TMI Blog2014 (5) TMI 265X X X X Extracts X X X X X X X X Extracts X X X X ..... r, it would be a contract for sale and similarly, if separate contract is entered into for installation, that would be a contract for labour and service. But, a pregnant one, once there is a composite contract for supply and installation, it has to be treated as a works contract, for it is not a sale of goods/chattel simpliciter. It is not chattel sold as chattel or, for that matter, a chattel being attached to another chattel. Therefore, it would not be appropriate to term it as a contract for sale on the bedrock that the components are brought to the site, i.e., building, and prepared for delivery. The conclusion, as has been reached in Kone Elevators [2005 (2) TMI 519 - SUPREME COURT OF INDIA], is based on the bedrock of incidental service for delivery. It would not be legally correct to make such a distinction in respect of lift, for the contract itself profoundly speaks of obligation to supply goods and materials as well as installation of the lift which obviously conveys performance of labour and service. Hence, the fundamental characteristics of works contract are satisfied. Thus analysed, we conclude and hold that the decision rendered in Kone Elevators [2005 (2) TMI 519 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng out of SLP (C) Nos. 17236-17237/2010), Civil Appeal Nos. 5170-5172 of 2014 (Arising out of SLP (C) Nos. 23259-23261/2010), Civil Appeal No. 5174 of 2014 (Arising out of SLP (C) No. 15732/2011), Civil Appeal No. 5175 of 2014 (Arising out of SLP (C) No. 16466/2011), Civil Appeal No. 5178 of 2014 (Arising out of SLP (C) No. 16137/2011), Civil Appeal No. 5179 of 2014 (Arising out of SLP (C) No. 5503/2011), Civil Appeal No. 5180 of 2014 (Arising out of SLP (C) No. 11147/2011), Civil Appeal Nos. 5181-5192 of 2014 (Arising out of SLP (C) Nos. 11227-11238/2012), Civil Appeal No. 5193 of 2014 (Arising out of SLP (C) No. 19901/2013), Civil Appeal Nos. 5195-5206 of 2014 (Arising out of SLP (C) Nos. 36001-36012/2013) and Civil Appeal No. 6285/2010 (Under Article 32 of the Constitution of India) JUDGMENT Leave granted in all the special leave petitions. 2. By an order dated 13.2.2008 in Kone Elevator India Private Limited v. State of Tamil Nadu and others (2010) 14 SCC 788,a three-Judge Bench of this Court, while dealing with the writ petition preferred by Kone Elevator India Pvt. Ltd. along with Special Leave Petitions, noted that the question raised for consideration in the sai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h Court was overturned. After the pronouncement in the said case, the State Government called upon the petitioner to submit returns treating the transaction as sale. Similarly, in some other States, proceedings were initiated proposing to reopen the assessments that had already been closed treating the transaction as sale. The said situation compelled the petitioner to prefer the petition under Article 32 of the Constitution. As far as others are concerned, they have preferred the writ petitions or appeals by special leave either challenging the show cause notices or assessment orders passed by the assessing officers or affirmation thereof or against the interim orders passed by the High Court requiring the assessee to deposit certain sum against the demanded amount. That apart, in certain cases, appeals have been preferred assailing the original assessment orders or affirmation thereof on the basis of the judgment in Kone Elevators (supra). 5. Mr. Harish Salve, learned senior counsel for the petitioners, has contended that prior to the decision of this Court in Bharat Sanchar Nigam Ltd. and another v. Union of India and others (2006) 3 SCC 1, which has been further explained in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the lift and all ropes, cables, wires and plant, directly connected with the operation of the lift. He has also placed reliance on Section 4 which deals with permission to erect a lift, Section 5 that deals with licence to use a lift and Section 7 which provides a lift not to be operated without a licence. Learned senior counsel has also drawn our attention to the various rules that deal with many a technical aspect and the terms on which lift shall work and what requirements are to be carried out by a licencee under the Act. In essence, the submission is that the manufacture, supply and the installation are controlled by the statutory provisions under an enactment of the legislature and also the rules made in consonance with the Act which would reflect that immense skill is required for such installation and the separate parts of the lift are not sold like goods, but it only becomes operational after it is installed, adjusted, tested and commissioned in a building. 7. Mr. Khambatta, learned Advocate General, appearing for the State of Maharashtra, submitted that in the case of sale and installation of a lift or elevator, the contract would include the obligation to install t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of the lift, it has to be construed as a works contract and the decision in Kone Elevators (supra) does not lay down the law correctly. 9. Mr. Rakesh Dwivedi, learned senior counsel appearing for the State of Orissa, has referred to the terms of the quotation, the confirmation letter, the letter of approval, the preparatory erection work or civil work which are to be carried out by the customer at its own cost, the specific mode of payment and the nature of supply and, on that basis, contended that the contract was for sale and supply of a lift to the customer for a monetary consideration. It is urged by him that a part of manufacture is carried out at the project site of the customer and the skill and labour deployed in the installation or the work done is merely a component of the manufacturing process and, as a matter of fact, the elevator is supplied to the customer only after its erection/installation at the site. It is further contended by him that where a manufacturer of lift first manufactures components and then completes the manufacture of the lift at the site and retains ownership in the components as property while producing the completed lift, it is a case of pu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gineering Works v. Commissioner of Sales Tax, U.P. (1979) 1 SCC 487, Man Industrial Corporation (supra) and Vanguard Rolling Shutters Steel Works (supra) were rendered prior to the amendment of the Constitution and hence, they stand on a different footing as they were fundamentally dealing with indivisible contracts. Elaborating on the nature of affixation, it is urged by him that only the guide rails and the frame of the entry/exit doors are attached to the immovable property by nuts and bolts and the motor is also placed on the beam with the help of nuts and bolts. The sheave is attached to the motor and it enables the steel rope to move. The steel rope is attached to one side of the cabin car and on the other side to the counter weight. These parts are aligned so that the cabin car and the counter weight move up and down in opposite directions. Therefore, contends the learned senior counsel, the lift is only partially attached to the building and the remaining major portions of the components are constantly mobile. In fact, people buy lifts only with the object of movability and the lifts are advertised as transport systems. The learned senior counsel would further submit that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the site to bring it to its usable state, the same does not make a difference as to the nature of the contract and it cannot be regarded as a works contract. 12. Ms. Hemantika Wahi and Mr. Preetesh Kumar, learned counsel for the State of Gujarat, while adopting the submissions of the learned senior counsel for the State of Orissa, have submitted that the traditional tests for determining whether a contract is a works contract or not would continue to apply. It is urged that the sale of goods involved in the execution of a works contract is quite distinct from the works performed while executing a sale of goods contract. It is also put forth that it would come within the competence of the State legislature being a measure of tax and for that purpose, reliance has been placed on Federation of Hotel and Restaurant Association of India v. Union of India and others (1989) 3 SCC 634. Be it noted, the learned counsel for the State, while placing reliance on Bharat Sanchar (supra), have also asserted that the dominant nature test or other test approved in Larsen and Toubro (supra) are still relevant. It is apt to note here that in the written note of submission, certain lines from para ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Mr. Malhotra would further submit that it is not a mere case of sale and according to the expanded definition of tax on sale, tax is leviable only on the transfer of property in goods, whether in goods or in some other form, involved in the execution of work and no sales tax is leviable on the execution of works contract. Thus, the stand of the Union of India is that supply and installation of lift is not a contract for sale but a works contract. 16. To appreciate the controversy in the backdrop of the rivalised submissions, it is necessary to delve into the genesis of the law in respect of works contract and thereafter to dwell upon how far the principles pertaining to works contract would govern the manufacture, supply and installation of lifts. In this context, it is seemly to appreciate the legal position as to how the impost of sales tax on works contract was treated prior to the insertion of Clause (29A) in Article 366 of the Constitution by the Constitution (Forty-sixth Amendment) Act, 1982 with effect from 1.3.1983 and how this court has dealt with the said facet after the constitutional amendment that changed the concept of levy of sales tax on works contract . ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed that under the law, there could not be an agreement relating to one kind of property and a sale as regards another. The Constitution Bench further held that on the true interpretation of the expression sale of goods , there must be an agreement between the parties for the sale of the very goods in which eventually property passes and in a building contract, the agreement between the parties being to the effect that the contractor should construct a building according to the specifications contained in the agreement, and in consideration therefor receive payment as provided therein, there was neither a contract to sell the materials used in the construction nor did the property pass therein as movables and, therefore, it was impossible to maintain that there was implicit in a building contract a sale of materials as understood in law. Eventually, the Court summed up the conclusion by stating that the expression sale of goods in Entry 48 is a nomen juris, its essential ingredients being an agreement to sell movables for a price and property passing therein pursuant to that agreement and in a building contract which was one, entire and indivisible, there was no sale of goods, an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... envisage either the sale of materials by the respondent to the Railway, or of the coach bodies as such, treated it as a works contract. 