Page 227 - ELT_1st September 2020_Vol 373_Part 5

2020 ] STATE OF KARNATAKA v. DREDGING CORPORATION OF INDIA LTD. 665

The expression ‘dredge’ has been defined in The Law Lexicon reprint
Edition 1987 to the following effect :
“Dredge. As a noun in its original meaning, a net or drag for taking
oysters; it is now called a machine for cleansing canals and rivers; but
sometimes applied to a dredger. As a verb, to gather or take with a dredge
to remove sand, mud and filth from the beds of rivers, harbours and canals
with a dredging machine.”
In the light of above said definition in the common parlance and the def-
inition of ‘ship’ as defined under the Merchant Shipping Act, 1958 are read to-
gether, contention of Revenue that dredgers cannot be construed as “ships” can-
not be accepted. Even other taxing authorities having considered that ‘dredgers’
as equivalent to ships, boats and floating constructions, and as such, contention
of Sri Vikram Huilgol, Learned High Court Government Pleader cannot be ac-
cepted and the judgment of Atul Glass Industries (Pvt.) Ltd. v. Collector of Central
Excise reported in (1986) 3 SCC 480 = 1986 (25) E.L.T. 473 (S.C.) pressed into ser-
vice would lean in favour of assessee rather than Revenue, inasmuch as, even
applying the test of commonality to determine whether an article for subjecting it
to tax, the only irresistible conclusion which can be drawn is that the ‘dredger’ is
also a sea going vessel or a floating craft which is self propelled used in the sea
for the purpose of de-silting, removal of mud etc., as already noticed here-
inabove.
In fact, under the Central Excise Act similar issue came up for considera-
tion before the Appellate Tribunal in the matter of Collector of Customs, Bombay v.
Dredging Corporation of India Ltd., whereunder the Tribunal had held that “dredg-
ers” are to be considered as “ocean going vessels” against which order a Civil
Appeal No. 5/87 [1991 (55) E.L.T. A33 (S.C.)] had been filed by the Collector of
Customs, Bombay and the said appeal came to be withdrawn by order dated 7-5-
1991. In other words, as noted hereinabove and at the cost of repetition, we will
have to hold that statutory authorities under different enactments have consist-
ently held that ‘dredgers’ are to be considered as “ocean going vessels”. In fact,
the dredger which has been registered as a ship under the Merchant Shipping
Act, 1958 has also been recognized by the Income Tax Department as a ship.
8. In the light of the aforestated discussion, we are of the considered
view that questions of law, raised hereinabove, has to be answered in favour of
the respondent-assessee and against the petitioner-Revenue by arriving at a con-
clusion that ‘dredgers’ are ‘ocean going vessels i.e., ship’ and it cannot be termed,
considered or held as “machinery” referable to entry 52 of 1st schedule of KTEG
Act.
9. Hence, the following :
ORDER
(i) Revision petition is dismissed by answering the substantial question
of law against the petitioner-Revenue and in favour of the respond-
ent-assessee.
(ii) The order dated 30-6-2010 passed by the Karnataka Appellate Tri-
bunal at Bengaluru in STA No. 379/2009 is affirmed.
(iii) No order as to costs.
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