A compilation of various Judgments of Service Tax and VAT on relevant issues in works contract and construction sector is made. Stands of High court is highlighted on complex issues arising in Constructions and taxation of works contract. A brief description of matter, appellant and petitioner's contemplation and order passed by authorities is also included to add more value.
GST on Real Estate & Construction SectorLijo Philip
- Construction, building, and maintenance contracts are considered works contracts and treated as services for GST purposes.
- Under-construction projects will be taxed as services if consideration is received before completion, otherwise land and completed buildings are outside GST scope.
- Tax rates are estimated at 18% CGST+SGST or IGST for works contracts, with input tax credit available only for subcontractors that pay tax.
This document provides information about input tax credit under GST including definitions, eligibility conditions, and procedures. It discusses what constitutes input, input services, capital goods, and the electronic credit ledger. It outlines the primary conditions for claiming ITC including the invoice, payment, and filing of returns. Special scenarios where ITC can be claimed are described. The document also discusses blocked credits, apportionment of credit, and the process for determining and reversing ITC.
The document outlines policies for payments to contractors, including:
1) Contractors must submit bills that are then checked by engineers before payment. Final bills are based on tender value and interest is owed for delayed payments.
2) Contractors must notify completion within 10 days and receive completion certificates within 30 days. Final bills must be submitted within 1 month of completion.
3) Payments can be made directly to banks if requested. Deductions will be made for taxes, VAT, and cess. Advance payments require security and permits while mobilization advances over 2 crores require bank guarantees.
The document discusses the key provisions related to Input Tax Credit (ITC) under the GST law in India. It begins by defining ITC and input tax. It then outlines some of the major ITC provisions under the Central GST Act and rules, including those relating to eligibility for ITC, documentation requirements, blocked credits, and time limits. Specific provisions covered in more detail include Section 16 on eligibility and conditions for ITC, Section 17 on apportionment of credit and blocked credits, and restrictions on ITC for works contracts and construction of immovable property. The document provides an overview of the major ITC concepts and sections under the GST law.
K. Vijaya Kumar, Asst. Commissioner of C.Excise, presents on the determination of value of goods and services under GST law. The key points are:
1. The determination of value is essential for calculating tax liability under GST law. Section 15 of the CGST Act outlines how to determine the transaction value, which is the price actually paid or payable.
2. The valuation rules provide various methods for determining value when the transaction value is not available, such as open market value, value of like goods/services, and cost plus 10% method.
3. Specific rules cover valuation of supplies between related parties, through agents, and supplies where consideration is not wholly monetary
Scope of Sales Tax Act 1990 of PakistanAima Masood
The document summarizes key provisions related to sales tax in Pakistan. It discusses (1) the rate of sales tax charged on taxable supplies and imports, (2) goods charged at zero percent tax rate, (3) exemptions provided to certain supplies, and (4) rules regarding input tax deduction and payment of tax. Registered persons can deduct input tax paid on purchases against output tax due, provided they hold valid tax invoices and import documents. The time and mode of payment of tax on imports and local supplies is also specified.
The following Presentation enumerates the various provisions w.r.t. ITC, how it can be used,eligibilty and conditions for claiming ITC along with various case studies and illustrations. further, it elaborates the concept of input service distributor.
The document summarizes key changes made to Pakistan's Income Tax Ordinance of 2001 through the Finance Act of 2009. Some key points include:
1) Branch profits of foreign companies in Pakistan will now be taxed as dividend income rather than business profits. Petroleum E&P companies are excluded from this change.
2) The tax rate on bonuses for high-income corporate employees was increased to 30% for tax year 2010 to support internally displaced people.
3) Tax credits and deductions were increased for donations, home loans, and manufacturers selling to registered persons.
4) A minimum tax on turnover was re-introduced for resident companies to broaden the tax base.
5)
GST on Real Estate & Construction SectorLijo Philip
- Construction, building, and maintenance contracts are considered works contracts and treated as services for GST purposes.
- Under-construction projects will be taxed as services if consideration is received before completion, otherwise land and completed buildings are outside GST scope.
- Tax rates are estimated at 18% CGST+SGST or IGST for works contracts, with input tax credit available only for subcontractors that pay tax.
This document provides information about input tax credit under GST including definitions, eligibility conditions, and procedures. It discusses what constitutes input, input services, capital goods, and the electronic credit ledger. It outlines the primary conditions for claiming ITC including the invoice, payment, and filing of returns. Special scenarios where ITC can be claimed are described. The document also discusses blocked credits, apportionment of credit, and the process for determining and reversing ITC.
The document outlines policies for payments to contractors, including:
1) Contractors must submit bills that are then checked by engineers before payment. Final bills are based on tender value and interest is owed for delayed payments.
2) Contractors must notify completion within 10 days and receive completion certificates within 30 days. Final bills must be submitted within 1 month of completion.
3) Payments can be made directly to banks if requested. Deductions will be made for taxes, VAT, and cess. Advance payments require security and permits while mobilization advances over 2 crores require bank guarantees.
The document discusses the key provisions related to Input Tax Credit (ITC) under the GST law in India. It begins by defining ITC and input tax. It then outlines some of the major ITC provisions under the Central GST Act and rules, including those relating to eligibility for ITC, documentation requirements, blocked credits, and time limits. Specific provisions covered in more detail include Section 16 on eligibility and conditions for ITC, Section 17 on apportionment of credit and blocked credits, and restrictions on ITC for works contracts and construction of immovable property. The document provides an overview of the major ITC concepts and sections under the GST law.
K. Vijaya Kumar, Asst. Commissioner of C.Excise, presents on the determination of value of goods and services under GST law. The key points are:
1. The determination of value is essential for calculating tax liability under GST law. Section 15 of the CGST Act outlines how to determine the transaction value, which is the price actually paid or payable.
2. The valuation rules provide various methods for determining value when the transaction value is not available, such as open market value, value of like goods/services, and cost plus 10% method.
3. Specific rules cover valuation of supplies between related parties, through agents, and supplies where consideration is not wholly monetary
Scope of Sales Tax Act 1990 of PakistanAima Masood
The document summarizes key provisions related to sales tax in Pakistan. It discusses (1) the rate of sales tax charged on taxable supplies and imports, (2) goods charged at zero percent tax rate, (3) exemptions provided to certain supplies, and (4) rules regarding input tax deduction and payment of tax. Registered persons can deduct input tax paid on purchases against output tax due, provided they hold valid tax invoices and import documents. The time and mode of payment of tax on imports and local supplies is also specified.
The following Presentation enumerates the various provisions w.r.t. ITC, how it can be used,eligibilty and conditions for claiming ITC along with various case studies and illustrations. further, it elaborates the concept of input service distributor.
The document summarizes key changes made to Pakistan's Income Tax Ordinance of 2001 through the Finance Act of 2009. Some key points include:
1) Branch profits of foreign companies in Pakistan will now be taxed as dividend income rather than business profits. Petroleum E&P companies are excluded from this change.
2) The tax rate on bonuses for high-income corporate employees was increased to 30% for tax year 2010 to support internally displaced people.
3) Tax credits and deductions were increased for donations, home loans, and manufacturers selling to registered persons.
4) A minimum tax on turnover was re-introduced for resident companies to broaden the tax base.
5)
Wealth Tax Act, 1957 charges tax on the net wealth of individuals and Hindu Undivided Families (HUFs) at a rate of 1% of net wealth exceeding Rs. 15 lakhs. Net wealth includes all assets owned in India and abroad for citizens and residents, and assets in India for non-citizens and non-residents, less prescribed deductions for debts and exemptions. The valuation date is March 31st or the last day of the previous financial year if the person is not assessed under the Income Tax Act. Returns must be filed by those with net wealth over the taxable limit, and assessments can be re-opened within 4-6 years from the end of the assessment year. However,
Wealth tax is levied at 1% on net wealth exceeding Rs. 30 lakhs as of March 31. Net wealth is total assets minus exempted assets and debts incurred to purchase taxable assets. Individuals and HUFs resident in India are taxed on worldwide assets, while non-residents are taxed only on Indian assets. Common taxable assets include cars, boats, jewelry, urban land and cash in hand exceeding Rs. 50,000. One residential house and certain other assets are exempt from tax. Wealth tax returns are due by July 31 if not liable for audit, else by September 30, with late filing penalties of 1% per month. Wealth tax was abolished from FY 2016
360 degree analysis of block credit in relation to vehicle , vessels and aircraft includes amendment which are effective from 01.02.2019 in their relation
Professional Practice II - Presentation - Construction Delays & EOTYee Len Wan
The document discusses construction delays, extensions of time, and relevant clauses from PAM 2018. It outlines three categories of delay - contractor, employer, and natural events - and the implications of each. The contractor is entitled to an extension of time and compensation for delays caused by the employer or natural events, but not for self-inflicted delays. The document also describes the process for applying for an extension of time, including required notices and timelines, as well as the architect's role in assessing and granting or rejecting applications. Concurrent delays that involve both contractor and employer contributions are also addressed.
