# M/S Parishudh Machines Pvt. Ltd., Ghaziabad Revisionist v. Commissioner of Commercial Taxes, U.P., Lucknow

- **Citation:** (2019) 4 ILRA 817
- **Court:** High Court of Judicature at Allahabad
- **Decided:** 2019-10-23
- **Case number:** Commercial Tax Revision No. 169 of 2018
- **Bench:** Saumitra Dayal Singh
- **Source:** https://unisonlegal.in/judgment/allahabad-high-court/m-s-parishudh-machines-pvt-ltd-ghaziabad-revisionist-v-commissioner-of-44953
- **Pages:** 5

## Headnote

A. Tax Law - Uttar Pradesh Value Added
Tax, 2008: Entry 26 of Schedule -II Part
A; Sections 2(f), 4(1)(a) - Resort has to
be had to the residuary heading only
when by a liberal construction the
specific heading cannot cover the goods
in question. (Para 12)

If „crankshaft‟ and „camshaft‟ manufactured by the
assessee were not machinery, then in absence of
any other or alternative claim, the Tribunal could
treat the goods to be unclassified under Schedule V
to the Act. But if they were machinery, they could
not have been treated as unclassified by relying on
Section 2(f) of the Act, which has no bearing to
classification of any goods for taxation purpose.
(Para 13)

The words „machinery‟ and phrase „capital
goods‟ are different and may overlap or
remain mutually exclusive depending upon the
facts of each case, in the context of the
particular fiscal statute wherein they may have
been used. (Para 15)

Any machinery that may be put to use in
manufacture of goods may be treated as
capital goods in the context of any particular
legislation, especially fiscal statutes. Certain
other goods may continue to be machinery,
though not capital goods. Treatment of any
goods as capital or non-capital goods, would
remain extraneous so far as the taxability of
those goods is concerned. (Para 16)

Matter remitted. (E-4)

Precedent followed:

## Text

4 All. M/s Parishudh Machines Pvt. Ltd., Ghaziabad Vs. Commissioner of Commercial Taxes, U.P., Lucknow 817
from the date of production of certified
copy of this order.

42. With the aforesaid observations,
the present revision stands disposed of.
----------

(2019)12 ILR A817

REVISIONAL JURISDICTION
CIVIL SIDE
DATED: ALLAHABAD 23.10.2019

BEFORE
THE HON'BLE SAUMITRA DAYAL SINGH, J.

Commercial Tax Revision No. 169 of 2018

M/S
Parishudh
Machines
Pvt.
Ltd.,
Ghaziabad ...Revisionist
Versus
Commissioner of Commercial Taxes, U.P.,
Lucknow ...Opposite Party

Counsel for the Revisionist:
Sri Nishant Mishra, Sri Rahul Agarwal

Counsel for the Opposite Party:
C.S.C.

A. Tax Law - Uttar Pradesh Value Added
Tax, 2008: Entry 26 of Schedule -II Part
A; Sections 2(f), 4(1)(a) - Resort has to
be had to the residuary heading only
when by a liberal construction the
specific heading cannot cover the goods
in question. (Para 12)

If „crankshaft‟ and „camshaft‟ manufactured by the
assessee were not machinery, then in absence of
any other or alternative claim, the Tribunal could
treat the goods to be unclassified under Schedule V
to the Act. But if they were machinery, they could
not have been treated as unclassified by relying on
Section 2(f) of the Act, which has no bearing to
classification of any goods for taxation purpose.
(Para 13)

The words „machinery‟ and phrase „capital
goods‟ are different and may overlap or
remain mutually exclusive depending upon the
facts of each case, in the context of the
particular fiscal statute wherein they may have
been used. (Para 15)

Any machinery that may be put to use in
manufacture of goods may be treated as
capital goods in the context of any particular
legislation, especially fiscal statutes. Certain
other goods may continue to be machinery,
though not capital goods. Treatment of any
goods as capital or non-capital goods, would
remain extraneous so far as the taxability of
those goods is concerned. (Para 16)

Matter remitted. (E-4)

Precedent followed:
1. State of Maharashtra Vs. Bradma of India
Ltd., (2005) 2 SCC 669 (Para 12)

Present revision is against order dated
07.03.2018, passed by Commercial Tax
Tribunal, Ghaziabad, U.P. for the A.Y.
2008-09.

