Lift supply and installation contracts are works contracts where supply and fitting form one composite taxable arrangement.

A composite contract for the supply, assembly, commissioning and installation of lifts is treated as a works contract where the contractual terms show that supply and installation are inseparable. After the Forty-sixth Amendment, Article 366(29A)(b) permits taxation of the transfer of property in goods involved in execution of such a contract, and the dominant nature test is not determinative for this class of composite arrangements. The earlier view treating lift supply-and-installation contracts as a mere sale was overruled, and the legal position was settled in favour of works contract treatment for tax purposes.

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Issues: Whether the manufacture, supply and installation of lifts/elevators under the standard contract constituted a contract of sale or a works contract.

Analysis: The majority held that the governing question must be answered from the true terms of the bargain. The contract showed a composite arrangement in which supply of lift components and installation were inseparably linked, with the contractor undertaking supply, assembly, commissioning and installation of the lift at site. The Court held that after the Forty-sixth Amendment, Article 366(29A)(b) permits taxation of the transfer of property in goods involved in execution of a works contract, and that the dominant nature test no longer controls such composite contracts. It concluded that the reasoning in the earlier view treating the transaction as a sale was incorrect because the installation activity was not merely incidental but formed part of the composite works contract.

Conclusion: The transaction was held to be a works contract and not a mere sale of goods, and the earlier contrary view was overruled.

Concurring Opinion: The majority outcome was opposed by a separate opinion which held that the contractual terms disclosed a sale of lifts and not a works contract, emphasizing that the essential object was supply of the elevator and that the installation element was insufficient to change the character of the bargain.

Final Conclusion: The legal position was settled in favour of treating such lift supply-and-installation arrangements as works contracts for tax purposes, with the earlier contrary precedent displaced.

Ratio Decidendi: After the Forty-sixth Amendment, a contract for supply and installation of lifts is taxable as a works contract where the contractual terms disclose a composite arrangement for transfer of property in goods involved in execution of the work, and the dominant nature test is not determinative.

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