The document discusses various provisions under section 60-65 of the Indian Income Tax Act regarding clubbing of income. It summarizes the key conditions where income from assets may be taxed in the hands of the transferor rather than the transferee. This includes situations involving revocable transfers, transfers to a spouse or minor child without adequate consideration, and transfers for the benefit of the transferor's spouse or son's wife. Exceptions to clubbing are provided if the transfer was made for adequate consideration or under separation agreement.
David Quinlan from Pinsent Masons explains the basics of contract law for sport and recreation organisations – from the Sport and the Law Conference 2014.
This document summarizes the key points of the Indian Electricity Act of 1910.
The Act establishes the legal framework for the supply and use of electricity in India. It defines important terms related to electricity supply and distribution. It requires licenses from state governments for the generation, transmission, and distribution of electricity within specified areas. The licenses define the limits and conditions of electricity supply. The Act also establishes the rights and responsibilities of electricity providers and consumers.
This document discusses the laws related to central excise duty in India. It outlines the Central Excise Act of 1994, Central Excise Tariff Act of 1985, and Central Excise Rules of 1944 as the basic laws governing the levy and collection of central excise duties. It also describes the conditions for goods to be subject to central excise duty, which are that the goods must be movable, marketable, excisable as defined in the Tariff Act, and manufactured/produced in India. Finally, it discusses the different bases for valuation of excise duty, including specific duty, tariff duty, maximum retail price, and ad valorem basis, with ad valorem being the most common
This document provides an introduction to Indian contract law. It begins with an overview of the Indian Contract Act of 1872, including that it was enacted by Parliament and applies to all states except Jammu and Kashmir. It then discusses key concepts like what a contract is, the sources of Indian mercantile law, and the essential elements of a valid contract. The essential elements discussed include offer and acceptance, intention to create a legal relationship, mutual consent, capacity of parties, free consent, consideration, lawful object and consideration, certainty, agreement not being void, possibility of performance, and satisfying legal formalities. It concludes by stating everyone is equally competent to contract if they satisfy the essential elements.
The document provides an overview of customs law in India. It discusses that customs duty is an indirect tax imposed under the Customs Act of 1962. The key points are:
1) The Customs Act and Customs Tariff Act are the two main statutes governing customs law in India. Various rules and regulations have been prescribed to carry out the objectives of these Acts.
2) Important definitions related to customs are provided in Section 2 of the Customs Act, including definitions for terms like "assessment", "baggage", "bill of entry", "export", "imported goods", and "goods".
3) In addition to levying duties, the Customs Act aims to regulate imports/exports, protect
The document discusses the Income Tax Ordinance of 2001 in Pakistan. It provides some background and history on the ordinance. A commission report from May 2001 recommended replacing the previous 1979 ordinance. The new 2001 ordinance was published in September 2001 and became effective from July 2002. It overhauled the previous law by abolishing the role of assessing officers and requiring taxpayers to self-assess their tax liability. The government claimed the new ordinance would bring revolutionary changes and make the tax law easier to understand and aligned with global standards. The ordinance has since been amended annually through Finance Ordinances or Acts.
The document provides an overview of key concepts from the Indian Contract Act of 1872, including:
- The definition of a valid contract according to Section 2(h) as an agreement enforceable by law.
- The essential elements of a valid contract as outlined in Section 10, including offer, acceptance, free consent, capacity to contract, and lawful consideration.
- An explanation of offer and acceptance, including the definition and essentials of a valid offer according to Section 2(a), and the definition and legal rules regarding acceptance according to Section 2(b).
- An overview of persons considered incompetent to contract, including minors under the age of 18 and persons of unsound mind, and the
This document discusses various aspects of section 195 of the Indian Income Tax Act, which deals with tax deducted at source (TDS) for payments made to non-residents. Some key points discussed include:
- Section 195 mandates any person making payments such as interest, royalty or fees for technical services to non-residents to deduct TDS at the time of payment.
- The rate of TDS depends on factors such as whether a lower treaty rate can be applied based on a tax residency certificate.
- Non-compliance can attract penalties for the payer such as interest, fines and in some cases prosecution.
- Exceptions apply when a lower or nil withholding certificate is obtained
Procedures to claim refund, rebate and duty drawback under customsDVSResearchFoundatio
OBJECTIVE
Import of all kinds of goods and on the export of goods on certain situations attracts customs duty. The Customs Act,1962 contains provisions which govern the levy of customs duty. In this webinar, we shall understand the procedures to be followed while claiming refunds, rebate and duty drawback under customs law.
Income Of Other Persons, Included In Assesses Total IncomeAdmin SBS
Who is an assessee?
Extract of sec 2(7)(a)
Assessee means a person by whom any tax or any other sum of money is payable under this Act, and includes
every person in respect of whom any proceeding under this Act has been taken for the assessment of HIS income or
of the Income of any other person in respect of which he is assessable
or of the loss sustained by him or by such other person
or of the amount of refund due to him or to such other person
The document provides an overview of key aspects of the Integrated Goods and Services Tax (IGST) Act in India. It notes that IGST is levied on all inter-state supplies of goods and services at a rate not exceeding 40%. Zero-rated supplies that allow for input tax credit include exports and supplies to special economic zones. Advance rulings under the IGST Act provide binding guidance on issues like classification and taxability. Refund provisions exist for taxes wrongly paid and for goods purchased in India by international tourists.
Overview of Returns in GST, steps to file returns in GST India, Number of returns in GST, Due date for filing returns in GST India, Late Filing Fee in GST, Procedure to File Returns in GST etc.
This presentations discusses the finer aspects of how VAT was being levied on Works contract. And the controversies related to the judgement of Gannon Dunkerly, options available for deductions under VAT for composite contracts
This document provides information about works contracts under VAT. It defines works contracts and provides examples. It explains the two methods to compute tax - determining sale price of goods or composition scheme. It provides details on calculating sale price of goods, fixed percentage deductions, and composition rates. It also discusses ongoing works contracts, set off rules, tax invoices, interstate contracts, TDS requirements, and important court judgements.
Wealth Tax Act, 1957 charges tax on the net wealth of individuals and Hindu Undivided Families (HUFs) at a rate of 1% of net wealth exceeding Rs. 15 lakhs. Net wealth includes all assets owned in India and abroad for citizens and residents, and assets in India for non-citizens and non-residents, less prescribed deductions for debts and exemptions. The valuation date is March 31st or the last day of the previous financial year if the person is not assessed under the Income Tax Act. Returns must be filed by those with net wealth over the taxable limit, and assessments can be re-opened within 4-6 years from the end of the assessment year. However,
Wealth tax is levied at 1% on net wealth exceeding Rs. 30 lakhs as of March 31. Net wealth is total assets minus exempted assets and debts incurred to purchase taxable assets. Individuals and HUFs resident in India are taxed on worldwide assets, while non-residents are taxed only on Indian assets. Common taxable assets include cars, boats, jewelry, urban land and cash in hand exceeding Rs. 50,000. One residential house and certain other assets are exempt from tax. Wealth tax returns are due by July 31 if not liable for audit, else by September 30, with late filing penalties of 1% per month. Wealth tax was abolished from FY 2016
360 degree analysis of block credit in relation to vehicle , vessels and aircraft includes amendment which are effective from 01.02.2019 in their relation
Professional Practice II - Presentation - Construction Delays & EOTYee Len Wan
The document discusses construction delays, extensions of time, and relevant clauses from PAM 2018. It outlines three categories of delay - contractor, employer, and natural events - and the implications of each. The contractor is entitled to an extension of time and compensation for delays caused by the employer or natural events, but not for self-inflicted delays. The document also describes the process for applying for an extension of time, including required notices and timelines, as well as the architect's role in assessing and granting or rejecting applications. Concurrent delays that involve both contractor and employer contributions are also addressed.
The document discusses various provisions under section 60-65 of the Indian Income Tax Act regarding clubbing of income. It summarizes the key conditions where income from assets may be taxed in the hands of the transferor rather than the transferee. This includes situations involving revocable transfers, transfers to a spouse or minor child without adequate consideration, and transfers for the benefit of the transferor's spouse or son's wife. Exceptions to clubbing are provided if the transfer was made for adequate consideration or under separation agreement.
David Quinlan from Pinsent Masons explains the basics of contract law for sport and recreation organisations – from the Sport and the Law Conference 2014.
This document summarizes the key points of the Indian Electricity Act of 1910.
The Act establishes the legal framework for the supply and use of electricity in India. It defines important terms related to electricity supply and distribution. It requires licenses from state governments for the generation, transmission, and distribution of electricity within specified areas. The licenses define the limits and conditions of electricity supply. The Act also establishes the rights and responsibilities of electricity providers and consumers.
