Works contract taxation: goods deemed sold in transformer repair contracts were held outside service tax.

In a composite contract for repair of old and damaged transformers, the goods deemed to have been sold in execution of the works contract were outside the scope of service tax. The Court accepted the Tribunal's view that the goods component could not be taxed as service, and no material was produced to justify a different conclusion. The levy of service tax on the goods portion of the composite repair contract was therefore not sustainable.

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Issues: Whether, in a composite contract for repair of old and damaged transformers, the goods deemed to have been sold in execution of the works contract could be brought to service tax, and whether the total contract value was taxable as service.

Analysis: The Court agreed with the Tribunal that the goods which were deemed to have been sold in execution of the works contract did not fall within the purview of service tax. No material was placed to justify a different view.

Conclusion: The levy of service tax on the goods portion of the composite repair contract was not sustainable.

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