20. In The State of Madras v. Richardson Cruddas Ltd. (1968) 21 STC 245 (SC), there was a postulate that a consolidated lump sum would be paid per ton for fabrication, supply and erection at site of all steelwork, and there was no provision under the contract for dissecting the value of the goods supplied and the value of the remuneration for the work and labour bestowed in the execution of the work and the predominant idea underlying the contract was bestowing of special skill and labour by the experienced engineers and mechanics of the respondent. Taking into consideration the said aspects and relying on the principles stated in Clark v. Bulmer (1843) 11 M W. 243, the Court held that the contract was a works contract and not a contract for sale. 21. In Man Industrial Corporation Ltd. (supra), which has been taken note of in the referral order, this Court treated the contract for providing and fixing four different types of windows of certain sizes according to specifications, designs, drawings and instructions set out in the contract ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7. It can be treated as well settled that there is no standard formula by which one can distinguish a contract of sale from a contract for work and labour. There may be many common features in both the contracts, some neutral in particular context, and yet certain clinching terms in a given case may fortify a conclusion one way or the other. It will depend upon the facts and circumstances of each case. The question is not always easy and has for all time vexed jurists all over. 24. In Vanguard Rolling Shutters and Steel Works' case, the assessee manufactured rolling shutters according to specifications given by the parties and fixed the same at the premises of the customers. The assessee claimed that it was not liable to sales tax on the ground that the amount received by it represented the proceeds of works contract. When the matter travelled to the High Court, it opined that the contracts entered into by the assessee were not works contracts but contracts for supply of goods simpliciter and the assessee was, therefore, liable to pay sales tax. While reversing the decision of the High Court, this Court took note of certain aspects, namely, that the amount from the owner of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rule applicable alike to all transactions which can indicate distinction between a contract for sale and a contract for work and labour, opined that basically and primarily, whether a particular contract was one of sale or for work and labour depended upon the main object of the parties in the circumstances of the transaction. 27. The aforesaid authorities clearly show that a works contract could not have been liable to be taxed under the State sales tax laws and whether the contract was a works contract or a contract for sale of goods was dependent on the dominant intention as reflected from the terms and conditions of the contract and many other aspects. In certain cases, the court has not treated the contract to be a works contract by repelling the plea of the assessee after taking into consideration certain special circumstances. No straitjacket formula could have been stated to be made applicable for the determination of the nature of the contract, for it depended on the facts and circumstances of each case. As the works contract could not be made amenable to sales tax as the State Legislatures did not have the legislative competence to charge sales tax under Entry 48 List ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Constitution as well as the amendments made by the State Legislatures, were challenged in Builders' Association (supra). The Constitution Bench took note of the various problems which arose on account of the decisions in the field pertaining to works contract and the recommendations by the Law Commission in its 61st Report recommending for certain amendments in the Constitution so as to levy sales tax on transactions of the nature which were not liable to sales tax and the purpose of the amendment to bring many of the transactions in which property in goods passed for the purpose of levy of sales tax within the scope of power of the State to levy tax. The Constitution Bench also took note of the amendments that were incorporated in clause (1) of Article 269 and clause (3) of Article 286 and eventually upheld the constitutional validity of the amendment. In that context, the court observed that sub-clause (b) of clause (29-A) states that tax on the sale or purchase of goods' includes, among other things, a tax on the transfer of property in the goods (whether as goods or in some other form) involved in the execution of a works contract, but does not say that a tax on the sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s v. State of Rajasthan and others (1993) 1 SCC 364 is necessary to be noted. While dealing with the various submissions of the counsel for the States, the Constitution Bench referred to the Builders' Association case wherein it has been clearly stated that the tax leviable by virtue of sub-clause (b) of clause (29A) of Article 366 of the Constitution becomes subject to the same discipline to which any levy under Entry 54 of the State List is made subject to under the Constitution. After so stating, the Court did not think it appropriate to reopen the issues which were covered under the Builders' Association case and proceeded to deal with the matter in accordance with the law laid down in that case. 31. Be it noted, the Constitution Bench, in Gannon Dunkerley-II (supra), has unequivocally restated and reaffirmed the principle that the States have legislative power to impose tax on the transfer of property in goods or in some other form in the execution of works contract and they have also the power to bifurcate the contract and levy sales tax on the value of materials used in the execution of the works contract, regard being had to the principle that the State Legislatu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nections which are enjoyed, is a sale or is a service or both. Though the context pertained to the meaning of the term goods under Article 366(29A), yet the Court referred to the case in Associated Cement Companies Ltd. v. Commissioner of Customs (2001) 4 SCC 593 and stated thus: - After the Forty-sixth Amendment, the sale element of those contracts which are covered by the six sub-clauses of clause (29-A) of Article 366 are separable and may be subjected to sales tax by the States under Entry 54 of List II and there is no question of the dominant nature test applying. Therefore when in 2005 C.K. Jidheesh v. Union of India (2005) 13 SCC 37 held that the aforesaid observations in Associated Cement were merely obiter and that Rainbow Colour Lab v. State of M.P. (2000) 2 SCC 385 was still good law, it was not correct. 35. We have referred to the aforesaid decision only to point out that the dominant nature test relating to the works contract that gets covered under Article 366(29A) of the Constitution has been held therein to be not applicable. 36. In K. Raheja Development Corporation v. State of Karnataka (2005) 5 SCC 162, the appellants were involved in carrying on bu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orm) and, therefore, the works contract which is an indivisible contract is, by a legal fiction, divided into two parts-one for sale of goods and the other for supply of labour and services, which has made it possible for the States to levy sales tax on the value of the goods involved in a works contract in the same way in which the sales tax was leviable on the price of the goods supplied in a building contract, for the concept of value addition comes in. 38. Reference to the aforesaid authorities is for the purpose that post the constitutional amendment, the Court has been interpreting a contract of work, i.e., works contract in the constitutional backdrop. In certain cases, which involve transfer of property and also an element of service in the context of work rendered, it has been treated as works contract. 39. The essential characteristics have been elucidated by a three-Judge Bench in Larsen and Toubro (supra) thus: - As the very title of Article 366 shows, it is the definition clause. It starts by saying that in the Constitution unless the context otherwise requires the expressions defined in that article shall have the meanings respectively assigned to them in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... act, besides the obligations of supply of goods and materials and performance of labour and services, some additional obligations are imposed, such contract does not cease to be works contract, for the additional obligations in the contract would not alter the nature of the contract so long as the contract provides for a contract for works and satisfies the primary description of works contract. It has been further held that once the characteristics or elements of works contract are satisfied in a contract, then irrespective of additional obligations, such contract would be covered by the term works contract because nothing in Article 366(29-A)(b) limits the term works contract to contract for labour and service only. 41. In the said case, another significant aspect has been considered. That relates to the dominant nature test . We think it apt to reproduce what has been stated in Larsen and Toubro (supra):- Whether the contract involved a dominant intention to transfer the property in goods, in our view, is not at all material. It is not necessary to ascertain what is the dominant intention of the contract. Even if the dominant intention of the contract is not to trans ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... matter travelled to the Sales Tax Tribunal, it concurred with the view expressed by the Deputy Commissioner of Sales Tax. It was observed by the Tribunal that the amount or price of the materials supplied was overwhelming as compared to the amount agreed upon for labour and service and that apart, the price of the materials supplied was subject to adjustment. It was further held by the Tribunal that the intention of the parties was that there was a sale qua lifts for money consideration and there was also to be the installation of those lifts by the applicants. On a reference being made by the Tribunal, the High Court scanned the terms of the contract and took note of certain facts, namely, that detailed provisions were given regarding the dimensions and travel of the car, the load and speed of the elevator, the type of the platform and the car enclosure, and what the car was to consist of, as also of the place where the machine was to be located, viz., above the hoistway upon rolled steel joists to be provided to the elevator; that the car-frame was to be made of structural steel and equipped with suitable guides and an Otis car safety device; that the counterbalance was also to b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment into two parts, one for the sale of goods, and the other for services rendered, for the two are so intimately connected that severance is not possible in such cases and, in fact, it was an indivisible contract. 44. The aforesaid decision makes it limpid how many facets are to be taken care of for the purpose of installation of the elevator, regard being had to its technical facet, safety device and actual operation. That apart, the decision has taken note of the fact that upon the installation of the lift in the building, it becomes a permanent fixture in the premises and that the involvement of technical skill and experience pertain to the precision in execution for rendering satisfactory service and the obligation to maintain which are integral to the supply and installation. 45. In this backdrop, we shall now proceed to deal with the submissions advanced by the learned counsel for the respondents which we have already noted. The fundamental submission of Mr. Dwivedi is that the manufacturer of the lift retains ownership in the components as property while producing the completed lift and, hence, it would be a case of pure manufacture. A distinction has been sought to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r a mutation mink jacket. As the jacket was not up to mark, it was rejected by the defendant. In that context, the Court observed that though huge degree of skill and craftsmanship had gone into making up of a fur jacket as was made for the defendant, yet it was no more than making an article for sale to the defendant on a special order and the transaction, in fact, related to sale of a complete article and the receipt of the price. 