TaxTMI 
TaxTMI 
2017 (2) TMI 1365
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....;), for fabrication of super luxury bus bodies on the chassis allocated by the Corporation for Rs. 7,11,95,807.55 vide letter dt 16.5.2011. The contract, inter alia, provided that the petitioner assessee being a Fabricator, shall manufacture and fabricate bus bodies on the chassis supplied by the Corporation strictly as per drawing and specifications. After the bus bodies were completed by the Fabricator-assessee, the same were to be delivered by the Fabricator at the Corporation's vehicle yard at Musheerabad (A.P.). The contract also, inter alia, provided that the petitioner/assessee being a Fabricator, shall keep the chassis insured from all risks during the period the same remained in the custody of petitioner. The officers of the Corporation were free to check the work being carried on by the assessee for the purpose of inspection, as it was to be carried in accordance with the contract and specifications. The Corporation further created a lien on the material which is procured for manufacture and fabrication of bus body and a right to purchase the material in case the cancellation of the contract on contravention of any of the conditions of work order. The work order furth....
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....during execution of contract became the owner of these goods or vehicle or any system. 5. Taking into consideration the aforesaid, the assesse moved an application for exemption certificate in Form WT-1, before the Assessing Officer, however, the Assessing Officer took into consideration the contract and taking into consideration judgments of CTO, Anti Evasion-I v. Rajesh Motors & Others [1997] 107 STC 468 (RTT), as also judgment of Dutt Motor Body Builders v. State of Gujarat (1999) 116 STC 216 (Guj.), Sundaram Industries Pvt. Ltd. v. The State of Madras (1975) 36 STC 95 (Mad), and also the Apex court judgment in State of Andhra Pradesh v. Kone Elevators (India) Ltd. [2005] 140 STC 22, held that it is not in the nature of works contract and is a simplicitor sale, and accordingly denied/rejected the application moved for the exemption certificate. 6. Appeals were preferred before the Dy. Commissioner (Appeals) before whom the facts were reiterated and it was brought to the notice that the judgment relied upon by the AO of CTO v. Rajesh Motors (supra), was overruled by the Apex court in the case of Kumar Motors v. Commissioner of Sales Tax, U.P., Lucknow [2007] 5 VST 646 (SC),....
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....onsidering the various judgments and also the fact that the judgment relied upon by the AO in the case of CTO v. Rajesh Motors (supra), stood overruled. Learned counsel also contended that the Tax Board relied on the judgment in the case of Sundaram Industries Pvt. Ltd. v. The State of Madras (supra), and Dutt Motor Body Builders v. State of Gujarat (supra), however, the said judgments related prior to 46th Amendment made in the Constitution of India and even by then the law of Works Contract was not enacted and learned counsel also brought to the notice of court that there is yet another and latest judgment of Kone Elevator of India Pvt. Ltd. v. State of Tamil Nadu [5 Judges Bench] (2014) 7 SCC 1, which has taken into consideration all earlier judgments on the issue including the judgment of State of Andhra Pradesh v. Kone Elevators (India) Ltd (supra) by the Apex court, and also contended that judgment in the case of Larsen & Toubro Ltd. & Anr v. State of Karnataka & Anr (2014) 1 SCC 708, has held that the narrow meaning given to the term "Works Contract" in Gannon Dunkerley & Co. v. State of Rajasthan (1993) 1 SCC 364, no longer survived. Learned counsel also contended that a fi....
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.... supported the order passed by the AO and Tax Board and relied on Gannon Dunkerley & Co. v. State of Rajasthan (supra), Hindustan Shipyard Ltd. v. State of A.P. (2000) 6 SCC 579, T.V. Sundram Iyengar & Sons v. State of Madras (1975) 3 SCC 424, Dutt Motor Body Builders v. State of Gujarat (supra). 12. I have considered arguments advanced by the learned counsel for the parties and gone through the material, impugned order and judgments. 13. It would be appropriate to quote the definition of "Sale" and "Works Contract" as given in the RVAT Act, as also "Works Contract" as used in Art. 366(29-A)(b) of the Constitution of India :- "Sec.2(35) - "sale" with all its grammatical variations and cognate expressions means every transfer of property in goods by one person to another for cash, deferred payment or other valuable consideration and includes-- (i) a transfer, otherwise than in pursuance of a contract, of property in goods for cash, deferred payment or other valuable consideration; (ii) a transfer of property in goods (whether as goods or in some other form) involved in the execution of a works contract; (iii) any delivery of goods on hire-pu....
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....er recording reasons for doing so, condone the delay, on payment of a late fee of rupees one thousand for a year or part thereof. No such application shall be entertained after expiry of one year from the date of the award of the contracts; (4) That on receipt of the application under clause (1), the AA on being satisfied as to the correctness of the facts mentioned therein, shall issue exemption certificate in Form WT-3 appended hereto, in the case of works contracts awarded on or after 1.4.2006 and in Form WT-4 appended hereto, in the case of work contracts, where the contractor opted for automatic exemption fee under rule 12 of RST Rules, 1995 for exemption, for the remaining part of the contract as on 1.4.06. A copy thereof, shall be sent to the awarder; (5) That such contractor shall pay exemption fee at the rate specified in Column 3 of the list given below in the following manner:- (i) where an awarder is a Department of any Govt., a Corporation, a public undertaking, a co-operative society, a local body, a statutory body, an autonomous body, a trust or a private or public limited company, an amount calculated at the rate as specified in column No.....
