M/S. The Jeypore Sugar Co. Pvt. Ltd vs State Of Odisha
2021 Latest Caselaw 10937 Ori

      IN THE HIGH COURT OF ORISSA AT CUTTACK

         STREV Nos.6 of 2005, 25 of 2010 and 26 of 2010


STREV NO.6 of 2005
M/s. The Jeypore Sugar Co. Pvt. Ltd. ....                       Petitioner

STREV NO.25 of 2010
M/s. C.F.L. Capital            Financial ....                   Petitioner
Services Ltd.

STREV NO.26 of 2010
M/s. C.F.L. Capital            Financial ....                   Petitioner
Services Ltd.
                                  -versus-
State of Odisha, represented by the
Commissioner of Sales Tax and ....
                                                        Opposite Parties
Others

Advocates, appeared in these cases:

For Petitioner(s)             :                   Mr. Jagabandhu Sahoo
                                                        Senior Advocate

For Opposite Parties          :                           Mr. S.S. Padhy
                                             Additional Standing Counsel

 CORAM:
 THE CHIEF JUSTICE
 JUSTICE B. P. ROUTRAY
                             JUDGMENT

26.10.2021 Dr. S. Muralidhar, CJ.

1. These three revision petitions raise similar questions of law for consideration and are accordingly being disposed of by this common judgment.

STREV Nos.6 of 2005; 25 and 26 of 2010

Background facts in STREV 6 of 2005

2. STREV No.6 of 2005 by Jeypore Sugar Co. Pvt. Ltd. (hereafter 'JSCPL') arises from the order dated 28th September, 2004 of the Sales Tax Tribunal (Tribunal) in S.A. No.439 of 1999-2000 filed by the Petitioner-Assessee JSCPL. In turn the said appeal was directed against an order dated 22nd December 1998 passed by the Assistant Commissioner of Sales Tax (ACST), Koraput Range, 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

STREV No. 6 of 2006; 25 and 26 of 2010

mistakenly disclosed as sales and a declaration form obtained from CFL was submitted claiming deduction.

4. The Assessing Authority (AA) while assessing JSCPL for the year 1995-96 referred to a notification dated 22nd December, 1989 of the Finance Department which held that machineries were subject to levy of sales tax at the first point in a series of sales. Accordingly, the AA held that furnace sold to CFL was 'machinery' exigible to sale tax at the first point. Accordingly, the declaration form produced was disallowed and the said turnover was subjected to sales tax @ 16% and a demand was accordingly raised by the assessment order dated 30th June, 1997.

5. Initially JSCPL challenged the said assessment order in this Court by filing a writ petition, OJC No.10664 of 1997 contending that the AA no jurisdiction to assess the said transaction as a transaction of sale of goods. This Court disposed of the said writ petition on 13th August 1997 permitting JSCPL to file an appeal before the appellate authority.

6. JSCPL's appeal, STA No.135 of 1997-98, was dismissed by the ACST by an order dated 22nd December, 1998 thereby affirming the order of the AA. According to JSCPL although the ACST took note of the mode of construction of the furnace, he erroneously held that the accessories sold by JSCPL to CFL were in fact 'machinery'.

STREV Nos.6 of 2005; 25 and 26 of 2010

7. JSCPL then filed a further appeal, S.A. No.439 of 1999-2000, before the Tribunal and raised the following two issues:

(a) Whether furnace in not a machinery liable to sales tax as such under the Orissa Sales Tax Act?

(b) Whether furnace being an immovable property the sale price of it is not liable to tax under the Act?

8. The Tribunal by order dated 28th September, 2004 in S.A. No.439 of 1999-2000 held that the furnace was in fact 'machinery' was liable to sales tax. The Tribunal rejected the contention of JSCPL that the furnace was an immovable property, embedded to the earth, and therefore not amenable to sales tax.

