9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2017 (2) TMI 1365 - HC - VAT and Sales TaxExemption certificate in Form WT-1 - Works contract or Sale? - fabrication of super luxury bus bodies on the chassis allocated by the Corporation - 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. Held that - The Apex court in the case of Kone Elevator of India Pvt. Ltd. v. State of Tamil Nadu (5 judges) 2014 (5) TMI 265 - SUPREME COURT affirmed the judgment in the case of Larsen & Toubro Ltd. v State of Karnataka 2013 (9) TMI 853 - SUPREME COURT , and held that the judgment in the case of State of A.P. v. Kone Elevators (India) Ltd 2005 (2) TMI 519 - SUPREME COURT OF INDIA does not lay down the correct law and, therefore, was overruled. Thus, the judgment in the case of Kone Elevator of India Pvt. Ltd. v. State of Tamil Nadu of 2014, governs the case at hand and being latest and of Five Judges Bench, holds the field and the other judgments relied upon by both the learned counsel, are not required to be referred. 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 - 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. 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 , fitting out and it takes in its sweep all genre of works contract and is not to be narrowly construed. 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, like seats or air conditioner system being provided by the awarder APSRTC. The claim of learned counsel for the Revenue that the body has been sold, is not found to be justified - Petition allowed - decided in favor of petitioner.
Issues Involved:
1. Whether the contract awarded to the petitioner for fabrication of bus bodies on the chassis supplied by the Corporation is a works contract. 2. Whether the Rajasthan Tax Board was justified in deciding that the contract is a sale. Issue-wise Detailed Analysis: Issue 1: Whether the contract is a works contract The petitioner was awarded a contract by Andhra Pradesh State Road Transport Corporation for fabricating bus bodies on the chassis provided by the Corporation. The contract specified that the petitioner, as a fabricator, would manufacture and fabricate bus bodies according to the Corporation’s drawings and specifications. The petitioner was also responsible for insuring the chassis during fabrication. The petitioner argued that the contract involved various activities such as pre-treatment, chassis preparation, structure clearance, panelling, flooring, and fitting of seats and air conditioning systems provided by the Corporation. The ownership of the chassis, seats, and AC systems remained with the Corporation throughout the contract execution. The petitioner applied for an exemption certificate under the Rajasthan Value Added Tax Act, 2003, claiming the contract was a works contract. The Assessing Officer, however, denied the exemption, treating the contract as a sale based on previous judgments. The Deputy Commissioner (Appeals) later reversed this decision, recognizing the contract as a works contract. The Rajasthan Tax Board, however, reinstated the Assessing Officer's decision, classifying the contract as a sale. The court examined the definitions of "sale" and "works contract" under the Rajasthan Value Added Tax Act, 2003, and Article 366(29-A)(b) of the Constitution of India. It referred to the Supreme Court’s judgment in Kone Elevator India Pvt. Ltd. v. State of Tamil Nadu, which clarified that a works contract is indivisible and includes both the supply of goods and the provision of labor and services. The court concluded that the petitioner’s contract fell within the ambit of a works contract, as it involved assembling, fabrication, erection, and installation, which are included in the definition of works contract. Issue 2: Whether the contract is a sale The Rajasthan Tax Board had decided that the contract was a sale, not a works contract. The respondent contended that the contract involved the creation and fitting of bus bodies on the chassis provided by the Corporation, which should be treated as a sale. They argued that the fixed price of the bus body and the provision of major components like seats and air conditioning systems by the Corporation indicated a sale transaction. The court, however, disagreed with the Tax Board’s decision, emphasizing that the nature of the contract, as defined by the activities and responsibilities outlined, clearly fell within the definition of a works contract. The court noted that the characteristics of a works contract were met, and the additional obligations, such as the provision of seats and air conditioning systems by the Corporation, did not change the nature of the contract. Conclusion: The court held that the contract for fabricating bus bodies on the chassis provided by the Corporation was indeed a works contract and not a sale. The petitions were allowed, and the question of law was answered in favor of the assessee. The court directed that the work accomplished by the assessee should be charged tax or exemption fee as applicable under the works contract provisions.
|