47. In Norman Wright (Builders) Ltd. (supra), an agreement was entered into by the appellant for fixing of black-out curtains at some London police stations. The appellant-plaintiff contended before the Court that the fixing of curtains was not a sale of goods but a contract for work and labour and the supply of material in connection therewith. Repelling the said submission, it was held that as the contract involved transferring chattels, namely, curtains to the defendants for a price, in which they had no previous right, it was a sale of goods. 48. Narne Tulaman Manufacturers Pvt. Ltd., Hyderabad v. Collector of Central Excise, Hyderabad (1989) 1 SCC 172 , Eastend Paper Industries Ltd. (supra), Aspinwall Co. Ltd. (supra), MIL India Ltd. (supra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cussed in Otis Elevator (supra) by the High Court of Bombay. Therefore, the installation of a lift in a building cannot be regarded as a transfer of a chattel or goods but a composite contract. Hence, we unhesitatingly hold that the said decisions are not of much help to the learned senior counsel for the State of Orissa. 49. Coming to the submissions of Mr. Venkataramani, we find that the fundamental facet of the contention is based on the principle of deliverable state and the intention of the purchaser to obtain an identifiable product or goods and the said identified product comes into being after the components are fixed at the site to make the lift usable. As submitted, the rendering of service is only to make the lift deliverable. The aforesaid submission, on proper appreciation, really rests on the bedrock of incidental or ancillary service involved in the installation of lift. We shall deal with this aspect when we address more elaborately to the dominant nature test and the incidental service in the context of clause 29A(b) of Article 366 of the Constitution. 50. As far as the submission put forth by the learned counsel for the State of Gujarat, it is based on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as percentage of total value of the contract specifying 15% for fabrication and installation of elevators (lifts) and escalators, is self-contradictory, for once it is treated as a composite contract invoking labour and service as a natural corollary, it would be works contract and not a contract for sale. To elaborate, the submission that the element of labour and service can be deducted from the total contract value without treating the composite contract as a works contract is absolutely fallacious. In fact, it is an innovative subterfuge. We are inclined to think so as it would be frustrating the constitutional provision and, accordingly, we unhesitatingly repel the same. 53. As far as submissions of Mr. K.N. Bhat, learned senior counsel for the State of Karnataka, and Mr. P.P. Malhotra, learned Additional Solicitor General, are concerned, as their stand is that the decision in Kone Elevators (supra) is not correct, we have only noted that for completeness. 54. Having dealt with the submissions advanced by the learned counsel for various States and the learned Additional Solicitor General for the Union of India, we shall presently proceed to deal with the correctness of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... settled law that the substance and not the form of the contract is material in determining the nature of transaction. No definite rule can be formulated to determine the question as to whether a particular given contract is a contract for sale of goods or is a works contract. Ultimately, the terms of a given contract would be determinative of the nature of the transaction, whether it is a sale or a works contract . Therefore, this question has to be ascertained on facts of each case, on proper construction of terms and conditions of the contract between the parties. 55. After so stating, the three-Judge Bench adverted to the definitions in the State Act, referred to the decision in Gannon Dunkerley-I (supra), placed reliance on the decision in Hindustan Shipyard Ltd. (supra) and, analyzing the principle stated therein, observed thus: - 9. In the case of Hindustan Shipyard Ltd. v. State of A.P. this Court held that if the thing to be delivered has any individual existence before the delivery as the sole property of the party who is to deliver it, then it is a sale. If the bulk of material used in construction belongs to the manufacturer who sells the end product for a pri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fts manufactured and brought to the site in knocked-down state to be assembled by the assessee and ruled that it was clear that the transaction in question was a contract of sale and not a works contract . The Court perused the brochure of the assessee Company and noticed that the assessee was in the business of manufacturing of various types of lifts, namely, passenger lifts, freight elevators, transport elevators and scenic lifts and a combined study of the above models, mentioned in the brochure, indicated that the assessee had been exhibiting various models of lifts for sale and the said lifts were being sold in various colours with various capacities and variable voltage. From the further analysis, it is manifest that the Court took into account the fact that it was open for a prospective buyer to place purchase order for supply of lifts as per his convenience and choice and ruled that the assessee, on facts, satisfied the twin requirements to attract the charge of tax under the 1957 Act, namely, that it carried on business of selling the lifts and elevators and it had sold the lifts and elevators during the relevant period in the course of its business. To strengthen the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the matters of composite contract involving both a contract of work/labour and a contract for sale for the purposes of Article 366(29-A)(b). Now by legal fiction under Article 366(29-A)(b), it is permissible to make such contract divisible by separating the transfer of property in goods as goods or in some other form from the contract of work and labour. A transfer of property in goods under clause (29-A) (b) of Article 366 is deemed to be a sale of goods involved in the execution of a works contract by the person making the transfer and the purchase of those goods by the person to whom such transfer is made. For this reason, the traditional decisions which hold that the substance of the contract must be seen have lost their significance. What was viewed traditionally has to be now understood in light of the philosophy of Article 366(29-A). xxx xxx xxx 97.5. A contract may involve both a contract of work and labour and a contract for sale. In such composite contract, the distinction between contract for sale of goods and contract for work (or service) is virtually diminished. 97.6. The dominant nature test has no application and the traditional decisions which have h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d been entered into in two distinct and separate parts as stated above. 61. Explaining the said passage, the Constitution Bench, in Gannon Dunkerley-II (supra), has opined thus:- This would mean that as a result of the Fortysixth Amendment, the contract which was single and indivisible has been altered by a legal fiction into a contract which is divisible into one for sale of goods and other for supply of labour and services and as a result such a contract which was single and indivisible has been brought on a par with a contract containing two separate agreements. 62. It has been further observed therein as follows: - 36. If the legal fiction introduced by Article 366(29-A)(b) is carried to its logical end it follows that even in a single and indivisible works contract there is a deemed sale of the goods which are involved in the execution of a works contract. Such a deemed sale has all the incidents of a sale of goods involved in the execution of a works contract where the contract is divisible into one for sale of goods and the other for supply of labour and services. 63. Considered on the touchstone of the aforesaid two Constitution Bench decisions, we are o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... early exposit that they are contracts for supply and installation of the lift where labour and service element is involved. Individually manufactured goods such as lift car, motors, ropes, rails, etc. are the components of the lift which are eventually installed at the site for the lift to operate in the building. In constitutional terms, it is transfer either in goods or some other form. In fact, after the goods are assembled and installed with skill and labour at the site, it becomes a permanent fixture of the building. Involvement of the skill has been elaborately dealt with by the High Court of Bombay in Otis Elevator (supra) and the factual position is undisputable and irrespective of whether installation is regulated by statutory law or not, the result would be the same. We may hasten to add that this position is stated in respect of a composite contract which requires the contractor to install a lift in a building. It is necessary to state here that if there are two contracts, namely, purchase of the components of the lift from a dealer, it would be a contract for sale and similarly, if separate contract is entered into for installation, that would be a contract for labour a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther Justice Dipak Misra. With respect, I state that I am not able to subscribe to the views and conclusions of His Lordship. Therefore, I wish to record my reasoning and conclusions holding that the manufacture, supply and installation of lifts are to be treated as a contract of 'Sale' in the following paragraphs. 2. By an Order dated 13.02.2008, a three Judge Bench of this Court, headed by the Hon'ble Chief Justice, referred the following question to be decided by a Constitution Bench, namely, Whether manufacture, supply and installation of LIFTS are to be treated as a contract of 'Sale' or 'Works Contract'? 3. In the decision reported in State of Andhra Pradesh vs. Kone Elevators (India) Pvt. Ltd., (2005) 3 SCC 389, it was held that a contract for supply of LIFTS constituted a 'Sale' and did not amount to a 'Works Contract' and that the element of service provided by the vendor of the elevator was negligible. The referral order referred to the other decisions which were drawn to the attention of the Court, namely, State of Rajasthan Anr. vs. Man Industrial Corporation Ltd., [1969] 24 STC 349, State of Rajasthan vs. Nenu Ra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be applied to find out as to whether the contract is one for 'Sale' or 'Works Contract'. The first decision is the M/s. Patnaik and Company vs. State of Orissa reported in AIR 1965 SC 1655, wherein the principle stated by the High Court was affirmed by the Constitution Bench of this Court. The said principle was to the effect that it makes no difference whether an article is a ready-made article or is prepared according to the customer's specification. It would also make no difference whether the assessee prepares it separately from the thing and then fixes it on it, or does the preparation and the fixation simultaneously in one operation. It was further held that it is the essence of the transaction viz., the agreement and sale, which relates to the same subject-matter, i.e. the goods agreed to be sold and in which the property gets transferred. In another Constitution Bench decision of this Court in The Commissioner of Commercial Taxes Mysore, Bangalore vs. Hindustan Aeronautics Ltd. reported in (1972) 1 SCC 395, it was again held that the answer to the question whether it is a works contract or it is a contract of sale depends upon the construction of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9;. 