Definition of Machinery for the purpose of Sales Tax Act

The question of law raised was as to whether “Hydraulic Excavator” is a machine under Entry 2 or motor vehicle under Entry 13 of the Schedule attached to Act, 2007?

Revenue had filed a revision petition under Section 58 of the U.P. Value Added Tax Act, 2008 on being aggrieved by the order of U.P. Trade Tax Tribunal whereby its Second Appeal was dismissed, resultantly confirming the order passed by First Appellate Authority holding 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, 2007 i.e., “machinery and spare parts”, but is governed by Entry No. 13 of the Schedule, i.e., Motor Vehicles of all kinds.

The question of law raised was as to whether “Hydraulic Excavator” is a machine under Entry 2 or motor vehicle under Entry 13 of the Schedule attached to Act, 2007?

It was observed that the term “machinery” is a wider term, deriving its meaning from the term “machine” but its scope being wider than the term “machine”. The earlier 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 and now 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.

The “machinery” would infact mean to be 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.

Accordingly, as held, “Hydraulic Excavator” would satisfy the meaning of term “machinery” in wider sense and, therefore, it would be 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.

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”. 

The “Hydraulic Excavator” as held would be governed by Entry 13 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 an 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 Entry 13 of the Schedule attached to Act.

[Commissioner, Commercial Tax, Lucknow vs. Anand Tyres]
(Allahabad HC, 05.02.2015)
(Sales/Trade Tax Revision No. 1408 of 2009)