HIGH COURT OF JUDICATURE AT ALLAHABAD AFR Reserved on 03.09.2014 Delivered on 05.02.2015 Court No. - 34 Case :- SALES/TRADE TAX REVISION No. - 1408 of 2009 Applicant :- The [ENTITY]. Opposite Party :- S/S [ENTITY], [ENTITY], Jhansi Counsel for Applicant :- [ENTITY] Counsel for Respondent :- [ENTITY] Hon'ble [ENTITY],J.
1. This revision has come up under Section 58 of the U.P. Value Added Tax Act, 2008 at the instance of Revenue, who is aggrieved by the order of U.P. Trade Tax Tribunal (hereinafter referred to as the "Tribunal"), whereby the [CASE NUMBER] for the Assessment Year 2003-04, instituted by Revenue, has been dismissed, vide judgment and order 23.05.2009, confirming the order dated 26.11.2007 passed by First Appellate Authority, whereby it has held that "Hydraulic Excavator" is not included in Entry No. 2 of the Schedule attached to Uttar Pradesh Tax on Entry of Goods into Local Areas [ACT](hereinafter referred to as the "[ACT]"), i.e., "machinery and spare parts", but is governed by [SECTION] of the Schedule, i.e., Motor Vehicles of all kinds.
2. The question of law raised in this revision is, "whether "Hydraulic Excavator" is a machine under [SECTION] or motor vehicle under [SECTION] of the Schedule attached to [ACT]."
3. The dealer, M/s [ENTITY], [ENTITY]h, Jhansi imported "Hydraulic Excavator" and claimed that the said item is not a machinery under [SECTION] of the [ACT] but is a motor vehicle under [SECTION]. The claim of dealer was rejected by Assistant Commissioner, Trade Tax Division-3, Jhansi vide order dated 31.07.2007 and holding that disputed item is a machinary, hence is taxable at 2%, imposed entry tax of Rs. 31,938/-, whereagainst the respondent-dealer preferred [CASE NUMBER], which was allowed by Joint Commissioner of Appeal vide order dated 26.11.2007 holding that disputed item is governed by entry "motor vehicles of all kinds". Thereagainst the Revenue preferred [CASE NUMBER], which has been dismissed by Tribunal vide impugned order dated 23.05.2009.
4. Learned Standing Counsel, appearing for applicant-revisionist contended that definition of "motor vehicle" is not given in [ACT] and, therefore, for that purpose it would be prudent to go to the definition of "vehicle" under [ACT] (hereinafter referred to as the "[ACT]") and under [SECTION] of [ACT] and in that view of the matter, "Hydraulic Excavator" cannot be said to be a motor vehicle since it is not used for carrying load on the road but is usable for a limited purpose of excavation, hence is not a "motor vehicle" but a "machinery".
5. On the contrary, Sri [ENTITY], learned counsel appearing for respondent-dealer contended that "Hydraulic Excavator" was registered under [ACT] and road registration certificate was issued by Regional Transport Officer, Jhansi. It is used for excavation of stone boulders and to carry the same from one place to another. He also placed reliance on Apex Court's decision in [PRECEDENT] wherein "Excavator" and "Road Rollers" have been held motor vehicles for the purpose of [ACT].
6. I have considered the rival submissions and perused the record as also the relevant provisions and authorities on the subject.
7. It is not in dispute that the term "motor vehicle" has not been defined under [ACT]. [SECTION] of the Schedule attached to [ACT], reads as under:
"Machinery and spare parts of machinery valuing Rs. 10 lacs or more."
8. Similarly, [SECTION] of the Schedule attached to [ACT], reads as under:
"Motor vehicles of all kinds including chassis thereof but excluding tractors." (emphasis added)
9. The term "motor vehicle" or "vehicle" for the purpose of [ACT] has been defined under [SECTION] therein and read as under:
"(28) "motor vehicle" or "vehicle" means any mechanically propelled vehicle adapted for use upon roads whether the power of propulsion is transmitted thereto from an external or internal source and includes a chassis to which a body has not been attached and a trailer ; but does not include a vehicle running upon fixed rails or a vehicle of a special type adapted for use only in a factory or in any other enclosed premises or a vehicle having less than four wheels fitted with engine capacity of not exceeding twenty-five cubic centimeters."
