Plant and machinery classification governs tax rate where industrial use shows ID fans, FD fans and heat exchangers are integral parts.

Goods such as ID fan, FD fan and heat exchanger are treated as plant and machinery, or integral parts of plant and machinery, where their nature and industrial use support that classification. On that basis, they fall under item No. 54B of Schedule C, Part I of the West Bengal Value Added Tax Act, 2003 and are taxable at 4%, not under Schedule CA at 12.5%. Prior classification accepted in the assessee's returns and an earlier appellate order supported the 4% entry, while the contrary notice lacked material to displace that position. The impugned order and demand notice were therefore set aside.

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Issues: Whether the goods manufactured by the petitioner, namely ID fan, FD fan and heat exchanger, were plant and machinery or integral parts of plant and machinery covered by item No. 54B of Schedule C, Part I of the West Bengal Value Added Tax Act, 2003 and therefore taxable at 4%, or were classifiable under Schedule CA and taxable at 12.5%.

Analysis: The goods were examined with reference to their nature and use in industries. The record showed that the petitioner had consistently returned the goods as plant and machinery at 4%, and an appellate order dated 28 June 2010 had already accepted that ID fan, FD fan and heat exchanger were integral parts of plant and machinery and attracted tax at 4%. The opposite view in the impugned notice was not supported by material sufficient to displace that classification.

Conclusion: The goods ID fan, FD fan and heat exchanger were held to be plant and machinery covered by item No. 54B of Schedule C, Part I of the West Bengal Value Added Tax Act, 2003 and taxable at 4%, not at 12.5% under Schedule CA. The impugned order and demand notice were set aside.

Ratio Decidendi: Where the nature and industrial use of goods show that they function as integral parts of plant and machinery, they are to be classified under the plant-and-machinery entry and taxed accordingly rather than as separate commercial commodities.

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