(Delivered by Hon'ble Saumitra Dayal
Singh,J.)

1. Present revision has been filed by
the assessee against the order of the
Commercial Tax Tribunal Ghaziabad
dated 7.3.2018, passed in second appeal
no. 518 of 2013, for the A.Y. 2008-09
(U.P.). By that order, the Tribunal has
dismissed the appeal filed by the assessee
against the order of the first appeal
authority dated 12.7.2013. The first
appeal authority had held 'crankshaft' and
'camshaft' used in the compressors in
refrigerators are not machinery. However,
with respect to rejection of books of
accounts and best judgement assessment,
the matter had been remitted to the
assessing authority. The proceedings, thus
remanded, have given rise to two separate
revisions being Sales/Trade Tax Revision
Nos. 298 of 2018 for A.Y. 2008-09 (U.P.)
818 INDIAN LAW REPORTS ALLAHABAD SERIES
and 299 of 2018 for A.Y. 2008-09
(Central). Those revisions would be dealt
with separately.

2. Heard Sri Rahul Agrawal, learned
counsel for the applicant-assessee and Sri
B.K. Pandey, learned Standing Counsel
for the opposite party-revenue.

3. The present revision has been
pressed on the following question of law:

"A. Whether goods in question
'crankshaft' and 'camshaft' are covered
within the ambit of Entry No. 26 of
Schedule-II Part-A of the U.P. VAT Act,
2008?"

4. During the assessment year in
question, the assessee was engaged in
manufacture of 'crankshaft' and 'camshaft'
used in manufacture of compressors for
refrigerators. It sold the same to a
manufacturer of refrigerators. Treating the
items 'crankshaft' and 'camshaft' to be
component parts of machinery, the
assessee charged those goods @ 4%
under Entry 26 of Schedule-II Part-A of
the Uttar Pradesh Value Added Tax Act,
2008 (hereinafter referred to as the Act).
However, the assessing authority took a
different view and treated the same as
unclassified goods and subjected the same
to tax @ 12.5%. Upon first appeal, the
first appeal authority upheld this view of
the assessing authority, however, it
remitted the matter on quantification
issues. Upon further appeal, the Tribunal
has confirmed the order of the assessing
authority.

5. Having heard learned counsel for
the parties and having perused the record,
it appears, the revenue authorities have
taken a view that 'crankshaft' and
'camshaft' cannot be taxed as machinery
or component parts of the machinery on
the reasoning that such 'crankshaft' and
'camshaft' are used in compressors used in
the refrigerators and air-conditioners,
which in turn are consumer goods or
home appliances, and not machinery. To
reach that conclusion, the Tribunal has
reasoned that machineries are only such
items as are used for production and
manufacture of other goods. The Tribunal
has relied on the definition of capital
goods under Section 2(f) of the Act and
observed,it includes machinery used for
production and manufacture of goods. On
such
reasoning,
the
Tribunal
has
dismissed the appeal filed by the assessee.

6. The aforesaid reasoning appears
to be wholly erroneous, inasmuch as, the
Tribunal has completely misdirected itself
in approach and thus, reached wholly
unacceptable conclusions.

7. Entry no. 26 of Schedule-II PartA reads as under:

"26.
Machinery,
equipment,
apparatus,
tools,
moulds,
dies
and
component
spare
parts,
accessories
thereof."

8. Section 2(f) of the Act reads as
under:

(f) "capital goods" means any
plant, machine, machinery, equipment,
apparatus, tool, appliance or electrical
installation used for manufacture or
processing of any goods for sale by the
dealer and includes:-

(i) components, spare parts and
accessories of such plant, machine,
machinery, equipment, apparatus, tool,
appliance or electrical installation;

(ii) moulds and dies;

(iii) storage tank;
4 All. M/s Parishudh Machines Pvt. Ltd., Ghaziabad Vs. Commissioner of Commercial Taxes, U.P., Lucknow 819

(iv)
pollution
control
equipment;

(v) refractory and refractory
materials;

(vi) tubes and pipes and fittings
thereof,

(vii)
lab
equipments,
instruments and accessories,

(viii)
machinery,
loader,
equipment for lifting or moving goods
within factory premises, or

(ix) generator and boiler used in
manufacture of goods for sale by him but
for the purpose of section 13, does not
include:-

(i) air-conditioning units or air
conditioners, refrigerators, air coolers,
fans, and air circulators if not connected
with manufacturing process;

(ii) an automobile including
commercial vehicles, and two or three
wheelers, and parts, components and
accessories for repair and maintenance
thereof;

(iii)
goods
purchased
and
accounted for in business but utilised for
the purpose of providing facility to the
employees.

