9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2015 (7) TMI 229 - HC - VAT and Sales TaxClassification of contract - Whether the works contract entered into between the revisionist Company and a customer is a sale contract or a works contract - Held that - If the appellant, having a strong prima-facie case, is directed to deposit an amount of assessment so made or penalty so levied it would cause undue hardship to him though there may be no financial strains on the appellant running in a good financial condition. Even otherwise where two views are possible dispensation of deposit should be allowed to the assessee - Since the assessing authority has made the assessment relying exclusively on the earlier judgment of the Supreme Court in State of Andhra Pradesh Vs. M/S Kone Elevator, 2005 (2) TMI 519 - SUPREME COURT OF INDIA which has now been overruled by the Constitution Bench of the Supreme Court in Kone Elevator India Pvt. Ltd. Vs. State of Tamil Nadu 2014 (5) TMI 265 - SUPREME COURT , the revisionist is entitled to complete stay of the demand amount - Decision in the case of Pennar Industries Limited Versus State of Andhra Pradesh and Others 2009 (2) TMI 457 - SUPREME COURT OF INDIA and Benara Valves Ltd. Versus Commissioner of Central Excise and Another 2006 (11) TMI 6 - SUPREME COURT OF INDIA followed - The impugned order dated 19.06.2015 passed by the Tribunal is modified and a direction is issued to the Appellate Authority to decide the appeal of the revisionist expeditiously in accordance with law within a period of two months from the date of receipt of the certified copy of this order. - Decided in favour of assessee.
Issues Involved:
1. Classification of the contract as a sale contract or a works contract. 2. Validity of the assessment order based on the Supreme Court's decision in State of Andhra Pradesh vs. Kone Elevators (2005). 3. Applicability of the Constitution Bench decision in Kone Elevator India Pvt. Ltd. vs. State of Tamil Nadu (2014). 4. Consideration of the stay application by the Additional Commissioner (Appeals). 5. Principles for granting stay pending disposal of the appeal. Detailed Analysis: 1. Classification of the Contract: The primary issue revolves around whether the contract between the revisionist Company and its customers for supplying and installing lifts/elevators is a sale contract or a works contract. The assessing authority classified it as a sale contract, relying on the Supreme Court decision in State of Andhra Pradesh vs. Kone Elevators (2005), which held that the materials used in the lift were pre-assembled and transported to the site, indicating a sale contract. The revisionist argued that the contract is a composite one involving both the sale and installation of lifts, thus qualifying as a works contract. 2. Validity of the Assessment Order: The assessment order for the year 2009-2010 imposed a total demand of Rs. 5,53,54,723/- based on the classification of the contract as a sale contract. The revisionist Company challenged this order, arguing that the assessment relied on an outdated Supreme Court decision that had been overruled. 3. Applicability of the Constitution Bench Decision: The revisionist cited the Constitution Bench decision in Kone Elevator India Pvt. Ltd. vs. State of Tamil Nadu (2014), which overruled the earlier decision in State of Andhra Pradesh vs. Kone Elevators (2005). The Constitution Bench clarified that a composite contract for the supply and installation of lifts, involving significant labor and service elements, qualifies as a works contract. The judgment emphasized that the contract's nature, involving the integration of various components into a functional lift, necessitates treating it as a works contract. 4. Consideration of the Stay Application: The revisionist's stay application was initially partially granted by the Additional Commissioner (Appeals), who stayed 50% of the demand. The Commercial Tax Tribunal modified this to an 80% stay, requiring the revisionist to deposit the remaining 20%. The revisionist argued that the stay application should have been considered in light of the Constitution Bench decision, which would likely result in the revisionist's favor on merits. 5. Principles for Granting Stay: The Court referred to various precedents, including ITC Ltd. vs. Commissioner (Appeals) Custom and Central Excise Meerut-I and Pennar Industries Limited vs. State of Andhra Pradesh, emphasizing that stay applications should not be disposed of mechanically. The Court highlighted that a strong prima facie case and the potential for undue hardship should be considered. The Court noted that the assessment relied on an overruled decision, thus entitling the revisionist to a complete stay of the demand. Conclusion: The Court allowed the revision, modifying the Tribunal's order and directing the Appellate Authority to expedite the appeal's decision within two months. It ordered that no recovery of the remaining 20% of the tax demand should be made from the revisionist until the appeal is decided. The judgment underscores the importance of considering updated legal precedents and ensuring fair treatment in stay applications.
|
