wire ropes used in the Mobile Cranes are a part of the Mobile Cranes and thus fall in Entry 155 of Schedule IV of the VAT Act. = It is for this reason, we are of the considered opinion that the Mobile Crane Wire Rope is an essential part of the Mobile Crane and, therefore, falls in Entry 155 of Schedule IV of the VAT Act. It is, therefore, taxable at the rates prescribed for the goods specified in Entry 155.

REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL No.3198 OF 2019
(Arising out of S.L.P.(C) No.11937 of 2017)
CTO, Anti Evasion, Circle III,
Rajasthan, Jaipur ….Appellant(s)
VERSUS
M/s Prasoon Enterprises, Jaipur ….Respondent(s)
WITH
CIVIL APPEAL Nos.3199­3200 OF 2019
(Arising out of S.L.P.(C) Nos.4837­4838 of 2017)
CIVIL APPEAL Nos.3201­3202 OF 2019
(Arising out of S.L.P.(C) Nos.4839­4840 of 2017)
AND
CIVIL APPEAL No.3203 OF 2019
(Arising out of S.L.P.(C) No.5981 of 2017)

J U D G M E N T
Abhay Manohar Sapre, J.
In C.A. @ S.L.P.(c) No.11937/2017

  1. Leave granted.
    1 1
  2. This appeal is filed against the final judgment
    and order dated 05.01.2017 passed by the High
    Court of judicature for Rajasthan at Jaipur Bench,
    Jaipur in S.B. Sales Tax Revision Petition No.114 of
    2016 whereby the High Court dismissed the revision
    petition filed by the appellant herein.
  3. The appeal involves a short point as would be
    clear from the undisputed facts stated infra.
  4. The appellant herein­State of Rajasthan
    (Commercial Tax Department) is the revision
    petitioner whereas the respondent herein is the
    respondent of the revision petition before the High
    Court out of which this appeal arises.
  5. The respondent is engaged in the business of
    trading of spare parts of mining machinery, steel
    wire ropes, standard wires, wire rods etc. These
    goods are subjected to payment of Value Added Tax
    (VAT) under the Rajasthan Value Added Tax Act,
    2 2
    2003 (hereinafter referred to as “VAT Act”). The
    respondent is a registered dealer under the VAT Act.
  6. The Commercial Tax Officer (AE) [hereinafter
    referred to as “CTO”] conducted a survey in the
    respondent’s business premises on 16.03.2009 and
    it was noticed therein that the respondent was
    charging VAT at the rate of 4% on “Mobile Crane
    Wire Ropes”.
  7. It is with this background fact, the question
    arose before the taxing authorities under the VAT
    Act as to which is the proper Entry under the VAT
    Act for charging tax on “Mobile Crane Wire Ropes”.
  8. The aforementioned question arose before the
    CTO in the assessment proceedings, which were
    initiated against the respondent in their business
    premises as a result of the survey conducted by the
    CTO and also arose before the Deputy
    3 3
    Commissioner, Commercial Tax Department to seek
    his advance ruling on the aforementioned question.
  9. The CTO and the Deputy Commissioner were
    of the view that the rate of tax chargeable to the
    goods in question is 12.5% as prescribed in the
    Residuary Entry in Schedule V under the Act and
    not 4% as prescribed in Entry 155 of Schedule IV of
    the VAT Act.
  10. In other words, both the taxing authorities
    were of the view that the proper Entry for payment
    of tax on these goods is the Residuary Entry of
    Schedule V, which prescribes the rate of tax as
    12.5%.
  11. The CTO accordingly initiated the assessment
    proceedings against the respondent for the
    Assessment Year 2007­2008. By assessment order
    dated 16.03.2009, it was held that the respondent
    was liable to pay VAT at the rate of 12.5% under the
    4 4
    Residuary Entry of Schedule V of the VAT Act.