10. The definition of a particular term in a particular statute is not to be used mechanically for the purpose of another statute unless it is applicable by necessary implication or otherwise some relevance is shown. In the judgment in [PRECEDENT] (supra) the term "motor vehicle" was defined in the [ACT] by stating that the motor vehicle would mean the same definition as is provided under [ACT]. It is in that context of the matter, Court held, that "Excavators" and "Road Rollers" are governed by the wider definition of motor vehicle under [ACT] and, therefore, would be motor vehicle for the purpose of [ACT].
11. Strictly speaking the issue in question cannot be decided mechanically by relying on the aforesaid decision unless I find some more facts relevant to decide the issue in question as to whether the "Excavator" or to be more precise "Hydraulic Excavator" can be said to be a "machinery" or a "motor vehicle" for the purpose of [ACT].
12. The term "machinery" is a wider term. It derives its meaning no doubt from the term "machine" but its scope is wider than the term "machine". The word "machine" itself has been taken from the Latin word "Machina" which in turn has been derived from the Greek word "Mekhane" a derivation from "means, expedient, remedy".
13. Earlier, a machine, used to be said to be a "tool containing one or more parts that uses energy to perform an intended action". Usually in its nascent stage the "machines" were powered by mechanical, chemical, thermal, or electrical means, and are often motorized. But with the advent of electronic digital technology, it has led to the development of power tools without moving parts. In the "American Heritage Dictionary", Second College Edition, published by Haughton Mifflin Co., 1985, the equipments using electronic technology are also considered as "machines".
14. In ancient India, the concept of machines though as such is not penned down, but used to be understood and practiced by common people, using simple techniques like taking water from the well, with the help of animal like Buffalo or Ox (called Rahet), and so on. Similarly, wheels of bullock cart constitute a simple machine part making movement convenient and simple. In Roman civilization, the idea of simple machine is said to have originated by Greek Philosopher, Archemedes, around 3rd century BC, who studied simple machines, i.e., lever, pulley, and screw. The Greek's understanding was probably limited to the statics of simple machines, the balance of forces, and did not include dynamics. It is claimed that Italian Scientist [ENTITY], in 1600, explained that a simple, machine do not create energy but only transforms. In other words, at that stage dynamic theory of simple machine was only worked out.
15. With the advent of heat engines, device designed to convert energy into useful mechanical motion. It gives rise to another kind of "machine", i.e., engines or motors. Herein heat engines including internal combustion engines and external combustion engines burn fuel to create heat, which is then used to create motion. Electric motors convert electrical energy into mechanical motion. These "electrical machine" is the generic name for a device that converts mechanical energy to electrical energy, converts electrical energy to mechanical energy, or changes alternating current from one voltage level to a different voltage level.
16. With the advent of electronics and computerization, more sophisticated machines have come into existence. In simple way one can explain that electronics is the branch of physics, engineering and technology dealing with electrical circuits that involve active electrical components such as vacuum tubes, transistors, diodes and integrated circuits, and associated passive interconnection technologies. The nonlinear behaviour of active components and their ability to control electron flows, makes amplification of weak signals possible and is usually applied to information and signal processing. The ability of electronic devices to act as switches, makes digital information processing possible. Interconnection technologies such as circuit boards, electronic packaging technology, and other varied forms of communication infrastructure, complete circuit functionality, and transform the mixed components into a working system. Similarly, "computing machines" are another advanced form of machines of modern day. The Computers store and manipulate flow of electrons, with patterns in this storage, and flow being interpreted as information manipulation.
