M/S. KONE ELEVATOR INDIA PVT. LTD. versus STATE OF TAMIL NADU AND ORS.

M/S. KONE ELEVATOR INDIA PVT. LTD. versus STATE OF TAMIL NADU AND ORS.

A composite contract for manufacture, supply and installation of lifts in a building constitutes a works contract under Article 366(29A)(b) of the Constitution, regardless of incidental additional obligations. The decision in Kone Elevators (India) Ltd. was overruled as incorrect in law. Contracts of this nature must be treated for sales tax purposes on the basis of the works contract principles, allowing exclusion of the labour and service element for assessment.

Parties
Petitioner: M/S. Kone Elevator India Pvt. Ltd.; Respondents: State of Tamil Nadu and Ors.
Jurisdiction
India
Judgment Date
06 May 2014
Procedural Posture
Writ Petition (civil) No. 232 of 2005 / Decision on Reference by Larger Bench
Outcome
Decision in State of A.P. v. Kone Elevators (India) Ltd. overruled; the show-cause notices and impugned assessment orders are quashed; finalized assessments not under appeal are closed; pending appeals/revisions to be decided per this decision; writ petitions and civil appeals disposed of.
Legal Topics
Works Contract, Sales Tax, Value Added Tax, Interpretation of Article 366(29 A)(b), Composite Contracts
Constitutional Law Tax Law Works Contract Sales Tax Value Added Tax Interpretation of Article 366(29 A)(b) Composite Contracts

Case Brief

Summary, issues, holding and outcome

More case intelligence is available

Unlock the full research layer for this judgment.

Full judgment text Legal principles 3 Authorities cited 18 Party arguments 2
Sign in to unlock

Parties

M/S. Kone Elevator India Pvt. Ltd.

Petitioner

State of Tamil Nadu and Ors.

Respondents

Procedural Posture

Writ Petition (civil) No. 232 of 2005 / Decision on Reference by Larger Bench

Legal Issues

  1. 1 Whether a contract for the manufacture, supply, and installation of lifts in a building is a 'contract for sale of goods' or a 'works contract'.
  2. 2 Whether the decision in State of A.P. v. Kone Elevators (India) Ltd. correctly interpreted the law regarding such contracts.

Ratio Decidendi

A composite contract for manufacture, supply and installation of lifts in a building constitutes a works contract under Article 366(29A)(b) of the Constitution, regardless of incidental additional obligations. The decision in Kone Elevators (India) Ltd. was overruled as incorrect in law. Contracts of this nature must be treated for sales tax purposes on the basis of the works contract principles, allowing exclusion of the labour and service element for assessment.

Court Disposition

Decision in State of A.P. v. Kone Elevators (India) Ltd. overruled; the show-cause notices and impugned assessment orders are quashed; finalized assessments not under appeal are closed; pending appeals/revisions to be decided per this decision; writ petitions and civil appeals disposed of.

Orders

  • The decision in State of A.P. v. Kone Elevators (India) Ltd. is overruled.
  • Show-cause notices relying on prior law are quashed.