Wind mill exemption includes essential electrical works and transformers, but not foundation work that becomes immovable property.

Electrical works and transformers supplied with a wind energy converter were treated as part of the wind mill for exemption under Entry 57, because the expression "wind mill" had to be understood in its technical and commercial sense and those components were necessary for functional generation and transmission of power. The contrary view was set aside, and the related turnover qualified for exemption. The foundation work, however, was not exempt because once embedded in concrete it became immovable property, while the exemption applied only to goods. The assessment was interfered with only to that extent, and the matter was remitted for fresh assessment accordingly.

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Issues: (i) Whether electrical works and transformers formed part of the wind mill for the purpose of exemption under Entry 57 of the Fifth Schedule to the Karnataka Sales Tax Act, 1957; (ii) Whether foundation work formed part of the wind mill and was likewise exempt.

Issue (i): Whether electrical works and transformers formed part of the wind mill for the purpose of exemption under Entry 57 of the Fifth Schedule to the Karnataka Sales Tax Act, 1957.

Analysis: The expression "wind mill" was not defined in the Act and had to be understood in its technical and commercial sense. The contract was for supply, erection and commissioning of wind energy converters as a working unit, and the electrical works and transformers were necessary for making the wind mill functional for generation and transmission of power. Since the entry covered wind mills and the subject in question was part of the movable goods supplied as a wind mill, the turnover relating to these items could not be excluded from the exempt entry merely because they were separately described in the assessment.

Conclusion: The electrical works and transformers were held to be part of the wind mill and eligible for exemption; the contrary view of the Tribunal was set aside.

Issue (ii): Whether foundation work formed part of the wind mill and was likewise exempt.

Analysis: Although the foundation was necessary for installation, once the wind mill was embedded in the earth with a concrete foundation it became immovable property. The exemption under Section 8 and Entry 57 applied only to goods, that is, movable property, and not to immovable property. On that basis, the foundation component could not be treated as exempt wind mill goods.

Conclusion: The foundation work was not held exempt as part of the wind mill.

Final Conclusion: The challenge succeeded in part. The assessment and appellate orders were interfered with to the extent they denied exemption for electrical works and transformers, while the foundation-related turnover remained taxable, and the matter was remitted for fresh assessment in accordance with the Court's observations.

Ratio Decidendi: For exemption entries covering a specified product, only those components that constitute movable goods forming part of the product in its commercial and technical sense are covered; items that become immovable property on installation do not qualify for the exemption.

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