IMPORTANT POINTS
Scheme for composition is not synonymous with exemption.
All components of the work are to be considered for arriving at correct composition rate.
Taxing statute should be construed as per the language employed. There is no equity or presumption about tax. In case of reasonable doubt, though, construction most beneficial to the subject should be adopted.
Burden of proof to justify classification of goods and chargeability thereof lies on the taxing authorities.
Every word in the statute or an instrument has to be given full effect.

Headnote:(a) Sales Tax Act, 1969 – Section 55A – Scheme for composition – Not synonymous with exemption. (Para 14)
       (b) Sales Tax Act, 1969 – Section 55A, Notification dated 18.10.1993 – Entry 5 – Fabrication – Work contract as a whole neither intended nor can be reduced to mere installation of the finally emerging apparatus – Requires fabrication and installation – All components of the work are to be considered for arriving at correct composition rate – High Court missing the aspect of fabrication – The work falls under Entry 5 and not Entry 2. (Para 14, 15, 19, 24, 26)
       (2003) 4 SCC 699 – Distinguished
       (c) Interpretation of statute – Taxing statute – Taxing statute should be construed as per the language employed – There is no equity or presumption about tax – In case of reasonable doubt, though, construction most beneficial to the subject should be adopted. (Para 20)
       (1921) 1 KB 64; (1968) 68 ITR 252; (2014) 6 SCC 444; (2015) 1 SCC 1 – Relied upon
       (d) Section 55A – Burden of proof to justify classification of goods and chargeability thereof – Lies on the taxing authorities – Mere assertion in that regard is of no avail. (Para 21)
       (1996) 10 SCC 413; (2006) 5 SCC 208 – Relied upon
       (e) Interpretation of statute – A statute should not be so construed as to render a part of it otiose or redundant – No word in a statute can be brushed aside – Every word in the statute or an instrument has to be given full effect. (Para 22, 23)
       (2010)3 SCC 786; (1998) 2 SCC 580 – Relied upon
       Facts of the case:
       M/s. Anupam Colours and Chemicals Industries, Bombay, placed an order with M/s Voltas Ltd. for water chilling plant at its factory at Vapi.
       The appellant filed an application before the Deputy Commissioner of Sales Tax (Legal), Gujarat under Section 62 of the Act and insisted that the works contract involved came within the purview of Entry No.5 attracting the composition rate of tax at 5% only. The application was rejected and instead it was held that the works contract was covered by Entry No.2 as the assessee had to air-condition the plant to be erected by it.
       Ultimately the appellant filed a writ petition.
       The High Court has sustained the determination made by the revenue authorities/fora and the learned Tribunal declaring that the appellant’s works contract for fabrication and for installation of air-conditioning plant did fall under Entry 2 of the Notification and was taxable at the composition rate of 15%.
       Finding of the Court:
       The work contract in question falls under Entry 5 and cannot be dragged under Entry 2.
       Result: Appeal allowed.

JUDGMENT

AMITAVA ROY,J.

1. The oft encountered debate on the extent of tax liability based on the classification of the determinants of a levy in law seeks judicial scrutiny in the attendant factual conspectus. The appellant being aggrieved by the determination made by the High Court of Gujarat on the issue common to a reference under Section 69 of the Sales Tax Act, 1969 (for short hereinafter referred as to as the “Act”) being Sales Tax Reference No.1/2004 and its appeal, i.e. Special Civil Application No. 12508/2002, against it, seeks redress against the judgment and order dated 4.09.2006 to that effect.

2. We have heard the learned counsel for the parties.

3. The indispensable skeletal facts introduce the appellant, M/s. Voltas Ltd. as a company incorporated under the Companies Act, 1956 engaged amongst others in the business of execution of jobs design, supply and installation of air-conditioning plants construed to be indivisible works contracts. It is a registered dealer under the Act. By a communication dated 22.10.1993 of M/s. Anupam Colours and Chemicals Industries, Bombay, an order was placed with it for water chilling plant at its factory at Vapi. The basic design parameters were enumerated in the work order as hereunder:

“1.Tonnage of Refrigeration .. 11 TR

2. Final temperature or chilled water to be made available for our process. .. 5 to 6°C

3.Quantity of chilled water .. 12,000 liters( 5 to 6° C) required for our liters” process in about 10 hours.

Other specifications pertaining to the water chilling plant were advised to be in conformity with the assessee’s offer, as referred to therein. The work order insisted on the requirement of chilled water to be used directly for its process of manufacturing pigments with the assertion that sufficient precautions be taken to ensure that chilled water at 5 to 6 degree centigrade is available for such process. The letter emphasized as well that the assessee would provide the customer with the lay-out details, foundation drawing and other necessary information required for the erection of the plant. The essential segments of the works contracts involved, as would be eventually relevant for the adjudicative exercise underway, were thus specified with distinct details in the work order.

4. The Act which is a legislation to consolidate and amend the law relating to the levy of tax on the sale or purchase of goods in the State of Gujarat has set out in Part-A of Schedule II-A thereof, the rates of the impost on the sale of goods involved in the execution of the works contracts, the relevant excerpt whereof is quoted as under:

Sr. No.	Description of works contract	Entry No. in Schedule-IIA of the act	Regular of tax
1.	Installation of air-conditioners and A.C. Coolers and for repairs thereof.	67	18%
2.	Furniture and fixtures partitions including contracts for interior decoration and repairs thereof	104	8%
3.	Fabrication and installation of lifts or elevators or escalators and for repairs thereof	120	8%
4.	Fabrication and installation of plant and machinery and repairs thereof	128(5)	4%
5.	Construction of bodies on chassis of Motor Vehicles including three wheelers and for repairs thereof	186	4%
6.	Ship building including construction of barges, Ferries Tugs Trawlers or Dredgers and for repairs thereof	186	4%

5. Section 55-A of the Act dwells on the scheme of composition of tax whereunder a dealer as referred to therein and in the circumstances and subject to such conditions as may be prescribed, is left with the option to pay in lieu of the amount of tax leviable from him under Section 7 or 8 in respect of any period, a lump sum by way of composition at the rate/rates, as may be fixed by the State Governm

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2015 Supreme(SC) 302

SUPREME COURT OF INDIAArun Mishra, Amitava Roy, JJ.Voltas Ltd. – AppellantVersus State of Gujarat – RespondentCIVIL APPEAL NO. 2957 of 2007Decided On : 08-04-2015

Cases Referred (8)

SUPREME COURT OF INDIA
Arun Mishra, Amitava Roy, JJ.
Voltas Ltd. – Appellant
Versus
State of Gujarat – Respondent
CIVIL APPEAL NO. 2957 of 2007
Decided On : 08-04-2015