17. In other words, one can say that earlier the concept of "machines" was confined to the mechanized equipments but with the innovative ideas, discoveries and inventions, the concept of machines has undergone a huge but consistent change. Today, besides the traditional kind of machines, we have gone to the extent of having molecular machine, which is a concept designed in bio-technology. The present day Scientist and Researchers term these machines and equipments as part of "nano-technology".
18. The term "machinery", as has already said, includes something more than "machines" and in general it can be said to include:
(i) Machines of a particular kind or machines in general;
(ii) The working parts of machine; and,
(iii) The means or system by which something is kept in action or a desired result is obtained.
19. In the context of fiscal statute, the term "machinery" has come up for consideration by various Courts time and again. It would be useful to have a glance over some of such authorities.
20. In [ENTITY] and [ENTITY], In re (1891) W.N. 61, [ENTITY], J. held that speaking generally "machinery" included everything which by its action produced or assisted in production.
21. In [PRECEDENT] the term "machinery" implies the application of mechanical means to the attainment of some particular end by the help of natural forces.
22. Privy Council's decision in [PRECEDENT] laid down certain guidelines to understand what the word "machinery" would means and said:
"(i) The word "machinery" must mean something more than a collection of ordinary tools. It must mean something more than a solid structure built upon the ground whose parts either do not move at all or, if they do move, do not move the one with or upon the other in interdependent action with the object of producing a specific and definite result.
(ii) It is not possible to define "machinery" as applicable to all cases. However, it could be said that, when used in ordinary language, prima facie, means some mechanical contrivances, which by themselves or in combination with one or more other mechanical contrivances, by the combined movement and inter-dependent operation of their respective parts, generate power, or evoke, modify, apply or direct natural forces with the object in each case of effecting so definite and specific a result. The tank and its supporting structure do not satisfy this definition.
(iii) Determination as to what is or what is not "machinery" must, to a large extent, depend on the special facts of each case.
(iv) Illustrations are better guides to ascertain the true meaning of the word "machinery", when used ordinarily and not as a specific definition.
(v) Whether an intelligent person would, in the ordinary use of language, describe a particular thing as machinery."
23. The Privy Council in [PRECEDENT] (supra) also held that machinery must be something more than a solid structure built upon the ground whose parts either do not move at all or, if they do move, do not move the one with or upon the other in interdependent action with the object of producing a specific and definite result. Their Lordships said that there was great danger in attempting to give a definition of the word "machinery" which would be applicable in all cases and it may be impossible to succeed in such an attempt. However, they observed that the word "machinery" when used in the ordinary language, prima facie, means some mechanical contrivances which by themselves or in combination with one or more other mechanical contrivances by the combined movement and interdependent operation of their respective parts generate power, or evoke, modify, apply or direct natural forces with the object in each case of effecting so definite and specific a result.
24. In the context of [ACT] a question had arisen whether a new diesel engine or petrol engine used in automobiles can be said to be a machinery or it is only a part of equipment or machine. The Court considered it in [PRECEDENT] and held that a diesel engine itself is a machinery. It relied on the earlier decision of Privy Council in [PRECEDENT] (supra).
25. In [PRECEDENT] a question arose whether Tractor Trailer is a machinery or accessory of a machinery for the purpose of levy of tax under the [ACT]. Relying on [PRECEDENT] (supra) the Division Bench also quoted the definition of "machinery" and "machine" given in Webster's Third New International Dictionary, which reads as under:
"Machine, engine, apparatus, appliance signify, in common, a device, often complex, for doing work beyond human hand or mind; machine applies to a construction or organisation whose parts are so connected and interrelated that it can be set in motion and perform work as a unit (those most practical machines of our modern life, the dynamo and the telephone - Havelock Ellis) (calculators, billers, duplicators, and other business machines)
Machinery : machines as a functioning unit."
The above meaning indicates that "machine" means a mechanical device consisting of a planned and an organized arrangement of various parts, each part having definite functions and, as a result of combined functioning, does some work, which may be impossible or difficult for human physical power to perform or even if it can be done it cannot be done continuously for a long period or with the speed and with the same uniformity with which the machinery does the same work. Supply of power to the machine could be either by the natural forces or by human or animal energy, or electric energy or any other type of energy."