This document discusses the laws related to central excise duty in India. It outlines the Central Excise Act of 1994, Central Excise Tariff Act of 1985, and Central Excise Rules of 1944 as the basic laws governing the levy and collection of central excise duties. It also describes the conditions for goods to be subject to central excise duty, which are that the goods must be movable, marketable, excisable as defined in the Tariff Act, and manufactured/produced in India. Finally, it discusses the different bases for valuation of excise duty, including specific duty, tariff duty, maximum retail price, and ad valorem basis, with ad valorem being the most common
This document provides an introduction to Indian contract law. It begins with an overview of the Indian Contract Act of 1872, including that it was enacted by Parliament and applies to all states except Jammu and Kashmir. It then discusses key concepts like what a contract is, the sources of Indian mercantile law, and the essential elements of a valid contract. The essential elements discussed include offer and acceptance, intention to create a legal relationship, mutual consent, capacity of parties, free consent, consideration, lawful object and consideration, certainty, agreement not being void, possibility of performance, and satisfying legal formalities. It concludes by stating everyone is equally competent to contract if they satisfy the essential elements.
The document provides an overview of customs law in India. It discusses that customs duty is an indirect tax imposed under the Customs Act of 1962. The key points are:
1) The Customs Act and Customs Tariff Act are the two main statutes governing customs law in India. Various rules and regulations have been prescribed to carry out the objectives of these Acts.
2) Important definitions related to customs are provided in Section 2 of the Customs Act, including definitions for terms like "assessment", "baggage", "bill of entry", "export", "imported goods", and "goods".
3) In addition to levying duties, the Customs Act aims to regulate imports/exports, protect
The document discusses the Income Tax Ordinance of 2001 in Pakistan. It provides some background and history on the ordinance. A commission report from May 2001 recommended replacing the previous 1979 ordinance. The new 2001 ordinance was published in September 2001 and became effective from July 2002. It overhauled the previous law by abolishing the role of assessing officers and requiring taxpayers to self-assess their tax liability. The government claimed the new ordinance would bring revolutionary changes and make the tax law easier to understand and aligned with global standards. The ordinance has since been amended annually through Finance Ordinances or Acts.
The document provides an overview of key concepts from the Indian Contract Act of 1872, including:
- The definition of a valid contract according to Section 2(h) as an agreement enforceable by law.
- The essential elements of a valid contract as outlined in Section 10, including offer, acceptance, free consent, capacity to contract, and lawful consideration.
- An explanation of offer and acceptance, including the definition and essentials of a valid offer according to Section 2(a), and the definition and legal rules regarding acceptance according to Section 2(b).
- An overview of persons considered incompetent to contract, including minors under the age of 18 and persons of unsound mind, and the
This document discusses various aspects of section 195 of the Indian Income Tax Act, which deals with tax deducted at source (TDS) for payments made to non-residents. Some key points discussed include:
- Section 195 mandates any person making payments such as interest, royalty or fees for technical services to non-residents to deduct TDS at the time of payment.
- The rate of TDS depends on factors such as whether a lower treaty rate can be applied based on a tax residency certificate.
- Non-compliance can attract penalties for the payer such as interest, fines and in some cases prosecution.
- Exceptions apply when a lower or nil withholding certificate is obtained
Procedures to claim refund, rebate and duty drawback under customsDVSResearchFoundatio
OBJECTIVE
Import of all kinds of goods and on the export of goods on certain situations attracts customs duty. The Customs Act,1962 contains provisions which govern the levy of customs duty. In this webinar, we shall understand the procedures to be followed while claiming refunds, rebate and duty drawback under customs law.
Income Of Other Persons, Included In Assesses Total IncomeAdmin SBS
Who is an assessee?
Extract of sec 2(7)(a)
Assessee means a person by whom any tax or any other sum of money is payable under this Act, and includes
every person in respect of whom any proceeding under this Act has been taken for the assessment of HIS income or
of the Income of any other person in respect of which he is assessable
or of the loss sustained by him or by such other person
or of the amount of refund due to him or to such other person
The document provides an overview of key aspects of the Integrated Goods and Services Tax (IGST) Act in India. It notes that IGST is levied on all inter-state supplies of goods and services at a rate not exceeding 40%. Zero-rated supplies that allow for input tax credit include exports and supplies to special economic zones. Advance rulings under the IGST Act provide binding guidance on issues like classification and taxability. Refund provisions exist for taxes wrongly paid and for goods purchased in India by international tourists.
Overview of Returns in GST, steps to file returns in GST India, Number of returns in GST, Due date for filing returns in GST India, Late Filing Fee in GST, Procedure to File Returns in GST etc.
This presentations discusses the finer aspects of how VAT was being levied on Works contract. And the controversies related to the judgement of Gannon Dunkerly, options available for deductions under VAT for composite contracts
This document provides information about works contracts under VAT. It defines works contracts and provides examples. It explains the two methods to compute tax - determining sale price of goods or composition scheme. It provides details on calculating sale price of goods, fixed percentage deductions, and composition rates. It also discusses ongoing works contracts, set off rules, tax invoices, interstate contracts, TDS requirements, and important court judgements.
This document provides an overview of work contract service under Indian tax law, including:
1. It defines a works contract as a contract involving the transfer of goods that is taxable as sale of goods, for purposes like construction, installation, repair, etc. of movable or immovable property.
2. It outlines two methods for determining the taxable service portion of a works contract: by subtracting the value of goods transferred from the total amount, or by applying a percentage to the total amount.
3. It discusses CENVAT credit eligibility and the partial reverse charge mechanism for works contracts.
4. It lists certain works contracts that are exempt from service tax, such as those provided to government
Supreme Court Judgement - L&T / K Raheja (VAT on Builders)sandesh mundra
This presentation takes one through the details of recent Supreme Court Judgement in the case of Larsen & Toubro, which was a review of K Raheja Judgement. The judgement has a severe impact on the tax aspects of builders and real estate developers. It redefines the definition of works contract and levy of VAT on sale of flats and commercial premises
This document discusses works contracts under Indian tax law. It begins by defining works contracts and distinguishing between divisible and indivisible works contracts. It then discusses a key Supreme Court case that determined works contracts do not constitute a "sale of goods" and thus are not subject to sales tax. The document outlines the types of expenses that can be deducted from the contractual transfer price to determine the taxable amount. It provides examples of how tax is calculated for works contracts in two case studies. Finally, it briefly discusses the composition scheme option for works contracts to pay a compounded 2% tax rate instead of the standard rates.
This document provides an overview of service tax on work contracts under Indian law. It defines what constitutes a work contract and declared services. A work contract is a single contract for material and labor to carry out works like construction, installation, etc. It discusses how work contracts are taxed, with the labor portion taxed under service tax and the goods portion taxed under VAT/Sales tax. There is a reverse charge mechanism for service tax on certain work contracts. The place of provision of service for work contracts is where the immovable property is located.
This presentation discusses the intricacies involved and the modifications in the taxation of works contract in various VAT Regimes. It highlights the critical issues to be asked when a project company enters into any state for its operations.
10/3/13 Meet the Primes workshop: bonding and insurancenubbyhead
This document provides an overview of bonding and insurance for new and emerging contractors. It discusses barriers to entry, how contractors have addressed bonding issues, the differences between bonding and insurance, the three parties involved in a bond, types of bonds (bid, performance, payment), how bonds are evaluated based on the three C's (capacity, capital, character), and the roles of surety bond producers and underwriters. It also covers insurance types and public agency bond assistance programs.
The document discusses the benefits of exercise for mental health. Regular physical activity can help reduce anxiety and depression and improve mood and cognitive functioning. Exercise causes chemical changes in the brain that may help boost feelings of calmness, happiness and focus.
Construction Law: An Indian Perspectivedesignesque
The document summarizes key developments in construction law and infrastructure projects in India. It discusses opportunities for growth given India's rising middle class and expected infrastructure investment. Common public-private partnership models are outlined. Government initiatives to attract foreign investment in real estate and construction are highlighted. Dispute resolution is identified as a major bottleneck, with long legal processes locking up significant funds. The complex redevelopment of the Mumbai International Airport is presented as one of India's most challenging infrastructure projects due to land constraints, encroachment, and the need to demolish and rebuild while operations continue.
This document summarizes key judgements related to indirect taxes in the Indian construction sector. It discusses two Supreme Court cases - Bharat Sanchar Nigam Ltd. v. Union of India regarding the tax treatment of telecom products with both goods and service components, and State of Andhra Pradesh v. Kone Elevators (India) Ltd regarding whether an elevator installation contract constitutes a works contract or supply of goods. It also discusses factors to consider regarding incidental installation services and interstate works contracts. Overall, the document analyzes how different transactions involving both goods and services have been treated for indirect tax purposes.
The architect as contract administrator a legal perspective - presentation ...Zainab Zainordin
This document provides an overview of the architect's role as contract administrator from a legal perspective. It discusses the architect's scope of work under the building contract, their duty to act independently and impartially when certifying payments. The document analyzes specific clauses in the PAM 2006 building contract form regarding practical completion, defects liability, damages for non-completion, and emphasizes the importance of the architect exercising proper judgment when issuing certificates that can financially impact the contractor and employer. Key sources of construction law are also outlined.
This document provides an agenda and overview for a presentation on risks in the construction industry and financial reporting for construction contracts. It discusses common risks like competitive bidding, estimating costs, unique accounting requirements, and bonding. It then explains the percentage-of-completion and completed-contract methods for recognizing revenue and includes an example showing a table with contract details, costs, billings, and profit recognized for 15 different jobs.
