TaxTMI 
TaxTMI 
2025 (4) TMI 1598
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....ent dated 05.04.2004 with ISPAT for setting up a 300 TPD Oxygen Plant. Both the plants are to be set up at ISPAT's premises. 1.3 Under the agreement dated 02.01.2004, certain equipment required for setting up of the plant facilities were provided by ISPAT (termed as 'ISPAT equipment' under the agreement). Those ISPAT equipment were provided free of cost to the appellants for setting up of the Gas Plant. The ownership of that equipment always remained with ISPAT and the appellants do not have any interest in the same. Apart from the ISPAT equipment, ISPAT also provides power and water. The site on which the plant is required to be set up is provided by ISPAT. The site consists of a plot of developed land. According to the agreement, the appellants have no interest in the land provided by ISPAT. The appellants only have a right of access to the site to carry out their obligations under the agreement. The rest of the equipment (other than the ISPAT equipment) were procured by the appellants themselves. For the equipment, intended to be procured by the appellants from overseas suppliers, ISPAT took out EPCG licence for importing the equipment under the EPCG scheme and undertoo....
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....various statements from different persons. On detailed investigation into the matter, the department had concluded that the appellants are liable to pay service tax on the lease rental paid by ISPAT under the category of 'Renting of immovable property service', defined Section 65(90a) read with Section 65 (105) (zzzz) of the Finance Act, 1994 (hereinafter for short, referred to as the 'Act of 1994'). 2.2 On the basis of investigation, the department had initiated show cause proceedings against the appellants, alleging that the plant set up by them on ISPAT's site includes the building, various machinery, pipes, equipment etc., and the plant is permanently fixed to the earth and therefore, it is an immovable property. According to the department, the plant cannot function unless it is permanently fastened to the earth. In this context, the department had relied upon the definition of 'immovable property', contained in Section 3(26) of the General Clauses Act, 1897. Thus, the department had averred that though the civil works may be substantially damaged while removing the plant, but the fact remains that the plant is immovable. Further, it has also been averre....
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....n support of confirmation of the adjudged demands on the appellants, the learned adjudicating authority in the impugned orders has inter alia, held that the plant in question cannot be functional, unless those become immovable or permanently fastened to earth; that the plants were erected by use of various civil engineering techniques viz., digging, piling, civil construction, electrical installation etc., to support the immovability and thus, no Central Excise duty liability was discharged by the appellants, considering the same as 'immovable property'; that those plant facilities having been used as immovable property in the course of furtherance of business or commerce, the appellants are liable to pay service tax on renting of such property, under the taxable category of 'renting of immovable property service'. 3. Feeling aggrieved with the impugned orders dated 03.01.2012 and 31.10.2013, the appellants have preferred these appeals before the Tribunal. 4.1 Shri V. Sridharan, learned Senior Advocate appearing for the appellants submitted that for the purpose of 'Renting of Immovable Property Services', the term 'Immovable Property' covers only 'Building', 'La....
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.... were entered into and the activities pursuant thereto were carried out much prior to such effective date, it cannot be said that the appellants are liable for payment of service tax under the head of such taxable service. He further submitted that by considering the transactions as 'deemed sale', the appellants had discharged the VAT liabilities and the same was also accepted as due discharge of the tax liabilities by the jurisdictional VAT authorities. 4.4 Learned Senior Advocate submitted that the land on which, the plants are set up belong to ISPAT; that the agreements clearly state that the appellants shall not have any interest in the land, apart from the right of access for the limited purpose of fulfilling the obligations under such agreements. Further, he also pleaded that the economic life time of a plant is 35 years, whereas the term of the agreement is only for a period of maximum 25 years (15 + 10) in case of 1260 TPD plant and similarly the life time is 15 years (10 + 5) in case of 300 TPD plant; thus, the life of the plant is much more than the outer limit of the contract period. He has also referred to the terms of the agreement to state that the appellants are r....