26. Referring to some other judgments of High Courts, the Court held the "Tractor Trailer" not a "machinery", observing as under:
"7. Bearing in mind, the criteria laid down by the Privy Council in order to find out what is machinery and its application in the cases referred to above, we shall now proceed to consider, as to whether the tractor-trailer is a machinery. A few illustrations would be helpful to decide whether the tractor-trailer is machinery or not. Take the case of a tailoring machine. When force is applied on the treadle, the bigger wheel which is connected to the treadle by a rod moves, which having been connected to a smaller wheel of the machinery called the balance wheel, by a belt, makes the smaller wheel to move fast and it makes all other parts to move in the designed manner. Thus, the tailoring machine answers the description of a machine. The work of stitching is done by the machine with great speed and uniformity. Doing similar work and with that speed is impossible by human physical power. So also a typewriter, which works in a systematic manner on pressing the keys of the keyboard by the fingers in the required manner which work cannot be performed by human physical power. But, take the case of scissors, though on the application of force at one end, the two blades of it move and can cut certain articles, it has no attributes of a machines. Force is not multiplied for doing any work. There is no organisation of the several parts into one unit, all functioning simultaneously on the supply of power at a given point. No intelligent person considers it a machine. The scissors therefore could be considered as an implement and no a machinery. A wheelbarrow used to remove any debris or mud, etc., is likewise in common parlance not considered as a machinery. Similarly, take the case of hand-pulled cart. By applying or supplying power it does not work as a combined effect of the movement of its parts as in the case of tailoring machine or typewriter. When pulled all that happens is it moves along with with the puller and stops when the stops. The tractor-trailer, just as a hand-pulled cart, moves when attached to a tractor and dragged by it and it stops when not dragged. The tractor-trailer is a mere receptacle made to contain specifications and is mounted on wheels. The tractor, which is a machinery, drags it, whether loaded or unloaded. In the trailer there is no systematic arrangement of several parts which move and function in the designed manner to perform any work, on the supply of force to it. It does not multiply or convert the force supplied to it for any such purpose. It only moves when dragged by a machine, otherwise it remains stationary. No intelligent person would consider it a machinery. Applying the definition of the word "machinery" given by the Privy Counsel in the Calcutta Corporation's case ([PRECEDENT].) and the criteria laid down therein, and the decisions of the High Courts referred to earlier, we conclude that tractor-trailer is not "machinery" falling under [SECTION] to the Act."
27. The Gujarat High Court also, followed the above interpretation of the term "machinery" by Privy Council in [PRECEDENT] (supra) and Apex Court's decision in [PRECEDENT] (supra) in [PRECEDENT].
28. In [PRECEDENT] the Karnataka High Court, while considering, whether "handloom" is "machinery" or not, said:
"In simpler language 'machinery' is a contrivance whereby several things are put together to work in such a way that force may be applied at a most convenient point in a most convenient way to get a particular work or an item of work done or to produce a specific article or manufactured goods.
If this is the essential feature of a machinery which distinguishes it from other things, the mode or he manner in which power is fed into it or force is applied need not and should not make any difference. It is conceded, for example, that a machinery would be a machinery whether it is fed by electrical power or other form of power applied by steam or generated by burning combustible oils. If the ode or the manner in which the power is applied makes no difference in these specific cases, it should make no difference either if the source of power is either human or animal."
29. Looking to the above explanation and interpretation with reference to "machinery" I find that, how an individual or a party understand the thing or a commodity by itself would not be decisive in holding a particular commodity to belong to a particular category. It depends upon various relevant aspects. The general consensus in the context of "machinery" is that it is a device used for a particular purpose or result which takes energy in any form but results in combined functioning to achieve the work which otherwise may not be possible by human physical efforts or power, i.e., without help of such devices. The supply of power could be either by natural forces or human or animal energy or electronic energy or any other type of energy.
