Specific entry prevails in works contract classification for central air-conditioning plant installation under composition tax rules.

Classification of a works contract for fabrication and installation of a central air-conditioning plant turned on whether the installation fell within the composition schedule entry for air-conditioners or the broader entry for plant and machinery. The Gujarat High Court treated the air-conditioning entry as the more specific provision, relying on the statutory scheme, the ordinary meaning of the terms, and the technical character of the system. It found no reliable common-parlance basis to separate an air-conditioning plant from air-conditioner installations for this purpose. The contract was therefore classified under the air-conditioner entry, attracting composition tax at 15 per cent rather than the lower rate under the plant-and-machinery entry.

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Issues: Whether the works contract for fabrication and installation of an air-conditioning plant fell under entry 2 of the composition schedule, taxable at 15 per cent, or under entry 5, taxable at 5 per cent.

Analysis: Section 55A of the Gujarat Sales Tax Act, 1969 empowered the State Government to fix composition rates by notification having regard to the incidence of tax on the goods involved in the execution of works contracts. Entry 2 of the notification covered installation of air-conditioners and A.C. coolers, while entry 5 covered fabrication and installation of plant and machinery. On the facts, the contract related to a central air-conditioning system installed at site. The Court held that the essential character of the installation was the provision of air-conditioning, and that the terminology of entry 2 was broad enough to include such a system. It further held that there was no reliable common parlance material to distinguish air-conditioning plant from air-conditioners for this purpose, and that dictionary meaning and the technical nature of the system supported inclusion under entry 2. The Court also applied the principle that a specific entry prevails over a general entry, and treated entry 2 as the specific provision governing air-conditioning installations.

Conclusion: The works contract was covered by entry 2 and was liable to composition tax at 15 per cent, not by entry 5 at 5 per cent.

Final Conclusion: The reference was answered against the assessee, and the connected writ petition was disposed of on the same footing.

Ratio Decidendi: For composition-rate classification under the notification, installation of a central air-conditioning plant is included within the expression covering installation of air-conditioners where the specific entry is broader and more directly applicable than the general entry for plant and machinery.

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