The essential part of the manufacturing process and its qualification under the relevant section of the Act influenced the court's decision.

JUDGMENT :

1. Heard Sri Bipin Kumar Pandey, learned Additional Chief Standing Counsel for the revisionist and Sri Atul Gupta, learned counsel for the respondent/assessee.

2. Present revisions are in relation to the assessment years 2011-12 and 2012-13 against the order dated November 27, 2019 passed by the Tribunal.

3. Both the revisions were admitted by this Court on the following question of law:

“Whether the cello used by the assessee were capital goods or merely usable containers used for sale of the ink manufactured by the assessee ?”

4. Sri Bipin Kumar Pandey, learned Additional Chief Standing Counsel appearing on behalf of the revisionist has taken the Court through the entire order passed by the Tribunal. He submitted that the definition of “capital goods” as per Section 2(f) of the Uttar Pradesh Value Added Tax Act, 2008 (hereinafter referred to as “the Act”.) means any plant and machinery as also apparatus, tool and appliances used for “manufacture or processing of any goods”. He has submitted that even though storage tank is included in the said definition in clause (iii) of Section 2(f) of the Act, however the Cello in question is not a fixed part of the plant and machinery and is an apparatus used for supply of the ink, that is already manufactured, to the customers.

Once a customer uses the said ink, the Cello is returned to the factory and is once again attached to the plant that fills the cello again. He has further submitted that one would see that certain goods have been excluded specifically from the definition in Section 2(f) of the Act such as vehicles used for transporting the goods or passengers or both. It is his submission that the Cello is an apparatus used only for transporting and cannot be treated as a part of plant and machinery.

5. Per contra, Sri Atul Gupta, learned counsel appearing on behalf of the assessee/respondent has submitted that the Tribunal has come to a particular fact finding that the Cello is an intricate part of the manufacturing process which is attached to the machinery wherein the manufactured ink is directly stored. He has further submitted that the Cello being moveable in nature will not prevent it for being treated as capital goods. Reliance is placed on Commissioner of Commercial Tax, Lucknow v. Ambuja Cement Limited, reported in 2018 (8) GSTL 161 (All) is relied upon by him. He has further relied upon a judgment of the Supreme Court in J.K. Cotton SPG & WVG Mills Co. Ltd. v. Sales Tax Officer, Kanpur reported in 1997 (91) E.L.Y. 34 (S.C.) to emphasise that if a particular apparatus is an integral part relating to manufacture of goods without which that process or activity of manufacture would not be possible, it should be treated as an apparatus that is “in connection with” manufacture, or “in relation to” manufacture.

Analysis and Conclusion

6. Before delving into the controversy in the instant case, I feel it is important to extract Section 2(f) of the Act herein:

“2. Definitions

In this Act, unless there is anything repugnant in the subject or context;

(a) …

(b) …

(c) …

(d) …

(e) …

(f) “capital goods” means any plant, machine, machinery, equipment, apparatus, tool, appliance or electrical installation used for manufacture or processing of any goods for sale by the dealer and includes:-

(i) components, spare parts and accessories of such plant, machine, machinery, equipment, apparatus, tool, appliance or electrical installation;

(ii) moulds and dies;

(iii) storage tank;

(iv) pollution control equipment;

(v) refractory and refractory materials;

(vi) tubes and pipes and fittings thereof,

(vii) lab equipments, instruments and accessories,

(viii) machinery, loader, equipment for lifting or moving goods within factory premises, or

(ix) generator and boiler used in manufacture of goods for sale by him but for the purpose of section 13, does not include:-

(i) air-conditioning units or air conditioners, refrigerators, air coolers, fans, and air circulators if not connected with manufacturing process;

(ii)