30. It thus cannot be doubted that "Hydraulic Excavator" would satisfy the meaning of term "machinery" in wider sense and, therefore, it would be a machinery by all means. However, if the entry would have been only about a machinery, the situation would have been different but if the legislature in its wisdom has used or classified some more items which though in wider sense, are within the ambit of term "machinery" but have been mentioned separately then it is to be seen, whether a particular item, even if machinery, if is governed by the separate narrower entry, then that specific separate entry shall prevail.
31. In other words "machinery" here is a general term and when some kinds of machineries are separately mentioned, they would become "special entry" and shall prevail over the general one.
32. The maxim Generalia Specialibus non Derogant would in principle apply in this case. Further the legislature has considered all the circumstances and made special provision for a particular case. The presumption is that another provision of general character would not have been intended to interfere with the specific provision. Special provision stands as a special proviso upon the general.
33. Lord [ENTITY] of [ENTITY] in [PRECEDENT] has described the maxim "Commo Sense Rule". The principle is based on a concept that where a state of facts falls within the literal meaning of a wider provision but there is another provision covering restricted field, the effect would be that the provision covering restricted field would apply to the cases covered therein and not the wider provision.
34. In Halsbury's Law of England, 4th Edn., Vol. 44 (1), (London 1995 para 1486) this principle is explained as "Constitution of general and particular enactments Whenever there is a general enactment in an Act, which, if taken in its most comprehensive sense, would override a particular enactment in the same Act, the particular enactment must be operative, and the general enactment must be taken to affect only the other parts of the Act to which it may properly apply."
35. In [ENTITY]'s Dictionary of Irish Law (4th ed.), this principle has been defined as a rule which requires that general things do not derogate other from special things. Initially this principle was applied mostly in the cases where conflict between provision of two separate instruments/statute was noticed but later on it has been applied to a situation covered by two provisions of the same Statute for the reason that the principle is of a common sense doctrine that the general shall not derogate from the particular.
36. The Apex Court in [PRECEDENT], in para 36 held as under:
"36. On a conspectus of the whole issue, it is thus difficult to comprehend that the General Rule framed under [SECTION] should or would also govern the existing special rules concerning the police rules. Admittedly, the guidelines as contained in the Government Order dated 5.11.1965 have been under and in terms of the provisions of the [ACT]. There is special conferment of power for framing of Rules dealt with more fully hereinbefore, which would prevail over any other Rule. Since no other rule stands formulated and the [ACT] being taken as the existing rule pertaining to the subject matter presently under consideration with recent guide-lines as noted above, its applicability cannot be doubted. Unless the General Rule specifically repeal the effectiveness of the special rules, question of the latter rule becoming ineffective or inoperative would not arise. "
37. The applicability of general and special provision was discussed in [ENTITY] and [ENTITY], Statutory Interpretation in Australia, 6th edition, at [7.18]. As [ENTITY] J. in Goodwin v Phillips (1908) 7 CLR 1 at 14 said:
"Where there is a general provision which, if applied in its entirety, would neutralize a special provision dealing with the same subject matter, the special provision must be read as a proviso to the general provision, and the general provision, in so far as it is inconsistent with the special provision, must be deemed not to apply."
38. Further, in a recent judgment in [PRECEDENT]; the Court has observed and held (per [ENTITY], J.), inter alia, as follows (in paras 28, 33 and 60 ):
"28. [SECTION] of the Act of 2003 is a special provision and hence will override the general provision in [SECTION] of the [ACT] for arbitration of disputes between the licensee and generating companies. It is well settled that the special law overrides the general law. Hence, in our opinion, [SECTION] of the [ACT] has no application to the question who can adjudicate/arbitrate disputes between licensees and generating companies, and only [SECTION] shall apply in such a situation.
