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2014 (10) TMI 765 - HC - VAT and Sales TaxNature of activity - Works Contract or contract of sale or contract of service - imparting computer education in the schools - petitioner had provided computers and software for teaching purpose - Whether the contract dated 29.6.2002 can be construed and interpreted as a 'works contract' within the meaning of Section 2 (1) (f) of APGST Act, 1957 and whether it is exigible to tax under Section 5-F of the said Act - Held that:- On a careful analysis of the recitals and terms and conditions of the contract dated 29.06.2002, there cannot be any doubt that it involves certain goods in execution of the contract and that the same would be transferred to the schools in which the equipment is installed for imparting the computer education. It is no doubt true that the ownership of the said equipment remains with the petitioner till the end of the contract. However the mere fact that the ownership of the computers and the accessories passed on to the respondent at the end of the contract does not alter the nature of the contract. Passing of ownership at a later point of time is permissible as held in Larsen and Toubro Limited's case [2013 (9) TMI 853 - SUPREME COURT] On a combined reading of the terms and conditions of the contact dated 29.6.2002 with reference to the object sought to be achieved, it appears to us that the contract in question involves both a contract of service and a contract of sale of goods. It is a composite contract and by legal fiction provided under Article 366 (29-A) (b) of the Constitution it is permissible to separate the transfer of property in goods (as goods or in some other form) from the contract of service. It is also explained in Larsen and Toubro Limited's case (2013 (9) TMI 853 - SUPREME COURT) that the term 'works contract' cannot be confined to a particular form and it encompasses a wide range of many varieties of contract. It is also laid down in the said decision that for sustaining the levy of tax on the goods deemed to have been sold in execution of a works contract three conditions must be fulfilled namely (i) there must be a works contract, (ii) the goods should have been involved in the execution of a works contract, and (iii) the property in those goods must be transferred to a third party either as goods or in some other form. According to us, all the said three conditions are satisfied in the present case - Decided against Assessee.
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