Mounting auto rickshaw body on chassis, amounts to new product – Supreme Court

Mounting auto rickshaw body on chassis, amounts to new product coming into existence liable to purchase tax under U.P. Sales Tax Act.

In a recent judgment, the Hon’ble Supreme Court held that upon mounting a fabricated auto rickshaw body on a three wheeler chassis, a new product comes into being which is liable to purchase tax under U.P. Sales Tax Act 1948.

ABCAUS Case Law Citation:
4798 (2025) (10) abcaus.in SC

In the instant case, the dispute was as to whether mounting a fabricated body on a three wheeler chassis amounts to manufacture and creates a new commercial commodity, thereby attracting purchase tax liability under Section 3-AAAA of the U. P. Sales Trade Tax Act, 1948 (the Act).

The respondent assessee had purchased chassis against Form-A, got the bodies fabricated and mounted them on the chassis and sold the finished products as tempos.

This triggered the Assessing Officer to levy purchase tax for creating and treating it as a new commodity. The assessee challenged the matter before the Deputy Commissioner (Appeals) who set aside the same and remanded the matter back to the Assessing Officer for re-examination of the claim of the assessee in light of the proper verification and to pass a fresh assessment order consistent with law.

The respondent Assessee carried the matter in Second Appeal before the Tribunal which held in favour of the assessee and was affirmed by the Allahabad High Court. Not satisfied, the Revenue filed a Civil Appeal before the Hon’ble Supreme Court challenging the order of the High Court.

The Hon’ble Supreme Court observed that the issue involved in the appeal was no more res integra in view of the law laid down by the Apex Court whereunder it had been held that mounting auto rickshaw body on the chassis, a new product comes into being. It has also been held that the sale of chassis with mounted body would be selling a body which is in a different condition from the chassis or the body, thus same would be liable to purchase tax under Section 3, 4A(1)(a) of the Act.

The Hon’ble Supreme Court opiend that in the light of the aforesaid propositions of law, the order of the Tribunal and High Court would not stand to test

Accordingly, the Hon’ble Supreme Court set aside the order of the High Court and the matter was remitted back to the Assessing Officer for passing further orders in this regard keeping in mind the observations made as well as the law laid down by the Hon’ble Supreme Court.

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