The document discusses sources of construction law in Sri Lanka, including legislation and case law. It outlines several key Acts that govern the construction industry, such as the Apartment Ownership Law Act, and summarizes some important case laws that have helped define legal principles. The legislation aims to regulate the construction sector, protect the environment, and plan urban development. Case laws help interpret these statutes and serve as precedents for resolving similar legal disputes.
Statutory compliances for companies in Indiakborah
The document discusses different types of business entities including sole proprietorships, partnerships, and companies. It explains the key characteristics of each structure such as liability, ease of setup, funding options, and legal compliance requirements. The document also covers common post-incorporation requirements for companies such as obtaining tax registrations, creating budgets and managing payroll.
This document discusses various Indian labor laws and statutory compliance requirements for human resource management. It outlines key provisions of laws related to provident fund, employee state insurance, professional tax, gratuity, minimum wages, maternity benefits, bonus payments, and payment of wages. Compliance with these statutes is important to safeguard employees and the organization from risks and penalties for non-compliance. Failure to adhere to the various labor laws could result in fines or imprisonment for the employer.
This document provides an overview of building bye laws in India. It discusses that building construction varies by region depending on factors like materials, labor, and weather. Bye laws establish rules and regulations to maintain proper ventilation, privacy, and safety between neighbors. They define restrictions on building construction set by local authorities regarding setbacks, open spaces, heights, and more. The objectives are to allow orderly development while protecting safety, providing efficient use of space, and ensuring occupant health and comfort. Various terms and requirements related to setbacks, heights, room sizes, floor area ratios, and lighting/ventilation are also outlined.
This document provides an introduction to business law. It defines law and explains the need for laws in society to regulate behavior. The main branches of law are described as constitutional law, administrative law, criminal law, civil law, and commercial law. Sources of law are explained as statutory law, case law, natural law, English mercantile law, and customs. Key legal concepts such as legal positivism, legal realism, stare decisis, precedent, and civil versus criminal law are introduced. The document concludes by noting how laws regulate all areas of business and factors owners must consider.
The document discusses offer and acceptance in contract law. It provides definitions for key terms like offeror and offeree. It examines landmark cases that established important principles. Carlill v Carbolic Smoke Ball Co established that advertisements can constitute offers capable of acceptance. Bowerman v ABTA established that notices displayed by travel agents constituted offers. The document also discusses what does and does not constitute an offer, like negotiations being invitations to treat, and how long an offer remains open.
Evolution of Works Contract under VAT and ServiceAnmol Gupta
A works contract is a single indivisible contract that involves both the sale of goods and the provision of services necessary to fulfill the contract. Works contracts were first addressed by courts in cases involving State of Madras vs. Gannon Dunkerley & Co. and Gannon Dunkerley and Co. vs. State of Rajasthan. The document then discusses the definition of works contracts under various acts and laws, and how works contracts are taxed under sales tax and service tax laws. Value added tax is applied only to the value of goods involved in the works contract, which must be determined by deducting labor, services, and other charges from the total contract value.
This document summarizes the two main methods for taxing works contracts under the Rajasthan VAT Act: the exemption fees method and the VAT method. The exemption fees method allows contractors to pay tax as a percentage of the contract value in exchange for foregoing input tax credits. The VAT method calculates taxable turnover by deducting labor and other costs from the gross contract value, then contractors can claim input tax credits and pay the net tax amount. Contractors must choose which method to use based on their individual circumstances and need for input tax credits on goods purchased.
How will be the impact of GST on manufacturing industry?
“The government also realizes that becoming a manufacturing hub will need several strategic reforms to simplify manufacturing in India. One of the proposed reforms, in line with Make in India, is the implementation of the Goods and Services Tax (GST). “
Works contract is a deemed sale which involves the transfer of property in goods (whether as goods or in any other form) involved in the execution of the works contract. The concept of taxation of goods transferred during the execution of works contract has been a matter of great litigation over the period.
I am trying to sum up the regularly followed methods and procedures while determining the taxation of works contracts in the hands of contractor.
This document discusses the partial reverse charge mechanism for works contracts under Indian service tax law. Key points:
1) For certain works contracts, the liability to pay service tax is shared between the service provider and service recipient. For service portions of works contracts, the recipient must pay 50% of the service tax and the provider pays the remaining 50%.
2) The value of the service portion of a works contract is determined by subtracting the value of transferred goods from the total contract value. For certain types of works contracts, the service portion is deemed to be 40-70% of the total contract value.
3) The introduction of partial reverse charge for works contracts increases the tax burden on service recipients while aiming
VAT driven local purchases
Cost driven CST purchases
Duty burden on imports
Complex State Laws
Ever changing tax landscape
Different decisions on the same issue
Border controls
This document provides an introduction and overview of the Maharashtra Value Added Tax Act of 2002. It discusses key aspects of VAT including:
- VAT is a multi-stage tax system that taxes value added at each stage of production and distribution, allowing tax credits for taxes previously paid.
- The Act replaced the earlier Bombay Sales Tax Act and came into effect on April 1, 2005, establishing the VAT system in Maharashtra.
- Registration is required if annual turnover exceeds Rs. 1 lakh for traders or Rs. 5 lakhs for manufacturers. Importers must register regardless of turnover.
- Goods are classified into Schedules A-E and taxed at rates from 0-20% depending
The document discusses Income Computation and Disclosure Standard III relating to Construction Contracts notified by the Central Government. Some key points:
- It comes into force from April 1, 2015 and applies to AY 2016-17 onwards.
- It mandates use of the percentage of completion method for recognizing revenue and costs from construction contracts over time.
- In the initial stage where the outcome cannot be reliably estimated, revenue can only be recognized to the extent of costs incurred, up to a maximum of 25% of the stage of completion.
- It provides guidance on aspects like contract segmentation, contract costs, changes in estimates, transitional provisions, and disclosure requirements.
ICDS III provides guidance for accounting of revenue and expenses for construction contracts. It requires using the percentage of completion method to recognize revenue and expenses over time based on the stage of completion. Revenue includes the initial contract amount and approved variations/claims/incentives if probable and reliably measurable. Expenses include direct costs, allocated borrowing costs and overheads. Early stage contracts limit revenue to costs until 25% completion. The standard applies prospectively from FY 2015-16. Transitional provisions apply for ongoing contracts as of April 1, 2015.
Real estate construction GST impact-great compilation by CA Shiv AshishShakir Shaikh
1) Construction and real estate contracts related to immovable property like buildings and civil structures are considered works contracts and treated as services under GST.
2) EMIs or advance payments for under-construction homes will attract GST, but supply of land and buildings where payment is received only after completion will be exempt from GST.
3) The tax rate for most construction and real estate contracts is estimated to be 18%, and transitional provisions have been made to allow credit for taxes already paid on stocks and contracts.
This document provides an overview and summary of key aspects of IFRS 15 - Revenue from Contracts with Customers. It defines important terms, outlines the scope of IFRS 15, and discusses principal vs agent considerations, repurchase agreements, and the 5 steps for recognizing revenue under IFRS 15: 1) identify the contract with a customer, 2) identify the performance obligations, 3) determine the transaction price, 4) allocate the transaction price to the performance obligations, and 5) determine when to recognize revenue. It also covers contract modifications, licensing agreements, and contract costs.
VALUATION OF STOCK TRANSFER,JOB WORK, E-WAY BILL UNDER GSTGST Law India
The following presentation enumerates how valuation is to be done during inter-unit transactions especially during stock transfer, job work and e-way bill along with their tax treatment under GST.
The document provides an overview of service tax in India. Some key points:
- Service tax is imposed on specified services at 12.36% rate and is levied on the date of invoice or payment, whichever is earlier.
- Registration is required if annual turnover exceeds Rs. 10 lakhs. Invoices must contain specified details and be issued within 30 days of services.
- Records like invoices and payment details must be maintained for 5 years.
- Works contracts are taxed based on the service portion valued using composition rates of 25-70%. Cenvat credit can be claimed on inputs.
This document provides an overview of TDS provisions under the Delhi VAT for works contracts. It discusses who is liable to deduct TDS as a contractee or contractor, the value on which TDS should be deducted, applicable rates, procedures for payment and filing of returns. Key points covered are determining what constitutes a works contract, exclusions from TDS, deducting TDS on material value only and not advances, and penalties for non-compliance. The document emphasizes being careful in applying TDS only to works contracts and taking necessary precautions to avoid costs of non-compliance.
Clause 14.1 The Contract Price- Understanding Clauses in FIDIC ‘Conditions of...Divyanshu Dayal
•Contract Price is an agreed amount or lump sum amount for the design, execution and completion of the works, remedying of defects and adjustments.
•The Contract Price is inclusive of all taxes, duties and fees and adjusted as per changes in legislation.
•The Contract Price is linked with variation, legislation, access to site, delay damages, provisional sum, costs, unforeseeable difficulties, employer’s risk etc.
This document discusses transfer pricing regulations in Nigeria. It defines transfer pricing as how related parties price cross-border transactions between entities. It outlines Nigeria's objectives for its transfer pricing regulations, which include ensuring a fair share of profits and preventing profit shifting. The regulations provide guidance on comparability analysis, documentation requirements, advance pricing agreements, dispute resolution procedures, and penalties for noncompliance.
