M/s. Permasteelisa (India) Pvt.Ltd. vs. State of Maharashtra, Sales Tax, Reference No.55/2014 and 80/ 2010 , dated 6th May, 2016, Bomay High Court.

Facts
The Applicant is engaged in activity of fixation of glass walls. It is the case of the Applicant that these glass walls also known as curtain walls are used in the construction of modern buildings. These glass walls are permanent walls and are constructed instead of usual brick walls. In the modern age of architecture these glass walls have replaced the traditional brick walls and many buildings are constructed and developed using glass walls. If the glass walls are erected for a building then brick walls are not required as these glass walls have all the characteristics of traditional brick walls as a result of which there are modern high rise buildings and skyscrapers. In applying the rate of composition as applicable under the Work Contracts Act, the Applicant has relied upon the Notification dated 8 March 2000 in terms of which certain contracts specified therein are identified as ‘construction contract’ eligible for beneficial rate of tax. According to the Applicant, the activities, it undertakes, are in respect of construction contracts or contracts incidental or ancillary to the construction contracts as set out in the Notification dated 8 March 2000 and it has raised invoices and filed returns accordingly.

The assessing authority held that the Applicant was not eligible for benefit under the said Notification dated 8 March 2000. The order of the Assessing Officer was upheld by the Deputy Commissioner of Sales Tax (Appeal). Aggrieved by the order of the Deputy Commissioner of Sales Tax (Appeal), the Applicant filed Appeal before the Tribunal. The Tribunal held that the activity undertaken by the Appellant was not construction and the contracts undertaken by the Applicant are not building construction contracts and would not be covered by the Notification dated 8 March 2000. Aggrieved by the order of the Tribunal, the Applicant preferred a Rectification Application which was dismissed by tribunal by an order passed in February 2013. The Tribunal, at the instance of the appellant, referred the question of law before the Bombay High Court.

Held
The Notification dated 8 March 2000 clearly mentions the contract for “construction of buildings”. The term “construction of buildings” would not involve the fixing of glass walls. Since the Applicant is seeking a lesser rate of tax, the burden to probe is on the Applicant and the provisions of the Notification dated 8 March 2000 have to be construed strictly .The word “construction” and the word “building” are not defined in the Act and are to be read in the context of their ordinary meaning. The work of fixing glass to a building can in no manner said to be an activity which is covered under Notification dated 8 March 2000. The work of the Applicant is also not covered under the term “incidental or ancillary activity to the construction of the building” as that would have to have a direct nexus to the construction of the building itself. Therefore, the alternative argument that the contract would get covered by paragraph B of the said Notification which includes incidental or ancillary contract to the contract of construction also cannot be accepted. What meaning is to be attached to the word “building” as mentioned in the Notification would have to be determined considering the facts and circumstances of each case. The reliance on the definition of ‘building’ in the Regulation 2(3)(11) of DCR is misplaced and would not assist the Applicant in any manner. That definition is in the context and purposes of DCR and cannot be imported and applied in the facts and circumstances of the present case. Accordingly, the High Court answered the question of law referred by the Tribunal as under:

The contracts of construction of glass curtain wall executed by the applicant would not constitute contracts for construction of buildings mentioned in para A of the Notification dated 8 March 2000 issued for the purpose of section 6A(1) of the Works Contract Act nor would it constitute contracts incidental or ancillary to the contracts as mentioned in paragraph B of the said Notification.