"33. [SECTION] provides that the [ACT] will prevail over anything inconsistent in any other law. In our opinion the inconsistency may be express or implied. Since [SECTION] is a special provision for adjudicating disputes between licensees and generating companies, in our opinion by implication [SECTION] of the [ACT] will not apply to such disputes i.e. disputes between licensees and generating companies. This is because of the principle that the special law overrides the general law. For adjudication of disputes between the licensees and generating companies there is a special law namely [SECTION] of the [ACT]. Hence the general law in [SECTION] of the [ACT] will not apply to such disputes.
"60. We make it clear that it is only with regard to the authority which can adjudicate or arbitrate disputes that the [ACT] will prevail over [SECTION] of the [ACT]. However, as regards, the procedure to be followed by the State Commission (or the arbitrator nominated by it) and other matters related to arbitration (other than appointment of the arbitrator) the [ACT] will apply (except if there is a conflicting provision in the Act of 2003). In other words, [SECTION] is only restricted to the authority which is to adjudicate or arbitrate between licensees and generating companies. Procedural and other matters relating to such proceedings will of course be governed by [ACT], unless there is a conflicting provision in the Act of 2003."
39. In [PRECEDENT] in para 19 of the judgment the Court said:
"The provisions of a special Act will override the provisions of a general Act. A later of it will override an earlier Act. 1956 Act is a general Act."
40. This has also been followed by a Division Bench of this Court in [PRECEDENT].
41. Looking to the matter in the light of above discussion it can safely be said that the term "machinery" is a genus and "motor vehicle" is a species. The motor vehicles in wider sense may specify the term "machine" and "machinery" but when a special entry is provided in the same statute differently than the items which would specify the definition of "motor vehicle" will have governed by that entry and not by "machine" and "machinery". In that context now it would be necessary to examine, whether "Hydraulic Excavator" can be said to be within the ambit of term "motor vehicle" and if so it will stand excluded from the term "machine" and "machinery" and will be governed by the entry "motor vehicle".
42. In "[PRECEDENT] by Houghton Miffin Company, the word "motor vehicle" has been described as "a self propelled wheeled conveyance, such as a car or truck, that does not run on rails".
43. In "Collins English Dictionary" its meaning is "a road vehicle driven by a motor or engine".
44. In "Random House Kernerman Webster's College Dictionary, 2010" it is described as "an automobile, truck, bus or similar motor driven conveyance".
45. "Excavator" is also defined in "Oxford Advanced Lerner's Dictionary" as a large machine that is used for digging and moving earth.
46. In "Longman Dictionary of Contemporary English" the term "excavator" has been defined a large machine that digs and moved earth and soil.
47. The Tribunal has also recorded a finding that "Hydraulic Excavator" in question is used for carrying stone boulders from one place to another, besides digging from earth. In view thereof, it cannot be doubted that excavator is a "machine" but it is used for carrying goods like stone boulders etc. from one place to another and is also used for excavation, i.e., digging from the earth and, therefore, despite being a machine, in wider sense, it also satisfy the term "motor vehicle".
48. Moreso, I am satisfied to hold that it is governed by [SECTION] of the Schedule for the reason that the legislature has provided that motor vehicle of all kinds are included therein excluding specifically only a Tractor otherwise even a Tractor would have been included in the aforesaid term. The mere fact that excavator in question works with hydraulic system would not change its very nature of being a excavator. The Tribunal, therefore, has rightly held that in wider sense a, "Excavator" or "Hydraulic Excavator" may be said to be a "machinery" but when a specific entry is there, i.e., "motor vehicles of all kinds", an excavator satisfying aforesaid entry will be governed by the same and cannot be taxed by treating it as a machinery only. The mere fact that the general goods are not being transported by Excavator would make no difference for the reason that legislature has used the term "motor vehicles" in a very wide manner by providing that all kinds of motor vehicles would be governed by [SECTION] of the Schedule attached to [ACT].
49. In the result, the question of law formulated above is answered against Revenue and in favour of Dealer. I do not find any error with the judgment of Tribunal and the same is hereby confirmed. The revision is accordingly dismissed with costs, which I quantify to Rs. 5,000/-.
Order Date :- 05.02.2015 AK