TMI Blog2016 (12) TMI 1071X X X X Extracts X X X X X X X X Extracts X X X X ..... bject contracts have been viewed - the writ petition is thus disposed off - matter remanded back. - W. P. No. 38178 of 2016, WMP No. 32711 of 2016 - - - Dated:- 5-12-2016 - Rajiv Shakdher, J. For the Petitioner : Mr. V. S. Manoj For the Respondents : Mr. K. Ravi, Standing Counsel ORDER 1. This is a writ petition filed to assail the order dated 31.08.2016 passed by respondent No.1. With the consent of the counsel for parties, the writ petition is taken up for final hearing. 2. The principal ground, on which, the order is impugned by the petitioner is that respondent No.1, while passing the impugned order, took into account extraneous material, inasmuch as he adverted to a decision of the Supreme Court passed in State of Andhra Pradesh V. M/s.Kone Elevators (India) Limited, 2005 (181) ELT 156 (in short Kone-I ), which had been overruled by a Larger Bench of the Supreme Court in the case of Kone Elevator India Pvt. Ltd., V. State of Tamil Nadu, 2014 (34) S.T.R. 641 (SC) (in short Kone-II ). 3. My predecessor, while issuing notice in the writ petition, on 03.11.2016, had, after a detailed discussion, granted time to the respondents counsel to take instructio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch is summarised in paragraph 17 of the writ petition : ...... (i) ₹ 36,35,90,578/- represents pure sale of goods which is completely outside the purview of service tax. Documentary evidences were placed to establish that the value pertains to supply of goods which is not liable to service. This has not at all been considered. (ii) ₹ 6,58,90,923/- represents the value of goods which are exported and any attempt to levy service tax is contrary to the law. The petitioner also placed the details of bill of lading to establish the value of export. This has not at all been considered. (iii) ₹ 61,41,44,180/- represents the supply portion in a contract and there is no provision to levy service tax on the value of goods supplied. (iv) ₹ 49,89,90,042/- pertains to comprehensive contract which clearly provides for value of goods, charges towards commissioning and installation and civil works. (v) The petitioner relied upon Rule 2A of the Service Tax (Determination of Value) Rules, 2006 which provides for deduction of value of goods supplied during the contract. (vi) The petitioner also specifically addressed the allegations in the Show Ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntract including the nature of the obligations to be discharged thereunder and the surrounding circumstances. If the intention is to transfer for a price a chattel in which the transferee had no previous property, then the contract is a contract for sale. Ultimately, the true effect of an accretion made pursuant to a contract has to be judged not by artificial rules but from the intention of the parties to the contract. In a contract of sale , the main object is the transfer of property and delivery of possession of the property, whereas the main object in a contract for work is not the transfer of the property but it is one for work and labour (emphasis supplied). Another test often to be applied to is : when and how the property of the dealer in such a transaction passes to the customer : is it by transfer at the time of delivery of the finished article as a chattel or by accession during the procession of work on fusion to the movable property of the customer? If it is the former, it is a sale ; if it is the latter, it is a works-contract . Therefore, in judging whether the contract is for a sale or for work and labour , the essence of the contract or the reality of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bid was for giving contract on lump sum turn-key basis for erection of the plant as a whole and is not restricted to mere supply of equipments. The person awarded with the contract is obliged to supply the equipments, erect the same in the premises of the contractee and their contractual obligation continues till the plant is erected. Thus, in this case, both the supply of goods and provision of services go hand-in-hand for execution of the comprehensive contract of erection, commissioning or installation of the plant altogether. Thus raising of mere sale invoices on the supply of equipments alone will not take away the basic character of such composite contracts being works contracts and make it separate contracts for supply of goods and provision of services. Therefore, I have no hesitation to hold that classification of a work undertaken under a particular contract is to be decided on the basis of the comprehensive nature of work undertaken and the purpose of the contract and accordingly, the comprehensive contract for execution of Turn-Key Project and all composite work involving both service and supply for erection and commissioning of the plant as a whole, are to be classifie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the contract was a comprehensive works contract, and therefore, no interference was called for in the impugned order. 10.1. Mr.Ravi, when, queried as to whether reliance on the overruled judgment of the Supreme Court could have had an impact on the conclusions that the Adjudicating Authority/ respondent No.1 reached; said, that, if, that part of the order is severed, the impugned order could still be sustained. 10.2. In any event, it was the submission of the learned counsel for the Adjudicating Authority/respondent No.1 that since, an alternative remedy was available to the petitioner, the writ would not lie. 11. I have heard the learned counsel for the parties. 12. A perusal of the record and submissions shows that at the heart of the case is the two diametrically opposite stands taken by the parties. While the petitioner's say is that the transactions are separate and not composite in nature, it is the contention of the respondents that the transactions are composite in nature and that they have been artificially split . 12.1. Whether or not, the impugned transactions are composite in nature, as alleged by the respondents is a mixed question of fact and law. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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