ORDER
S.R. Rajasekhara Murthy, J.
1. Emergent notice re. rule was issued to the respondents.
2. After hearing the learned counsel for the petitioner and the learned Government Pleader, the writ petition is disposed of on merits after issuing rule.
3. The petitioner is a private limited company which is a manufacturing dealer in computer stationery. The petitioner is a small-scale unit as recognised by the Department of Industries and Commerce. The petitioner imported certain reconditioned printing machinery from the United Kingdom under an import licence issued by the Government of India.
4. The petitioner claimed concessional levy of sales tax under the Government order dated 15th October, 1981 issued by the Government under section 8A of the Karnataka Sales Tax Act. The Commercial Tax Officer, the second respondent, by an endorsement dated 10th December, 1986 declined to grant the concession by way of concessional rate as per the Government order, on the ground that the machinery imported by the petitioner was a second-hand machinery. Being aggrieved by this order, the petitioner has approached this Court in this writ petition for necessary relief.
5. The question that arises for consideration is whether the machinery installed in the petitioner’s unit is an old and second-hand machinery ? If it is so, then the concessional rate under the Government order would not be applicable to the petitioner’s case. The petitioner’s contention is that the machinery imported is neither an old nor a second-hand machinery, but is a reconditioned machinery and the reconditioned machinery cannot be equated with or the same as old and second-hand machinery. It is, therefore, contended that the action of the second respondent declining to grant the concessional rate of tax is not in accordance with law and the notification of the Government should be extended to the petitioner’s case.
6. In support of his contention Sri Ramanujam, the learned counsel for the petitioner, has relied upon the following decisions :
(i) Commissioner of Income-tax, Patiala v. Hindustan Milk Food Manufacturers Ltd. .
Their Lordships in that case, were dealing with a reconditioned machinery in the context of the claim for development rebate under section 10(2)(vib) of the Indian Income-tax Act, 1922. Though the machinery for the purpose of the said claim was not described as new machinery the court went into the question whether a reconditioned machinery could be considered as a machinery for the purpose of development rebate.
Dealing with this aspect, the High Court observed whether a reconditioned machinery could be treated as a machinery for purpose of the development rebate should depend upon the facts and the material placed by the assessee as to what was the reconditioning that the machinery underwent and whether the said machinery, after undergoing reconditioning, could be considered and treated as a new machinery for purposes of allowing development rebate.
The Punjab High Court while allowing the claim of the assessee applied the reasoning of the Supreme Court in the case of Cochin Company v. Commissioner of Income-tax, Kerala . It was observed by the Supreme Court in the said case that “the question whether the reconditioning of the machines amounted to reconstruction or substitution of the entire machinery, meaning by entirety, not necessarily the whole, but substantially the whole subject-matter of the machinery”.
7. In the course of the discussion on this point, their Lordships referred to the meaning of the term “new” in the Shorter Oxford Dictionary :
“New” means, “not existing before; now made, or brought into existence for the first time”.
8. Applying this meaning, their Lordships construed that the expression, “new” in contradistinction and antithesis to the word “used”, and observed that this question should be decided with reference to the facts of each case. It was further held that while dealing with a case which involves this question the court must find out whether the machinery after being reconditioned, was entirely different from the old machinery and whether the latest improvements incorporated into them, made the machines substantially new.
(ii) Commissioner of Income-tax, Madras v. Fenner Cockill Ltd. .
9. Their Lordships agreed with the finding of the Appellate Assistant Commissioner and the Tribunal, on the facts of that case, that the machinery in question was reconditioned and it was as new as a reconditioned machinery could be, and allowed the claim for relief under the Income-tax Act.
10. In Commissioner of Income-tax, Punjab v. Hindustan Milk Food Manufacturers Ltd. , their Lordships were again dealing with a claim for development rebate under the provisions of the Income-tax Act, 1922, and held that, “under certain circumstances, reconditioned machinery can be treated as new machinery under section 10(2)(vib) of the Act”.
11. The petitioner is recognised by the Department of Industries and Commerce as a new unit manufacturing “continuous stationery” for use in computers. A certificate along with the additional information was furnished to the assessing officer in support of the claim for concessional rate of levy of sales tax on the ground that the machinery imported was new machinery.
12. Thereupon the petitioner was asked by the second respondent to produce a certificate from the Director of Industries and Commerce that no part of the plant and machinery installed in their unit, was an old and second-hand machinery. Accordingly the petitioner produced a certificate issued by the Joint Director (SSI) (annexure F), that the machinery installed by the petitioner was a reconditioned WUN UP MARK III printing machinery along with the accessories, was imported from England under an import licence issued by the Government of India. That certificate also made a mention that the Karnataka State Financial Corporation had sanctioned the loan for the import and purchase of the machine.
13. But what followed was an endorsement issued by the second respondent (annexure G) that the petitioner was not entitled to the benefit of the Government order since accordingly to the assessing officer’s view, the machinery installed in its unit was a second-hand machinery.
14. No doubt under the Government notification referred to by the second respondent an assessee under the Karnataka Sales Tax Act is not entitled to the concessional levy if the investment is made on a second-hand machinery. But the question that was required to be decided by the assessing officer before rejecting the claim, was whether the reconditioned machinery which was imported by the petitioner and installed on its industrial unit, was an old or second-hand machinery ?
15. It is seen from the import licence that the total value of machinery imported was Rs. 9,09,000 in terms of Indian currency and $ 52,176 in terms of pounds sterling and customs duty of Rs. 3,04,813.95 was paid as per bill of entry. All the documents produced before me indicate that the machinery was “a reconditioned machinery”. The order rejecting the claim is therefore set aside and I direct the claim to be reconsidered in the light of this order and taking into consideration the additional material that the petitioner may produce before the authority to establish its claim for a concessional rate.
16. The writ petition is accordingly allowed for the reasons stated above.
17. The petitioner is directed to appear before the second respondent, the Commercial Tax Officer, X Circle, Bangalore on 6th June, 1988 to receive further instructions.
18. Writ petition allowed.