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....Raipur - 2004 (167) E.L.T. 501 (S.C.). 6. Heard Shri V. Sridharan, learned Sr. Advocate for the appellants, Shri Adeeb Pathan, Authorized Representative of the respondent and perused the case records, including the written note of submissions filed by both sides during the course of hearing of these appeals. 7. The issues involved in these appeals, for consideration by the Tribunal, are as under: (a) Whether the appellants would be considered as the absolute owner of both the gas/oxygen plants, and whether the lease rentals received by them, would be subjected to levy of service tax under the taxable category of 'Renting of immovable property' service? (b) Whether, setting up of gas/oxygen plants by utilizing the equipment supplied by both the appellants as well as ISPAT would be considered as 'immovable property', in order to fall within the scope and ambit of 'Renting of Immovable property', as defined under Section 65(90a) read with Section 65 (105) (zzzz) of the Act of 1994 for levy of service tax thereon; especially under the circumstances, when those equipment were removed in the disassembled condition, after closure of the contract period?....
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....he plant, by utilizing the equipment/components supplied by both sides, do not make the appellants as the sole owner of the whole plant, set up by them. Therefore, we are of the considered opinion that since the equipment supplied by both are involved in setting up of the plant facilities, the appellants alone cannot be treated as the absolute owner, in order to be saddled with the service tax liability for provision of the alleged taxable service under the category of 'Renting of immovable property'. 9.1 In order to ascertain, whether an article attached to the land can be regarded as the movable or immovable property, the primary and essential requirement is to find out the intention of the parties, who arrive at the conclusion of accomplishing a certain purpose or act. Such objective can be achieved by wholistically reading the entire contents in the agreement, entered into between such parties. In the case in hand, the land on which the plant is set up, belongs to ISPAT. The agreement clearly states that the appellants shall not have any interest in the land, apart from the right of access for the limited purpose of fulfilling the obligations under the agreement.....
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....(High Purity Nitrogen) INOX factory in the premises of Jindal Steel, Vashind INOX factory in the premises of Jindal Steel, Tarapur 1999-2000 Shifted in 2003-04 from Tarapur to Vashind & is in operation as on date. 2 4 HPN INOX factory in the premise of CEAT Tyres, Gujarat INOX factory at Thana A-2 2003-2004 Transferred to our new plant in the premises of CEAT Tyres in FY 2017-18 and is in operation. 3 N2O Plant INOX factory at Patalganga (PG) INOX factory at Thana A-2 2003-2004 Shifted in 2016-17 from Thana to PG. Presently is in operation at PG. 4 45 TPD LIN Liquefier INOX factory at Karjan INOX Jejuri Factory 2010-2011 Shifted in 2016-17 from INOX Jejuri Factory to Karjan Presently is in operation at Karjan. 5 600 SM3/Hr INOX factory at Tadipatri INOX Jejuri Factory October 2004 Shifted in 2018-19 from INOX Jeju....
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....t Dahej. 2 600 CUM Rizim Ispat Ltd., U.P INOX factory in the premises of Tata Metaliks Ltd Kharagpur (W.B) 2019. The plant is sold and is being shifted from Kharag 9.3 The fact of dismantling of the plant from one place to another, has also been stated by Shri R. Yugandhar Babu, Operation Engineer of the appellant's company in the statement dated 13.04.2010, recorded under summon by the department. Pursuant to the query at point No.8, 'whether these plants can be dismantled, without damage?', he had replied that 'there may be substantial damage to the civil works, but machineries can be dismantled without substantial damage...'. The facts explained in the said statement by Shri R. Yugandhar Babu, concur to the affidavits sworn in by Shri Praveenchandra Silian (supra) as well as the certificate furnished by the Chartered Engineer (supra). 9.4 We have also perused the photographs of different plant facilities erected at ISPAT site by the appellants, which were submitted during the course of hearing of the appeals. Sample copies of some of the photographs are captured here under: On careful scrutiny ....
