- (1.) The question involved in this civil appeal filed by the department is - whether contracts entered into and executed by the assessee were contracts for sale and not works-contract.
(2.) M/s Kone Elevators (India) Ltd. (hereinafter referred to as "the assessee") is a unit of M/s Kone Corporation, Finland who are one of the pioneers in the manufacture of hi-tech New Generation Elevators in the world. M/s Kone Corporation, Finland has its operations spread over 37 countries in the world. The assessee herein is a registered dealer falling in the jurisdiction of the commercial Tax Officer, R. P. Road Circle, secunderabad, having its head office at 50, vanagaram Road, Aynambakkam, Madras, with branches at Vijaywada and vizag. The assessee filed monthly returns in form A-2 for the months of April and May, 1995. It was assessed by the said Commercial Tax Officer provisionally for the period 1.4.1995 to 31.5.1995 and for the period from 1.6.1995 to 31.7.1995 under the Andhra Pradesh General Sales Tax Act,, 1957 (hereinafter referred to for the sake of brevity as "the 1957 Act"). The said two provisional assessments were made by the commercial Tax Officer vide orders dated 19.8.1995 and 5.9.1995 respectively. The assessee claimed deductions of labour charges for composition of tax under Section 5g read with section 5f of the said Act saying that nature of the work undertaken by it constituted "works-contract" involving manufacture, supply, installation and commissioning of elevators and lifts. The assessing authority however did not allow the deduction sought for and passed the provisional assessment orders giving rise to two appeals against the said assessment orders. By judgment and order dated 9.10. 1995, the Deputy Commissioner, secunderabad Division, Hyderabad, in turn dismissed the appeals filed by the assessee and thereby confirmed the aforestated assessment orders. Both the lower authorities treated the disputed turnover of the assessee as falling under Entry 82 of the First Schedule to the said 1957 act, which was objected to by the assessee by filing two separate appeals bearing T. A. Nos. 676 and 677 of 1995 before the Sales tax Appellate Tribunal, Hyderabad. The point that arose before the Tribunal in the aforestated two appeals, heard and disposed of jointly, was - whether the transactions related to "works-contract" or to "sale" of lifts. By judgment and order dated 22.12.1995, the said appeals bearing T. A. Nos. 676 and 677 of 1995 were allowed in favour of the assessee setting aside the impugned orders of the lower authorities by holding that the disputed turnover related to the manufacture, supply, fabrication and erection involved in the works-contract and that the said transaction did not amount to a contract of sale. The original assessing authority was accordingly directed to allow the deduction of labour charges and to complete the assessment under Section 5g read with Section 5f of the 1957 Act, as amended, without treating it under Entry 82 of the first schedule to the Act. Aggrieved by the decision of the tribunal dated 22.12.1995, the department preferred Tax Revision Case no. 129 of 1999 under section 22 (1) of the 1957 Act, to the High Court. By impugned judgment and order dated 2.7.1999, the Tax Revision Case filed by the department was dismissed. Hence, this civil appeal.
(3.) Shri Debojit Borkakati, learned counsel for the department submitted that the main object of the contract in question was to sell the lifts and the works done by the assessee for installation was incidental to the sale of lifts. It was urged that the Legislature had classified the commodity "lift" under Entry 82 of the First Schedule to the act keeping in mind that the word "installation" was ancillary to the "sale" of lifts. It was urged that the High Court had erred in holding that the installation of the lift involved skill and technical know-how, which was to be treated as works-contract.;