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.... plant, laying of pipe line with material. 2.25% 4 Any other kind of works contract not covered by item Nos. 1, 2 and 3. 3.00% This notfn shall be deemed to have come into force w.e.f. 1.4.2006. 15. The assessee claims that it falls in Sl. No.4 where rate of exemption fee was highest i.e. 3.00% of the total value of contract. 16. Before elaborating further, it would be appropriate at this juncture to take into consideration the judgments on the issue. The Apex court in the case of Kone Elevator India Pvt. Ltd. v. State of Tamil Nadu [(supra) Five Judges Bench] took into consideration what is "works contract" for the purpose of Art. 366(29-A)(b) of the Constitution of India, and considered all the judgments delivered till the year 2014 including the judgment in the case of Larsen & Toubro Ltd. v State of Karnataka (supra), which was affirmed by this judgment, wherein it was observed ad infra :- [Larsen & Toubro] "56. It is important to ascertain the meaning of sub-clause (b) of clause 29-A of Article 366 of the Constitution. As the very title of Article 366 shows, it is the definition clause. It....
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....or purchase of goods" and overcome Gannon Dunkerley (1) (AIER 1958 /SC 560. Seen thus, even if in a contract, besides the obligations of supply of goods and materials and performance of labour and services, some additional obligations are imposed, such contract does not cease to be works contract. The additional obligations in the contract would not alter the nature of contract so long as the contract provides for a contract for works and satisfies the primary description of works contract. Once the characteristics or elements of works contract are satisfied in a contract then irrespective of additional obligations, such contract would be covered by the term 'works contract'. Nothing in Article 366(29-A) (b) limits the term "works contract" to contract for labour and service only. Learned Advocate General for Maharashtra was right in his submission that the term "works contract" cannot be confined to a contract to provide labour and services but is a contract for undertaking or bringing into existence some "works". We are also in agreement with the submission of Mr. K.N. Bhat that the term "works contract" in Article 366(29-A)(b) takes within its fold all genre of works co....
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....e concept of "dominant nature test" or, for that matter, the "degree of intention test" or "overwhelming component test" for treating a contract as a works contract is not applicable; (iii) the term "works contract" as used in Clause (29A) of Article 366 of the Constitution takes in its sweep all genre of works contract and is not to be narrowly construed to cover one species of contract to provide for labour and service alone; and (iv) once the characteristics of works contract are met with in a contract entered into between the parties, any additional obligation incorporated in the contract would not change the nature of the contract. 60. Coming to the stand and stance of the State of Haryana, as put forth by Mr. Mishra, the same suffers from two basic fallacies, first, the supply and installation of lift treating it as a contract for sale on the basis of the overwhelming component test, because there is a stipulation in the contract that the customer is obliged to undertake the work of civil construction and the bulk of the material used in construction belongs to the manufacturer, is not correct, as the subsequent discussion would show; and second, th....
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....clusion that it was a contract for sale. The principal logic applied, i.e., the incidental facet of labour and service, according to us, is not correct. It may be noted here that in all the cases that have been brought before us, there is a composite contract for the purchase and installation of the lift. The price quoted is a composite one for both. As has been held by the High Court of Bombay in Otis Elevator (supra), various technical aspects go into the installation of the lift. There has to be a safety device. In certain States, it is controlled by the legislative enactment and the rules. In certain States, it is not, but the fact remains that a lift is installed on certain norms and parameters keeping in view numerous factors. The installation requires considerable skill and experience. The labour and service element is obvious. What has been taken note of in Kone Elevators (supra) is that the company had brochures for various types of lifts and one is required to place order, regard being had to the building, and also make certain preparatory work. But it is not in dispute that the preparatory work has to be done taking into consideration as to how the lift is going to be at....
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....t" as used in Art. 366(29A)(b), as also the definitions of "sale" and "works contract", specially the word used in the definition of "works contract" to include "erection" and "installation" would in my view cover it to be falling within the ambit of works contract, and taking into consideration the terms & conditions of the agreement/contract arrived at by and between the assessee and the Corporation, and the works assigned, referred to hereinbefore, in para 3 supra, in my view, the assessee has indeed justified in claiming that it is a works contract and not a sale as held by the lower authorities, including the Tax Board. In my view, it does not materially make any difference if the assessee did not get the body or chassis insured as raised by the learned counsel for the Revenue, particularly when it is admitted that the chassis was duly insured. 20. On perusal of the agreement/contract entered into by and between the assessee and the Corporation, in my view the nature of the contract certainly falls within the ambit and definition of "works contract", as given in sec. 2(44) of the VAT Act, which includes in its ambit "assembling", "fabrication", "erection", "installation", "....