9. The above documents are found in Volume 1 of I.A. No. 2 of 2013. The details of the above documents are available in Annexure A-1, which are at pages 6 to 27. The first document is dated 23.12.2009, addressed to one of the customers of the Petitioner. The subject column reads as under: Order Acknowledgment for One (1) No. OTIS Electric Traction Passenger Elevator for your Building at BAPU NAGAR, JAIPUR, RAJASTHAN . 10. In the body of the said letter, the order placed by the customer was acknowledged by referring to the acceptance of the Petitioner's proposal for 'SUPPLY' and 'INSTALLATION' of one (1) No. OTIS Electric Traction Passenger Elevator for their building. Along with the said letter, a copy of the proposal duly approved by the Petitioner's authorized officer was also enclosed. The contract number allocated to the customer was also mentioned. The first document enclosed along with the said letter dated 23.12.2009, is a document dated 21.10.2009, containing nine pages and in the last page the signatures of the Petitioner and its customers were found affixed in proof of acceptance of the Petitioner's offer to supply and installat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y mentioned in the said document that the system would continuously monitor critical aspects of system health, self-health, diagnostic capabilities, which are built into the control system to speed up trouble-shooting, which can be monitored from seven segment display provided in the logic board and that it will facilitate quick identification of fault for restoration of normal operation. 13. The next page of the document annexed is under the caption 'Benefits of ACV F (Variable Voltage Variable Frequency Drive)'. This document contains 10 specific details, namely, (i) smooth and controlled acceleration/deceleration, (ii) better riding quality, (iii) assured leveling accuracy +/- 5 MM, (iv) improved flight time, (v) improved reliability increased efficiency, (vi) reduced power consumption about 50% and improved power factor, (vii) reduced heat release, (viii) flexibility of programme and programming of features at site, (ix) enhances the value of building, and (x) simplified maintenance. A cursory glance of the details furnished under the above 10 heads by way of benefits of the offered LIFT discloses the claim of the Petitioner as to the advantage that will be availab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... H SPECIFIED TIME so that no delay is caused in carrying out the installation by the Petitioner, to relieve the Petitioner of any responsibility in respect of expenses relating to power supply or expenses of any nature relating to the rest of the building and other contractor's work, to pay all fees that may be required in connection with erection of preparation of the structure in which the elevator equipment is to be erected including any general permit/certificate fees, usually billed by the Government Agency licence fee etc., to PROVIDE SCAFFOLDING for erector's requirement in the elevator hoist way, during the erection period AND FOR ITS REMOVAL thereafter and in the event of the elevator hoist way being more than 40 meter height, such scaffolding should be in steel structure by OTIS, to provide suitable weatherproof lockup storage accommodation of approximately 50 sq.mt. per elevator at the ground floor level near the hoist way, to provide and maintain adequate safety and security measures, as also retain OTIS safety infrastructure to prevent any injury to third party or damage, theft or pilferage of material during erection period till the installed LIFT is handed ove ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y, Note 1 and Note 2 at the bottom of the said document, which states that the sole purpose of the above stipulation is to arrive at the amount of the entire contract under the various situations and the above stipulations do not indicate any intentions to sell materials under this contract as movables. Note No.2 states that the indices MP and WO are regularly published by IEEMA in monthly basic price circulars based on information bulletins from the authorities mentioned and those indices would be used for determining price variation and only IEEMA circulars would be shown as evidence, if required. Another very important clause stated in the said document is 'Payment Terms', which reads as under: Under this clause claim for manufactured materials shall be paid along with our material invoice and claim for installation labour shall be paid along with our final invoice. Firm prices: The prices quoted in this proposal will be firm upto 5/5/10. Thereafter for any delay in completion of installation and commissioning due to reasons attributable to your goodselves prices will be adjusted in accordance with the above clause. 17. Therefore, it is quite apparent that there ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by way of final payment either on commissioning or in the event of delay by any cause beyond the control of the Petitioner, which is to be paid within 90 days from the date the materials are ready for dispatch. In the event of any fault on the part of the Purchaser in making the Preparatory Work unavailable to enable the Petitioner to carry out the installation, such as defects in the hoist room or for any other lapse, the option is retained by the Petitioner to discontinue the work or withhold the release of completed elevator subject however, to charge of over payments to be charged at the rate of 1.5% per month of the agreed price. It also entitles the Petitioner to reschedule the erection time depending upon the delay caused at the instance of the Purchaser. Condition No.6 relates to the provision to be made by the Purchaser for the stay of the employees of the Petitioner who are assigned the task of erection of the LIFT. Condition No.7 relates to the work timings and in the event of the employees of the Petitioner were to work overtime based on mutual agreement with the Purchaser, such overtime charges should be borne by the Purchaser. Condition No.8 is a mutual FORCE MAJEURE ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tract. Condition No.17 is again a FORCE MAJEURE clause. Under Condition No.18, the Petitioner wants to reserve its right to effect the supply either from its factory at Karnataka or from any other place in India or by importing the LIFT from a foreign country. Condition No.19 is the provision under which the Petitioner's right to claim compensation/damages in the event of breach of contract at the instance of the Purchaser. Condition No.20 provides for settlement of the disputes by way of conciliation at the bipartite level and on its failure to go in for Arbitration. Condition No.21 refers to the manner in which the apportionment over the expenses of the contract relating to the amount or advances paid by the Purchaser, which would be determined by the Petitioner and that the same cannot be questioned by the Purchaser even before the legal forums. As per Condition No.22, the proposals when accepted by the Purchaser, the same would supersede all other earlier proposals, representations etc. Condition No.23 clarifies that in order to authenticate any change in the conditions of the contract after the signing of the contract, the same can be done only by the authorized person fro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... technical aspects and other minute details relating to the LIFT to be supplied along with the works to be carried out at the instance of the Purchaser to enable the Petitioner to supply and erect the LIFT are also furnished. (b) Based on the proposal of the Petitioner, once the order is placed by the Purchaser by way of acknowledging the said order, specific communication is issued furnishing a distinct contract number. In the said acknowledgment of order, the entire set of documents relating to the proposal and the signed contract is also enclosed with the price agreed between the parties. (c) The documents found in the ultimate agreed contract, therefore, contain the details relating to the model and the mechanical details about the operation of the LIFT, which are furnished with detailed particulars. (d) The various details contained in the proposal are all mainly related to the nature of the LIFT to be supplied and as to how the technology involved in the LIFT would be advantageous to the customer when it is ultimately erected and put into operation. (e) The details of the Preparatory Work is one of the relevant aspects of the contract, which disclose that at the si ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erials relating to the LIFT to be supplied being made and kept ready for dispatch. Therefore, the said condition is required to be examined in detail to ascertain as to whether the payment schedule really determines the nature of the contract. 21. Having noted the above salient features of the contract relating to the supply and erection of the LIFT by the Petitioner, to which I will discuss in detail in the latter part of this judgment, I wish to refer to the statutory provisions which are required to be noted at this stage. Mr. Salve, learned Senior Counsel in his submissions drew our attention to various statutory provisions relating to LIFTS, which provide for charging of duty under the provisions of the Central Excise Legislation as well as the provisions brought out by various States for charging tax on supply and installation of LIFTS construing the same as 'Works Contract' and the subsequent changes brought about after the decision of this Court in Kone Elevators (India) Pvt. Ltd. (supra), besides the Constitutional provision, namely, Article 366(29A)(b) of the Constitution. 