(iv)
vehicle
used
for
transporting goods or passengers or both;

(v) capital goods used in the
execution of a works contract; and

[(vi) ................]Omitted"

9. Section 4(1)(a) of the Act reads as
under:

"4. Levy of tax on turnover of
sale.-

(1) The tax, payable on sale of
goods under this Act, shall be levied and
paid on the taxable turnover of sale of-

(a) goods named or described in
column 2 of the Schedule II, at every point
of sale and at the rate of four percent."

10. Thus, in the first place, Section
4(1)(a) read with Schedule-II of the Act
provides for rate of tax on goods that have
been described in column-2 Schedule-II.
Thus, everything else apart, the rate of tax
on goods falling under Schedule-II would
remain 4%. There exist other Schedules to
the Act and parts thereof providing
different categorization of goods both on
the basis of rates and also use. However,
no classification or categorization of any
goods by virtue of those being 'capital
goods'.

11. On the other hand, Section 2(f)
of the Act is not a provision affecting the
rate of tax. There is no taxing entry of
'capital goods' existing or relied upon by
the revenue. Inasmuch as, such an entry
had not been provided for by the
legislature, the line of reasoning adopted
by the Tribunal, is wholly extraneous and
therefore irrelevant.

12. What was required to be seen
first was - whether 'crankshaft' and
'camshaft'
of
compressors
used
in
refrigerators
and
air-conditioners
manufactured and sold by the assessee
were items as would fall within any of the
description of the taxing entry 26 of
Schedule II, Part A of the Act. While
examining that claim the Tribunal could
not have looked into the residuary entry
that in effect is Schedule V of the Act. In
State of Maharashtra v. Bradma of
India Ltd., (2005) 2 SCC 669, the
Supreme Court held:

"7. We are of the opinion that
the High Court was wrong. Both the
Tribunal and the High Court commonly
enunciated the principle that a specific
entry would override a general entry. In
addition we would add, and as has been
820 INDIAN LAW REPORTS ALLAHABAD SERIES
held in CCE v. Wood Craft Products Ltd.,
(1995) 3 SCC 454, at p. 462, resort has to
be had to the residuary heading only
when by a liberal construction the specific
heading cannot cover the goods in
question. The language of Entry 97(b)
clearly shows, by use of the phrase "other
than those specified elsewhere" that it is
not only a residuary entry but also that
electronic systems, instruments, etc. may
be classified under other entries. Entry 90
on the other hand does not contain any
words of limitation. The items mentioned
therein would cover every species thereof
irrespective
of
the
mode
of
their
operation. Cash registering machines are
specifically mentioned. In the absence of
any limitation or qualification as to the
different
kinds
of
cash
registering
machines, there is no reason to read in
any such qualification and limit the entry
to particular kinds of cash registering
machines. It is significant that by
contrast, data processing machines have
expressly excluded computers. Were it not
so excluded, computers would have also
fallen within Entry 90. In fact computers
are separately dealt with in Entry 97(a).
But the exclusion of computers from data
processing machines would indicate that
the items mentioned in Entry 90 are
generic covering all species of such items.
Given the language of the two entries we
fail to understand how the High Court
could have come to the conclusion that
Entry 97(b) was the specific entry and
that Entry 90 was the general entry. Such
an interpretation goes against the express
language of the two entries."