    Since the respondent had deposited the tax at the
    rate of 4% treating the goods in question as falling
    in Entry 155 of Schedule IV, the notice was issued
    to the respondent to pay the difference amount of
    VAT along with penalty and the interest payable
    under the VAT Act.
  12. The respondent felt aggrieved and filed appeal
    before the Deputy Commissioner (Appeals). By order
    dated 02.12.2010, the Appellate Authority allowed
    the appeal and set aside the order of the CTO (AE).
    The Appellate Authority held that the ropes in
    question were essentially used in Mobile Cranes as
    part of the Mobile Cranes. It was held that a Mobile
    Crane is not complete and nor it can effectively
    function without the use of the rope. It was,
    therefore, held that the rope is a part of a Mobile
    Crane and chargeable to VAT in accordance with
    5 5
    rates prescribed in the Entry 155 of Schedule IV of
    the Act.
  13. The State (CTO) felt aggrieved and filed appeal
    before the Rajasthan Tax Board under Section 83 of
    the VAT Act. By order dated 06.01.2016, the Board
    dismissed the appeal and affirmed the order of the
    Deputy Commissioner. The State (CTO) felt
    aggrieved and filed revision petition in the High
    Court of Rajasthan Bench at Jaipur.
  14. By impugned order, the High Court dismissed
    the revision and upheld the order of the Board,
    which has given rise to filing of this appeal by way
    of special leave by the State (CTO) in this Court.
  15. So, the short question, which arises for
    consideration in this appeal, is whether the High
    Court was justified in dismissing the appellant’s
    (State/CTO) revision and thereby justified in
    upholding the view taken by the Board that the
    6 6
    “Mobile Crane Wire Ropes” are chargeable to tax @
    4% under Entry 155 of Schedule IV of the VAT Act.
  16. Heard Dr. Manish Singhvi, learned AAG for the
    appellant and Ms. Jyoti Mendiratta, learned counsel
    for the respondent.
  17. Learned counsel for the appellant (CTO) while
    assailing the legality and correctness of the
    impugned order reiterated the same submissions,
    which were urged before the High Court.
  18. In substance, his submission was that the
    goods in question are chargeable to tax at the rate
    of 12.5%, which is the rate prescribed in the
    Residuary Entry of Schedule V of VAT Act because,
    according to the learned counsel, there is no specific
    Entry under which the goods in question fall for
    being taxed at a specified rate.
  19. In other words, the submission was that since
    the goods in question are not specified in any of the
    7 7
    Entries in Schedule IV and Schedule V of the VAT
    Act and nor they are the parts of the Mobile Cranes,
    the only Entry under which they can be taxed is the
    Residuary Entry of Schedule V of the VAT Act.
  20. In reply, the learned counsel for the
    respondent (dealer) supported the impugned order
    and contended that it does not call for any
    interference.
  21. Having heard the learned counsel for the
    parties and on perusal of the record of the case
    including the written submissions, we find no merit
    in this appeal.
  22. As taken note of supra, the question, which
    arises for consideration in this case, is whether the
    “Mobile Cranes Wire Ropes” are chargeable to tax at
    the rate of 4% or 12.5% under the VAT Act.
  23. In other words, the question arises is whether
    the goods “Mobile Cranes Wire Ropes” fall under
    8 8
    Entry 155 of Schedule IV or under the Residuary
    Entry of Schedule V of the VAT Act.
  24. At the relevant time, there were two relevant
    Entries which read as under:
    SCHEDULE IV
    [See section 4]
    Goods Taxable at 4%
    S.No. Description of Goods Rate of
    Tax %
    Conditions, if any
  25. 2. 3. 4.
  26. Hydraulic excavators
    (earth moving and mining
    machinery), mobile
    cranes and hydraulic
    dumpers (including parts
    thereof).
    Bracketed portion was inserted by
    Notification
    No.F.12(63)FD/Tax/2005­51 dated
    08.05.2006 vide S.O. No.99 dated
    09.05.2006
    4
    SCHEDULE V
    [See section 4]
    Goods Taxable at 12.5%
    S.No Description of Goods Rate of Tax %Conditions, if any
    1 2 3 4
  27. Goods not covered in any other
    Schedule under the Act or under
    any notification issued under
    section 4 of the Act.
