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STATE OF GUJARAT Versus YANTRAMAN AUTOMAC PVT LTD

2016 (7) TMI 588 - GUJARAT HIGH COURT

Classification - Levy of vat on goods used in execution of works contract - manufacturer of construction equipment - The assessee also re-sells machines used in execution of works contract after purchasing the same in case of inter-state sale. - GVAT - Central question is whether such goods would fall under entry 35 pertaining to “machinery including parts and accessories thereof used in the execution of works contract” and invited tax at the rate of 4% and additional rate of 1% or the goods wou .....

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equipment satisfies description of being a machinery used in execution of works contract, the fact that it also happens to be a motor vehicle, would not change this fundamental feature which would be sufficient to bring the equipment within the purview of entry 35. In absence of any specific entry pertaining to motor vehicle, merely because a certain equipment satisfies description of being a motor vehicle, in addition to being a machinery used in execution of works contract, cannot carry it to .....

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s appeal is filed by the State Government challenging the judgment of Value Added Tax Tribunal( the Tribunal for short). While admitting the appeal, following substantial questions of law were framed: (1) Whether in the facts and circumstances of the case, the Tribunal has erred in believing that all the equipments, goods, products, vehicle machinery used in execution of works contract resold by the opponent herein, fall under entry 35 of the notification issued under section 5[2] of the VAT Act .....

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l the equipments, products resold by the opponent herein are Motor Vehicle Machineries/ Equipments and in absence of any specific entry of Motor Vehicle Machinery/ Equipments entry 87 [Residuary Entry] of Schedule II of the said Act would be applicable? 2. The controversy arises in the following background. The respondent assessee, is a company registered under the Companies Act and is a distributor of JCB India Ltd. which is the manufacturer of construction equipments. The assessee also re-sell .....

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ing to machinery including parts and accessories thereof used in the execution of works contract and invited tax at the rate of 4% and additional rate of 1% or the goods would fall under residuary entry inviting tax at higher rate. 3. The assessee, in view of such possible dispute applied to the competent authority under section 80 of the Act for determination of disputed questions. The assessee's specific query was with respect to the following equipments: Sr No Invoice No. Date Item Name 1 .....

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uled against the assessee. He neither stated that the equipments in question were not machinery nor held that the same was not used in execution of a works contract. He merely relied on the provisions of Motor Vehicles Act and the decision of the Supreme Court in the case of Bose Abraham vs. State of Kerala and another reported in 121 STC 614 to come to the conclusion that these equipments are in the nature of motor vehicles. He observed that such vehicles are required to be registered compulsor .....

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epted the assessee's contention and came to the conclusion that the equipments were in the nature of machines used for works contract and therefore, covered under entry 35 of the schedule and not residuary clause. The Tribunal referred to various judgments cited by the Government to find that the same were primarily concerned with Motor Vehicles Act. In the opinion of the Tribunal, even if the machinery was otherwise categorised as motor vehicle under Motor Vehicles Act, it could not be excl .....

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hand, learned counsel Shri Uchit Sheth for the assessee opposed the appeal contending that (i) entry 35 of the schedule is specific and includes machinery used in execution of works contract. The goods in question satisfied said description. Merely because they also happened to be motor vehicles, cannot be excluded from the purview of the said entry 35 (ii) the Government amended the said entry under notification dated 15.2.2010 by adding following words: but excluding the machinery in the form .....

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Tax, reported in 27 S.T.C. 203 (3) Gem Granites vs. Commissioner of Income-Tax, reported in 271 ITR 322. 9. Having thus heard learned counsel for the parties and having perused documents on record, we may notice that term sale has been defined under section 2(23) of the VAT Act which provides that sale means the sale of goods made within the State for cash or deferred payment or other valuable consideration and includes inter alia in clause (b) transfer of property in goods whether as goods or .....

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er they would be machines used in execution of a works contract. Here also, it does not appear to be the case of the Government that the equipments are not in the nature of machines. Whatever doubt one may have with respect to this aspect of the matter would disappear when one peruses the judgment of the Tribunal challenged in the appeal. In such judgment, the Tribunal bestowed detailed consideration to the nature of equipments and its different uses. The appellant had produced extensive materia .....

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t was observed that in order to be a machinery, four factors must exist, namely; a complete and integrated collection of several objects or articles; these objects or articles should interact in unison upon or with each other; this interaction is promoted by application of force which may be manual or motive power; and the movement should be with a view to do some specific activity or to obtain specific or definite result. These observations were based on the Privy Council judgment of Cossipore .....

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ny particular use out of the diversity of uses to which a tractor is capable of being put. 10. Bearing in mind said principles and considering the nature of construction equipments, we have no hesitation in upholding the Tribunal's view that these were machineries used for the purpose of works contract. 11. The main question therefore, arises is whether these machines being motor vehicles, would be covered by residuary entry. The fact that these vehicles are motor vehicles and were registere .....

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cle, would be wholly insignificant. In other words, if an equipment satisfies description of being a machinery used in execution of works contract, the fact that it also happens to be a motor vehicle, would not change this fundamental feature which would be sufficient to bring the equipment within the purview of entry 35. In absence of any specific entry pertaining to motor vehicle, merely because a certain equipment satisfies description of being a motor vehicle, in addition to being a machiner .....

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works contract. Unless and until this amendment is treated either as declaratory or clarificatory, its significance would be that till these words were added in the statute, any motor vehicle which otherwise fulfilled description of being machinery used in execution of works contract, would be covered under entry 35. This amendment in plain terms is neither declaratory nor clarificatory; nor is given retrospective effect either specifically or by necessary implication. This would be one more gro .....

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ecific class from the generic class of minerals and ores . This means that were it not for the exception, the specific processed minerals and ores would have been covered by the words minerals and ores , it also indicates that only the minerals and ores subjected to the process of cutting and polishing would be entitled to the benefit of Section 80HHC meaning thereby that all other species of processed minerals and ores would continue to be covered by the general exclusion applicable to the gene .....

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