After the matter was argued at some length the basic issue for consideration which survives is as to whether in the facts of the case the plant and machinery which was sold out earlier by the assessee and subsequently taken on lease for running of the same sugar factory involved separation of the machinery from the earth to which it was attached and therefore covered within the definition of goods as per Section 2-(d) of the U.P. Trade Tax, 1948 or not.
This Court on examination of the order of the Tribunal finds that the Tribunal has proceeded on a presumption totally irrelevant for considering as to whether in the facts of the case the sale of the plant and machinery without the transfer of the land would amount to sale of goods within the definition of goods as contained under section 2-d of the Act or not.
Section 2(d) of the Act reads as follows:
'Goods' means every kind or class of movable property and includes all materials, commodities and articles involved in the execution of a works contract, and growing crops, grass, trees and things attached to, or fastened to anything permanently attached to the earth which, under the contract of sale, are agreed to be severed, but does not include actionable claims, stocks, shares, securities or postal stationery sold by the Postal Department.
The Tribunal has proceeded to hold that merely because the plant and machinery was attached to the earth it ceased be a 'good' covered under the U.P. Trade Tax Act.
In the opinion of the Court, there has been complete misreading of Section 2-(d) of the Act wherein it has been explained that plant and machinery permanently attached to the earth shall be treated as 'goods' provided under the contract of sale, it is agreed to severe the same from the earth. Meaning thereby that between the parties there is an agreement to severe the machinery from the earth. In such a circumstance, the attached machinery would fall within the definition of 'goods' as contained in Section 2-(d) of the Act completely ignored.
The severance must flow from the agreement between the parties and in a given case can also be notional. All these aspects of the matter have been ignored by the Tribunal.
The impugned order of Tribunal is hereby set aside. The second appeal is restored to its original number. Tribunal shall re-examine the issue with reference to the agreement between the parties in the light of what has been recorded above.
The Tribunal shall decide the second appeals and pass fresh orders preferably within three months from the date a certified copy is filed before it.
The trade tax revision is disposed of.
Order Date :- 13.10.2011 Puspendra