Summary
The Court upheld sales tax on pipes and associated materials supplied under the assessee’s pre-2001 pipeline works contracts. Concurrent findings established separable supply and labour components. Article 366(29A) permitted taxation of the goods component even of an indivisible works contract; the dominant-intention test did not govern. The later exemption did not assist the disputed earlier periods.
Issues
- Whether the pipeline contracts supported taxation of their goods component despite the claim of a composite works contract.
Held
- Concurrent findings on the agreements established distinct supply of pipes and associated materials and provision of labour and services. Kone Elevator did not establish immunity from tax on the goods component merely because the transaction was a works contract. (¶¶ 15–18, 21)
- After the Forty-sixth Amendment, even an indivisible works contract could be divided by legal fiction into goods and services components. The State could tax the value of goods at incorporation in the works, without taxing immovable-property transfer; dominant intention and the proportion of services were immaterial to that power. (¶ 17–20)
- The disputed manufacture and supply did not fall within the exempted categories identified by the authorities. The sale element extended to jointing materials, valves and anchor blocks as well as pipes. (¶ 21)
Result
Appeals dismissed with costs; the impugned assessment and High Court judgment left undisturbed.