9. In STREV No.6 of 2005, while admitting the revision petition on 16th July, 2009 this Court framed the following substantial questions of law for consideration:

"(1) Whether in the facts and circumstances of the case, the furnace permanently embedded to the earth and being an immovable property as such can still be liable to Orissa Sales Tax as sale of machinery?

(2) Whether in the facts and circumstances of the case the "Furnace" is covered under machinery 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

STREV No. 6 of 2006; 25 and 26 of 2010

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 aforementioned order, i.e. S.A. No. AA 263/BH-II- 2001-02 filed by CFL was disposed of by the ACST by order dated 27th February, 2002 partly reducing the assessment completed by the STO Bhubaneswar-II Circle.

13. Thereafter CFL filed S.A. No.380 of 2002-03 in the Tribunal which by an order dated 8th August 2007 set aside the order of the ACST. The two questions that arose for consideration by the Tribunal were as follows:

STREV Nos.6 of 2005; 25 and 26 of 2010

(a) Whether or not tax under the OST Act can be imposed on the lease consideration involving transfer of the right to use the goods when the goods so hired out have suffered tax at the time of their purchase in the State of Orissa?

(b) Whether such deemed sales involving the transfer of the right to use the goods can be taxed @ 4% against the declaration in Form IV?

14. In its judgment dated 8th August 2007, the Tribunal considered the earlier order dated 30th October, 2006 passed by the Full Bench of the Tribunal in SA 1323 of 2006 in the case of the CFL itself for the year 1995-96 which in turn had followed the decision 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). It also took note of another decision dated 28th June 1999 of the Full Bench of the Tribunal in M/s. Kotak Mahindra Finance Corporation Ltd. v. State of Orissa which had held that transfer of the right to use goods is a separate transaction distinct from the sale of goods and therefore even if the goods had suffered tax at the first point of sale, again lease rentals received on account of the goods subsequently can be taxed as a separate transaction. It was further held by the Tribunal in M/s. Kotak Mahindra Finance Corporation Ltd. v. State of Orissa that since there is no specific entry in the schedule of rate of tax for leasing transactions, the rate would be that applicable to

STREV No. 6 of 2006; 25 and 26 of 2010

unspecified goods in terms of the decision of the High Court of Orissa in OJC No. 2414 of 1985 (M/s. Rajshree Pictures (P) Ltd.). The Tribunal in the impugned order dated 8th August 2007 chose to follow the decision in M/s. Kotak Mahindra Finance Corporation Ltd. v. State of Orissa and answered question (a) in the affirmative i.e. in favour of the department and against the Assessee CFL.

15. As regards question (b), the Tribunal in its order dated 8th August 2007 chose to follow 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

STREV Nos.6 of 2005; 25 and 26 of 2010

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 of such transaction.

17. In both the STREV Nos. 25 and 26 of 2010, since the issues involved were interlinked with the outcome of STREV No. 6 of 2005, this Court directed the two petitions to be listed with STEV No.6 of 2005 for hearing.

18. Accordingly, while admitting STREV Nos. 25 and 26 of 2010, this Court frames the following questions of law for consideration:

"1. Whether the contract involving receipt of lease rental for leasing of flameless furnaces constitutes sale or deemed sale of goods within the meaning and definition of 'sale' under Section 2(g) of the Orissa Sales Tax Act, 1947?

2. Whether leasing of flameless furnaces can be legitimately subject matter of taxation when the same has suffered Orissa Sales Tax at the interior stage in view of Section 8 of the Orissa Sales Tax Act?

3. Whether concessional rate of tax against declaration Form IV is allowable against deemed sale transaction constituting lease of furnaces?"

19. This Court has heard the submissions of Mr. Jagabandhu Sahoo, learned Senior Counsel appearing for the Petitioners in all

STREV No. 6 of 2006; 25 and 26 of 2010

these cases and Mr. S.S. Padhy, learned Additional Standing Counsel for the Opposite Parties (Department).

