Sales of Transfer of Property of Goods Involved in Execution of Works Contract

Maharashtra Tax Tribunal:  Maharashtra Sales Tax on Transfer of Property in Goods Involved in Execution of Works Contract (Re-enacted Act), 1989 – Work Contract – Build, Operate and Transfer Project – Toll Road – Definition of ‘dealer’ – Whether the contract taken up by the appellant on B.O.T. basis could be said to be works contract and whether he could be said to be a dealer and liable to pay tax on the turnover of sales in respect of the goods used at the time of construction of the road and other constructions – HELD – In the present case there is no sale of chattel to chattel, therefore, it is not a sale – It is not contract of doing only work. As in contract of work the person who gives the work has to supply the goods, on the basis of which work as per requirement is to be done. Therefore, the present case does not fall within the category of contract of doing only work – Here we have a category of case where goods, services, labour and skill are all used by the appellant. The component/end-product that is to be delivered by using his own goods, services, labour skill, experience etc. is for construction of the road. In the present case, skill, labour, experience service and goods has to be used by the appellant himself and therefore the case would fall in the category of works contract – So far as argument that no price is paid by Government, therefore it is not works contract. We do not agree with the submissions made. The end result is permitting public to use the road for price i.e. toll, no one is permitted to use the road without payment of toll, except specifically agreed. Instead of the State, price is paid by the public at large by way of toll, therefore there is element of price involved – The word ‘free of cost’ used does not mean that the appellants are to work for loss by investing their amounts, skill and labour. Handing over the project free of cost is after the concession period is over, as it is deemed that entire cost of the project, inclusive of interest and expenses and profits have been realized. Therefore, contention of the appellant that he is not earning any profit cannot be accepted – All the ingredients of dealer are satisfied. Appellant is a legal person. There is valuable consideration which has passed. There is transfer of property involved in works contract. Hence, he is a dealer – Hence, B.O.T. project involves both goods, labour and services and therefore, it is a works contract – Once it has been held that appellant is a dealer what is required now for him is to pay tax on the turnover of sales in respect of goods – Assessee appeal stands dismissed