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2017 (12) TMI 1074 - HC - VAT and Sales TaxWorks contract or contract for Sale - M/s. Rashtriya Chemicals & Fertilizers Ltd. (RCF) had engaged the applicant apparently for designing, engineering, supplying, erection, installation and Commissioning of the TrombayV Expansion Project at RCF site for a total price of about ₹ 22 crores under a contract - The Assistant Commissioner of Sales Tax Assessment treated the transaction as a transaction of sale - The applicant produced the relevant documents and correspondence before the Deputy Commissioner of Sales Tax claiming that the contract was a divisible contract for supply of labour and could not be treated as a contract for sale. Held that: - in the facts of the present case the contract was clearly one for supply and erection of equipment, supply of equipment being dominant purpose. No doubt the State of Maharashtra had enacted the Maharashtra Sales Tax on “Transfer” of property of goods involved in works contract Act only in 1982 but the contention that during the period under consideration 197980 and 198081 the State had no power to levy the tax on Works contract will not be of any assistance to the applicant - the contract in the instant case is predominantly for supply of equipment, erection and installation. FPDIL was required to carry out all preparation work , provide foundation, provide all civil works required, the equipment was merely supplied and installed. In the instant case, even assuming a contract was a works contract, we are of the view that the labour element was only incidental. The contract is itself described as a divisible contract. The intention of parties as derived from the diverse contractual provisions set out above leaves us in no manner of doubt that the contract in question was not a works contract but the dominant intention was of sale of equipment. Having reached that conclusion the question referred for our opinion is answered in the affirmative, in favor of Revenue. Appeal dismissed - decided against assessee.
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