20. As regards the first question whether the furnace embedded to the earth is to be considered immoveable property, there are a series of judgments of the Supreme Court beginning with Quality Steel and Tubes (P) Ltd. v. Collector of Central Excise (1995) 75 ELT 17. In that case the Appellant was engaged in manufacture of welded steel pipes and tubes which were classified before 1st August 1983 under Item No.28AA of the first Schedule to the Central Excises and Salt Act, 1944 ('CE Act'). Later on, the said items were classified under Tariff Item 25 of the Schedule. The steel tubes and pipes produced by the Appellant were exempt from duty as they were produced out of duty paid raw material. For the manufacture of the items the Appellant had set up plant and machinery at its factory site. The expansion project consisted of acquiring the items and components and installing them for making a complete unit for production of steel tubes. Certain items of the plant and machinery such as uncoiler, looper, etc. were purchased from the market and embedded to earth and installed to form a part of the tube mill. There were certain other components like motors, coupling, gear 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

STREV Nos.6 of 2005; 25 and 26 of 2010

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 in the said decision confirmed the order of the CEGAT dated 15th May, 1998 (Silical Metallurgic Ltd. v. Commissioner of Central Excise, Cochin) 1999 (106) E.L.T. 439 (Tribunal). In that case, just as in the present one, the electric arc furnace had not been manufactured in any factory in an assembled form and taken to the site for erection. The electric arc furnace was constructed and installed at the site. It consisted of (i) a central pillar bolted to the foundation embedded to the earth by civil works at a depth of 15 feet, (ii) the axis with rotation mechanism and the wheels and rail arrangements etc. and (iii) the furnace constructed brick by brick in a steel shell and rammed with carbon paste. The foundation, the bolting arrangements to the

STREV No. 6 of 2006; 25 and 26 of 2010

foundation, the railings as well as the wheels formed an integral part of the submerged electrical arc furnace. The entire mass was baked by burning and heating for 20 days. It was held by the Supreme Court that the construction of the electric arc furnace had taken place simultaneously with the civil work and "the foundation has not acted as a base for laying the machinery." The item had come into existence along with civil work. It could not be dismantled and on such dismantling only spare parts were recoverable. It was accordingly held that it was not exigible to excise duty.

22. The later decisions including those in Mittal Engineering Works Pvt. Ltd. v. CCE, Meerut 1996 (88) ELT 622 (SC), Sirpur Paper Mills Ltd. v. CCE, Hyderabad 1998 (97) ELT 3 (SC), Duncan Industries Ltd. v. CCE, Mumbai 2000 (88) ECR 19 (SC), Triveni Engineering Industries Ltd. v. CCE 2000 (120) ELT 273 (SC) CCE, Jaipur v. Man Structurals Ltd. 2001 (130) ELT 401 (SC) and TTG Industries Ltd. V. Collector of Central Excise (2004) 4 SCC 751 have reiterated the above legal position vis-à-vis different kinds of plant and machinery that on account of their nature of being embedded to the earth cannot be considered moveable properties or goods.

23. In this context, it is necessary to refer to a circular No.58/1/2002-CX, dated 15th January, 2002 issued by the Government of India clarifying the question of excisability of

STREV Nos.6 of 2005; 25 and 26 of 2010

plant and machinery assembled at site. It was inter alia clarified in para 4 as under:

"4. The plethora of such judgments appears to have created some confusion with the assessing officers. The matter has been examined 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 'goods'. For example, plants for transportation of material (such as handling plants) are actually a system or a net work of machines.

The system comes into being upon assembly of its component. In such a situation there is no

STREV No. 6 of 2006; 25 and 26 of 2010

manufacture of 'goods' as it is only a case of assembly of manufactured goods into a system. This cannot be compared to a fabrication where a group of machines themselves may be combined to constitute a new machine which has its own identity/marketability and is dutiable (e.g. a paper making machine assembled at site and fixed to the earth only for the purpose of ensuring vibration free movement).

