1. Heard Sri Nishant Mishra, Advocate, assisted by Sri Tanmay Sadh, for the applicant-assessee and Sri B.K. Pandey, learned Standing Counsel for the opposite party-revenue.
2. Present revision has been filed by the assessee against the order of the Trade Tax Tribunal, Allahabad dated 19.11.2005 in Second Appeal No. 291 of 1999 for A.Y. 1994-95. By that order, the Tribunal has dismissed the appeal filed by the assesee and thus confirmed the first appeal order.
3. Present revision has been admitted on the following questions of law:-
"(i) Whether, on the facts and in the circumstances of the case, the levy of tax on lease rent amounting to Rs.55,91,076/- was justified?
(ii) Whether, on the facts and in the circumstances of the case, the levy of tax on sale of Baggase amounting to Rs.73,89,688/- was justified?
(iii) Whether, on the facts and in the circumstances of the case, the levy of tax on sale of boilers in running condition and embedded to earth amounting to Rs.3,50,00,000/- was justified?
(iv) Whether, on the facts and in the circumstances of the case, the levy of tax on the turnover amounting to Rs.22,25,388/- received for execution of works contract U/s 3AAAA of the Act was justified?"
4. First, learned counsel for the applicant has pressed question no.(ii). In that regard, it has been submitted, during the assessment proceedings, the only case that existed and was considered by the assessing officer was, whether the sale of "Baggase" made by the assessee was taxable. The assessee relied on a decision of a learned Single Judge of this Court in the case of M/s. Dhampur Sugar Mills Limited Vs. Commissioner of Sales Tax, 1996 U.P.T.C. 184, to contend that no tax liability exists in view of the purchase tax having been paid on purchase of sugarcane. The first appeal authority culled out a new case and subjected the assessee to tax on sale of "Lugdi" manufactured out of "Baggase". Thus, learned counsel for the assessee would submit that there was no material in existence to reach such conclusion.
5. Opposing the same, learned Standing Counsel would submit that the first appeal authority has considered the issue to reach a conclusion that the assessee had itself disclosed sale of "Lugdi" against Form III-B and realized tax on such sale. Therefore, in his submission, no grievance can be raised by the assessee at this stage.
6. Having considered the arguments advanced by learned counsel for the parties and having perused the record, no interference is warranted in the present revision, inasmuch as from a plain reading of the order passed by the first appeal authority, first, it does appear that the conclusion had been drawn against the assessee upon perusal of the record itself. In any case, once the first appeal authority reached a conclusion that the assessee had disclosed sale of "Lugdi" against Form III-B and had recovered tax on such sale, it was for the assessee to have challenged the correctness of the finding and the approach taken by the first appeal authority before the Tribunal. Perusal of the memo of appeal as annexed with the present revision discloses that only one ground was raised with respect to tax imposed on "Baggase". Perusal of that ground does not bring out any challenge raised either to the approach adopted by the first appeal authority or finding of fact recorded by it that the assessee had sold "Lugdi" against Form III-B and recovered tax therein. Therefore, question of law no.(ii) is answered in the affirmative, i.e. in favour of the revenue and against the assessee.
7. Insofar as the question no.(i) is concerned, the learned counsel for the assessee submits that the assessee had leased out turbo alternators to M/s. Gangeshwar Limited. It received lease rent of Rs.55,91,076/-. The equipment that had been leased out is claimed to be an immovable property that was assembled and permanently attached to the earth at the site provided by M/s. Gangeshwar Limited. Merely because the assessee had a right to claim return those properties after the end of the leased period, it would not render the said immovable goods taxable under the Act. Reliance has been placed on a decision of this Court in the case of M/s. Indian Oil Corporation Limited Vs. The Commissioner of Trade Tax, U.P., Lucknow 2005 NTN (Vol. 28) 60. Reference has also been made on the decision of the Supreme Court in the case of the assessee under the Central Excise Act being Triveni Engineering & Indus. Ltd. Vs. Commissioner of Central Excise 2000 (120) E.L.T. 273 (S.C.).
9. Opposing the same, learned Standing Counsel would submit that the judgement of the Supreme Court would not be applicable to the facts of the present case, as the controversy arising under the Act is to be decided keeping in mind the statutory definition of the word 'goods' given under Section 2(d) of the U.P. Trade Tax Act, 1948 (hereinafter referred to as the 'Act').
