AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2021 (11) TMI 170
X X X X Extracts X X X X
X X X X Extracts X X X X
....nge, Jeypore disposing of Appeal No.AA (KOII) 135/97-98 confirming the order of assessment dated 30th June, 1997 passed by the Sales Tax Officer (STO), Koraput-II under Section 12(4) of the Orissa Sales Tax Act, 1947 (OST Act) relating to the year 1995-96. 3. JSCPL is engaged in business or manufacturing Ferro Manganese, Ferro Chrome and India made Foreign Liquor and it is a registered dealer under the OST Act. JSCPL entered into a financial arrangement with M/s. CFL Capital Financial Services Limited (earlier known as "Ceat Financial Services Limited") (hereafter 'CFL') by virtue of which all accessories of JSCPL, including the flameless furnaces in question, were sold to CFL on as-is-where-is basis on 30th March, 1996. On that very date, the flameless furnaces were leased in favour of JSCPL on monthly lease rental basis. It is stated that the furnaces in question were not dismantled for delivery to CFL. It was sought to be contended that this kind of a sale of the furnace situated in the factory premises of JSCPL does not satisfy the definition of sale under Section 2(g) of the OST Act. It is contended by JSCPL that it was mistakenly disclosed as sales and a declaration form obt....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ery under Entry-70 (List-C) of the Schedule of rates?" Background facts in STREV 25 and 26 of 2010 10. As far as STREV Nos.25 and 26 of 2010 are concerned, the background facts are that CFL is a registered dealer under the OST Act located at Bhubaneswar and is engaged in the business of lease financing capital assets which is a new financing concept to tide over financially difficulty of industrial units. 11. CFL purchased the flameless furnaces belonging to JSCPL through a lease agreement entered into on 30th March, 1996. CFL received Rs. 27,48,712 from JSCPL and under bona fide impression the said transaction was subject to levy of tax @ 4% against the declaration Form -IV furnished by JCSPL which was also paid by CFL. Subsequently, the CFL realized that the transaction was not amenable to levy of sales tax and filed a refund return to claim refund of the tax paid. 12. The STO, i.e. the AA by the assessment order dated 27th August 2001 for the year 1998-99 held that Form IV was not permissible and accordingly disallowed the claim of CFL. The AA raised an extra tax demand of Rs. 1,20,819/- for the assessment. The prayer for refund was negatived. The appeal against the aforement....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ow the earlier order dated 28th September, 2004 of the Tribunal in S.A. No.439 of 1999-2000 (being the case of JSCPL and which is the subject matter of STREV No. 6 of 2005) which had held that machinery in question though embedded to the earth was not immovable property and further that the surcharge was leviable under Section 5A of the OST Act. The Tribunal accordingly held that no Form IV is applicable to leasing transactions and that the rate of tax should be 12% in all cases. Thereafter CFL filed STREV No.25 of 2010 in this Court. 16. Turning now to STREV No.26 of 2010 filed again by CFL, it arises out of an order dated 27th May, 2008 of the Tribunal dismissing SA No. 89 of 2005-06 filed by CFL, thereby affirming an order dated 25th January 2005 passed by the ACST in AA 121/BWBH-II/04-05 which in turn affirmed the demand raised by the STO by assessment order dated 23rd March, 2004 for the year 2000-01. The Tribunal came to the same conclusion as it had for the earlier years viz., that the lease rental for the flameless furnace was amenable to tax notwithstanding that it may have suffered tax at the first point of sale and that Form IV declaration cannot be accepted in respect ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... boxes, bearing, castings etc. which were also purchased from the market and also covered in the process of welding facility. The tube mill, therefore, according to Appellant, was thus not a specific machine and component but consisted of several machines and components which after the installation got embedded to the earth and formed part of the plant. A question arose about the exigibility of the above goods to excise duty. According to the Appellant, since the items and components the market were embedded to the earth they were immovable goods therefore, not transportable and could not be sold and therefore could not be deemed to be excisable goods within the meaning of the CE Act. The Supreme Court agreed with the contention and held that "erection and installation of a plant cannot be held to be excisable goods. If such wide meaning is assigned it would result in bringing in its ambit structures, erections and installations. That surely would not be in consonance with the accepted meaning of excisable goods and its exigibility to duty." 21. The next decision for consideration is Commissioner of Central Excise v. Silical Metallurgic Ltd. (1999) ELT 858 (SC). The Supreme Court ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ned by the Board in consultation with the Solicitor General of India and the matter is clarified as under:- (a) For goods manufactured at site to be dutiable they should have a new identity, character and use, distinct from the inputs/components that have gone into its production. Further, such resultant goods should be specified in the Central Excise Tariff as excisable goods besides being marketable i.e. they can be taken to the market and sold (even if they are not actually sold). The goods should not be immovable. (b) Where processing of inputs results in a new products with a distinct commercial name, identity and use (prior to such product being assimilated in a structure which would render them as a part of immovable property), excise duty would be chargeable on such goods immediately upon their change of identity and prior to their assimilation in the structure or other immovable property. (c) Where change of identity takes place in the course of construction or erection of a structure which is an immovable property, then there would be no manufacture of "goods" involved and no levy of excise duty. (d) Integrated plants/machines, as a whole, may or may not be 'g....
X X X X Extracts X X X X
X X X X Extracts X X X X
....and SREI as "the purchaser". IMFA wanted to install a 90 Ton Per Hour (TPH) Spreader Stoker Water Tube Boiler at its Choudwar Power Plant of Indian Charge Chrome Ltd. (ICCL) a sister concern of IMFA. For the installation, IMFA negotiated with IJT for designing, supplying, erecting and commissioning the said 90 TPH plant and its Choudwar power plant. 25.2 After the terms were settled between IMFA and IJT, IMFA approached SREI for the purpose of erection and installation of the said plant and then to lease it out to IMFA. The said lease was a bipartite contract between IMFA and SREI. Lease rent was agreed at Rs. 23 lakh per year. Both the tripartite agreement and the lease agreement were executed in Calcutta on the same date i.e. 31st July, 1995. 25.3 Pursuant to the said agreements, IJT fabricated and supplied the boiler and delivered it to the IMFA plant at Choudwar where it was installed and commissioned by IJT. Whereafter the lease rental was paid by IMFA to SREI. 25.4 The STO, Cuttack-II Circle, Cuttack passed an assessment order raising a demand of sales tax on the lease rent paid by IMFA to SREI on the ground that the boiler is located in Odisha and was delivered in ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....mmissioner of Commercial Taxes (1995) 97 STC 330, this Court held that the foundation of all the transactions was the lease agreement dated 31st July, 1995 entered into between SREI and IMFA at Calcutta. It was also held that the transaction was clearly an inter-state transaction falling within the meaning of Section 3 of CST Act. It is accordingly, held that the interstate lease cannot be subjected to tax in the State of Odisha under the OST Act. 25.10 It was further held as under: "...the contention of the Revenue that as the payment of lease rental commenced after the boiler in question was installed, erected and commissioned at IMFA's plant at Choudwar, the State of Orissa acquires jurisdiction to levy tax on such lease rental cannot be sustained. The further case of the Revenue that after installation, erection and commission of the boiler, the goods in question cease to be the same goods for which agreement was executed at Calcutta on 31.7.1995 is equally misconceived. As a matter of fact, the boiler which was transported from Haryana to Orissa pursuant to the lease agreement was the same boiler which was installed, erected and commissioned in IMFA's plant at Choud....