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....s with regard to the issue of immovability of the plant was also considered by the Hon'ble Supreme Court in the said case of Solid & Correct Engineering & Ors. (supra) and upon consideration of the factual matrix involved therein, had held as under: "33. It is noteworthy that in none of the cases relied upon by the assessee referred to above was there any element of installation of the machine for a given period of time as is the position in the instant case. The machines in question were by their very nature intended to be fixed permanently to the structures which were embedded in the earth. The structures were also custom made for the fixing of such machines without which the same could not become functional. The machines thus becoming a part and parcel of the structures in which they were fitted were no longer moveable goods. It was in those peculiar circumstances that the installation and erection of machines at site were held to be by this Court, to be immovable property that ceased to remain moveable or marketable as they were at the time of their purchase. Once such a machine is fixed, embedded or assimilated in a permanent structure, the movable character of the ma....
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....t does not include - (i) renting of immovable property by a religious body or to a religious body; or (ii) renting of immovable property to an educational body, imparting skill or knowledge or lessons on any subject or field, other than a commercial training or coaching centre. Explanation 1. - For the purposes of this clause, "for use in the course or furtherance of business or commerce" includes use of immovable property as factories, office buildings, warehouses, theatres, exhibition halls and multiple-use buildings; Explanation 2. - For the removal of doubts, it is hereby declared that for the purposes of this clause "renting of immovable property" includes allowing or permitting the use of space in an immovable property, irrespective of the transfer of possession or control of the said immovable property; (105) "taxable service" means any service provided or to be provided, - (zzzz) to any person, by any other person in relation to renting of immovable property for use in the course or furtherance of business or commerce. Explanation 1. - For the purposes of this sub-clause, "immovable property" includes - (i) buil....
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....s not provided as to which of the properties would be contemplated as 'immovable', such vacuum was remedied by way of providing the various category of properties for consideration as 'immovable' in nature in the said Explanation 1. In view of the fact that the said Explanation clause has considered only a 'building', 'land', 'facilities relating thereto', in our considered view, no other property can be included therein for consideration as 'immovable property'. 11.2 For bringing about more clarity in Section 65 (90a) and in the subclause (zzzz) of Section 65(105) of the Act of 1994, since the Explanation was added, such prescriptions of properties mentioned thereunder should alone be considered for determination as to which are those properties, to be considered as 'immovable'. This is evident from the fact that the Explanation clause commences with the words that 'for the purposes of this sub-clause, "immovable property" includes...'. The phrase 'includes', though is to be considered as extensive in common parlance, but in specific circumstances, the same phrase can be interpreted to read as 'means'. In such scenario, it has to be construed that the phrase 'includes' wo....
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....onsider 'Mangalore pattern roofing tiles' within the scope and ambit of entry 22 (supra). By referring to the well-known use of the word 'includes' in interpretation clauses, the Counsel appearing for the State of Gujarat contended that when the Explanation says that potteries industry 'includes' the nine named objects, what is meant is that it includes not only those objects, but other articles of pottery, including the 'Mangalore pattern roofing tiles' as well. Countering the above arguments placed by the State Government, the Counsel for the other side contended that the articles mentioned in the Explanation were intended to be exhaustive of the objects covered by entry 22; that if the legislature wanted to bring within the entry all possible articles of pottery, then there was hardly any point in mentioning only a few of them by way of Explanation. Considering the rival contentions, the Hon'ble Supreme Court expressed the views, as to how the provisions in the statute must be interpreted. The Hon'ble Court clarified that the word 'includes' is generally used as a word of extension, but the meaning of the word or phrase is extended, when it is said to include things that would n....
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....atural significance of the words or expressions defined. It may be equivalent to 'mean and include' and in that case it may afford an exhaustive explanation of the meaning which, for the purposes of the Act, must invariably be attached to these words or expressions." It must therefore be held that the manufacture of Mangalore pattern roofing tiles is outside the purview of entry 22." 12.1 We find that the learned adjudicating authority in the impugned orders passed by him has referred to various judgements delivered by the judicial forum, to conclude that the plant assembled at site and embedded in the ground, is an immovable property and excisable. Such ratio was drawn by him from the Central Excise statute and applied to the issue in hand, which deals with the provisions of levy of service tax under the Finance Act, 1994 on the taxable service i.e., renting of immovable property. The judgements relied upon in the impugned order were also referred to by the learned AR, as the defense submission for Revenue, during the course of the hearing of the appeals. The reference of those judgements is noted at paragraph 5 above. 12.2 The phrase 'excisable goods' has ....