22. Under Article 366(29A), tax on the sale or purchase of the goods is defined and th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ho has been empowered to issue a licence for the working of the LIFT. Such intimation about the erection of the LIFT and the nature of licence to be issued in the prescribed format has been specified. The required fee to be paid is also mentioned in the said section. Section 7 specifies that no LIFT should be operated without a licence. The corresponding rules, namely, Rules 3, 5, 6, 9 and 9(a), as well as Form A has also been referred. In furtherance of Sections, 4, 5, 6 and 7 of the Bombay Lifts Act, 1939 and the Bombay Lifts Rules, 1958, namely, Rules 3, 4, 5, 6, 9 and 9(a), what is specified is the detailed procedure to be followed by approaching the concerned authorities initially for the erection of the LIFT by getting a permission and securing a licence after successful installation of the LIFT and the periodical inspection to be carried out in order to ensure that the LIFT erected does not cause any damage to men and materials due to any defect in the material used while installing the LIFT, as well as in its future operation on regular basis, as well as in the course of its maintenance. Rule 9A(5) prescribes the fee for issuing a licence to LIFT contractors for permission, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Service' under sub-clause (zzzza) to sub-section (105) of Section 65, which was inserted by the Finance Act, 2008 w.e.f. 16.05.2008. The said provision reads as under: 105 Taxable Service means any service provided,- (zzzza) to any person, by any other person in relation to the execution of a works contract, excluding works contract in respect of roads, airports, railways, transport terminals, bridges, tunnels and dams. Explanation-For the purposes of this sub-clause, works contract means a contract wherein- (i) Transfer of property in goods involved in the execution of such contract is leviable to tax as sale of goods, and (ii) Such contract is for the purposes of carrying out,- (a) erection, commissioning or installation of plant, machinery, equipment or structures, whether prefabricated or otherwise, installation of electrical and electronic devices, plumbing, drain laying or other installations for transport of fluids, heating, ventilation or air-conditioning including related pipe work, duct work and sheet metal work, thermal insulation, sound insulation, fire proofing or water proofing, lift and escalator, fire escape staircases or elevators; or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was an addition made in sub-section (29) of Section 65 by which while defining a 'commissioning and installation agency', the expression 'erection' came to be added. A further subsection, namely, sub-section 39(a) was also introduced by Finance Act (No.2) of 2004 w.e.f. 10.09.2004, which further defined the expression 'erection, commissioning or installation' to mean any service provided by a commissioning and installation agency in relation to erection, commissioning of installation of plant, machinery or equipment. Consequently, in sub-section 105(zzd) the expression 'erection' was added along with the other expressions 'commissioning or installation', which was again to operate w.e.f. 10.09.2004. The above definition relating to 'commissioning and installation agency' under sub-section (29) of Section 65 continued even w.e.f. 16.06.2005. However, in sub-section 39(a) of Section 65 while defining 'erection, commissioning or installation', an elaborate definition came to be introduced as per which the expression 'erection, commissioning or installation' would mean any service provided by a commissioning or installati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Writ Petitions, the challenge is to the revised pre-assessment notices under the Central Sales Tax Act or under the respective State General Sales Tax Act for the assessment periods related to the years 1999-2000, 2000-2001, 2001-2002 and 2002-2003. Therefore, the question for consideration is what is the legal position with reference to the nature of contract of the Petitioner vis- -vis its Purchaser with reference to manufacture, supply and installation of LIFTS. Based on the terms of the specific contracts, a specimen copy is placed before us vis- -vis the relevant statutory provisions which are in existence during the relevant years. 32. Other statutory provisions which are relevant to be noted while construing the definitions prior to 16.05.2008 are sub-clause (29), (39a) and (105)(zzd) of Section 65. Service Tax was levied at the rate of 12% for the value of the 'taxable services' referred to under sub-clause (zzd) of sub-section (105) of Section 65. After 16.05.2008, under the amendments introduced by Finance Bill No.2 of 2009, the charge of service tax underwent a change and the rate was brought down to 5% of the value of taxable services referred to in sub-cla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecision of this Court in Kone Elevators (India) Pvt. Ltd. (supra), the various States who were earlier contending that supply and erection of a LIFT was a 'Works Contract', took a diametrically opposite view and started contending that the said contract will amount to 'Sale' and not 'Works Contract'. The learned Senior Counsel drew our attention to some of the counter affidavits filed on behalf of the State of U.P., Andhra Pradesh and Karnataka in Writ Petition No.232 of 2005, wherein such a stand has been taken by the respective State Governments. The learned Senior Counsel by referring to the definition of 'Works Contract' under Section 2(jj) of the Orissa Sales Tax Act, 1947, which has been extracted in the earlier part of this Judgment, submitted that the manufacture, supply and erection/installation of a LIFT squarely falls within the said definition of 'Works Contract' and, therefore, the stand of the Petitioner is well founded. In support of his submissions, the learned Senior Counsel also relied upon the Division Bench decision of the Bombay High Court in OTIS Elevators Co. (India) Ltd. vs. The State of Maharashtra reported in [1969] ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r Co. (India) Ltd. (1981) ELT 720 in support of his submissions. That was a decision of the Government of India in an appeal filed by OTIS Elevator Company under the provisions of the Central Excise Act, wherein it was contended that erection and installation of elevators and escalators were indivisible 'Works Contract' and do not constitute contracts for mere sale of goods. While dealing with the said submission, the above decision came to be rendered by the Government stating that elevators and escalators erected and installed by the company became a part of immovable property and hence are not goods. It was, however, held that the component parts of the elevators and escalators manufactured and cleared from their respective factory would be chargeable to duty at the appropriate rates. 39. By relying on the above decision, the learned Senior Counsel also brought to our notice an order under Section 37B of the Central Board of Excise and Customs dated 15.01.2002, wherein the assessibility of plant and machinery assembled at site was explained and as regards the LIFTS and Escalators in sub-paragraph (iv) of paragraph 5, it was described that though LIFTS and Escalators a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ut a 'Contract for Works' and not 'Sale'. The learned Senior Counsel drew our attention to sub-clause (zzzza) to sub-section (105) of Section 65 wherein, in the explanation to the said sub-clause, the erection of a LIFT has been defined to mean a 'Works Contract'. The learned Senior Counsel would, therefore, contend that there cannot be two different meanings relating to 'Works Contract', one for the purpose of Service Tax and the other for the purpose of Sales Tax. The submission of the learned Senior Counsel was adopted by all other counsel who appeared for the Petitioners in the other cases. 42. Mr. Dwivedi, learned Senior Counsel appearing for the State of Orissa, in his submissions contended that the contract as between the Petitioner and its Purchaser, going by its terms, is always one for sale of its branded LIFTS, which having regard to the nature of the product has to be necessarily erected at the site, that 90% of payment is to be made on the signing of the contract, that the LIFTS would be handed over to the Purchaser on its erection and that the contract provides for the payment of balance 10% on fulfillment of certain other conditions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of his trade or business, for cash, or for deferred payment or for any other valuable consideration, the same would be a sale and by referring to the definition of 'Works Contract' under Section 2(t), he pointed out that the definition itself makes it clear that any agreement for cash or for any other valuable consideration for carrying out the building construction, manufacture, fabrication etc., including erection/installation or commissioning of any movable or immovable property alone would fall within the said definition. By referring to the above statutory provisions, the learned Senior Counsel contended that there is a world of difference as between a contract by which one party agrees to supply a product as compared to a party agreeing to carry out a work such as construction of building, erection, installation or commissioning of movable or immovable property. In other words, according to the learned Senior Counsel going by the terms of the contract between the Petitioner and the prospective Purchasers, what is agreed to between the parties is the supply of LIFTS and the act of installation is not the contract for which the parties were ad idem. Therefore, if the co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 'Works Contract'. According to the learned Counsel, the test that was prevailing pre 46th Amendment, continued to hold good and that the sale of a LIFT is definitely not a 'Works Contract'. The learned Counsel relied upon the decision reported in Bharat Sanchar Nigam Ltd. and Another vs. Union of India and others, (2006) 3 SCC 1, in particular paragraph 43 and pointed out that the transactions which are 'mutant sales' alone are limited to the clauses of Article 366 (29-A) and that all other transactions would have to qualify sales within the meaning of Sale of Goods Act, 1930 for the purpose of levy of sales tax. The learned Counsel while referring to the judgment in Larsen Toubro Ltd. (supra) by making specific reference to paragraph 90, contended that although the decision in Hindustan Shipyard Ltd. (supra) has been distinguished, paragraph 6 of the said decision is still the correct proposition of law to be applied in all cases to find out the nature of a contract. 47 Mr. Preetesh Kumar, learned Standing Counsel for the State of Gujarat by referring to paragraphs 71 to 76 of the judgment in Larsen Toubro Ltd. (supra) and in particular the ratio lai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lause (b) to Sub-Article (29-A) of Article 366 of the Constitution. In fact, if an answer to the said question can be held in the affirmative, then that would axiomatically lead to an answer in favour of the Petitioner. Though, several decisions, wherein various tests have been highlighted, were cited before us and also reference to various provisions of different statutes, as well as the Finance Act provisions were brought to our notice, in my view, before adverting to those tests and the provisions, in the first instance, it will have to be found out as to what exactly was the nature of contract, as between the Petitioner and its Purchasers. 52. At the outset, even before examining the terms of the contract, it will have to be stated that the only business of the Petitioner is manufacture and supply of LIFTS/ELEVATORS. In fact, neither Mr. Salve nor any other Counsel appearing for the Petitioners submitted before us that the business of the Petitioner included any other activity along with the manufacture and supply of LIFTS/ELEVATORS. Certainly, it is not the case of the Petitioner that mere installation/erection of LIFT/ELEVATOR simpliciter is their business activity. It can ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9; that by itself will not ipso facto make the activity a 'Works Contract' unless the activity as explained in the document affirms and confirms to the effect that the said activity is nothing but a 'Works Contract'. In my opinion, when a detailed reference to the terms agreed upon between the Petitioner and the Purchaser is made, it will not be proper to merely go by such expression used sporadically to hold that the contract is a 'Works Contract'. On the other hand, I find that what the Petitioner has agreed under the Contract, is only to supply its branded LIFT in the premises of the Purchaser. I can firmly and validly state that a careful analysis of the terms contained in the contract will lead only to that conclusion and not any other conclusion. 