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materials used in a contract to provide pest control treatment would amount to a deemed sale

Shanti Prime Publication Pvt. Ltd.

Works Contract — Whether the materials used in a contract to provide pest control treatment would amount to a deemed sale within the meaning of Article 366 (29A)(b) of the Constitution of India so as to make the same exigible to tax under the Gujarat Value Added Tax Act, 2003 is the question that arises for determination in the present proceedings. The High Court by the impugned order had answered the same in negative i.e. in favour of the Assessee leading to this appeal filed at the instance of the State. The salient features of the contract executed by and between the respondent - contractor and the consumer, namely, Reliance Petroleum Limited is to make services of pest control available to the consumer by use of chemicals to be procured and supplied by the contractor. Admittedly, in the course of the execution of the contract there is no trace of the goods/materials used for execution of the contract. While allowing the appeal of the department, Hon'ble Supreme Court of India held that:- A Constitution Bench of this Court in Kone Elevator India Private Limited vs. State of Tamil Nadu (2014) 7 SCC 1, while considering the correctness of its earlier view with regard to dominant nature of the contract test, had, apart from holding that the dominant nature test would no longer be determinative, considered paragraph 56 of the report in Larsen & Toubro Limited (supra) and has accepted the same to be the correct position in law. In view of the above position of law enunciated in Larsen & Toubro Limited (supra) and Kone Elevator India Private Limited (supra) the view taken by the High Court that there is no deemed sale of the goods used in the contract executed by the respondent - contractor cannot have our approval. We, therefore, set aside the order of the High Court and allow this appeal.[2018] 51 TUD 153 (SC)