(e) If items assembled or erected at site and attached by foundation to earth cannot be dismantled without substantial damage to its components and thus cannot be reassembled, then the items would not be considered as moveable and will, therefore, not be excisable goods."

24. In its judgment in Commissioner of Central Excise, Indore v. Virdi Brothers 2007 (207) E.L.T. 321 (S.C.) the Supreme Court while dealing with the correctness of the order passed by the CEGAT holding that refrigeration plant/cold storage plant which were fabricated out of duty paid materials would be subject to excise duty, held that these plants are basically systems comprising of various components and are thus in the nature of systems and are not machines as a whole. Therefore, they could not be considered to be excisable goods. The Supreme Court accordingly dismissed the Department's appeal.

25. A similar view was held in Commissioner of Central Excise, Indore v. Cethar Vessels Ltd. 2007 (212) E.L.T. 454 (S.C.) and Ibex Gallaghar Pvt. Ltd. v. Commissioner of Central Excise, Bangalore 2007 (215) ELT 161 (SC). This Court followed the

STREV Nos.6 of 2005; 25 and 26 of 2010

above decisions and held likewise in Srei International Financial Ltd. v. State of Odisha (2008) 16 VST 193 (Ori).

25.1 The last-mentioned judgment requires a detailed discussion as the facts therein were similar to the facts of the present case. SREI was a non-banking finance company carrying on business in leasing as well as hire purchase of plant, machinery and other equipments. On 31st July, 1995 a tripartite agreement was entered between SREI and Indian Metal Ferro Alloys Ltd. (IMFA) and Isgee John Thompson (IJT). Under the agreement IMFL was referred to as "the user", IJT was referred to as "supplier/contractor" 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.

STREV No. 6 of 2006; 25 and 26 of 2010

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 Odisha and was being used in Odisha. Reliance was placed on the Explanation to Section 2(g)(iv)(a)(i) of the OST Act which stipulates that the sale or purchase of goods shall be deemed to take place inside the State if the goods are within the State at the relevant time.

25.5 The Assessee-Petitioner relied on the judgment in 20th Century Finance Corpn. Ltd. v. State of Maharashtra [2009] 119 STC 182 and contended that the lease rental was not exigible to sales tax. It became payable on account of an inter-state lease agreement which was disclosed in the gross turnover. Further it was contended that payment of lease rental would arise only after erection, and commissioning of the boiler plant i.e. only after the plant was embedded to the earth. This being a lease of immovable property, the transaction was not exigible to sales tax under the OST Act. The third contention was that the agreement of lease was signed in West Bengal and the Assessing Officer in Odisha has no jurisdiction to tax the lease rental.

STREV Nos.6 of 2005; 25 and 26 of 2010

25.6 Reliance was placed before this Court on a decision in ITC Classic Finance and Services v. Commissioner of Commercial Taxes (1995) 97 STC 330 (AP) which was affirmed by the Supreme Court dismissing the appeal filed by the State of Andhra Pradesh.

25.7 In Srei International Financial Ltd. v. State of Odisha, this Court examined the following questions:

"(i) Whether the exhaustion of statutory remedy can be a bar in this case for this Court to exercise its jurisdiction under Article226 of the Constitution?

(ii) Whether a dealer is liable to pay tax on the ground that he admitted to pay tax on a certain transaction even if the said transaction is not taxable within the provisions of the OST Act?

(iii) Whether the-lease rental received by the Petitioner from IMFA is exigible to tax under the provisions of the OST Act?"

25.8 As regards question (i), this Court held that the writ petition was maintainable even though the statutory remedy has not been exhausted. As regards question (ii) it was held that there was no estoppel against the statute. In other words, the liability to pay tax had to be imposed by law, "it cannot be imposed on admission".