55. As stated earlier and as has been set out in detail in paragraphs 8 to 19, the Petitioner while agreeing to supply an Elevator of a specific model, highlighted the details of the LIFTS, such as, its technical details, advantages of its product and other sophisticated equipments put into the product. In fact, if at all any work element is involved in the activity of supply of the LIFTS/ELEVATORS, I find ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he LIFT is that of the Purchaser and the Petitioner merely goes to the Purchaser's premises and fixes the various parts of the LIFT in the slots created for it. 57. While making a deeper scrutiny of the terms of the contract as a whole, as noted earlier, in Annexure A-1, which is the acknowledgement of the Order dated 23.12.2009, the very subject column States: Order Acknowledgment for One (1) No. OTIS Electric Traction Passenger Elevator for your Building at BAPU NAGAR, JAIPUR, RAJASTHAN . 58. The contents of the letter also states that the Petitioner was glad to receive the valued order placed with it by the Purchaser and stated that it is prepared to supply and install One (1) No. OTIS Electric Traction Passenger Elevator. Thus, while acknowledging the order placed by the Purchaser, the proposed specifications submitted earlier based on the Purchaser's requirement have been enclosed. A specific Contract number is also provided. Rest of the documents consist of the details of the model, the nature of the machine that would be operating the LIFTS, the brake system, the type of parts that are used in the Machine and the peculiar features of those mechanical aspe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d. The provision relating to cutting of walls, floors or partitions together with any repairs to be made necessary including grouting of all bolts, sills, members indicator and button boxes etc., are but certain incidental minor jobs to be attended to in the course of the supply and erection of the LIFT. When under the contract, the Purchaser has been directed to prepare the hoist way, which is a solid structure in the building and in the course of the erection of the LIFT if some holes are to be drilled for fixing a frame or a nut and bolt as compared to the enormity of the preparatory work that has been entrusted with the Purchaser for the purpose of erecting the LIFT, it must be stated that the said work of cutting the walls to fix the frames and grouting the bolts could not be held to be a service or work for which the contract was entered into. It is like doing some incidental work for fixing a Fan or an Air Conditioner. Providing a steel scaffolding again is not a matter which can be held to be a contract for works. On the other hand, for the purpose of grouting bolts and fixing the frames in a hoist way, which is stated to be having 30/40 metres height/depth, it has to be ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... attributable to the Purchaser, the price would be varied in accordance with the above costs indices. The price variation is supposedly agreed between the parties to prevail upto a specified date. Therefore, in the event of the contract being completed within the specified date, there is no question of any price variation arising in order to work out such variation based on the 'Wholesale Price Index' or 'Consumer Price Index'. Even assuming a contingency arises due to the fault of the Purchaser, at best it may result in some variation in the price and I fail to understand as to how based on the working out of such variation in the price, it can be held that the whole contract is a 'Works Contract'. 62. I do not find any sound logic or basis in the Petitioner referring to the Price Variation Clause under the caption 'Works Contract'. Therefore, it can be validly stated that by calling the Price Variation Clause as an 'Elevator Works Contract', the contract cannot be construed as a 'Works Contract'. On the other hand, going by the stipulations contained therein viz., that the claim for manufactured materials should be paid along with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Petitioner to cancel the contract for any reason whatsoever under Condition No.8 disclose that for mere signing of the contract for supply of the LIFT, the Petitioner would get the whole value of it without any corresponding obligation to effect the supply or to suffer any damages. The said outcome based on the payment conditions when read along with the other stipulations, disclose that the claim for manufactured materials should be paid along with the material invoice and the claim for installation should be paid along with their final invoice. It further makes it abundantly clear that the right of the Petitioner to realize the full value of the materials of the LIFT to be supplied does not entirely depend upon the installation part of it. In other words, supply of materials of the LIFT and installation costs are separately worked out in order to ensure that irrespective of the installation, the Petitioner will be able to realize the value of the material cost. This conclusion which is based on the above terms, also strengthens the reasoning that the contract is not an indivisible one and is always separable i.e., one for supply of materials and the miniscule part of the work ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed due to reasons attributable to the Purchaser, the apportionment clause will enable the Petitioner to retain such part of the amount of 90% already received to cover its costs and expenses. In fact the whole discretion vests with the Petitioner to determine such apportionment under Clause 21. Therefore, on a detailed consideration of the conditions of the contract, one will not be able to state with any certainty that the contract has got anything to do only with any work or service to be performed in the course of supply of the LIFT/ELEVATOR by the Petitioner. 67. The signed part of the said contract makes it clear that the price is inclusive of indirect taxes, as is currently applicable either leviable by the Central Government or State Government or any local Authority, including Excise Duty and Service Tax. However, it also states that in the event of any such statutory levy or payment of tax or otherwise faced by the Petitioner, then under such circumstances, that should be borne by the Purchaser. 68. Having considered the above terms of the contract threadbare, I am convinced that it can only be concluded that this contract is only one for the manufacture and supply o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e LIFT is installed in a premises, it can also be stated to be part of an immovable property. In my view, whether as a movable property or immovable property, it may not make any difference while considering the other prescriptions contained in the said provision. What is really relevant for consideration is to examine the issue by referring to the said provision, which in the foremost, depends upon an agreement between the parties. The said agreement should ordain an obligation on one party who has been entrusted with the task of fabrication, erection, installation of any movable or immovable property. The most mandatory requirement for invoking the said provision and for applying the said definition would be that the whole of the agreement should be for carrying out the work of fabrication, installation or erection of a movable or immovable property. Significantly, the expression 'manufacture' is absent in Section 2(jj). 72. Next, as per the agreement, it should be for cash or deferred payment or other valuable consideration. In other words, it must first satisfy the definition of a 'concluded contract' as provided under that Section. In this context, it would ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s 52 weeks, which again depends upon the fulfillment of the agreed conditions fastened on the Purchaser. It also provides for extending the contract periods. To recapitulate the said regime of the contract, it can be stated that the parties agreed as per the agreement wherein the Purchaser is bound to pay 90% of the agreed sum at the time of signing of the contract itself and the balance 10% within 90 days from the day the Petitioner gets the materials ready for dispatch in its premises, if it could not commission as agreed or within 30 days of its readiness to commission. Therefore, the whole of the valuable consideration becomes payable and was relatable or as agreed upon by the parties merely for the Petitioner's readiness to take up the contract of supply of the ELEVATOR and for its endeavour to effect the manufacture, procure the entire materials for a LIFT/ELEVATOR and keep it ready for dispatch in its premises. In other words, the moment the materials for a LIFT/ELEVATOR are made ready and kept for dispatch in the premises of the Petitioner, under a particular contingency within 90 days thereof, the majority of the contracted amount is to be paid to the Petitioner withou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... relevant terms of the Contract, the mentioning in Clauses 10 and 14 that the contract is otherwise indivisible 'Works Contract' will not by itself make it indivisible or a 'Works Contract'. When that is the factual and legal outcome as per the terms of the contract, it will have to be held that there is no scope to apply Section 2(jj) of the Orissa Sales Tax Act to the case on hand and hold that the manufacture, supply and installation of the LIFT by the Petitioner would fall within the said definition of 'Works Contract'. It may be a different situation if the contract was one for mere fabrication/erection/installation. Certainly a simple activity of fabrication cannot be equated to manufacture of parts of a LIFT since such fabrication may take place at the site with the aid of material and labour. 77. That apart, provisions of the Indian Contract Act stipulates the element of offer, acceptance and consideration for a concluded contract. In the case on hand, the offer would be for supply of the LIFT as described in the proposal made by the Petitioner. The consideration upto 90% would become payable the moment the Purchaser agrees to the proposal made by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, for the very same reasons, the said contention of the learned Senior Counsel is also liable to be rejected. 79. I have also highlighted how as per the payment terms the parties agreed specifically to the effect: 'under this clause claim for manufactured materials shall be paid along with our material invoice and claim for installation labour shall be paid along with our final invoice.' In fact the copy of the two invoices dated 17.12.2009 and 20.09.2010, clearly explains the fact that the first one related to material cost and the subsequent one only related to labour cost. 80. I have examined the provisions of the Bombay Lifts Act, 1939 which have been raised by learned Senior counsel for the petitioners in paragraph 25 and have extensively dealt with them in paragraph 37 of this judgment. Based on such examination of the various provisions of the Act, I have found that these provisions are meant for getting a permit, licence, registration etc. and for the purpose of ensuring that in the course of the installation, as well as, while the LIFT is in operation or in the course of the maintenance of the LIFT, no damage is caused to men and materials. Beyond that, base ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... To note the fallacy in the submission, a clear understanding of the said provision is required. At the very outset, it will have to be stated that the present attempt is to find out an answer to the question whether manufacture, supply and erection of a LIFT, will fall under the category of 'Sale' or 'Works Contract' for the purpose of a levy under the Sales Tax Act. Section 65(29), 65(39a) and 65(105) (zzd) and (zzzza) are all provisions for the levy of Service Tax. It is well known that while interpreting taxing statutes, strict and literal interpretation should be made. For this proposition of law, reference can be made to one of the earliest decisions of England in Cape Brand Syndicate vs. Inland Revenue Commissioner, 1921-1 KB 64. The above decision was followed in Income Tax Officer, Tuticorin vs. T.S. Devinatha Nadar, Etc., AIR 1968 SC 623 wherein it held that what is applicable to another taxing statute may not be applied to a case governed by sales tax statutes. Keeping the above fundamental principle in mind, an examination of Section 65(29), defines 'commissioning and installation agency' to mean any agency providing service in relation to erecti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 105 to Section 65, distinctly refers to transfer of goods in any such contract to mean such goods leviable to tax as a sale of goods. It will have to be stated that such leviability by itself may independently attract tax liability under the relevant Sales Tax Statutes. However, it is not the concern in this case and it is to be left open for consideration as and when any need arrives to decide that question. Therefore, the reference to the above provisions under the Service Tax Act are of no assistance to the Petitioner to hold that its manufacture, supply and installation of a lift is a 'Works Contract'. 