Case Note & Summary
The Applicant, M/s. Permasteelisa (India) Pvt. Ltd., a registered dealer under the Bombay Sales Tax Act and the Maharashtra Sales Tax on the Transfer of Property in Goods involved in the Execution of Works Contracts (Re-enacted) Act, 1989 (Works Contract Act), was engaged in the fixation of glass walls. It entered into contracts with ICICI Ltd. and Wockhardt Ltd. for construction of glass curtain walls. The Applicant claimed that these contracts were for construction of building or incidental/ancillary to building construction, and thus entitled to a composite/concessional rate of tax under a Notification dated 8 March 2000 issued under section 6A(1) of the Works Contract Act. The assessing officer rejected this claim, and the Tribunal in Second Appeal No.106 of 2007 upheld that rejection, holding that the contracts were not for construction of building nor incidental/ancillary thereto. The Applicant filed a Reference Application, and the Tribunal referred the question of law to the High Court. The High Court examined the nature of the contracts and the Notification. It noted that the Notification provided a composite rate of tax for works contracts specified in paragraph 'A', which included contracts for construction of building and contracts incidental or ancillary thereto. The Court held that glass curtain walls are not part of the building structure but are external cladding, and the contracts for their construction are separate from the main building contract. Therefore, they do not fall within the ambit of the Notification. The Court answered the question in the affirmative, i.e., the Tribunal was justified in holding that the contracts did not constitute building construction contracts or incidental/ancillary contracts. The Reference was disposed of accordingly.
Headnote
A) Sales Tax - Works Contract - Composite Rate of Tax - Notification dated 8 March 2000 - The issue was whether a contract for construction of glass curtain walls is a building construction contract or incidental/ancillary thereto. The Tribunal held that it is not, and the High Court affirmed, stating that glass curtain walls are not part of the building structure but are external cladding, and thus not covered by the Notification. (Paras 1-18)
Issue of Consideration
Whether the contract for construction of glass curtain walls executed by the Applicant constitutes a contract for construction of building or is incidental/ancillary to such contract, entitling the Applicant to composite/concessional rate of tax under the Notification dated 8 March 2000.
Final Decision
The High Court answered the question in the affirmative, holding that the Tribunal was justified in its decision. The Reference was disposed of accordingly.
Law Points
- Interpretation of Works Contract Act
- Composite rate of tax
- Notification dated 8 March 2000
- Building construction contract
- Incidental or ancillary contract
Case Details
2016 LawText (BOM) (05) 25
Sales Tax Reference No.55 of 2014 in Reference Application No.80 of 2010 in Second Appeal No.106 of 2007
S.C. Dharmadhikari, A.A. Sayed
Mr. F.B. Andhyarujina, Sr. Counsel a/w Mr. Ashish Sodhan i/b M/s. Nishith Desai Associates for the Applicant; Ms. Naira Jeejeebhoy, Spl. Counsel a/w Mr. B.B. Sharma, AGP for the State-Respondent
M/s. Permasteelisa (India) Pvt. Ltd.
State of Maharashtra, Assistant Commissioner of Sales-Tax (I-38), Deputy Commissioner of Sales-Tax (Appeals-VI)
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Nature of Litigation
Sales Tax Reference under the Works Contract Act read with Bombay Sales Tax Act
Remedy Sought
The Applicant sought a declaration that the contracts for construction of glass curtain walls are building construction contracts or incidental/ancillary thereto, entitling it to composite/concessional rate of tax under the Notification dated 8 March 2000.
Filing Reason
The Tribunal held that the contracts were not building construction contracts or incidental/ancillary contracts, and thus the Applicant was not entitled to the concessional tax rate.
Previous Decisions
The Tribunal in Second Appeal No.106 of 2007 upheld the assessment order rejecting the claim for concessional rate. The Reference Application was filed, and the Tribunal referred the question of law to the High Court.
Issues
Whether the contract for construction of glass curtain walls constitutes a contract for construction of building under the Notification dated 8 March 2000?
Whether the contract for construction of glass curtain walls is incidental or ancillary to a contract for construction of building?
Submissions/Arguments
The Applicant argued that glass curtain walls are an integral part of modern buildings and the contract is incidental to building construction.
The Respondent argued that glass curtain walls are not part of the building structure and are separate contracts, not covered by the Notification.
Ratio Decidendi
Glass curtain walls are external cladding and not part of the building structure; contracts for their construction are not contracts for construction of building nor incidental or ancillary thereto, and thus not eligible for composite/concessional rate of tax under the Notification dated 8 March 2000.
Judgment Excerpts
The following question of law is referred to this Court under section 9(1) of the Maharashtra Sales Tax on the Transfer of Property in Goods involved in the Execution of Works Contracts (Re-enacted) Act, 1989...
It is the case of the Applicant that it is a registered dealer under the Works Contract Act as well as under the Bombay Sales Tax Act.
Procedural History
Assessment proceedings under Bombay Sales Tax Act led to Second Appeal No.106 of 2007 before the Tribunal, which decided on 9 July 2010. The Applicant filed Reference Application No.80 of 2010, and the Tribunal referred the question of law to the High Court by order dated 7 March 2014, leading to the present Sales Tax Reference No.55 of 2014.
Acts & Sections
- Maharashtra Sales Tax on the Transfer of Property in Goods involved in the Execution of Works Contracts (Re-enacted) Act, 1989: Section 6A(1), Section 9(1)
- Bombay Sales Tax Act, 1959: Section 61(1)
