Ingersoll Rand (India) Limited vs The Commissioner of Commercial Taxes

K. Sreedhar Rao, J.—The above petitions involve common question of law and facts. Hence, they are taken up together. The above petitions pertain to the assessment years 1996-97 to 2001-2002. In these cases, the petitioner is the manufacturer of vibratory compactors. The AO took a contra view that the vibratory compactor is not earthmover and it is a machinery coming under Part M, Entry 1(iii)(a) of the Second Schedule of the Act. The Joint Commissioner for Commercial Taxes (Appeals) and the Appellate Authority concurred with the findings of the AO. Hence, the assessee aggrieved by the said order has preferred these revision petitions.

The following substantial question of law has been framed in the appeals for consideration:

Whether the Karnataka Appellate Tribunal was right in law in confirming the order dated 26-2-2010 of the JCCT (Appeals), Bangalore City Division-II, Bangalore, holding that ''compactors'' are not earthmoving machinery entitled for benefit under Notification Nos. FD 117 CSL 2001(1) and FD 117 CSL 2001(11), dated 26-7-2001?

Counsel for the respondent strenuously contended that the order of the Appellate Authority is sound and proper. The Joint Commissioner of Commercial Taxes (Appeals) has succinctly dealt with the concept of earthmover, which is defined under Part M, Entry 1(i)(a) of the Karnataka Sales Tax Act, 1957 as earthmovers, such as dumpers, dippers, bulldozers and the like. The vibratory compactor is described as "losely placed or fitted together, sediments compacted by pressure from above, an area formed by dumping rock waste by means of heavy machine, a machine which crushes solid waste into the ground". The function of the compactor is totally distinct and different from the earth-mover described in Part M, Entry 1(i)(a) of the KST Act. It is submitted that in order to be a earthmover, there should be movement of earth, but in case of compactor, there is no movement of earth, but does crushing of solid waste into the ground.

Counsel for the petitioner, per contra, submits that the earth-mover defined in Part M, Entry 1(i)(a) is only an illustrative in nature. The machineries described as earthmovers therein are not exhaustive. The definition of earthmover is inclusive one. Any other machinery, which is similar to the machinery stated in Part M, Entry 1(i)(a) of the Act also would get included to constitute earthmover.

On going through the submissions made at the Bar, we do not find any good reason to reject the contention of the petitioner. Because, the vibratory compactor does the function of putting waste vertically into the ground. The Counsel for the petitioner has produced copy of the notification dated 31-3-1993 under KST Act. In the said notification, the vibratory compactor has been classified as earthmoving equipment. However it is the contention of the respondent that the said notification has been withdrawn. It is to be noted that withdrawing of the notification would be of no consequence, when it was the stand of the Government in the notification dated 31-3-1993 that vibratory compactor has been classified as earthmoving machine. Therefore, it is the understanding of the Government that vibratory compactor is an earthmoving machinery. In fact, in the said notification the vibratory compactor is shown in brackets to make it specific that it is in the category of earthmoving machinery. In that view, it is untenable for the respondent to contend that vibratory compactors are not earthmoving machineries. The understanding of the Government with regard to the vibrating compactor as earthmoving machinery and issuing notification to that effect would be binding on the Government because the notification has statutory force and now the respondent cannot argue contrary to the stand taken in the notification. In that view of the matter, the question of law is answered in favour of the assessee.

Accordingly, the petitions are allowed.