Part 6- GST Definition of Good & AMP; ServicesHina juyal
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Part 6- GST - Definition of Goods & Service & AMP, Service Hina juyal
If you have any Query you can contact Us
Mail id:- ca.sanjiv.nanda@gmail.com
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Website :- http://www.sanjivnanda.com/
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Impact of GST on entertainment industry and media sector Shashwat Tulsian
India's media and entertainment market which is the 5th largest in the world .GST will do more good than harm for the entertainment industry on the whole prots for multiplexes are likely to go up
DECODING GST- INPUT TAX CREDIT OF CGST, SGST AND IGSTCa Ashish Garg
Basic Concepts of Input Tax Credit, availment, utilization and reversal of input tax credit.
In every value added taxation structure, Input tax credit remains the backbone of such tax structures as it removes the cascading effect of taxes. In GST also being a value added tax, it is the intention of the lawmakers to allow seamless flow of credit in the supply chain and remove cascading effect of taxes.
Similar to Case Laws on Construction and Works contract (20)
With the introduction of the concept of GST Audit, it is important to know and taken int consideration various facts that is needed before we conduct GST Audit. In this presentation, we have covered the concept of filing of GSTR 9C, its applicability and various other topics that one should take care of. The presentation also covers an example of GSTR 9C based upon a hypothetical case. The PPT is a one shot compilation of various topics associated with GSTR 9C - GST Audit.
With the introduction of the concept of GST Audit, it is important to know and taken int consideration various facts that is needed before we conduct GST Audit. In this presentation, we have covered the concept of filing of GSTR 9C, its applicability and various other topics that one should take care of. The presentation also covers an example of GSTR 9C based upon a hypothetical case. The PPT is a one shot compilation of various topics associated with GSTR 9C - GST Audit.
This document contains financial statements and additional notes related to income, expenses, input tax credit, and sales for a business. It includes a balance sheet, input tax credit ledger, and profit and loss statement for the period of April 2017 to March 2018. The additional notes provide clarifications on revenue and expense amounts, import of services, credit notes, discounts, sales booking and billing dates, annual return details, blocked and reversed input tax credits, and taxable rates.
With the introduction of the concept of GST Audit, it is important to know and taken int consideration various facts that is needed before we conduct GST Audit. In this presentation, we have covered the concept of filing of GSTR 9C, its applicability and various other topics that one should take care of. The presentation also covers an example of GSTR 9C based upon a hypothetical case. The PPT is a one shot compilation of various topics associated with GSTR 9C - GST Audit.
In this presentation, the concept of Affordable Housing is discussed from various angles such as income tax and GST. The PPT also analyses various components of Affordable housing scheme. It also takes into consideration various practical scenarios which are discussed in the form of case studies. The affordability as per public lending institution has also been covered. The presentation also covers various policies and programmes undertaken by the government for promotion of the same.Lastly, it also covers the impact of anti profiteering under the scheme.
After introduction of RERA, West Bengal has come up with its own legislation West Bengal Housing Industry Regulatory Act, 2017. There are various critical issues in this emerging law which can be addressed with the help of decisions and orders of numerous states.
The document discusses various notices issued by the GST department for non-compliance and how they can be handled. It mentions notices for differences in GSTR 1 and 2A, ITC claims, default in returns, and anti-profiteering issues. It advises that notices can be challenged on technical or jurisdictional grounds or by requesting more time. The document also discusses the need for businesses to have proper tax governance and ERP systems to avoid issues with the tax authorities. It provides guidance on handling summons and show cause notices issued under GST.
Complications of GST for Real-Estate and Developerssandesh mundra
This presentation contains the categories of units available with the developer as on the appointed day and the controversy attached with each category of unit. The presentation precisely covers all the controversies that could come up for the given category of unit.
An attempt to summarize the crucial aspects of maintaining records under GST is made. Apart from this, the presentation includes all types of audits proposed under GST regime. The system of return filling that the Group of Ministers are finalising together with GSTN officials and stakeholders is also included in the presentation. It also includes issues that may arise during filling of annual return and reconciliation statement.
An attempt to compile relevance of contractual clauses, technique of claiming back lost exemptions through doctrine of promissory estoppel, effect of repeals and omission and related judgments, is made. An overview of legal aspects for ongoing contracts is included.
Issues faced by Realtors and works contractorssandesh mundra
We have listed down several issues faced by Real estate and construction sector. A long list of issues are included separately for builders and works contractor for transition and post GST period.
Presentation contains cases and judgements delivered by courts pre-GST regime. A brief summary of all caselaws is made and an attempt is made to provide a bird's eye view of litigations arising in GST.
Presentation is prepared with the object of simplifying the interpretation issues and providing guidelines to read the rate schedules. Methods and mechanism of claiming tax free exports is also explained.
Goods and Service Tax in India is one of the biggest tax reform in Indirect Tax Regime. It is a destination bases tax levied on supply of Goods and Services. It includes impact of GST on several sectors. It also includes development of GST by way of notifications, circulars, press releases and other other compliances under GST.
Business law for the students of undergraduate level. The presentation contains the summary of all the chapters under the syllabus of State University, Contract Act, Sale of Goods Act, Negotiable Instrument Act, Partnership Act, Limited Liability Act, Consumer Protection Act.
Sangyun Lee, 'Why Korea's Merger Control Occasionally Fails: A Public Choice ...Sangyun Lee
Presentation slides for a session held on June 4, 2024, at Kyoto University. This presentation is based on the presenter’s recent paper, coauthored with Hwang Lee, Professor, Korea University, with the same title, published in the Journal of Business Administration & Law, Volume 34, No. 2 (April 2024). The paper, written in Korean, is available at <https://shorturl.at/GCWcI>.
Genocide in International Criminal Law.pptxMasoudZamani13
Excited to share insights from my recent presentation on genocide! 💡 In light of ongoing debates, it's crucial to delve into the nuances of this grave crime.
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Consult Construction is a consulting firm with all governance,
compliance and IT related services related to the construction
sector under one roof.
Focus Areas :-
Corporate Governance
Management Audit
Project Budgeting and Monitoring
Indirect Tax Compliances
Corporate Training
Information Technology and Allied Services
ISO Implementation
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Indirect Tax Services
Advice on the applicability and levy of Service Tax, CST and State VAT
on Contracts entered into or proposed to be entered into by the
company.
Assistance in the structuring of transactions and agreements in relation
to inter-state and intra-state sales to optimise the tax incidence
Conduct tax based health checks to determine the service tax & Multi
State - VAT implications on the operations,
Giving Multi State VAT opinions
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email - info@consultconstruction.com
• VAT and Service Tax updates for the construction / Project sector
companies.
• Legislative changes and major case laws under the State VAT Laws
and under Service Tax law affecting the construction /Project
Sector.
• In addition our brief analysis and comments on the various
developments.
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M/s SUJATA PAINTERS Vs THE STATE OF MAHARASHTRA
and M/s. B.L. Kashyap and Sons Ltd v. State of Maharashtra.
Back ground
Assessees undertakes certain works contract. The issue before the
Tribunal was whether Service tax would form part of the sale price to
charge VAT
Assessees contention
Sales price u/s 2(25) of the MVAT Act - “the amount of valuable
consideration paid or payable to a dealer for any sale made including any
sum charged for anything done by the seller in respect of the goods at
the time of or before delivery thereof, other than the cost of insurance
for transit or of installation, when such cost is separately charged”.
Explanation I to the definition says that the Excise and Customs shall be
deemed to be a part of the sale price of such goods
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Revenue contentions
Turnover of sales is defined in section 2(33) of the MVAT Act as ‘aggregate of
the amount of sale price’. Thus the consolidated sum mentioned in the invoice,
including service tax would be the ‘aggregate turnover of sale of goods’
Tribunal decision
By plain reading and the principle laid down by the SC in the case of Imagic
Creative Pvt. Ltd., wherein the Supreme Court has observed that payments of
service tax and VAT are mutually exclusive. Therefore the Tribunal held that,
Service tax would not be a part of sale price and consequently liable to VAT
under the MVAT Act.
In the case of Netafim Irrigation India P. Ltd v. State of AP, the Andhra VAT
Tribunal held that Service tax, being related to tax on service cannot be subject
matter of VAT. The Commissioner of Trade and Taxes determined that VAT
cannot be charged on the Service tax amount.
Reference
1. Imagic Creative Pvt. Ltd. Vs Commissioner of commercial taxes (Soft copy)
2. Netafim Irrigation India P. Ltd, Balanagar, Hyderabad v. State of Andhra
Pradesh,
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Sales price as defined under various State VAT
Maharashtra Haryana
“sale price” means the amount of
valuable consideration paid or payable
to a dealer
for any sale made
including any sum charged for anything
done by the seller in respect of the
goods at the time of or before delivery
thereof,
other than the cost of insurance for
transit or of installation, when such cost
is separately charged.