10. Having heard learned counsel for the parties and having perused the record, in the first place, the reasoning given by the Tribunal that the turbo alternators could be detached from the earth at the end of the lease period and, therefore, they are goods, is in the teeth of the ratio in Indian Oil Corporation Ltd. Vs. CTT (supra). In that case also, there was a clause in the agreement whereunder, the lessor could detach from earth the storage tanks etc. Referring to the definition of the word 'goods' under Section 2(d) of the Act, this Court had reasoned "the phrase which under the contract of sale are agreed to be severed" refers to lessee or the licensee, as the case may be, to severe the "goods" attached to, or fastened to any thing permanently attached to, the earth. To put it differently if a lessee or licensee is entitled to remove any "good" attached to or fastened to any thing permanently attached to the earth, such things shall be treated as moveable property otherwise not. The above phrase refers to a licensee or a lessee and not to an owner or a licensor.
11. Therefore, the reasoning given by the Tribunal cannot be sustained. However, the issue of taxability would survive to be considered by the Tribunal in terms of the other clauses in the agreement i.e. whether the turbo alternators leased out by the assessee could be severed by the lessee. If such a clause is absent in the agreement, the assessee cannot be subjected to tax as in that case, there would be no movable goods but only immovable property that had been leased out.
12. In the event of any such clause being found present, it would remain open for the assessee to raise other objections as it may be advised, to establish that the turbo alternators would not be taxable. For that matter, the instant issue is being remitted to the Tribunal to pass a fresh order in accordance with law without allowing any party to lead any fresh evidence.
13. Insofar as question no. (iii) is concerned, tax had been imposed on the assessee on sale of boiler equipment by it to M/S Cipla Ltd. (wrongly described as Kotak Mahindra Ltd. in the Tribunal order). It is an admitted case between the parties that the boiler equipment had been installed and thus fixed to the ground inside the factory premises of the assessee. In that condition and state, it was sold to M/S Cipla Ltd. Title being thus transferred, it was thereafter leased out by M/S Cipla Ltd. to the assessee itself. The Tribunal has proceeded on the reasoning that since the equipment was sold not with the land or earth to which it was attached, therefore, only movable goods had been sold.
14. That test applied by the Tribunal is totally erroneous. On the reasoning adopted by this Court in IOCL Vs CCT (supra), it would have to be seen whether, under the sale deed, the purchaser had right to remove the boiler equipment. If such right is found to be existing, the goods may be treated as movable subject to further objections that may arise at the instance of the assessee. However, if that right is found not existing under the sale deed, the goods would remain immovable property, irrespective of the title over the land to which such boiler may be found attached in view of the definition of "goods" u/s. 2(d) of the Act. The matter is thus remitted to the Tribunal to pass a fresh order in accordance with law, as expeditiously as possible, preferably within a period of six months from the date of production of a certified copy of this order.
15. On this issue, the assessee shall be at liberty to produce the sale deed of the boiler equipment to lead additional evidence which opportunity may be availed by filing appropriate application in that regard within a period of one month from today.
16. Insofar as question no.(iv) is concerned, learned counsel for the assessee would submit that during A.Y. 1994-95, Section 3AAAA of the Act was applicable only with respect to commodities taxable at the point of sale to consumer. That position was changed by amendment made to the Act by U.P. Act No.11 of 1997. However, by virtue of Section 1(ii) of the Amending Act read with the Notification No.3110 dated 30.09.1997, the said provision became effective from 01.10.1997 and not retrospectively.
17. Therefore, it has been submitted that insofar as the commodities bricks and 'gitti' is concerned, during the assessment year in question, those commodities were taxable at the point of sale by the manufacturer or the importer and not at the point of sale to consumer. No tax liability could arise under Section 3AAAA of the Act upon purchase of such commodities from an unregistered dealer.
18. It is undisputed that, in the relevant year, the commodities bricks and ballast 'gitti' were taxable at the point of sale by the manufacturer or the importer. Therefore to that extent, the liability could not arise on purchase of bricks and 'gitti'. The question no.(iv) is thus answered accordingly.
19. Accordingly, the present revision stands disposed of.
Order Date :- 22.8.2019 Saif/S. Chaurasia