YASHWANT VARMA,J. - (1.) Heard Sri Alok Kumar, learned counsel for the revisionist and the learned Standing Counsel for the State-respondents.
(2.) This revision pertaining to A.Y. 200102 raises the issue of whether the contract executed by the revisionist in favour of I.O.C. was liable to be viewed, treated and taxed as a contract of sale or as a works contract. The contract granted to the revisionist envisaged the "Design, Supply, Fabrication, Erection, Testing and Commissioning of Micro Processor Based Intelligent Control Panel" for a fire fighting system of I.O.C. at Aligarh.
(3.) As is evident from the judgment and order of the Tribunal, it has basically proceeded to conclude that the contract in question was one of sale in light of the principles laid down by the Supreme Court in M/s. Kone Elevator India Private Limited v. State of Tamil Nadu And Others; (2010) 14 SCC 7881 . It is however not disputed inter partes that the said decision has since been overruled by the Supreme Court in M/s. Kone Elevator India Private Limited v. State of Tamil Nadu And Others (2014) U.P.T.C. 5212. The Supreme Court while disagreeing with the principles formulated in Kone Elevator (I) proceeded to observe as under: "64. When examining these conditions, in the first instance, the most relevant and clinching condition is the one relating to the payment to be effected by the Purchaser, which is to the effect that on signing the contract, 90% of the contract amount should be paid and the balance 10% either on the commissioning of the LIFT or within 30 days of the Petitioner's offer to commission the LIFT and if for any delay caused beyond the control of the Petitioner, within 90 days from the date the materials are ready for dispatch at the premises of the Petitioner. The agreed period for execution of the supply of the LIFT, as per the contract, is 52 weeks i.e., one full year. Whereas by reason of any delay beyond the control of the Petitioner, within 90 days from the date of the commencement of the contract, the Petitioner will have the right to demand for the entire payment without doing anything towards the erection part of it. Alternatively, while the Purchaser would be liable to pay the entirety of the contracted amount for the supply of the LIFT, the Petitioner after receiving the full payment would still have sufficient time to effectuate the supply in the event of the supply not being effectuated within the due date, then, on that ground the inability to commission the LIFT within 30 days or within 90 days after the materials are ready for dispatch will not for any reason be attributable to the Petitioner. In fact, Condition No. 8 at the end states that if for any reason the Petitioner is not able to supply any equipment within 52 weeks, then at its option, it can cancel the contract without there being any liability for payment of damages or compensation. Therefore, those terms relating to payment in Condition No. 5 and the right retained by the Petitioner to cancel the contract for any reason whatsoever under Condition No. 8 disclose that for mere signing of the contract for supply of the LIFT, the Petitioner would get the whole value of it without any corresponding obligation to effect the supply or to suffer any damages. The said outcome based on the payment conditions when read along with the other stipulations, disclose that the claim for factured materials should be paid along with the material invoice and the claim for installation should be paid along with their final invoice. It further makes it abundantly clear that the right of the Petitioner to realize the full value of the materials of the LIFT to be supplied does not entirely depend upon the installation part of it. In other words, supply of materials of the LIFT and installation costs are separately worked out in order to ensure that irrespective of the installation, the Petitioner will be able to realize the value of the material cost. This conclusion which is based on the above terms, also strengthens the reasoning that the contract is not an indivisible one and is always separable i.e., one for supply of materials and the miniscule part of the work involved. The division of 90% payment in the first instance and the balance 10% under certain other situations, fully supports the above conclusion.";