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Judgment
The petitioners in these cases are dealers in machinery parts. In the course of their business, they import ball-bearings into local area and thereafter sell the same. The respondents having levied taxes under the Karnataka Tax on Entry of Goods Act, 1979 (''the Act'' for short), as covered by Entry 7 of Schedule to the Act either having brought the same to tax or attempted to bring the same to tax by issue of certain notices, the petitioners have approached this Court for necessary reliefs. In bringing to tax the ''ball-bearings'', the Assessing Authorities have relied upon a circular issued by the Commissioner and on a letter sent by the Ministry of Industry to the Secretary, Merchants'' Association. The letter sent by the Government of India was issued in the context of Industrial Development and Regulation Act and for that purpose alone. It is difficult to understand how that letter could have been made the basis of the assessment in bringing the goods in question to tax under the Act. The Clarification issued by the Commissioner reads as follows:
"''Ball-bearings'' are taxable at the rate of 2% from 1-4-1982 under Entry 7 of the Schedule as accessories to ''Industrial machinery'' on its entry into local area irrespective of their use".
What is relevant for our purpose is whether ''ball-bearings'' fall within the Entry 7 -industrial machineries and parts and accessories thereof. The ''ball-bearings'' though could be characterised as part or accessory of machinery, what is to be seen is whether the same would constitute industrial machinery for the purpose of Entry 7 referred to supra.
The learned Counsel for the petitioner has placed material to show the nature and function of ''ball-bearing''. He relied upon McGraw Hill Dictionary of Scientific and Technical Terms, Second Edition at page 144. This is how it is explained:
"Ball-bearing (MECH RNGG) an antifriction bearing permitting free motion between moving and fixed parts by means of ball confined between outer and inner rings".
Again in book ''How does it work'' by Richard M. Koff which explains functions of various machines and other engineering items referring to bearings reads as follows: (Page 32)
"Ball-bearings, sometimes called frictionless bearings, are intended for service where even the little friction of the sleeve bearing cannot be tolerated, ball-bearings are not completely frictionless, of course, but they''re much more so than sleeve bearings. The reason is simple to demonstrate. Take a tennis ball and put it on a flat surface. Put the flat of your hand on top of the ball and roll the ball back and forth on the table. Note that the ball rolls on both your hand and the table. Now hold the ball in your fingers and try to slide it along the table top without rolling. It''s a lot harder, the difference being the difference between rolling and sliding friction.
Imagine a tube cut in half the long way. Put the bottom half on your table and line up two or three balls inside the trough of the tube. Take the top half and place it on top of the balls. You can run the top half back and forth very freely and the balls will roll along with it.
If you bend the tube halves into a circle and fill the space between them with balls, the outer half (called a race) can spin around the inner trough and the balls just keep rolling around and around indefinitely. Slip your shaft into the center hole and put a tire on the outer race and you''ve got an automobile wheel or a roller skate. Fit a ball-bearing into a motor housing and let the shaft extend through the inner race and you have a neat ball-bearing motor.
Ball-bearings are made so tiny you can barely see them and so large you can drive a truck through the inner race. They''re made to run on straight rods instead of balls, tapered rods, and needle like rods, too. Why not? The oldest method of moving anything too heavy to lift or slide is to get two or three logs under it. Roll the object forward until it frees a log at the back, then pick up the log and put it in front.
How are the balls inserted in the first place? Sometimes grooves are cut in the edges of the races and lined up in order to slip the balls in. When the races are full, retainers are used to keep the balls evenly spaced around the bearing and to keep the balls from falling out when the two grooves line up. Sometimes the outer race is split actually broken in one spot and spread to fill the races with balls. Later it''s held together by the housing or by a thin, tight-fitting sleeve.
Sometimes the balls are large relative to the race diameters. By pushing the inner race over to one side, five or six balls can be slipped into the remaining crescent-shaped space. Then the balls are redistributed evenly around the bearing with a retainer".
It cannot be said by the nature of the machineries or their use that they are used in industry alone. It is used in ordinary household appliances and vehicles or even toys. Wherever there is any machinery part engaged in motion which results in friction, the contraption of ball-bearing is adopted. It is certainly possible that such appliances could be used even in industrial machinery but it cannot be said that it is generally used in industrial machinery so as to attract tax under the Act. When an identical question came up for consideration before this Court in Assistant Commissioner of Entry Tax (Assessments) v M/s. Mysore Sales Corporation, 1991(35) Kar. L.J. 357 (HC) (DB), wherein sewing machines are brought to tax under Entry 7 of Schedule to the Act, this Court held merely because such sewing machine is capable of being used in industrial unit, for the purpose of the Act it does not attract as it is capable of using for other purpose as well and it could not be definitely said that said articles are generally used in industrial machinery alone. When this very entry has been interpreted by this Court, I do not think any further discussion is necessary in this behalf.
However, the learned Counsel for the respondents referred me to the decisions in Corporation of Calcutta v Chairman of the Cossipore and Chitpore Municipality, AIR 1922 PC 27; State of Gujarat v Minu Chemical Private Limited, (1982)50 STC 339 (Guj.) (DB); Shyam Enamel Works v Commissioner of Sales Tax, (1975)35 STC 489 (All.) (DB) and Mehra Brothers v Joint Commercial Tax Officer, Madras, (1991)80 STC 233 (SC), to point out as to when the appliance becomes machinery and that is wholly irrelevant as there is no doubt in this case that the ball-bearing could form part of the machinery or accessory. What is really in issue is whether it is a part of industrial machinery. That has been answered by this Court in Mysore Sales Corporation''s case referred to supra. In that view of the matter, I have no hesitation in quashing the clarification issued by the Commissioner and assessment orders made in each of these cases or any other action taken by them.
Assessments in other respect shall remain undisturbed.
Petitions allowed.
Rule made absolute accordingly.