“sale price” means the amount payable to a dealer as
consideration for the sale of any goods, less any sum allowed at
the time of sale as cash or trade discount according to the
practice, normally prevailing in the trade,
but inclusive of any sum charged for anything done by the
dealer in respect of the goods at the time of or before the
delivery thereof and the expression “purchase price” shall be
construed accordingly;
Explanation.- (i) In relation to the transfer of property in goods
(whether as goods or in some other forms) involved in
execution of a works contract, “sale price” shall mean such
amount as is arrived at by deducting from the amount of
valuable consideration paid or payable to a person for the
execution of such works contract, the amount representing
labour and other service charges incurred for such execution,
and where such labour and other service charges are not
quantifiable, the amount of such charges shall be calculated at
such percentage as may be prescribed.
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Sales price as defined under various State VAT
Gujarat Rajasthan
same as Maharashtra “Sale Price” means the amount paid or payable to a
dealer as consideration for the sale of any goods less
any sum allowed by way of any kind of discount or
rebate according to the practice normally prevailing
in the trade,
but inclusive of any statutory levy or any sum
charged for anything done by the dealer in respect
of the goods or services rendered at the time of or
before the delivery thereof,
except the tax imposed under this Act;
Explanation III: Where according to the terms of a
contract, the cost of freight and other expenses in
respect of the transportation of goods are incurred
by the dealer for or on behalf of the buyer, such cost
of freight and other expenses shall not be included
in the sale price, if charged separately in the invoice;
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Sales price as defined under various State VAT
Chhattisgarh Uttar Pradesh
"Sale price" means the amount or any other
consideration payable to a dealer as valuable
consideration for the sale of any goods less any sum
allowed as cash discount according to ordinary trade
practice
but inclusive of any sum charged for anything done by
the dealer in respect of the goods at the time of or
before delivery thereof other than the cost of freight or
delivery or the cost of installation when such cost is
separately charged.
“sale price” means the amount payable to a dealer as
consideration for the sale of any goods, less any sum
allowed as cash discount according to the practice
normally prevailing in the trade,
but inclusive of any sum charged for anything done by
the dealer in respect of goods at the time of or before
the delivery of such goods, other than cost of outward
freight or delivery or cost of installation in cases
where such cost is separately charged;
Explanation - (iii) Sale price of goods in relation to
transfer of property in goods (whether as goods or in
some other form) involved in the execution of a works
contract, shall be determined after deducting the
aggregate of actual amount incurred towards labour
and services, amount of profit relating to supply of
labour and services and such other amounts as may
be prescribed from the total amount received or
receivable in respect of such works contract
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M/s Suzlon Infrastructure Ltd Vs The State of Karnataka
Background
Petitioner undertakes four activities for the customer viz :-
(a) laying down of civil foundation
(b) supply and installation of electrical line
(c) Supply of electrical items
(d) erection and commissioning of WTGs supplied by Customer
Assessing Authority (AA) levied tax on these activities
considering the agreement as an integrated single composite
contract.
Petitioner contention –
Assessee paid Composition tax for (a) to (c) and for (d) which is
purely labour contract, the assessee discharged the service tax
liability
Reliance on the Judgment H S Chandrashekar Hande vs State of
Karnataka (2012(72) KLJ 116) Is placed
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Department’s Contention –
Offer was of services required for the erection and installation of WTG,
which is a single integrated contract. If work orders are segregated to
execute the unique wind farm project it does not lose its composite,
single, integrated nature
A contract has to be read as a whole and the purpose for which the contract
was entered into by the parties has to be ascertained from the terms of the
contract.
Here the intention of the parties is to enter into an agreement for the installation,
erection and commissioning of WTGs.
Perusal of the offer letter, with the terms and conditions of the work orders proves
that the assessee has executed a single integrated contract which cannot be
segregated.
The scope of work and the insurance clause specifically establishes that the
assessee has entered into an agreement for the installation, erection and
commissioning of the WTGs, which includes labour work also.
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Judgment
“the tax payable under Section 17(6) is on the total consideration including
labour charges.
No exemption in respect of that labour charges included in the works contract
under composition.
However, if he enters into purely labour contract, no portion of that labour
charges is liable to tax under the KST Act.
Assessee has segregated activities as per the work orders executed against the
offer for erection and installation of WTGs.
It is not exactly a case of receiving labour related charges for executing pure
labour work without transferring any property in goods.
The entire contract, is in the nature of composite single integrated
contract, though designed as it is four separate work orders. All the
segregated activities are related to the very same project with the very
same customer involving transfer of goods and labour.
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The Apex Court while considering an identical provision in the case of Builders
Association of India under the provisions of Kerala General Sales Tax Act has
categorically held that alternate method of composition is optional.
The assessee having opted for the composition benefit voluntarily and with the
full knowledge of the features of the alternate method of taxation, is liable to
make the payment of tax on the total consideration of the works contract
involving both labour and transfer of goods. Segregation of composite contract
is not permissible under Section 15(1)(b) of the Act.
Even if any segregation is made for the purpose of billing and separate
invoices are raised towards each portion, it does not alter the nature of
composite contract.
Appeal was dismissed
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Reliance Infrastructure Ltd vs DC, sales tax
Background
Assessee entered into three separate contract agreements with DVC
(i) Supply including design, engineering, manufacturing, inspection, testing
and packing of a plant and equipments including mandatory spares of the
main plant as Turn Key Package from abroad,
(ii)Second one also relates to supply contract inclusive of the above of Indian
origin
(iii)Third contract is restricted to a service.
All the aforesaid contracts were agreed under a Turn Key Package for
commissioning and setting up of the Thermal Power Project I
Appellant Contention -
On assessment Imposition of VAT on inter-State Sale or import of the goods
treating the three separate contracts to be composite one
Power to bring the sale of the goods effected in course of inter–State sale or
by import within the purview of the West Bengal VAT Act - Forty-sixth
Amendment
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Judgment
State cannot by legislature imposed Sales Tax on inter-State sale or the sale by
import in relation to a works contract
Provided the same is used in commissioning of the project on turnkey
basis in the same form without changing its character through a
manufacturing process.
The power of the state to legislate on imposition of Sales Tax in relation to the
works contract is not unfettered but a restrictive one.
After the Forty-sixth amendment in the Constitution, the works contract is
capable of being divorced into a supply and the labour and service.
It is not a universal rule that if the works contract is on the turn key
basis, it imbibed inseparation and indivisible but depends upon the
construction of the contracts and the intention of the parties to be
gathered therefrom.
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Judgment
Appellant has simply proceeded on the basis that though the separate
contracts are entered into between the parties but they are on a turn key
basis, it partakes the character of indivisible and inseparable works contract
exigible to the State Sales Tax.
There is no finding recorded in the impugned order on the nature of the
transaction reflected in the books maintained by the petitioner and the
return filed in this regard – Revenue Recognition.
It requires a voluminous documents to be looked into whether the transfer of
property in goods in connection with the Inter State Sale or by import can be
segregated and the said authorities is incompetent to levy tax under the State
Legislation.
The matter is relegated back to the Deputy Commissioner for
reconsideration.
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THE INDIAN HUME PIPE CO. LTD. Vs STATE OF
RAJASTHAN
Background
Contracts for execution of civil construction works including laying of
pipelines
for water supply
Assessing Authority, on the findings that the contract work executed by
the appellant is a contract, which is divisible work orders imposed tax
and penalties under Section 7AA of the Act
Denial of application for exemption by the assessee under Rule 10A on
the ground that the contract is a divisible contract, supply of pipes and
the works for contract of civil work
Appellant submission
The work performed was not an undivided work contract
Appellant submission is the contract is an indivisible contract for the
supply of pipes and for the supply of labour and services, the Company
is not liable to pay tax at the rate of 12%,
It was only liable to pay tax @ 2% on the turnover of the works
contract, which has already been deducted at source by the PHED
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Single judge order in appeal
The legal proposition with regard to definition of 'works
contract' in Article 366(29A)(b) of the Constitution of India, has
been explained in the recent judgment in Larsen and Toubro Ltd
Vs. State of Karnataka
For sustaining levy of tax on goods, deemed to have been sold in
execution of a works contract, three conditions namely
(i) there must be a works contract;
(ii) goods should have been involved in execution of a works
contract;
(iii) property in those goods must be transferred to a third party,
either as goods or
in some other form,
have been amply clarified.
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Judgment
A contract may involve both, a contract of work and labour, and a contract for
sale
A transfer of property in goods under clause 29A(b) of Article 366, is deemed to
be sale of goods involved in execution of a works contract by a person making
transfer and purchase of those goods to a person, to whom such transfer is
made.
