PREMIER DIESEL PVT. LTD. Vs. COMMISSIONER OF SALES TAX

JUDGEMENT

(1.) IN this application under Section 8(1) of the West Bengal Taxation Tribunal Act, 1987 the issue called for our consideration is whether the respondent -Commissioner of Sales Tax, West Bengal, in his order under Section 102 of the West Bengal Value Added Tax Act, 2003 passed in the Case Nos. 24X/PRO/VAT/2006/70,24X/ PRO/VAT/2006/71 and 24X/PRO/VAT/2006/78 committed error in determining that (a) diesel engine, diesel engine generator set and spares as well as accessories thereof would not come under item Nos. (xxviii) and (xxix) of the serial No. 54B of Schedule C, Part I of the West Bengal Value Added Tax Act, 2003, (b) with effect from April 1, 2007 with the introduction of the serial No. 54C in that Schedule, the sales of diesel engine and diesel engine generator set would not fall under item No. (xxviii) of serial No. 54B and unlike others the spares of specified machineries are only included in serial No. 54C. The petitioner prays for setting aside the impugned order under Section 102 of the Act, and order declaring that the diesel engines and spare parts, accessories and components thereof are respectively covered by item No. (xxviii) and item No. (xxix) of serial No. 54B of Part I of Schedule C to the West Bengal Value Added Tax Act, 2003.

(2.) THIS issue had been disposed of by the Bench of this Tribunal consisted of the honourable Chairman and the honourable Technical Member in Kasaban Services v. C. S. T. Case No. 1 R. N. 167, 168 and 180 of 2006 decided on November 8, 2006 -West Bengal Taxation Tribunal) with observation, inter alia, "relying on this decision Reported as Commissioner of Income -tax v. Sri Krishna Bottlers Private Limited : [1989] 175 ITR 154 (AP) and the principle as detailed hereinbefore, one has to take a view as to whether diesel engines and generator sets should fall within the purview of the expression 'plant and machinery' as used in serial No. 54B of Part I of Schedule C of the VAT Act, 2003. It would not be fair to take a summary view that these items cannot be considered as 'plant and machinery' for the purpose of levying taxes at four per cent as per provision of the West Bengal Value Added Tax Act, 2003. If these items are treated as 'plant and machinery', spare parts, accessories, components will also be automatically covered by item No. (xxix) of serial No. 54B of Part I of Schedule C of the West Bengal Value Added Tax Act, 2003. From the discussion as made hereinbefore, it is seen that diesel engine has been held to be a machinery in various judicial fora. However, since functional test is considered to be the decisive test, the items in question may be treated as 'plant and machinery7 at somebody's hand whereas the situation may be otherwise in other cases. To be very precise, the nature as to how these items are put to use should be the guiding principle in deciding the issue". The Commissioner took down the points as follows from the aforesaid judgment of this Tribunal for his guidance:

(3.) IN item No. 54B of the Schedule C, Part I the same kind of machines are mentioned with residuary entry "all other machinery not specified" under the heading "plant and machinery, that is to say". The words, "that is to say" means as "for example". So, it can be argued that the list is illustrative and not restrictive. Other goods having general likeness should come under this heading. But this proposition is disturbed by the residuary item No. (xxviii) which provides, "all other machinery not specified in items Nos. (i) to (xxvii) and item No. (xxix) providing spare parts, accessories and components of the plant and machinery specified in items Nos. (i) to (xxviii) which were omitted by amendment with effect from April 1, 2007. Had the goods specified in items Nos. (i) to (xxvii) of serial No. 54B been illustrative, the Legislature would not have introduced item No. (xxviii). Entry No. (xxviii) negates illustrativeness of items Nos. (i) to (xxvii). It indicates legislative intention to restrict the meaning of "plant and machinery" under serial No. 54B within the items specified thereunder. Under this serial No. all the specified goods are machines used in production activity, construction work, cooling towers and earth moving activity. Most of the machineries are used in production and some are used for other purpose. But all are used in commercial activities. So items Nos. (xxviii) and (xxix) should have connection with commercial activities. We have to examine whether diesel engine and diesel generator set should fall under item No. (xxviii) of serial No. 54B, i.e., whether these are machineries.