Fixed plant and machinery in a leased factory may be immovable property, outside tax on transfer of the right to use goods.

Plant and machinery fixed to the earth in a leased industrial unit will not fall within the definition of goods under Section 2(d) of the U.P. Sales Tax Act, 1948 where the contract does not contemplate severance. The legal character depends on the nature and degree of annexation, the manner of attachment, and the intention behind fixing the equipment. Where the entire unit, including land, building, plant and machinery, is leased as a running concern and the machinery is permanently attached for operational and beneficial enjoyment, it is treated as immovable property. On those facts, the machinery was outside the scope of tax on transfer of the right to use goods.

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Issues: Whether plant and machinery fixed to earth in an industrial unit leased as a running concern constituted movable property or goods so as to attract tax on transfer of the right to use; whether such machinery, in the absence of any agreement to sever it, could be treated as immovable property outside the definition of goods.

Analysis: The definition of goods under Section 2(d) of the U.P. Sales Tax Act, 1948 excludes things attached to or fastened to the earth unless the contract contemplates severance. The nature of annexation, the degree and manner of attachment, and the intention behind fixing the machinery are material. Where the entire unit, including land, building, plant and machinery, is leased for running the factory and the machinery is permanently attached for operational and beneficial enjoyment of the premises, it assumes the character of immovable property. The machinery here was not shown to have been intended for severance or removal, and the factual setting was distinct from cases where the equipment remained movable despite attachment.

Conclusion: The plant and machinery did not constitute goods within Section 2(d) of the U.P. Sales Tax Act, 1948 and was not taxable as transfer of the right to use goods.

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