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TMI Blog2015 (1) TMI 62X X X X Extracts X X X X X X X X Extracts X X X X ..... h work may result in a new product or may not result in a new product at all and therefore, the said finding recorded by the appellate authority is unsustainable and is contrary to the well settled legal principles over a period. If two views are possible and if the appellate authority or the assessing authority has adopted a particular view, it is not open to the Revisional Authority to substitute his reasoning and interfere with the orders - when it cannot be said that it is an electronic goods and the test prescribed by the appellate authority for coming to such conclusion is ex facie illegal, it cannot be said that two views are possible - the finding recorded by the assessing authority is erroneous - It is not the case of two views being possible - the Revisional Authority was justified in interfering with the order of the appellate authority and restoring the order of the assessing authority. Whether a revisional authority in exercise of power u/s 15(2) of the Act could interfere with the order of penalty, on the ground that the maximum penalty as prescribed under law is imposed – Held that:- The imposition of penalty is not automatic - this is not a case where the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urrency counting machines and bundling machines comes under the entry machinery (all kinds) and liable for tax @ 2% as per Notification No. FD 11-CET/2002, dated 30-3-2002, though the assessee had caused the scheduled goods into the local area. Therefore, he proposed to conclude the assessment to the best of his judgment under Section 5(4) of the KTEG Act. 3. A proposition notice was issued on 15-10-2005 which was served on the assessee on 27-10-2005. The assessee filed his objections contending that the currency counting machines and bundling machines are not liable for entry tax under the aforesaid Notification. Therefore, he sought for dropping of the proceedings. The assessing authority on consideration of his objections did not accept the stand of the assessee. Therefore, he proceeded to hold that the assessee has not produced any proof to show that the currency counting machines and bundling machines are electronic goods. Therefore, he proposed to levy of tax @ 2%. Accordingly, a sum of ₹ 45,019/- was levied as entry tax. Though he had proposed to levy penalty of ₹ 40,000/-, he levied the penalty of ₹ 10,000/- under Section 5(5) of the Act. 4. Aggrieve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing upon the assessee to file his written objections within ten days from the receipt of the notice and also giving him an opportunity of being heard. After service of notice, the assessee entered appearance and filed written objections. After hearing the assessee and considering the objections filed by him, the Revisional Authority held that, the judgment relied upon by the appellate authority has no application to the facts of this case as the dispute involved therein is, whether the item involved was an electronic goods or a Computer? Whereas, in this case, the dispute is, whether the item is a machinery or an electronic goods . He held, currency counting machine is not an electronic goods. It is a machine which falls under Item No. 7 of the Schedule and therefore, he passed an order setting aside the order of the appellate authority, restoring the assessment order passed by the assessing authority. He also set aside the reduction of penalty imposed by the assessing authority in so far as levy of penalty under Section 5(5) of the Act is concerned. Aggrieved by the said order, the assessee is before this Court. 6. The learned counsel appearing for the appellant assailing th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ity was of the view that in commercial circles and in common parlance, a machinery is understood to be a mechanical contrivance which produces output when an input is fed into it either manually or any other means. But in the case of currency counting machine and bundling machine, no input could be induced so as to obtain an output instead it only displays the number of currencies counted and bundled with the operation of the said machines. When the currencies are placed in the box provided in these machines and when the button provided therein is pressed, the flow of electrons takes place within the machine. When the electrons are flowed, then automatically the machine display the result electronically on the screen provided therein specifying the number of currencies counted and number of currencies bundled. The currency counting machines and bundling machines are classifiable as electronic goods in the light of the judgment of the Hon ble High Court of Karnataka referred to supra and it is not a scheduled goods under the Act. As such, no tax is payable. Therefore, in the view of the appellate authority, to call particular goods as a machine , there should be a manufacturing act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e a specific article or manufactured goods . If this is the essential feature of a machinery which distinguishes it from other things, the mode or the manner in which power is fed into it or force is applied need not and should not make any difference. It is conceded, for example, that a machinery would be a machinery whether it is fed by electrical power or other form of power applied by steam or generated by burning combustible oils. If the mode or the manner in which the power is applied makes no difference in these specified cases, it should make no difference either if the source of power is either human or animal . 13. Following the aforesaid judgment, a Division Bench of this Court in the case of K.B. Dani v. State of Karnataka reported in 1979 Sales Tax Cases Vol. 44 page 276 held as under : The above meanings indicate that Machine means a mechanical device consisting of a planned and an organized arrangement of various parts, each part having definite functions and, as a results of combined functioning, does some work, which may be impossible or difficult for human physical power to perform or, even if it can be done, it cannot be done continuously for a long ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t in the sense as ordinarily understood and would include charcoal in the term coal . It is only when the question of the kind or variety of coal would arise that a distinction would be made between coal and charcoal; otherwise, both of them would in ordinary parlance as also in their commercial sense be spoken as coal . 16. The said legal position has been reiterated by this Court in the aforesaid Diebold Systems Private Limited case as under :- It is also useful to refer to the meaning of the words machinery and machine given in Webster s Third New International Dictionary, to the extent it is relevant, which reads : Machine, engine, apparatus, appliance signify, in common, a device, often complex, for doing work beyond human hand or mind; machine applies to a construction or organization whose parts are so connected and interrelated that it can be set in motion and perform work as a unit (those most practical machines of our modern life, the dynamo and the telephone - Havelock Ellis) (calculators, billers, duplicators, and other business machines). Machinery : machines as a functioning unit. 17. So, in this background, from the material on record, it is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rded by the assessing authority is erroneous. It is not the case of two views being possible. Therefore, the Revisional Authority was justified in interfering with the order of the appellate authority and restoring the order of the assessing authority. POINT NO. 2 : 21. The assessing authority after noticing that the assessee has not reported to tax, the said turnover in respect of import of currency counting machines has levied tax @ 2%. Therefore, he was of the view though he has proposed a penalty of ₹ 40,000/- after hearing the assessee, he came to the conclusion that it appears to be more in the present case. He was of the view that it is not a case of evasion of payment of tax. It is a case where the assessee was contending it was not liable to entry tax. In the facts of the case, he was of the view that it is a case for taking lenient view in the case of penalty was made out. Therefore, instead of levying tax of ₹ 40,000/-, at the time of levying it, he only levied ₹ 10,000/- under Section 5(5) of the KTEG Act. The Revisional Authority has set aside the order of the appellate authority and remanded the matter to the assessing authority for redoing. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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