9911796707
TMI Blog2003 (3) TMI 699X X X X Extracts X X X X X X X X Extracts X X X X ..... t of Rs. 5,15,000. Aggrieved by the order of assessing authority, applicant filed appeal before the Assistant Commissioner (Judicial), Sales Tax, Moradabad, which was rejected. Claim of the dealer of works contract was also rejected by Tribunal. Being aggrieved by the order of Tribunal, the present revision has been filed. 3.. The only question for consideration in the present revision is that whether the agreement dated February 28, 1984 between the applicant and M/s. Gunkar Electrodes Private Limited, Rampur, was in the nature of works contract or contract for sale. A copy of the agreement is annexure 2 to the present revision. It has also been referred in the order of Tribunal. The agreement reads as follows: AGREEMENT This agreement is made at Rampur on this 28th day of February, 1984. M/s. Heera Electrodes, Rampur, having its office near Kosi River Bridge, Rampur, represented by Sri Pradeep Kumar Jain, its partner, hereinafter referred to as the first party. AND M/s. Gunkar Electrodes Private Ltd., Rampur, having its registered office at Jwalanagar, Rampur, and being represented by Shri R.B. Jain, managing director of the company, hereinafter referred to as the second par ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... out affecting the guaranteed performance of the plant. 9.. That the first party hereby guarantees that the designs are its own and that the plant and machinery to be designed and supplied by it does not infringe any existing patent or trade mark and agrees to indemnify against the latter for any such infringement. 10.. That in case any dispute or difference arises at any time between the parties to this agreement during the period of fabrication and supply of the plant or during the performance guarantee period thereof, or on account of any misinterpretation of this agreement, such dispute or difference shall be referred to an arbitration. Each of the two parties will appoint one arbitrator under the provisions of Indian Arbitration Act, 1940 or any statutory modification or reenactment thereof, for the time being in force. All proceedings in such arbitration will be held at a place or places as may be determined by the arbitrators. In case of any dispute in-between arbitrators, one independent umpire will be appointed, whose decision will be final. In witnessth we have put our signatures on this 28th day of February, one thousand nine hundred eighty four. Relating to aforesai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons: "From the reading of this agreement as a whole, it transpires that the assessee shall design, manufacture, fabricate and install complete machinery and equipments of electrodes plant, as per quotations furnished by it; that during the supply and installation of the electrodes plant and machinery, by the first party (assessee) to the second party, the second party will be bound to pay 90 per cent of the cost of the electrodes plant and remaining 10 per cent must be paid by the second party to the opposite party by watching the performance of the supplied electrodes plant and machinery for a period of one year; that the assessee also agreed to take back plant, if it fails to give full performance during that period of one year from the date of installation of plant; that the assessee would provide operational staff for the electrodes plant under this agreement and that staff will remain in direct employment of the second party; that the assessee also takes the responsibility to train the personnel for operating the plant if the second party so desire and provides them; that the second party will be responsible for all civil works such as godown, buildings, to modify, desig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re of the contract and pointed out that "the window-leaves did not pass to the Union of India under the terms of the contract as window-leaves. Only on the fixing of the windows as stipulated, the contract could be fully executed and the property in the windows passed on the completion of the work and not before". The contract was not for the transfer of property in the window-leaves as window-leaves. It was a contract for providing and fixing windows and windows could come into existence only when the window-leaves were fixed to the building by bestowing labour and skill, and it was for this reason that it was held to be a works contract. 7.. The same test was applied by the honourable Supreme Court in Sentinel Rolling Shutters & Engineering Company Pvt. Ltd. v. Commissioner of Sales Tax reported in [1978] 42 STC 409; 1979 UPTC 872. There the question was whether a contract for fabrication, supply and erection of certain types of rolling shutters was a contract of sale or a contract for work and labour. The apex Court analysed the nature of the contract and pointed out that "not only are the rolling shutters to be manufactured according to the specifications, desig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in [1979] 43 STC 195 (SC); 1979 UPTC 548 the apex Court observed as follows: "The primary test is whether the contract is one whose main object is transfer of property in a chattel as a chattel to the buyer, though some work may be required to be done under the contract as ancillary or incidental to the sale or it is carrying out of work by bestowal of labour and service and materials are used in execution of such work." 9.. In the case of Ram Singh & Sons Engineering Works [1979] 43 STC 195; 1979 UPTC 548, the court was considering as to whether the contract for supply and erection, a 3-motion electrical overhead travelling crane at the premises of the contractee was the works contract or the contract for sale. Honourable Supreme Court has held the contract as works contract and for which given following reasoning: "The fabrication and erection is one single indivisible process and a 3-motion electrical overhead travelling crane comes into existence only when the erection is complete. The erection is thus a fundamental and integral part of the contract, because without it the 3-motion electrical overhead travelling crane does not come into being. The manufactur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the conclusion that the contract was one of the primary for supply of material at the price agreed between the parties for material so supplied and the work or service referred in the installation is undoubtedly to the institution of contract are not relevant and do not lead to the conclusion drawn by the Tribunal. The perusal of the agreement referred above shows that the contract was for design, manufacturing, fabrication and the installation of complete machinery and equipment of electrode plant and composite price at Rs. 5,15,000 was settled for complete plant which included cost of material and labour charges including technical know-how, etc. 12.. Manufacturing, fabrication and installation was one single indivisible process and electrode plant comes into existence only when it was completely fabricated and installed. The installation is thus a fundamental and integral part of the contract, because without it complete electrode plant does not come into existence. The applicant at some stage, was no doubt the owner of the material in the process of fabrication, but at no stage had become the owner of electrode plant as a unit so as to transfer the property in it to the custo ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