The findings with regard to sale of pipes involved in the works contract, are
findings of fact, which do not required any interference by us in these matters
So far as the exemption is concerned, we do not find any error in the finding
recorded by learned Single Judge, that the exemption Notification having been
issued on 29.03.2001, will only apply prospectively from the year 2001-2002,
and that the benefit of exemption can be availed by a firm only after issuance of
the Notification dated 29.03.2001. The petitioner has challenged the Assessment
Year 1999-2000, and therefore, the Notification was not applicable to the
dispute involved in the matter
Writ petition are dismissed
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Upholds WCT on sub-contractor; Absent privity of contract, promissory
estoppel inapplicable – Andhra Pradesh HC
HC rejects assessee’s exemption claim as ‘sub-contractor’ for construction of
port pursuant to exemption granted to contractor on all inputs used under
concessional agreement with State Govt;
Refuses to invoke doctrine of promissory estoppel or legitimate expectation as
assessee not a party to said agreement, more so, when similar claim of
employer negated by this Court;
Value of goods will be value at time of incorporation in works contract,
Rule 17(1)(e) does not postpone its determination till receipt of total
consideration on completion of entire work, observes that the term
“finalisation of accounts” must be understood w.r.t. particular financial year,
not project completion several years thereafter;
Credit of WCT will be available on production of relevant certificate
Benefit of composition scheme cannot be denied merely for non-disclosure of
works contract turnover in returns.
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International Hospitals Pvt. Ltd. Vs State of UP and Others and
Fortis Health Care Ltd And Another Vs. State Of Punjab And Others
[2015-TIOL-466-HC-P&H-VAT]
Background
The issue whether the use of stents and valves as an intrinsic and integral
element in the performance of a heart procedure on in-patients at a
hospital would fall within the ambit of the expression “sale” has to be
determined with reference to the definition of that expression in section
2(ac) of the Uttar Pradesh Value Added Tax Act, 2008.
Petitioner Contention
When ever a stent or a valve is required to be implanted in a patient,
neither the hospital nor its pharmacy sells the implants directly to the
patient.
In other words, the implants are used during the course of a surgical
procedure and there is no "sale" when such a procedure is performed
on the patient. Deputy Commissioner has imposed tax on the value of
stents and valves used for providing medical services.
• In the reply which was sub mitted by the petitioner, reliance was placed
on a judgment of the Supreme Court in Bharat Sanchar Nigam Ltd. v.
Union of India [2006] 3 VST 95 and on a judgment of a Division Bench
of the Jharkhand High Court in Tata Main Hospital v. State of Jharkhand
[2008] 36 (Soft copy)
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Appellant Contentions –
The contention of the Revenue is that the contract between the
patient and the hospital is a divisible contract in which the sale
element involving the "sale" of the stent or valve to the patient is
distinct from the surgical procedure and hence, the firm is
assessable to tax.
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Judgment
Neither of the six clauses of article 366(29A) of the Constitution
is attracted to the rendering of service in this case
According to the hospital, where a patient comes to get admitted
for a surgical procedure like an angioplasty, the contract is
indivisible, in the course of which medical service is rendered to
the patient.
Section 2(ac) defines the expression sale.
Sub-clauses (i) to (vi) of section 2(ac) of the Act correspond to
subclauses (a) to (f) of article 366(29A) of the Constitution.
Those clauses are not attracted. Hence, the only issue is as to
whether any element of sale is involved by the transfer of
property in goods by one person to another for cash, deferred
payment or other valuable consideration in the course of the
execution of a contract for the implantation of a stent or valve in
the performance of a surgical procedure.
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In the judgment BSNL Vs Union of Others, Supreme Court has quoted
that, “
44. Of all the different kinds of composite transactions the drafters of
the 46th Amendment chose three specific situations, a works contract,
a hire-purchase contract and a catering contract to bring within the
fiction of a deemed sale.
Of these three, the first and third involve a kind of service and sale at the
same time.
Apart from these two cases where splitting of the service and supply has
been constitutionally permitted in sub-clauses (b) and (f) of clause
(29A) of article 366, there is no other service which has been permitted
to be so split.
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Jharkhand HC in Tata Main Hospital [2008] 36 NTN 149 held that the
transaction of supply of medicines, vaccines, surgical items, x-ray films
and plates, etc., to the indoor patients in course of treatment in TMH
does not come within the purview of the definition of 'sale' as
envisaged under section 2(t) of the Bihar Finance Act for the following
reasons:-
(i) Supply of those articles are part and parcel of the treatment and
they are essentially required for the treatment of the patients.
(ii) Supply of those articles are incidental to the medical service being
rendered by the TMH to the patients.
(iii) Those articles are not being sold to the patients but the cost
price of the same being adjusted against the head pharmacy and
are not being separately charged item wise.
(iv) Charge under the head pharmacy is part of composite charge
realized by the TMH towards the treatment of those indoor patients.“
Hence the appeal was allowed
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Hindustan Zinc Ltd. v. Commercial Taxes Officer [TS-406-SC-
2014-VAT]
Supply of explosives to contractor for use in mining operations.
Whether constitutes as ‘sale’ ?
The cost of explosive was separately charged from the
contractor by deducting the value of the explosive from bills of
contractor.
As per the statutory condition of licence obtained under
Explosive Act, 1884, taxpayer could not re-sell the explosives
purchased for its own use.
In view of this, the taxpayer purchased the explosives against
declaration on payment of concessional tax at 4 per cent.
However, the revenue issued notices on the ground that supply
of material such as cement, iron, steel, and explosives to various
contractors was ‘sale’.
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The taxpayer replied that the ownership of goods had never been
transferred to the contractor and therefore, such transaction does not
amount to ‘sale’ to be liable to sales tax.
The High Court held that the transaction in question is a sale on the grounds
that all ingredients of sale are present in the transaction.
The High Court rejected taxpayer’s contention that the said explosives have
been consumed in the works contract and the transaction cannot be a sale.
It observed that consumable items are only the items used ancillary in
works contract and those can be water, electricity and fuel, etc., as these
items are not goods transferred to the contractor in execution of works contract
and providing above or like items, the contractor is given some facilities by the
Principal engaged in works contract.
Accordingly, the revenue was justified in levying the tax. The High Court
dismissed the petition filed by the taxpayer. Aggrieved by such order, appeals
were filed before the Supreme Court, which dismissed the same and upheld the
High Court order.
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M/s Surya Constructions Vs. Commercial Tax Officer (WC & LT) –
Kerala High Court
Background
The petitioner is a works contractor who was awarded a contract by
BPCL. The entire work that was sub contracted and, therefore, no
portion of the work was executed by the petitioner
The petitioner approached the CTO for the issuance of
liability certificate in Form 20B of the Kerala Value Added Tax Rules
The amount represented the profit of the petitioner from the
transaction and the certificate was required to show that the petitioner
has discharged his tax liability, if any, to the Department in respect of
the said sum.
The request of the petitioner was initially turned down by the CTO on
the ground that the petitioner had to pay the tax amount on the profit
retained by him.
On further appeal certificate was granted on payment of tax on profit
amount
But the petitioner filed for refund claim which the authority has denied
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Appellant contention
It is pointed out that while seeking a Form 20B certificate, the petitioner had indicated
that the amount represented the cost of establishment charges and profit for supplying
labour and services. This, according to the respondent, was not a permissible deduction
under Rule 10(2)(a) of the Kerala Value Added Tax Act, 2005.
It is also submitted that on account of Circular No.5/2006 dated 11.1.2006 (soft copy),
the petitioner would be liable to pay tax even on the profit made out of a contract
Judgment
In a case where there is an agreement between an awarder and a contractor and the
entire work under the contract is sub contracted
The execution of the work then involves a transfer of material, in the course of execution
of the works contract, directly from the sub contractor to the awarder of the contract.
The decision of the Honourable Supreme Court in State ofAndhra Pradesh and Others
v. Larsen & Tourbo Ltd. and Others[(2008) 17 VST 1(SC)] is an authority for this
proposition. At paragraph 19 of the said decision, it is stated as follows:
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“19. If one keeps in mind the above quoted observation of this court in the case of Builders
Association of India [1989] 73 STC 370 the position becomes clear, namely, that even if
there is no privity of contract between the contractee and the sub-contractor, that
would not do away the principle of transfer of property by the sub-contractor by
employing the same on the property belonging to the contractee.
This reasons is based on the principle of accretion of property in goods. It is subject to the
contract to the contrary.
Thus, in our view, in such a case the work executed by a sub-contractor, results in a single
transaction and not multiple transactions. This reasoning is also borne out by section 4(7)
which refers to value of goods at the time of incorporation in the works executed.
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Thus, on the facts of the instant case, it would be clear that, when the
petitioner had sub contracted the entire work and also obtained the Form 20H
certificate from the sub contractor who undertook to discharge the tax liability
in respect of the entire work that was sub contracted, the amounts retained by
the petitioner, from out of payments made by the awarder of the contract,
represented only the profit element that accrued to the petitioner in his
capacity as the main contractor.
Hence, the demand of tax from the petitioner is thus illegal and liable to be set
aside
The respondents are directed to refund the tax amount to the petitioner or, in
the alternative, give credit to the said amount in the return submitted by the
petitioner for future periods.