85. The above conclusion is de hors the position that sub-clause (zzzza) of Sub-section 105 of Section 65 came to be introduced under the Finance Act of 2007, which came into force w.e.f. 11.05.2007. It should also be noted that Section 65(29), 65(39a) and 65(105) (zzd) have nothing to do with manufacture and supply which is actually the activity of the Petitioner. It is regarding the erection/commissioning/installation simpliciter, even if the LIFT or Escalator is independently carried out by an Agency. According to me, by relying upon Section 65 (29), 65 (39a) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on or in any case within 6 months of delivery of equipment. 89. After referring to the above clauses in the agreement and also the various decisions relied upon by the respective parties, the Division Bench noted the contention of the Department and the substance of the contention of the Department was as under: We have already referred to the contention of the Department that in view of the proportion of cost separately indicated for the material as against labour, and the use of the word 'price' in describing the consideration for the supply, erection and installation of the lifts the intention of the parties was to sell the goods. 90. While dealing with the said contention, the Division Bench observed as under: In the ultimate analysis in this case the form in which services are rendered does not permit its severance into two compartments. In this connection, there are certain factors which have relevance in determining the intention of the parties. The time-limit fixed for doing the work, the mention of and all-inclusive price for the totality of the materials and services rendered, the absence of an agreement for the sale of chattel as chattel, the poin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... allation. It has also got no relation to the delivery of the LIFT, either in its full form or in any semi-installed condition. The contractual terms between the Petitioner and its Purchaser have been explained in detail and have no relation to any service to be performed by the Petitioner by way of the agreed terms of the contract. The said decision is, therefore, of no assistance to the case of the Petitioner. In any event, if it is argued that the contract involved in the said decision is identical to the case on hand, as it has been found and held that the terms of the contract is not persuasive enough to call it a 'Works Contract', the said decision will no longer hold good. 94. Before analyzing the various other decisions relied upon by either side, having regard to the above conclusion that the manufacture, supply and installation of LIFT by the Petitioner would constitute a 'Sale' and not 'Works Contract', a reference can be made to the reasoning, which weighed with the learned Judges in the judgment rendered in Kone Elevators (India) Pvt. Ltd. (supra). In the said judgment this very question which has been referred to this Constitution Bench direc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al obligation of the assessee was only to supply and install the lift, while the customer's obligation was to undertake the work connected in keeping the site ready for installation as per the drawings. In view of the contractual obligations of the customer and the fact that the assessee undertook exclusive installation of the lifts manufactured and brought to the site in knocked down state to be assembled by the assessee, it is clear that the transaction in question was a contract of sale and not a works contract . Moreover, on perusal of the brochure of the assessee Company, one finds that the assessee is in the business of manufacturing of various types of lifts, namely, passenger lifts, freight elevators, transport elevators and scenic lifts. A combined study of the above models, mentioned in the brochure, indicates that the assessee has been exhibiting various models of lifts for sale. These lifts are sold in various colours with various capacities and variable voltage. According to the brochure, it is open for a prospective buyer to place purchase order for supply of lifts as per his convenience and choice. Therefore, the assessee satisfies, on facts, the twin requirem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... took the contract to develop the property of one Mr. Dinesh Ranka, owner of the land and subsequently, the show cause notice issued to the said assessee proceeded on the basis that the tripartite agreement was a 'Works Contract'. Further, it noted that in the show cause notice there was no allegation made by the Department that there was any monetary consideration involved in the first contract, which was the Development Agreement. The reference came before the three Judge Bench to which one of us was a party (Hon'ble the Chief Justice of India, Mr. Justice R.M. Lodha). 97. Before referring to the various reasons in the said judgment, it will be appropriate to note the basic facts which were noted in the said judgment in paragraph 3, which reads as under: 3. Of the 26 appeals under consideration before us, 14 are from Karnataka and 12 from Maharashtra. Insofar as Karnataka appeals are concerned, it is appropriate that we take the facts from the leading case being Larsen and Toubro. The ECC division of Larsen and Toubro (for short, L T ) is engaged in property development along with the owners of vacant sites. On 19.10.1995, L T entered into a development agreement ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rm of immovable property. 100. While dealing with the reference, the various contentions were noted in the first instance and while examining the implication of Article 366(29A)(b), it was observed in paragraph 60: 60. .in other words goods which have by incorporation become part of immovable property or deemed as goods the definition of Tax on the sale and purchase of sale includes tax on the transfer of the property in the goods as goods or which have lost its form as goods and have acquired some other form involved in the execution of works contract. 101. Thereafter, in paragraph 61 it was further observed as under: 61. Viewed thus, a transfer of property in goods under clause 29-A(b) of Article 366 is deemed to be a sale of the goods involved in the execution of a works contract by the person making the transfer and the purchase of those goods by the person to whom such transfer is made. 102. In paragraph 63 while interpreting the effect of Article 366 (29A) (b), which was brought into the Constitution by the 46th Amendment, the Bench held that tax on the sale or purchase of goods may include a tax on the transfer in goods as goods or in a form other than goo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sactions where essential ingredients of a 'Sale' as defined in the Sale of Goods Act, 1930 are absent, within the ambit of sale or purchase for the purposes of levy sales tax. The said proposition stated in Bharat Sanchar (supra) would only go to show that before invoking Article 366 (29A), the concerned transactions ought to be examined individually with particular reference to the essential ingredients contained therein to find out as to whether such ingredients would lead to a conclusion of a 'Sale' as defined in the Sale of Goods Act, 1930 are present or not. In the event of such element of 'Sale' not being present, then alone Article 366(29A)(b) would get attracted for the purpose of applying the principle of deemed sale. I find no relevance in paragraph 76 of the said decision where this Court laid down as to what nature of contract can be called as a 'Works Contract' falling under the said definition vis-a-vis Article 366 (29A) (b). Paragraph 76 reads as under: 76. In our opinion, the term 'Works Contract' in Article 366(29A)(b) is amply wide and cannot be confined to a particular understanding of the term or to a particular form. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... #39;. With great respect, it will have to be held that such a sweeping interpretation may not be appropriate for invoking Article 366(29A)(b). I say so because if a contract can be ascertained based on its definite terms and can be held to be a contract for supply of goods, then in the course of implementation of the said contract, namely, supply of the goods certain services are to be rendered, it will have to be held that insignificant services rendered alone, cannot be the basis to hold the entire contract to be a 'Works Contract'. 108. In this context, it will be relevant to note that in the execution of the present contract, the property in the goods would not loose its form as 'goods' as compared to a contract for development of a land into flats. What would be available after the ultimate conclusion or implementation of the contract would be an immovable property in the form of a building and the goods employed in the course of execution of such contract, might have lost its character as goods such as bricks, cement, sand, steel, fittings etc. Therefore, as a general proposition of law, it will not be appropriate to hold that wherever an element of works i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ract' covered by Article 366(29A) cannot be made. In fact, in the earlier part of this judgment a detailed reference has been made to the various terms of the contract to find out as to whether the element of sale was present or not. It has been held that by virtue of the essential ingredients of the contract, what was agreed between the parties was only sale of the LIFT and for that purpose the Petitioner also agreed to carry out the installation exercise. 110. In Larsen Toubro Ltd. (supra), this Court rightly noted in paragraph 72 that to attract Article 366(29A)(b) there has to be a 'Works Contract' and what is its meaning should also be found out. It was further held that the term 'Works Contract' needs to be understood in a manner that the Parliament had in its view at the time of introducing the 46th Amendment and which is more appropriate to Article 366(29A)(b). Reference can be made to paragraph 76, which has been extracted in paragraph 102 of this judgment. 