Jurisdiction - India
India – Taxation Updates.

17 July, 2014


In a decision passed on May 6, 20141, a five judge bench of the Supreme Court (‘SC’) has reversed its earlier three judge bench decision2, which had held that a contract for supply and installation of lifts constituted contract for sale of goods. SC has now held that a composite contract for supply and installation of lifts has to be treated as a “works contract”. It was observed that a composite contract is not a simple contract for sale of goods, since it contains obligations to supply both goods and services.

It was also held that the concept of “dominant nature test” or the “degree of intention test” or “overwhelming component test” are not applicable to a “works contract” falling under Clause (29A)(b) of Article 366 of the Constitution of India.


End Notes:


1 Kone Elevator India (P.) Ltd. v. State of Tamil Nadu, [2014] 45 taxmann.com 150 (SC)
2 State of A.P. v. Kone Elevators (India) Ltd., [2005] 3 SCC 389(SC)



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Zia Mody, AZB & Partners


Abhijit Joshi, AZB & Partners 

Shuva Mandal, AZB & Partners 


Samir Gandhi, AZB & Partners

Percy Billimoria, AZB & Partners 


Aditya Bhat, AZB & Partners 


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