2020 (9) TMI 45

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....and not works contract. The assessment was challenged before this Court in W.P.No.10938 of 2009. 3. Pending writ petition, a Constitution Bench of the Supreme Court rendered judgment on the issue of taxability of sale/works contract in Kone Elevator (India) Pvt. Ltd. V. State of Tamil Nadu (71 VST 1). Four Judges rendered the majority view setting down parameters as to when a transaction was to be construed as a works contract and the minority view was that the transaction in that case constituted a sale. The assessments were remanded to the file of the Assessing Authority to apply the parameters set out therein and determine the nature of the transaction afresh. The conclusions by the majority are as follows: ....... 63. Considered on the touchstone of the aforesaid two Constitution Bench decisions, we are of the convinced opinion that the principles stated in Larsen and Toubro (supra) as reproduced by us hereinabove, do correctly enunciate the legal position. Therefore, "the dominant nature test" or "overwhelming component test" or "the degree of labour and service test" are really not applicable. If the contract is a composite one which falls under the defin....

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....transfer either in goods or some other form. In fact, after the goods are assembled and installed with skill and labour at the site, it becomes a permanent fixture of the building. Involvement of the skill has been elaborately dealt with by the High Court of Bombay in Otis Elevator (supra) and the factual position is undisputable and irrespective of whether installation is regulated by statutory law or not, the result would be the same. We may hasten to add that this position is stated in respect of a composite contract which requires the contractor to install a lift in a building. It is necessary to state here that if there are two contracts, namely, purchase of the components of the lift from a dealer, it would be a contract for sale and similarly, if separate contract is entered into for installation, that would be a contract for labour and service. But, a pregnant one, once there is a composite contract for supply and installation, it has to be treated as a works contract, for it is not a sale of goods/chattel simpliciter. It is not chattel sold as chattel or, for that matter, a chattel being attached to another chattel. Therefore, it would not be appropriate to term i....

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....ed order of assessment was passed by the respondent relying upon the judgment of the Hon'ble Supreme Court in State of Andhra Pradesh vs. Kone Elevators (India) Limited, reported in (2005) 140 STC 22 (SC); that the said issue was subsequently taken up by the Hon'ble Supreme Court itself and a judgment was passed in Kone Elevator India Pvt.Ltd. vs. State of Tamil Nadu and others, reported in (2014) 71 VST 1 (SC), in which it has been categorically held that the manufacture, supply and installation of Lifts / Elevators comes under the definition of Sale and not Works Contract.. The transaction that is involved in the present case is with regard to the contract for designing, supplying and installing Modern Kitchens / Wardrobes. The scope of work undertaken by the petitioner includes measurement of the kitchen area, preparation of design regarding the type of module according to the space available, alterations in civil work, manufacture and supply of panels and shelves and erection and commissioning at the work site. The learned counsel for the petitioner has submitted that since the transactions involved in the present case and in the judgment of the Hon'ble Supreme Court in (2014) ....

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....nly. Notwithstanding the objections, an order of assessment came to be passed on 04.09.2019, wherein the objections of the petitioner were rejected, the Authority coming to the conclusion that the transaction in question constituted a sale. 7. An application for rectification was filed by the petitioner that also came to be rejected on 17.10.2019, which order is impugned in this writ petition. 8. The issue canvassed before me relates to the interpretation of the contract as well as other documents entered into inter se the petitioner and its customers which do not appear to even be part of the record of the assessing officer. It is only upon such examination that one could conclude as to whether the transaction is question would constitute a works contract or a direct sale. The Assessing Authority, in the present case, has come to the conclusion that the transaction is a sale and the sole argument advanced by learned counsel for the petitioner is that, in coming to this conclusion, what has been applied is the minority view in the Kone Elevator (India) Pvt. Ltd (supra) and not the majority view. 9. What the petitioner appears to imply is that the conclusion of the Assessin....