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2022 (7) TMI 6 - HC - VAT and Sales TaxClassification of goods - Equipment - whether equipment is same as machinery and would be covered under the Finance Department Notification No.44987-CTA-105/89-F dated 22nd December 1989 w.e.f. 1st January 1990 and Notification No.1691/CTA-37/01 (PT)-F dated 9th January 2002 w.e.f. 1st March, 2002? - disallowance of claim of deduction under section 5(2)(A)(a)(ii) of the Orissa Sales Tax Act for sale of mechanical equipments i.e. idler to HEC against Form No.XXXIV - HELD THAT:- As per the notification dated 9th January 2002 issued by the Finance Department, the entry at serial No.175 states “machinery, machinery parts and spare parts and component parts and accessories thereof and tools” would be exigible to tax at the first point of sale - Admittedly, the Petitioner is the first seller of the ‘idlers’ to HEC. The entry in question refers not only to machineries but also component parts thereof and accessories. It also includes ‘tools’. The decision of the Allahabad High Court in COMMISSIONER OF SALES TAX, UP., LUCKNOW VERSUS OM IRON FOUNDRY, AGRA [1973 (11) TMI 69 - ALLAHABAD HIGH COURT] was dealing with the question whether pulleys were not parts of the machinery. The High Court observed that the goods in question were “ordinary pulleys connecting shafts with electrical motors or oil engines for transmission of power”. In the present case, the Petitioner does not appear to have placed on record materials to show what the function of the ‘idler’ is. The STO treated it as “machinery spare” whereas the ACST took the view that components parts and accessories thereof constituted a separate part of the entry and therefore 12% rate in respect of unspecified taxability came into play when it concerned component parts and accessories. While it is true that idler by itself may not be a complete machine, what is exigible to tax is not only the complete machinery but also spare parts and accessories of machines. The Court is not persuaded that the idler sold by the Petitioner does not form part of machinery or is not an accessory. The distinction sought to be drawn by Mr. Sahoo between ‘equipment’ and ‘machinery’ is not convincing in the context in which the question arises here. If the idler was a component part of machinery or even an accessory or a tool, it would still be exigible to tax at the first point of sale. Questions decided in favour of the Department and against the Assessee thereby upholding the view expressed by the STO, ACST and the Tribunal - revision petition dismissed.
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