13. Thus, if the answer to the above
were in the negative and it were to be
found that the 'crankshaft' and 'camshaft'
manufactured by the assessee were not
machinery, then, in absence of any other
or alternative claim, the Tribunal could
treat the goods to be unclassified under
Schedule V to the Act. If however, that
answer were in the affirmative, they could
not be treated as unclassified by relying
on Section 2(f) of the Act, which has no
bearing to classification of any goods for
taxation purpose. For the purposes of
interpreting a taxing entry and to
determine the classification of goods,
section 2(f) of the Act and its effect would
remain wholly irrelevant. It may be
clarified, as there is complete absence of
any taxing entry of 'capital goods' under
any of the Schedules, hence there exists
no occasion to examine that issue any
further or to determine whether there
exists a special entry (of capital goods)
and a general entry (of machinery) under
entry no. 26, Schedule II, Part A.

14. No such exercise has been
carried out by the Tribunal. In fact the
Tribunal has got misdirected in forming
its opinion on the reasoning, treating the
goods to be non-capital goods and
therefore not machinery. In that regard the
Tribunal has not examined the true scope
and ambit of entry 26 Schedule II, Part A,
in correct light and it has further erred in
relying on section 2(f) of the Act, which
is not relevant to interpret the taxing
entry, in absence of use of the words
'capital goods', under any of the Schedules
to the Act.

15. Even as a general principle, the
word 'machinery' and the phrase 'capital
goods' are different and may overlap or
remain mutually exclusive depending
upon the facts of the each case, in the
context of the particular fiscal statute
wherein they may have been used. While
the phrase 'capital goods' may take within
its ambit goods and items other than
4 All. M/s Awadh Timber Merchant and Commission Agent Semri Road Vs. Commissioner Trade Tax U.P. Gomti NagarLucknow 821
machinery also, insofar as machinery is
concerned, it may remain both capital
goods as also non-capital goods including
consumer goods as well.

16. Any machinery that may be put to
use in manufacture of goods may be treated as
capital goods in the context of any particular
legislation, especially fiscal statutes. However,
that treatment given to some machineries for
specified purposes would not have any impact
on the identity of certain other goods that may
continue to be machinery, though not capital
goods. Thus, even as to principle, treatment of
any goods as non-capital goods, would remain
extraneous so far as the taxability of those
goods is concerned. That issue would have to
be decided purely on the basis of treatment
given by the legislature under the taxing
provision and entry. In the context of the Act,
the legislature has not classified 'capital goods'
as a class of goods to be taxed as such. Only
"List of Industrial Inputs" have been so
identified and classified under Part C,
Schedule II of the Act.

17. Commonly, even in homes and
non-commercial
or
non-industrial
establishment machines come to be used
on a daily basis. A common example of
such machine is a ceiling fan. In absence
of a special taxing entry to categorize it
otherwise, merely because a ceiling fan
may be used both in an industrial
establishment and also at a residential
establishment would not change its
identity and therefore its taxability as a
machine. It cannot be treated both as an
classified and unclassified goods solely
on the basis of its installation, whether at
an industrial establishment or a home.

18. In view of the above, order
passed by the Tribunal
is
wholly
unsustainable. The same is set aside and
the matter is remitted to the Tribunal to
pass a fresh order in accordance with law,
keeping in mind the observations made
above.

19. Accordingly, the question of law
is left unanswered. The proceedings in
remand
may
be
completed
as
expeditiously as possible, preferably
within a period of six months from the
date of production of a certified copy of
this order.

20. With the aforesaid observations,
the revision stands disposed of.
----------
(2019)12 ILR A821

REVISIONAL JURISDICTION
CIVIL SIDE
DATED: LUCKNOW 05.12.2019

BEFORE
THE HON'BLE PIYUSH AGRAWAL, J.

Trade Tax Revision No. 268 of 2010

M/S
Awadh
Timber
Merchant
and
Commission Agent Semri Road
 ...Revisionist
Versus
Commissioner Trade Tax U.P. Gomti
Nagar Lucknow ...Opposite Party

Counsel for the Revisionist:
N.C. Mishra

Counsel for the Opposite Party:
C.S.C.

A. Tax Law - Uttar Pradesh Trade Tax
Act, 1948: Section 2(e-1); Notification
dated 23.11.1998 - TIF-2-2375/XI-9
(251)/97-UP Act 15/48-order 98 - Only
one set of tax can be levied by the State
in the event the commodity remains the
same.
For
imposition
of
tax, after
processing,
some
new
commercial
commodity must come into existence