The central legal point established in the judgment is the interpretation of the specific entries in the notification and the distinction between the installation of air-conditioning plant and simple fabrication and installation of plant and machinery.

( 1 ) THE Gujarat Sales Tax Tribunal at Ahmedabad has referred the following question of law under Section 69 of the Gujarat Sales Tax Act, 1969, for the opinion of this Court. Whether on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the applicant s works contract for fabrication and installation of air-conditioning plants falls under Entry 2 and, therefore, taxable at the rate of 15% and not under Entry 5 under which it is taxable at the rate of 5%, of the Schedule to the notification dated 18-10-93 issued under Section 55a of the Gujarat Sales Tax Act, 1969?

( 2 ) THE facts emerging from the record of the case, which have necessitated the reference of the above mentioned question of law for the opinion of this Court, are as under: 2. 1. M/s. Voltas Limited is a company incorporated under the provisions of the Companies Act, 1956. It is registered as a dealer under the provisions of the Gujarat Sales Tax Act, 1969 ("the Act" for short ). The company, amongst other activities, is engaged in the business of carrying out jobs involving design, supply and installation of air-conditioning plants, which are treated by the company as indivisible works contracts. Earlier, the different rates of tax on sale of goods involved in execution of works contracts, as set out in Part-A of Schedule II-A of the Act, were as under: Entry No. Regular Sr. No. Description of works contract in Schedule-IIA of the Act

rate 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 3. Fabrication and installation of lifts or elevators or escalators and for repairs 104 8 % 120 12 %

Thereof 4. Fabrication and installation of plant and machinery and repairs thereof

39 8 %

5. Construction of bodies on chassis of Motor vehicles including three wheelers and for repairs thereof 6. Ship building including construction of barges, Ferries, Tugs Trawlers or Dredgers and for repairs thereof

128 (5) 4 %

186 4 %

2. Section 55a of the Act empowers the Commissioner to permit a dealer to pay at his option in lieu of the amount of tax leviable from him under Section 7 or Section 8, a lump sum tax by way of composition at the rate or the rates as may be fixed by the Government by notification in the official gazette having regard to the incidence of tax on the nature of the goods involved in the execution of total value of the works contract. In exercise of powers conferred by Section 55a of the Act, the Government of Gujarat issued Notification dated October 18, 1993 ("the notification" for short), which was as under: g. N. F. D. No. (GHN-28)GST-1093-S. (55) (A)TH dtd. 18/10/93. In exercise of powers conferred by Section 55a of the Gujarat Sales Tax Act, 1969 (Guj. 1 of 1970), the Government of Gujarat hereby fixes the rate of composition payable in lieu of the amount mentioned in Column (3) of the schedule here to in respect of each works contract shown in column (2) of the said schedule, having regard to the incidences of the tax on the nature of goods involved in the execution of total value of the works contract.

Sr. No . Description of works contract Rate of composition 1. Works contract for civil works like construction of buildings, bridges or roads, and for repairs thereof 2% 2. Installation of air-conditioners and A. C. Coolers 15% 3. Furniture and Fixtures, Partitions including contracts for interior 5%

decoration

4. Fabrication and installation of lifts or elevators or escalators 10% 5. Fabrication and installation of plant and machinery 5% 6. Construction of bodies on chassis of motor vehicles including three wheelers 3% 7. Ship-building, including construction of barges, ferries, tugs, trawlers or dredgers 2% 8. Works contracts other than those mentioned above 12%

3. M/s. Voltas Limited undertook air- conditioning and refrigeration job (Water Chilling Plant)