Consult Us For Construction
Transaction of Sale or Work Contract
M/s BHARAT HEAVY ELECTRICALS LTD Vs THE STATE OF MAHARASHTRA
Bombay Sales Tax Act, 1959 - Transaction of sale or Work contract - Contract for designing, engineering, supplying, erection, installation and Commissioning of the Trombay-V Expansion Project – contract involving manufacture, inspection, shipping, clearance and dispatch - Assessee in appeal against Tribunal order holding that supplies of material were sales, liable to tax under the BST Act, 1959
HELD – it is seen that the foundation is to prepare by FPDIL and not the applicant. The applicant is to supply equipment and erect it on the site. Work of erection is not separately valued but is tied with transportation costs and insurance. In any event this is only a fraction of total cost. In the circumstances, it is difficult to accept the contention of the applicant that the contract is one of work.
In value terms, the amounts spent for erection is minuscule. This notwithstanding, the transaction seems to be for supply of the compressors at a site prepared by FPDIL in terms of foundation and merely fixing four compressors. The schedule also provides for materials and workmanship guarantees which are restricted to specification laid down in the contract and free from defects in design and material in relation to equipment and not in relation to the work of installation.
Repair and replacement of the equipment is also contemplated at site. There is nothing to indicate that the guarantees also include the entire erection work - considering the factual matrix and the law and after applying the tests in Kone Elevator case, it is evident that in the facts of the present case the contract was clearly one for supply and erection of equipment, supply of equipment being dominant purpose
FPDIL was required to carry out all preparation work, provide foundation, provide all civil works required, the equipment was merely supplied and installed - The transaction entered by the applicant with RCF is one for sale and not for works contract – answered in favour of the revenue and against the assessee