111. In fact, I find that in the abovesaid paragraph in Larsen Toubro Ltd. (supra), it was ultimately held by accepting the argument of the learned Advocate General of Maharashtra that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fully met. In a contract to build a flat there will necessarily be a sale of goods element. Works contracts also include building contracts and therefore without any fear of contradiction it can be stated that building contracts are species of the works contract. (Underlining is mine) 113. A reading of the above paragraph, thus discloses three conditions and that at the foremost a contract must be a 'Works Contract' and in that contract in the course of its execution, goods must have been applied and the property in those goods ultimately gets transferred either as goods or in some other form. If the said condition is not fulfilled, the other two conditions will have no application. Therefore, the above principles stated in paragraph 94 of Larsen Toubro Ltd. (supra) are applied to the contract necessarily an exercise has to be carried out to find out whether the contract was a 'Works Contract' or not. Having regard to the essential ingredients of the contractual terms, it is difficult to hold that the supply of LIFT by the Petitioner to its Purchaser can be called as a 'Works Contract' and, therefore, since the very first condition is not fulfilled, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . In the present case, the contract was put into writing containing various clauses and conditions which were elaborate and definite to the effect that the Petitioner should manufacture, supply and then erect a product, namely, the LIFT. Apart from setting up of a sugar plant in Richardson Cruddas (supra), the parties also agreed for supply of fabrication and installation of bottle cooling equipment at the premises of the customer. While describing the said contract, it was held in page 251 that the contractor fabricated the component parts according to the requirements and specification of the customer and installed the same on a suitable base and foundation at the premises of the customer. It was held that the installation of the bottle cooling unit in the premises of the customer was not merely ancillary or incidental to the supply of the unit. Here again it was noted that for the installation of bottle cooling equipment also, there was no formal written contract and the terms of the contract had to be gathered from the correspondence. Having regard to such a nature of contract which was dealt with in that decision, it will have to be held that it will not be safe to apply the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t'. This Court in paragraph 31 rejected the submission of the counsel for the Appellant and clearly pointed out the distinction as between a building contract and a contract for supply of a chattel as a chattel. I am in full agreement with the proposition of law laid down in the said decision, which fully supports my conclusion. 120. The learned Senior Counsel also relied upon the decision in M/s. T.V. Sundaram Iyengar (supra). Paragraph 7 is relevant for the case on hand where the principle has been laid down, which reads as under: 7. The question with which we are concerned, as would appear from the resume of facts given above, is whether the construction of the bus bodies and the supply of the same by the assessees to their customers was in pursuance of a contract of sale as distinguished from a contract for work and labour. The distinction between the two contracts is often a fine one. A contract of sale is a contract whose main object is the transfer of the property in, and the delivery of the possession of, a chattel as a chattel to the buyer. Where the main object of work undertaken by the payee of the price is not the transfer of a chattel qua chattel, the contra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ioned case that having regard to the specific terms of the contract, which inter alia states that the material used for construction of coaches before its use was the property of the railways and the contract substantially related to the service or works to be rendered by the contractor for the construction of the coaches, it was, therefore, held that it was a 'Works Contract' and not a 'Sale'. However, it was categorically held that the question whether a contract is a 'Works Contract' or a contract of 'Sale' depends upon the conception of the terms of the contract in the light of the surrounding circumstances. Therefore, applying the above principle to the case on hand, I am convinced that by virtue of the terms as has been noted in the earlier part of this judgment, the manufacture, supply and installation of a LIFT is a contract for 'Sale' and not a 'Works Contract'. 124. Mr. Dwivedi, learned Senior Counsel also placed reliance upon the three Judge Bench decision of this Court in The Central India Machinery Manufacturing Company Limited (supra). An identical question has arisen for our consideration, namely, whether manufacture ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bill and on such payment, the vehicle in question will become the property of the Purchaser. There could be no clearer expression of the intention of the contracting parties than this clause that the contract was, in substance, one for the sale of manufactured wagons by the Company for a stipulated price. (Emphasis Added) 125. I find that the ratio laid therein mutatis mutandis apply to the facts of this case. In fact, in the said decision the Constitution Bench decision of this Court in M/s. Patnaik and Company (supra) was followed. Therefore, it has now become clear to the effect that such contract for manufacture, supply and installation of LIFT is nothing but a 'Sale' and not a 'Works Contract'. 126. Mr. Salve, learned Senior Counsel in his submissions placed reliance upon a Division Bench judgment of this Court in M/s Vanguard Rolling Shutters and Steel Works (supra). That was a case where the question of law was as to 'whether under the circumstances of the case and under the terms of the contract the supply of shutters related and iron gats worth ₹ 1,08,633.08/- was sale or amounted to 'Works Contract'. The Appellant therein was a co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... no assistance to the Petitioner except to the general proposition of law propounded in paragraph 2 referred to above. 128. The learned Senior Counsel also relied upon a three Judge Bench decision of this Court in Purshottam Premji (supra). That was also a case where the assessee was to quarry stones from the quarries belonging to the South-Eastern Railways and thereafter break those stones into pieces and convert them into ballast of a specified size and thereafter, supply them to the South-Eastern Railway. Dealing with the said contract, it was held that it was a 'Works Contract' and not a 'Sale'. In paragraph 7, the principle was stated as under: 7. The primary difference between a contract for work or service and a contract for sale of goods is that in the former there is in the person performing work or rendering service no property in the thing produced as a whole notwithstanding that a part or even the whole of the materials used by him may have been his property. In the case of a contract for sale, the thing produced as a whole has individual existence as the sole property of the party who produced it, at some time before delivery, and the property th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... survived is with reference to the dominant nature test to be applied to a composite transaction not covered by Article 366(29-A). Transactions which are mutant sales are limited to the clauses of Article 366(29-A). All other transactions would have to qualify as sales within the meaning of the Sales of Goods Act, 1930 for the purpose of levy of sales tax. (Emphasis Added) 131. I am in full agreement with the proposition of law stated in the said paragraph as regards the tests to be applied even after the introduction of Article 366(29A) into the Constitution. Therefore, I am convinced that the various tests laid down in the earlier Constitution Bench decisions, in particular, the ones which have been relied upon, namely, M/s. Patnaik and Company (supra), Hindustan Aeronautics Ltd. (supra), The Central India Machinery Manufacturing Company Limited (supra) still hold good. Consequently the ultimate conclusion is that the present contract between the Petitioner and its Purchaser is one for 'Sale' and not 'Works Contract', is justified. 132. Dr. Singhvi, learned Additional Advocate General also relied upon the decision of this Court in Hindustan Shipyard Ltd. (s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mendment, as well as, the judgment of this Court in Larsen Toubro Ltd. (supra). The learned Senior Counsel relied upon Builders' Association of India and others v. Union of India and others, (1989) 2 SCC 645, which is also a Constitution Bench judgment, wherein in paragraph 41 it was held as under: 41. ..The case-book is full of the illustrations of the infinite variety of the manifestation of 'works contracts'. Whatever might be the situational differences of individual cases, the constitutional limitations on the taxing power of the State as are applicable to 'works contracts' represented by 'building contracts' in the context of the expanded concept of 'tax on the sale or purchase of goods' as constitutionally defined under Article 366(29-A), would equally apply to other species of 'works contracts' with the requisite situational modifications. (Underlining is mine) 135. The learned Senior counsel, fairly brought to our notice paragraph 94 of the judgment in Larsen Toubro Ltd. (supra), which has been dealt with in paragraph 112 of this judgment, wherein it has been concluded as a case dealing with building contracts and h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s not always easy and has for all time vexed jurists all over. The distinction between a contract of sale of goods and a contract for work and labour is often a fine one. A contract of sale is a contract whose main object is the transfer of the property in, and the delivery of the possession of, a chattel as a chattel to the buyer. (Halsbury's Laws of England, 3rd edn., Vol. 34, p. 6) (Emphasis Added) 138. The above paragraph sufficiently demonstrates that the question will depend upon the intention of the parties executing the contract and that there can be no standard formula by which one can distinguish a contract of sale from a contract of work and labour. The said principle stated in the above said paragraph can be applied under all situations and since after the 46th Amendment as held in Larsen Toubro Ltd. (supra), the first condition to be found out is as to whether a contract is a 'Works Contract'. It has to be necessarily examined based on the terms agreed between the parties as to what is the intention of the parties. Therefore, applying the above tests, since it is found that the present contract is a contract for sale, it cannot be held to be a 'Wor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n hand, and having regard to the nature of the terms of the contract displayed, it will have to be held that the manufacture, supply and installation of LIFTS/ELEVATORS comes under the definition of 'Sale' and not 'Works Contract' and the decision in Kone Elevators (India) Pvt. Ltd. (supra) has been correctly decided. The Reference is, therefore, answered on the above terms. ORDER Keeping in view the conclusions of the majority, expressed in the judgment of Dipak Misra, J., it is held that the decision rendered in State of A.P. v. Kone Elevators (2005) 3 SCC 389 does not correctly lay down the law and it is accordingly overruled. 2. It is directed that the show-cause notices, which have been issued by taking recourse to reopening of assessment, shall stand quashed. The assessment orders which have been framed and are under assail before this Court are set aside. It is necessary to state here that where the assessments have been framed and have attained finality and are not pending in appeal, they shall be treated to have been closed, and where the assessments are challenged in appeal or revision, the same shall be decided in accordance with the decision ren ..... X X X X Extracts X X X X X X X X Extracts X X X X
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