    12.5
  28. Mere reading of Entry 155 quoted above would
    go to show that the goods called Hydraulic
    9 9
    excavators (earth moving and mining machinery),
    Mobile Cranes and Hydraulic Dumpers (including
    parts thereof) are chargeable to tax at the rate of
    4%.
  29. It may be mentioned here that the expression
    “including parts thereof” was inserted in the Entry
    155 by an amendment w.e.f. 09.05.2006. It,
    therefore, indicates that the parts of the goods
    specified in the Entry were not chargeable to tax at
    the rate of 4% prior to 09.05.2006 but became
    chargeable at the rate of 4% only on and after
    09.05.2006.
  30. This Court has laid down the test as to how
    the Court should decide the question as to whether
    a particular item is a part of other. The test is “a
    thing is a part of the other if the other is
    incomplete without it”. In other words, “a thing
    is a part of the other, if the other cannot
    10 10
    function without it”. [See M/s Annapurna
    Carbon Industries vs. State of Andhra Pradesh
    [(1976) 2 SCC 273 and Commissioner of Central
    Excise, Delhi vs. Insulation Electrical Private
    Limited (2008) 12 SCC 45)]
  31. When we apply this principle to the facts of the
    case at hand then we find no difficulty in holding
    that the wire ropes used in the Mobile Cranes are a
    part of the Mobile Cranes and thus fall in Entry 155
    of Schedule IV of the VAT Act.
  32. A fortiori, it is taxable at the rate of 4%. The
    reasons are not far to seek.
  33. The respondent has filed (Annexure R­1), the
    complete literature with a view to show as to how
    the Mobile cranes are designed, structured, built
    and operated in the field when it put to its ultimate
    use by the consumer. They have also filed the
    11 11
    details of the specification issued by the Bureau of
    Indian Standards specifying therein the strength of
    each wire rod/rope, which is used in the
    manufacture of different kind of Cranes.
  34. Mere perusal of the literature would go to show
    that the Mobile Cranes are not complete without the
    wire ropes. In other words, in order to use the
    Mobile Cranes and make them operational, the use
    of wire ropes is essential. If wire ropes are not fitted
    in the Mobile Cranes, they will not function much
    less effectively.
  35. It is for this reason, we are of the considered
    opinion that the Mobile Crane Wire Rope is an
    essential part of the Mobile Crane and, therefore,
    falls in Entry 155 of Schedule IV of the VAT Act. It
    is, therefore, taxable at the rates prescribed for the
    goods specified in Entry 155.
    12 12
  36. We, however, make it clear that we have
    examined only the question of taxability of the “wire
    ropes” in the context of its use in Mobile Cranes as
    would be clear from the question posed by the High
    Court in Para one of the impugned order.
  37. In view of the foregoing discussion, the appeal
    is found to be devoid of any merit and it thus fails
    and is accordingly dismissed.
    In C.A.Nos. @ S.L.P.(c) Nos.4837­4838/2017,
    4839­4840/2017 and 5981/2017
  38. Leave granted.
  39. These appeals are directed against the
    common final judgment and order dated 07.10.2016
    passed by the High Court of Judicature for
    Rajasthan, Jaipur Bench at Jaipur in S.B. Sales Tax
    Revision Petition Nos.106, 101, 99, 100/2013 and
    449/2011 whereby the High Court dismissed the
    revision petitions filed by the appellant herein.
    13 13
  40. In view of the order passed above in C.A. @
    S.L.P.(C) No.11937/2017, these appeals are
    dismissed.
    .……………………………………..J.
    [ABHAY MANOHAR SAPRE] ……………………………………….J.
    [DINESH MAHESHWARI]
    New Delhi;
    March 26, 2019
    14 14