2017 (5) TMI 1122

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....roperty? (ii) Whether, tax can be imposed under Section 3 F of the U.P. Trade Tax Act, on the goods purchased from outside the State of U.P., specifically for the purpose of being used in the construction of building for which risk and reward passed on the purchaser on execution of sale deed? (iii) Whether, the addition of 20% profits made in the purchase value of goods purchased for being used in the construction activity is based on surmises and conjectures and, therefore, not sustainable in the eyes of law? " On the first question, learned counsel submits that there was no works contract since the assessee was the owner of land in question and had raised constructions. It is also stated that although allotment was made but no transf....

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.... things are fully met. It is so because in the performance of a contract for construction of building, the goods (chattels) like cement, concrete, steel, bricks etc. are intended to be incorporated in the structure and even though they lost their identity as goods but this factor does not prevent them from being goods. (iii) Where a contract comprises of both a works contract and a transfer of immovable property, such contract does not denude it of its character as works contract. The term "works contract" in Article 366 (29- A)(b) takes within its fold all genre of works contract and is not restricted to one specie of contract to provide for labour and services alone. Nothing in Article 366(29-A)(b) limits the term "works contract". (i....

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....works contract where the contract is divisible into one for the sale of goods and the other for supply of labour and services. In other words, the single and indivisible contract, now by Forty-sixth Amendment has been brought on par with a contract containing two separate agreements and States have now power to levy sales tax on the value of the material in the execution of works contract. (ix) The expression "tax on the sale or purchase of goods" in Entry 54 in List II of Seventh Schedule when read with the definition clause 29-A of Article 366 includes a tax on the transfer of property in goods whether as goods or in the form other than goods involved in the execution of works contract. (x) Article 366(29-A)(b) serves to bring transac....

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.... construct for cash, deferred payment or other valuable consideration. iv. The developers had undertaken to build for the prospective purchaser. v. Such construction/development was to be on payment of a price in various installments set out in the agreement. vi. The developers were not the owners. They claimed lien on the property. They had right to terminate the agreement and dispose of the unit if a breach was committed by the purchaser. A clause like this does not mean that the agreement ceases to be "works contract". So long as there is no termination, the construction is for and on behalf of the purchaser and it remains a "works contract". vii. (vii) If there is a termination and a particular unit is not resold but retained by....