STREV No. 6 of 2006; 25 and 26 of 2010

25.9 As regards question (iii), after discussing the decisions in Gannon Dunkerley and Co. v. State of Rajasthan (1993) 88 STC 204 and ITC Classic Finance Services v. Commissioner 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 Choudwar. It is only if the said erected and commissioned boiler is considered to be immovable property because of value addition, it may be regarded as different from the boiler which was transported from Haryana to Orissa pursuant to the lease agreement executed in Calcutta. But then if the said erected, commissioned boiler is regarded as immovable property, no tax under Section 2(g) of the OST Act can be charged on the lease rental, as tax can only be charged on transfer of right to use goods

STREV Nos.6 of 2005; 25 and 26 of 2010

and not in respect of lease of immovable property."

(emphasis supplied)

Accordingly, the order of assessment and the orders affirming it were quashed.

26. Mr. Padhy, learned Additional Standing Counsel for the Department referred to the decisions of the Supreme Court in Sirpur Paper Mills Ltd. v. Collector of Central Excise, Hyderabad (1998) 1 SCC 400. The said decision was already taken note of in the circular issued by the Department in 2002 which has been extracted hereinbefore. The said circular thereafter accepted the proposition advocated by the Petitioners in these cases.

27. Mr. Padhy, learned ASC also referred to the decision of the Supreme Court in Commissioner of Central Excise, Ahmedabad v. Solid and Correct Engineering Works (2010) 5 SCC 122. There the question was about exigibility to excise duty on the ground that assembling, installation and commissioning of asphalt drum/hot mix plants "amounted to manufacture inasmuch as the plant that eventually came into existence was a new product with a distinct name, character and use different from what went into its manufacture." On the facts of that case it was held that "what is attached can be easily detached from the foundation and therefore, that need not be said to be "attached to the earth" within the meaning of Section 3 of the Transfer of Property Act. It was held to the fact of that case that "the machine is fixed by nut and bolts

STREV No. 6 of 2006; 25 and 26 of 2010

to a foundation not because the intention was to permanently attach it to the earth but because a foundation was necessary to provide a wobble free operation to the machine." It was again held in the fact of the case that an attachment of that kind "without the necessary intent of making the same permanent cannot constitute permanent fixing, embedding or attachment in the sense that would make the machine a part and parcel of the earth permanently".

28. The position as far as the present case is concerned is different. Here the flameless furnace was never intended to be dismantled or moved. It continued to remain in the premises of JSCPL. The facts of the present case are akin to those in the decisions referred to hereinbefore i.e. Virdi Brother (supra), Cethar Vessels Ltd. (supra) and Ibex Gallagher Pvt. Ltd. (supra). Incidentally the Supreme Court in Solid and Correct Engineering Works (supra), does not refer to the said decisions, or to the 2002 circular referred to therein.

29. Consequently, the Court accepts the plea of present Petitioners and answers the questions in STREV No.6 of 2005 as under:

(i) The furnace permanently embedded to the earth is an immovable property and is not liable to Orissa Sales Tax as sale of machinery.

(ii) The furnace in question is not covered under "machinery" under Entry 70 List-C of Schedule of rates and therefore, is not exigible to sales tax.

STREV Nos.6 of 2005; 25 and 26 of 2010

30. In STREV Nos. 25 and 26 of 2010 the questions framed therein are answered as under:

(i) The contract involving receipt of lease rent for leasing of the flameless furnace does not constitute sale or resale of goods within the meaning of sale under Section 2(g) of the OST Act.

(ii) Leasing of flameless furnace cannot be the subject matter of taxation since it has suffered Orissa Sales Tax at an interior stage in view of Section 8 of the Orissa Sales Tax Act.

(iii) The question of concessional rate of tax in declaration Form IV does not arise in view of the answers at (i) and (ii) above.

31. The impugned orders which hold to the contrary shall stand set aside accordingly. The consequential orders shall be issued within a period of eight weeks by the Department in accordance with law.

32. The revision petitions are disposed of in the above terms.

(S. Muralidhar) Chief Justice

( B.P. Routray) Judge S.K. Jena/PA

STREV No. 6 of 2006; 25 and 26 of 2010