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TMI BlogWorks Contact ServicesX X X X Extracts X X X X X X X X Extracts X X X X ..... imilar activity or a part thereof in relation to such property. Analysis: This entry covers only those contracts in which transfer of property in goods involved is liable to tax as sale of goods. Means basic requirement is that the contract must attract VAT on the goods portion. To understand works contract, one important decision by Supreme Court need to be discussed: Bharat Sanchar Nigam Limited vs Union of India 2006 (3) TMI 1 - Supreme court . The relevant paras 42 and 43 of the said judgement are reproduced below: 42 .Of all the different kinds of composite transactions the drafters of the 46th Amendment chose three specific situations, a works contract, a hire purchase contract and a catering contract ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o separate the agreement to sell from the agreement to render service, and impose tax on the sale. The test therefore for composite contracts other than those mentioned in Article 366 (29A) continues to be - did the parties have in mind or intend separate rights arising out of the sale of goods. If there was no such intention there is no sale even if the contract could be disintegrated. The test for deciding whether a contract falls into one category or the other is to as what is the substance of the contract. We will, for the want of a better phrase, call this the dominant nature test. The following principles emerge from the said judgment for ascertaining the taxability of Composite transactions- Except in cases of work ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ar that in pure sale contract, there cannot be levy of service tax and in indivisible contracts i.e. works contracts, Central Government can levy service tax on labour/ skill portion of the contract. In case of works contracts and service wherein goods, being food or any other article of human consumption or any drink (whether or not intoxicating) is supplied in any manner as part of the service the dominant nature test does not apply and service portion is taxable as a service This has also been declared as a service under section 66E of the Act . If the transaction represents two distinct and separate contracts and is discernible as such then contract of service in such transaction would be segregated and char ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ract? Yes. As pipeline or conduits are structures on land contracts for construction of such structure would be covered under works contract. 6.8.4 Would contracts for erection commissioning or installation of plant, machinery, equipment or structures, whether prefabricated or otherwise, be treated as a works contract? Such contracts would be treated as works contracts if transfer of property in goods is involved in such a contract. 6.8.5. Would contracts for painting of a building, repair of a building, renovation of a building, wall tiling, flooring be covered under works contract ? Yes, if such contracts involve provision of materials as well. 6.8.6 Is the definition of works contract in claus ..... X X X X Extracts X X X X X X X X Extracts X X X X
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