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TMI BlogProviding men and materials for laying concrete mixture is to be treated as ‘Works Contract’ and not as ‘Sale’X X X X Extracts X X X X X X X X Extracts X X X X ..... Providing men and materials for laying concrete mixture is to be treated as ‘Works Contract’ and not as ‘Sale’ - By: - Bimal jain - Value Added Tax - VAT and CST - Dated:- 3-2-2015 - - Dear Professional Colleague, Providing men and materials for laying concrete mixture is to be treated as Works Contract and not as Sale We are sharing with you an important judgment of Hon ble High C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ourt, Madras, in the case of Thirumalai Ready Mix Concrete Vs. State of Puducherry [2015 (2) TMI 52 - MADRAS HIGH COURT] on the following issue: Issue: Whether men and materials provided for laying concrete mixture can be treated as Works Contract ? Facts and background: Thirumalai Ready Mix Concrete ( the Appellant ) is a manufacturer of ready mix cement concret ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e and also provides men and materials to lay concrete mixture on area specified by purchaser. For the Assessment Year 2003-04, the Appellant claimed exemption treating the transaction as a Works contract under Notification G. O. Ms. No. 50/90/F6, dated December 10, 1990. The assessment made was revised by the Department stating that supply and pumping of ready mix concrete was not Works contrac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t and entire turnover was liable to assessed to tax at 3 per cent. The Appellant contended that the transaction is a Works contract and produced the copies of the Agreement executed between the dealer and the purchaser ( the Agreement ). However, the Assessing Officer rejected the contention of the Appellant by taking the view that the Appellant could not produce the invoice copy showing pric ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of the material and labour charges separately and completed the assessment by treating the transaction as Sale . Thereafter, the Assistant Commissioner also agreed with the view of the Assessing Officer and rejected the appeal filed by the Appellant. On appeal being filed to the Hon ble Sales Tax Appellate Tribunal, Puducherry, the Hon ble Tribunal relying upon the decisions of the Apex Cour ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t in Builders Association of India Vs . Union of India [ 1989 (3) TMI 356 - SUPREME COURT OF INDIA] and Gannon Dunkerly and Co. Vs . State of Rajasthan [ 1992 (11) TMI 254 - SUPREME COURT OF INDIA ] , after scrutiny of invoices and in view of the Agreement came to the conclusion that since the Agreement did not use the word Works contract , the transaction is to be treated as S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ale . Being aggrieved, the Appellant preferred an appeal before the Hon ble High Court of Madras. Held: The Hon ble Madras High Court in view of the nature of the work executed, the Agreement and the responsibility cast upon the Appellant on the quality, held the following: In terms of the Agreement, the nature of works entrusted to the Appellant is not restricted to supply of read ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y mix concrete mixture only. The Appellant was to provide men and materials in laying concrete mixture on the area specified by the purchaser. The supply had to be done through staff of the Appellant and that the Appellant was responsible for quality of the concrete and the laying also. In the event of any leakage arising there from in future, the responsibility was cast upon the Appellant t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o compensate the same. The Tribunal's view that on the mere absence of the word Works contract in the Agreement, the transactions have to be treated as Sale is not justifiable ground. Therefore, the Hon ble High Court allowed the appeal in favour of the Appellant and held that the present transaction is a composite Works contract involving men and labour. Hope the information w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ill assist you in your Professional endeavors. In case of any query/ information, please do not hesitate to write back to us. Thanks and Best Regards, Bimal Jain FCA, FCS, LLB, B.Com (Hons) Delhi: Flat No. 34B, Ground Floor, Pocket - 1, Mayur Vihar, Phase - I, Delhi - 110091, India Desktel: +91-11-22757595/ 42427056 Mobile: +91 9810604563 Chandigarh: H. No. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 908, Sector 12-A, Panchkula, Haryana - 134115 Kolkata: Ist Floor, 10 R G Kar Road Shyambazar, Kolkata - 700 004 Email: [email protected] Web: www.a2ztaxcorp.com Disclaimer: The contents of this document are solely for informational purpose. It does not constitute professional advice or recommendation of firm. Neither the authors nor firm and its affiliates acce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pts any liabilities for any loss or damage of any kind arising out of any information in this document nor for any actions taken in reliance thereon. Readers are advised to consult the professional for understanding applicability of this newsletter in the respective scenarios. While due care has been taken in preparing this document, the existence of mistakes and omissions herein is not rule ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d out. 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