed relief on account of Inter-State sales made to various government organisations and institutions against the Forms 3D and D.

6. The Assessing Authority, after examining the accounts and details, issued a show cause notice to the assessee proposing to make the best judgment assessment on the basis of an inference that the assessee had effected sales at concessional rate of tax to various organizations against the declaration of form 3D and form D even though the said organizations were not the Government organisations and no benefits of concessional rate of tax could have been claimed by the assessee. The assessing authority further took a 4 view that the goods sold by the assessee are not covered by the notification No. 1166 dated 10.4.2000 and hence the goods of the assessee were liable to be taxed at the rate of 10% as unclassified goods.

7. The assessee replied to the show cause notice and stated that the goods sold by the assessee are fully covered by the notification no. 1166 dated 10.4.2000 and that the assessee had charged and deposited tax at concessional rate on the Intra-State sales as well as Inter-State sales made to various Government Organizations and institutions but claimed that it was exempted under the said notification also.

8. The explanation as submitted by the assessee was not accepted by the assessing authority and assessment orders were passed on 20.2.2004, 17.3.2005 and 30.3.2005 for the Assessment Year 2001-2002, 2002- 2003 and 1998-1999 respectively and the tax was levied under the UP Act and also under the Central Act. The Assessing Authority has accepted books of 5 accounts of the assessee as well as declared turnover but rejected the benefits of declaration Form 3-D/D and on the Intra-State/ inter-state sales made to the Central/ State Government organizations and also treated the goods as unclassified goods, declining it to grant benefit of exemption under notification no.1166 dated 10.4.2000 holding that the assessee is not entitled to get exemption under the aforesaid notification.

10. The Assessee/Respondent filed appeals before the Trade Tax Tribunal, UP (Noida Bench) and the 6 Tribunal by an order dated 21.2.2007 dismissed the appeals filed by the assessee/respondent holding that only such articles are exempted from tax which are used for educating children such as maps, charts, instrumental box, educational globe, biology instruments, and not those used for research purposes.

31. We are unable to accept the aforesaid stand of the counsel appearing for the respondents for all these goods which are mentioned in the aforesaid entry of the notification relate to articles used for study of life science in schools and colleges, such as, maps, educational charts, scientific mathematical survey, mechanical drawing and biology instruments and apparatus. All of them belong to one class as they are the tools by using which a student would and could learn life science. In the aforesaid manner the doctrine of Nositur a Sociis would be applicable to the facts of the present case.

34. The respondent on the other hand manufacture and sell the articles, such as, Bilogical Safety Cabinets;

Laminar Flow Cabinets; Fume Hoods; Air Showers;

Operation Theatre Modules; Air Curtains; Air Conditioner Modules; Clean Tents; Clean Room Garments; Pass Boxes; Air Handling, Filter etc. These articles are manufactured and sold by the respondent 19 to Hospitals, Medical Colleges, Advance Research Institutions and Laboratories.

37. In the present case, the goods manufactured and sold by the assessee are not meant for Educational Institutions but are meant for Research Laboratories.

Hence the commodities in question are not covered by the said notification dated 10.4.2000, and are not entitled for exemption.

38. In view of the aforesaid discussion and law laid down by the Supreme Court in earlier decisions, we are of the considered opinion that the appeals deserve to be allowed. Accordingly, the appeals are allowed. The order passed by the High Court is set aside and the order of the Tribunal is restored.

..........................................J [Dr. Mukundakam Sharma ] ............................................J [ Anil R. Dave ] New Delhi, April 6, 2011