2011 (3) TMI 1518 - HC - VAT and Sales Tax

Summary

Issues:
Determining the nature of a composite contract for construction work and the inclusion of electrical works in the contract value.

Analysis:
The case involved two revisions against a Tribunal order for the assessment years 2001-02 and 2002-03 regarding a works contract awarded by IIT, Kanpur. The petitioner was contracted for the construction of various buildings, including electrical works. The applicant applied for compounding under the U.P. Trade Tax Act, with civil work compounding accepted but electrical works value excluded. Appeals were filed, leading to the Tribunal setting aside the Joint Commissioner's order and restoring the assessing authority's decision.

The key contention was whether the contract was a composite indivisible one for civil works, including electrical works, or if the electrical works should be excluded from the contract value. The petitioner argued that the contracts were composite in nature, with the electrical works forming part of the main contracts. The counsel for the applicant highlighted the composite nature of the contracts and the inclusion of electrical works in the overall contract value.

Upon review, the judge found that the contracts clearly outlined the scope of work and provided a consolidated price for the entire work, with electrical works mentioned separately for convenience. The judge emphasized that since the contracts were civil in nature and included electrical works, the value of electrical works should not be excluded from the composite value. The Tribunal was deemed to have erred in excluding the electrical works' value from the overall contract value.

As a result, the Tribunal's order was deemed unsustainable, and the authorities were directed to issue a fresh order under section 7D of the Act, incorporating the value of electrical works in the civil contract. Consequently, both revisions were allowed based on the above observations.