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• 2015-VIL-95-CESTAT-HYD-ST
• HELD - In a construction works contract, the property used in the
construction of a building/project passes from the builder to the owner of
the land on which the building is constructed when the goods or materials
used are incorporated in the building and
• that is so, even if there is no privity of contract between the contractee and
the sub-contractor, since the deemed transfer of property in goods is based
on the principle of accretion of property in goods
• On the basis of the law declared by Supreme Court in Larsen & Tourbo Ltd
[2008-VIL-30-SC], it prima facie appears that no ‘works contract service'
was provided by the appellant to the Government of Andhra Pradesh since
it was the sub-contractors who transferred the property in goods to the
State Government by the process accretion of such goods into the property
of State Government, Pre-deposit waived and stay granted
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VAT provisions applicable on construction of immovable property, not sale after
construction
HC clarifies on taxability of development of residential complex activity under Uttarakhand
VAT Act; VAT applicable when person agreeing to undertake construction sells the
construction as 'goods' covered by the Act,
But if he sells immovable property after construction, no sale of goods takes place;
Provisions of Act attract as soon as property in goods is transferred by way of sale, and tax
becomes leviable;
Remits back matter to Commissioner to decide issue after determining object ofassessee’s
business, viz., sale of immovable property as flats, apartments or construction of same on
behalf of other : Uttarakhand HC
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HC clarifies on taxability of development of residential complex
activity under Uttarakhand VAT Act;
VAT applicable when person agreeing to undertake construction
sells the construction as 'goods' covered by the Act,
But if he sells immovable property after construction, no sale of
goods takes place;
Provisions of Act attract as soon as property in goods is
transferred by way of sale, and tax becomes leviable;
Remits back matter to Commissioner to decide issue after
determining object of assessee’s business, viz., sale of
immovable property as flats, apartments or construction of
same on behalf of other : Uttarakhand HC
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State of Karnataka Vs. Reddy Structure (P.) Ltd. – SC
Background
Transfer of property in goods in execution of contract for
development of property—land value cannot be included in
taxable value.
Respondent Contention
"(1) Whether, on the facts and in the circumstances of the case
and in law, the Tribunal is justified in giving a finding that
deducting the value of land from the total receipt of the
builder is impermissible, but only value of the transfer of
property in goods has to be considered for the purpose of
assessment by adding G.P., as the same is against provisions of
law?“ In short, the question that falls for our consideration is
whether the land value should form part of taxable value for
levy of VAT or sales tax?
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Judgment
Para referred from judgment of the Supreme Court in Larsen and
Toubro Limited [2013] 65 VST 1 (SC) ; [2013] 77 KLJ 177.
"100. We have no doubt that the State Legislatures lack
legislative power to levy tax on the transfer of immovable
property under entry 54 of List II of the Seventh Schedule.
However, the States do have competence to levy sales tax on the
sale of goods in an agreement of sale of flat which also has a
component of a deemed sale of goods. Aspects theory though
does not allow the State Legislature to entrench upon the Union
List and tax services by including the cost of such service in the
value of goods but that does not detract the State to tax the sale
of goods element involved in the execution of works contract in
a composite contract like contract for construction of building
and sale of a flat therein. . ."
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"(xi) Taxing the sale of goods element in a works contract
under article 366(29A)(b) read with entry 54, List II is
permissible even after incorporation of goods provided
tax is directed to the value of goods and does not purport
to tax the transfer of immovable property. The value of
the goods which can constitute the measure for the levy of
the tax has to be the value of the goods at the time of
incorporation of the goods in works even though property
passes as between the developer and the flat purchaser
after incorporation of goods.“
From a bare perusal of the observations made by the
Supreme Court in paragraph 100 and the conclusion
drawn in sub-paragraph (xi) of para 101, it is clear answer
to the question raised in the revision petitions.
• Hence, With these observations, this group of sales tax
revision petitions is disposed of. No costs.
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• 2015-VIL-147-CESTAT-DEL-ST-LB
• Service Tax – Larger (Special) Bench reference pertaining to works contract
• In view of the majority opinions recorded, the reference is answered as: Service elements in a
composite (works) contract (involving transfer of property in goods and rendition of services),
where such services are classifiable under “Commercial or Industrial Construction”;
“Construction of Complex” or “Erection, Commissioning or Installation” (as defined), are
subject to levy of service tax even prior to (01.07.2007) insertion of sub-clause (zzzza) in
Section 65(105) of the Finance Act, 1994
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Indure Ltd. & Anr vs Commercial Tax Officer & Ors
Background
Indure Ltd. contracted with NTPC for supply, erection and commissioning of its
Turnkey Project. Company imported 12 items for supply in such project.
Two separate contracts were made. One for Supply and another for Erection
and Commissioning
VAT on subsequent sale is not paid as it was in the course of Import.
Out of 12 items 11 items were imported at Ghaziabad, UP and 1 item i.e. MS
Pipes has been imported at West Bengal.
State of Uttar Pradesh has allowed exemption u/s 5(2) but the State of West
Bengal has not given such exemption and he made appeal to CTO, Assistant
Commissioner, Tribunal and High Court.
But his appeal was dismissed by every authority and finally he applied to
Supreme Court.
Two issues were raised in front of Supreme Court -
1. Whether Import of pipes were pursuant to contract between Indure and NTPC?
2. Whether such import and there supply to NTPC were inseparable and integral
part of contract?
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Respondents contemplation
It was neither mandatory nor obligatory required for the company to import
such goods.
NTPC has not provided any name of supplier in contract and which proved
that company has imported goods in its own accord.
Indure has obtained Import license and one of the clause in it has specified
that Indure will not be reselling these goods but these goods would be
supplied in contract with a 33% value addition. Respondents contemplated
that such requirement has not been fulfilled.
Judgment
SC held that along with Pipes 11 other items were also imported, which were
given exemption from State levy then, why Pipes are not eligible for
exemption?
Import has only taken place because of Indure's Contract with NTPC and
respondents failed to establish the fact that such pipes are not imported for the
said contract.
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There must be an integral connection between the import and
subsequent sale.
Earmarked goods from the logo of contractee was evidence of that
Liability for import must arise from statue, contract or mutual
understanding of parties. The contract had mentioned that goods were
suppose to be imported
It is established that goods imported cannot be diversified to any other
contract and there is an inextricable link between the import and
subsequent sale and therefore, such imports are made for subsequent
sale and it is a sale in the course of Import
Appeal allowed
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ABB Vs State of Karnataka and Others
Background
The contractor was obliged to procure from the manufacturers, who comply with certain qualified
requirements
It also provided that all the equipment's/materials to be submitted for inspection by a duly
authorised representative of the KPTCL
Contract consists of supply of all equipment's/materials, erection, testing and commissioning
Contractee had provided choice of vendors for procurement from others states
The Deputy Commissioner of Commercial Tax passed an order of assessment granting exemption in
respect of the turnover pertaining to inter-State purchases of goods used in the execution of works
contract. First Revisional Authority, initiated suomoto proceedings to revise the order of assessment
on the ground, that the exemption in respect of the turnover representing inter-State purchase of
goods utilized in the works contract was erroneously allowed.
Petioner’s contemplation
Provisions contained in Section 5B read with the definition of "taxable turnover" as occur in Section
2(1) (u-1), the assessee is not liable to pay tax on the goods procured by him from outside the State.
He submitted that the goods, which the assessee procured in the course of inter-State trade, the tax
was paid by the assessee, under the Central Act to the States from which the goods were purchased.
In short, he submitted that under any circumstances, the assessee is not liable to pay any tax under
Section 5-B of the Act.
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Appellant contention
The assessee being a contractor, purchased goods and then used in execution
of works contract awarded by the KPTCL.
He submitted, that the assesse purchased the goods from different States and
stored at his place and, therefore, the second revisional authority has rightly
held that the purchase of goods from outside the State for the purpose of
execution of works contract as per the specification given by KPTCL and
storing at his godown is not amounting to inter-State sale falling under Section
3(a) of the Central Act.
He submitted that the works undertaken by the assessee amounts to works
contract which was exigible to tax under Section 5B of the Act since the
assessee only purchased the goods and thereafter incorporated the said goods
in execution of the works contract at Bijapur for KPTCL.
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Judgment
If a contract of sale contains a stipulation for such movement, the sale would, of-course,
be a inter-State trade. But it can also be inter- State sale even if the contract of sale does
not itself provide for movement of goods from one State to another but such movement
would be result of a covenant in the contract of sale or is an incident of such contract.
It is true, in the instant case, the contract of sale did not require or provide that goods
should be moved from other States to the State of Karnataka at Bijapur.
But it is not true to say that for the purpose of Section 3(a) of the Central Act it is
necessary that the contract of sale must itself provide for and cause the movement of
goods or that the movement of goods must be occasioned specifically in accordance with
the terms of the contract of sale.
A sale which occasions movement of goods from one State to another is a sale in the
course of inter-State trade, no matter in which State the property in goods passes.
It is not necessary that the sale must precede the inter-State movement in order that the
sale may be deemed to have occasioned such movement, and it is also not necessary for a
sale to be deemed to have taken place in the course of inter-State trade or commerce,
that the covenant regarding inter-State movement must be specified in the contract itself.
It would be sufficient if the movement was in pursuance of and incidental to the contract
of sale.
In the present case the movement of goods from one State to another may or may not be
as a result of a covenant but definitely it was an incident of the contract.
the appeal is allowed