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TMI Blog2015 (1) TMI 222X X X X Extracts X X X X X X X X Extracts X X X X ..... works followed by the revisionist Company is that it is only after entering into an agreement with the customer, that the activity of manufacturing of parts/components of lifts/elevators is carried out by the Company at its factory situate in Karnataka. The works contract provides for procurement and supply of all the component parts whether manufactured or bought from other manufacturers or imported and stored at the revisionist's Maharashtra Warehouse and involves a series of complex engineering activities such as template, plumbing, rails, designing, fixing platform and assembling car enclosure and accessories, checking continuity of safety link circuit, removing all shorting and start up, cleaning and painting, adjustment for balancing safety etc., which is undertaken for the erection, commissioning and installation of a functional elevator which is fully integrated into the structure in question. The short point which, therefore, arises in the present revision for consideration of the Court is whether the works contract entered into between the revisionist Company and a customer is a sale contract or a works contract. The assessing authority, Deputy Commissioner of Commer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of exempt goods and amount of profit thereon; (c) all amounts representing the rent paid or payable in respect of machinery and other equipments taken on hire for use in the execution of works contract; (d) all amounts representing the value of service and labour and profit thereon; (e) all amounts representing the value of goods in which property has been transferred in the execution of works contract as a result of sale in the course of inter-state trade or commerce; (f) all amounts representing the value of goods in which property has been transferred in the execution of works contract as result of sale in the course of goods out of the territory of India or sale in the course of import of goods in the territory of India; (g) all amounts representing the value of goods in which property has been transferred as a result of sale outside the State;" It is submitted that under Rule 9(1) although tax on turnover of sale of goods where such sale is affected by way of transfer of property in goods involved in the execution of a work contract, same shall be computed on the taxable turnover on the same taxable goods. However, for purposes of determining the taxable turnover of sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the time schedule for delivery and thereafter proceeded to state about the major component facet and how the skill and labour employed for converting the main components into the end product was only incidental and arrived at the conclusion that it was a contract for sale. The principal logic applied, i.e., the incidental facet of labour and service, according to us, is not correct. It may be noted here that in all the cases that have been brought before us, there is a composite contract for the purchase and installation of the lift. The price quoted is a composite one for both. As has been held by the High Court of Bombay in Otis Elevator (supra), various technical aspects go into the installation of the lift. There has to be a safety device. In certain States, it is controlled by the legislative enactment and the rules. In certain States, it is not, but the fact remains that a lift is installed on certain norms and parameters keeping in view numerous factors. The installation requires considerable skill and experience. The labour and service element is obvious. What has been taken note of in Kone Elevators (supra) is that the company had brochures for various types of lifts and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tisfied. Thus analysed, we conclude and hold that the decision rendered in Kone Elevators (supra) does not correctly lay down the law and it is, accordingly, overruled." Be that as it may, it is not necessary for this Court to enter into the merits of the matter or examine the nature of the contract as the appeal filed by the revisionist before the Additional Commissioner (Appeals) is still pending. Next it has been submitted by the learned Senior Counsel for the revisionist that an application for stay of the order of the Dy. Commissioner (Assessing Authority) was moved before the Additional Commissioner (Appeals) which has been rejected by the order dated 5.6.2014. It is not in dispute between the parties that the appeal is still pending decision before the Appellate Authority-Additional Commissioner Grade -II, Appeal-I, Commercial Tax, Lucknow but the submission is that in view of the decision of the Constitution Bench in the case of Kone Elevator (Supra), the claim of the revisionist with regard to order of the assessing authority must necessarily be allowed and therefore, the Appellate Authority ought to have considered the stay application in this light of the matter and no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... otal liability on disposal of his appeal. Dispensation of deposit should also be allowed where two view are possible. While considering the application for interim relief, the Court must examine all pros and cons involved in the case and further examine that in case recovery is not stayed, the right of appeal conferred by the legislature and refusal to exercise the discretionary power by the authority to stay/waive the pre-deposit condition, would be reduced to nugatory/illusory. Undoubtedly, the interest of the Revenue cannot be jeopardized but that does not mean that in order to protect the interest of the Revenue, the Court or authority should exercise its duty under the law to take into consideration the rights and interest of an individual. It is also clear that before any goods could be subjected to duty, it has to be established that it has been manufactured and it is marketable and to prove that it is marketable, the burden is on the Revenue and not on the manufacturer. In (2009) 3 SCC 177 Pennar Industries Limited Versus State of Andhra Pradesh and Others the Supreme Court has explained the principles relating to grant of stay and has reiterated its earlier view taken in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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