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TMI Blog2014 (4) TMI 842X X X X Extracts X X X X X X X X Extracts X X X X ..... have allowed the factory to run - There is no agreement between parties that plants and machinery shall be severed or removed from earth - Even according to definition of 'goods' under Section 2(d) in view of this Court, it cannot be included therein. The term "goods" is defined under Section 2(d) and this is in conformity with definition of "immoveable property" as contained in Section 3(26) of General Clauses Act 1897 - Items, which are fastened to or attached to earth or something attached to earth are not included in the definition of 'goods' unless there is an agreement between the parties that those items etc. would be severed pursuant to contract of sale between the parties, which is not the case here - It is not the case of the Revenue that there was any intention of parties to severe plants and machinery attached to earth - In fact, there was a lease to run entire factory and not to remove or severe plant and machinery attached or fastened to earth, which are installed in the aforesaid factory to make it functional - In view thereof and considering judgment of Tribunal, this Court do not find that plants and machinery in the case in hand can be treated to be "goods" ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such as can be removed from the earth by loosening nut and bolts etc. and therefore, they constitute goods, as defined under Section 2(d) of U.P. Sales Tax Act, 1948 (hereinafter referred to as Act, 1948 ) and transfer of goods with the right to use thereof is taxable under Act, 1948. The first appellate authority dismissed appeal confirming the view taken by Assessing Authority but the Tribunal has reversed the above view taken by authorities below, hence this revision at the instance of Revenue. 4. It is, however, admitted that plants and machinery, in the case in hand, is such which is fixed or attached to earth or to the things embedded or attached to earth. Now the question which has to be considered, whether these items can be held to be goods so as to attract tax liability under Act, 1948. 5. This question has been considered time and again by various courts including Apex court. The term goods is defined under Section 2(d) of Act, 1948 and reads as under: 'Goods' mean every kind or class of movable property and includes all material, commodities and articles involved in the execution of a works contract, and growing crops, grass, trees and things a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , but the concrete beds and bolts prepared for thorn negative any idea of treating the machines when fixed as movable chattels. 9. This decision in Official Liquidator Vs. Sri Krishna Deo (supra) has been affirmed and approved in Duncans Industries Ltd. Vs. State of U.P. and Ors., AIR 2000 SC 355. The Court held : We are inclined to agree with the above finding of the High Court that the plant and machinery in the instant case are immovable properties. The question whether a machinery which is embedded in the earth is movable property or an immovable property, depends upon the facts and circumstances of each case. Primarily, the court will have to take into consideration the intention of the parties when it decided to embed the machinery whether such c was intended to be temporary or permanent. A careful perusal of the agreement of sale and the conveyance deed along with the attendant circumstances and taking into consideration the nature of machineries involved clearly shows that the machineries which have been embedded in the earth to constitute a fertiliser plant in the instant case, are definitely embedded permanently with a view to utilise the same as a fertiliser plan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e or enjoyment, it is necessary to embed it or fix it on earth, though permanently, that is, when it is in use, it may not be regarded as immovable property, but not otherwise. 12. The term permanently fastened or attached to earth has to be read in the context for the reason that nothing can be fastened to earth permanently so that it can never be removed. When machines are attached to earth, not only they are attached for beneficial enjoyment of machines but also for beneficial enjoyment of land which is on lease. A similar question came up before Rajasthan High Court also in C.T.O. Vs. Sadulshahar Krai Vikrai Sahkari Samiti, 2004 (135) STC 90, and learned Single Judge, said in para 31 of the judgment, as under: If a comprehensive reading is done of all the relevant provisions, then what goes to show that the whole factory premises including the plant, machinery, land and building were given on lease. A lease of entire establishment was necessary for beneficial enjoyment of rights under the lease. If from the lease, plant and machinery is excluded, the land could not have been used for any purposes designed to be fulfilled by lease. The machinery and plant embedded to ea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on clause if it is defined in the concerned taxing statute. The Court should not search its meaning elsewhere since legislative intent in respect to meaning of that particular term, in the context of taxing statute, may be different. Here I find that items, which are fastened to or attached to earth or something attached to earth are not included in the definition of 'goods' unless there is an agreement between the parties that those items etc. would be severed pursuant to contract of sale between the parties, which is not the case here. In the present case, it is not the case of the Revenue that there was any intention of parties to severe plants and machinery attached to earth. In fact there was a lease to run entire factory and not to remove or severe plant and machinery attached or fastened to earth, which are installed in the aforesaid factory to make it functional. 17. In view thereof and particularly considering well considered judgment of Tribunal, I do not find that plants and machinery in the case in hand can be treated to be goods within the meaning of Section 2(d) of Act, 1948 so as to attract and taxability. Therefore, all the three questions are answered ..... X X X X Extracts X X X X X X X X Extracts X X X X
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