Indivisible works contract for wind mills cannot be taxed as goods; foundation and installation charges remain exempt.

Foundation, erection, installation and commissioning work associated with a wind mill was held not to constitute "goods" under the Karnataka Sales Tax Act. Although wind mills and specially designed devices running exclusively on wind power were exempt under the Fifth Schedule, the tax authorities had sought to levy sales tax on the charges attributable to the non-goods component. The Court held that where the contract was indivisible and comprehensive, and the work was treated as part of a works contract, such charges could not be taxed merely because they related to an exempt wind mill supply. The assessee was therefore entitled to exemption for the wind mill transaction.

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Issues: Whether the foundation, erection, installation and commissioning charges relating to wind mills formed part of exempt goods under the Karnataka Sales Tax Act, and whether sales tax could be levied on such charges.

Analysis: Section 8 of the Karnataka Sales Tax Act exempts the sale of goods specified in the Fifth Schedule, and Entry 57 covers wind mills and specially designed devices running exclusively on wind power. The authorities had treated the expenditure attributable to foundation and installation as taxable on the footing that it did not fall within the expression "wind mill". The Court held that foundation work or installation work is not "goods" at all. Even if such work is outside the expression "wind mill", it cannot be brought to tax as goods when the assessing authority itself had characterised it as part of the works contract and the appellate authority had found the contract to be indivisible and comprehensive.

Conclusion: Sales tax could not be levied on the foundation, erection, installation or commissioning charges, and the assessee was entitled to exemption for the wind mill transaction.

Final Conclusion: The assessment to the extent it fastened tax on the non-goods component of the wind mill contract was unsustainable, and the appeal succeeded with consequential relief.

Ratio Decidendi: Work forming part of an indivisible works contract cannot be taxed as "goods" merely because it is associated with the supply and commissioning of an exempt item.

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