M/s NTPC, Simhadri Super Thermal Power Project, Parwada, Hyderabad v. M/s ITO, Ward-6(2), Visakhapatnam, Visakhapatnam

ITA 101/VIZ/2012 | 2009-2010
Pronouncement Date: 22-07-2013 | Result: Allowed

Appeal Details

RSA Number 10125314 RSA 2012
Assessee PAN TAKEN1000M
Bench Visakhapatnam
Appeal Number ITA 101/VIZ/2012
Duration Of Justice 1 year(s) 3 month(s) 17 day(s)
Appellant M/s NTPC, Simhadri Super Thermal Power Project, Parwada, Hyderabad
Respondent M/s ITO, Ward-6(2), Visakhapatnam, Visakhapatnam
Appeal Type Income Tax Appeal
Pronouncement Date 22-07-2013
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted DB
Tribunal Order Date 22-07-2013
Date Of Final Hearing 30-04-2013
Next Hearing Date 30-04-2013
Assessment Year 2009-2010
Appeal Filed On 04-04-2012
Judgment Text
IN THE INCOME TAX APPELLATE TRI BUNAL VISAKHAPATNAM BENCH VISAKHAPAT NAM BEFORE S/SHRI D.MANMOHAN V.P. AND B.R.BASKAR AN AM I.T.A. NOS. 68 101 & 69/V/2012 ASSESSMENT YEARS : 2008-09 2009-10 & 2010-11 NTPC SIMHADRI SUPER THERMAL POWER PROJECT (VSP) SIMHADRI VISAKHAPATNAM. [PANAAACN O255D] VS. I.T.O. WARD 6(2) VISAKHAPATNAM. (ASSESSEE -APPELLANT) (REVENUE- RESPONDENT) ASSESSEE BY SHRI A.V. RAGHAVAN ADV. REVENUE BY SHRI K.V.N. CHARYA CIT(DR) DATE OF HEARING 03/05/2013 DATE OF PRONOUNCEMENT 22/07/2013 O R D E R PER B.R.BASKARAN ACCOUNTANT MEMBER: THESE THREE APPEALS FILED BY THE ASSESSEE ARE DIRE CTED AGAINST THE ORDERS PASSED BY LD CIT(A) VISAKHAPATNAM AND THEY RELATE TO THE FINANCIAL YEARS 2007- 08 TO 2009-10 RELEVANT TO THE ASSESSMENT YEARS 2008-09 TO 2010-11. SINCE THE ISSUES URGED IN THESE APPEALS ARE IDENTICAL IN NATU RE THEY WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. 2. THE ASSESSEE IS ASSAILING THE DECISION OF LD CIT(A) IN HOLDING THAT THE MACHINERIES PURCHASED BY THE ASSESSEE FALLS IN THE CATEGORY OF CONTRACT FOR WORKS AND LABOUR AND HENCE THE ASSESSEE IS LIABLE TO DEDUCT TAX AT SOURCE U/S 194C OF THE ACT ON THE PAYMENTS MADE BY IT AND CONS EQUENTLY THE ASSESSING OFFICER WAS RIGHT IN LAW IN HOLDING THE ASSESSEE AS AN ASSESSEE IN DEFAULT IN TERMS OF SEC. 201 OF THE ACT. I.T.A. NOS. 68 101 & 69/V/2012 2 3. THE FACTS RELATING TO THE ISSUE UNDER CONSID ERATION ARE NARRATED AS UNDER BY LD CIT(A) IN HIS COMMON ORDER DATED 30-12-2011 PASS ED FOR THE FINANCIAL YEARS 2007-08 & 2009-10 RELEVANT TO THE ASSESSMENT YEARS 2008-09 AND 2010-11. 2. THE APPELLANT COMPANY M/S. NATIONAL THERMAL PO WER CORPORATION LTD. (NTPC) IS IN THE ACTIVITY OF GENERATION OF THERMAL POWER AT ITS UNIT SIMHADRI SUPER THERMAL POWER PROJECT (SSTPP) LOCATE D AT PARAWADA IN VISAKHAPATNAM DISTRICT. TDS INSPECTION WAS CARRIED OUT IN THE PREMISES OF THE SSTPP ON 09-03-2009. DURING THE COURSE OF INSP ECTION IT WAS NOTICED THAT THE COMPANY HAS UNDERTAKEN 1000 MW EXPANSION O F SSTPP STATE-II. PURSUANT TO THIS BIDS WERE INVITED FOR VARIOUS PAC KAGES OF WORKS. AFTER EVALUATION AND DISCUSSION AND ISSUE OF LETTERS OF I NTENT NOTIFICATION OF AWARD WAS ISSUED TO THE SUCCESSFUL BIDDERS THE CON TRACT FOR VARIOUS PACKAGES OF WORKS WERE THUS FINALIZED WITH COMPANI ES LIKE ABB BHEL DRIPLEX WATER ENGG. LTD. ETC. 2.1 THE DIFFERENT PACKAGES OF WORKS INCLUDE DESIGN ENGINEERING MANUFACTURE FORWARDING ERECTION AND COMMISSIONING . AFTER FINALIZING THE CONTRACTOR CONTRACT AGREEMENTS WERE EXECUTED IN TWO PARTS VIZ. A) FIRST CONTRACT AND B) SECOND CONTRAC T. THE SCOPE OF WORK OF THE FIRST CONTRACT INCLUDES DESIGN ENGINE ERING MANUFACTURING SHOP FABRICATION ASSEMBLY INSPECTION AND TESTING AT SUPPLIERS WORKS TYPE TESTING PACKAGING FORWARDING TO SITE OF ALL EQUIPMENT/MATERIAL/SPECIAL TOOLS AND TACKLES AND MA NDATORY SPARES COVERED UNDER THE PACKAGE FOR A PRICE THAT IS NOTIF IED IN THE AWARD. THE SCOPE OF WORK UNDER SECOND CONTRACT INCLUDE TRANSPO RTATION FROM MANUFACTURERS WORKS/PLACE OF DISPATCH PORT CLEARA NCE & PORT CHARGES INLAND INSURANCE DELIVERY AT SITE RECEIPT UNLOAD ING HANDLING STORAGE INSURANCE AND INPLANT TRANSPORTATION AT SITE COMPL ETE INSTALLATION SUPERVISION PRE-COMMISSIONING COMMISSIONING COMP LETION OF FACILITIES CONDUCTING PERFORMANCE & GUARANTEE TESTS AND HANDLI NG OVER TO NTPC OF ALL EQUIPMENT/MATERIAL AND SPECIAL MAINTENANCE TOOL S AND TACKLES COVERED UNDER THE PACKAGE FOR A PRICE THAT IS NOTIFIED IN T HE AWARD. 2.2 THUS THE TOTAL VALUE OF CONTRACT HAS BEEN SPL IT INTO TWO PARTS. THE COMPANY HAS BEEN DEDUCTING TAX AT SOURCE U/S. 194C FROM PAYMENTS MADE UNDER THE SECOND CONTRACT AND HAS NOT DEDUCTED ANY TAX AT SOURCE FROM THE PAYMENTS MADE PURSUANT TO THE FIRST CONTRA CT. THE DEDUCTOR COMPANY WAS THEREFORE CALLED TO EXPLAIN FOR FAIL ING TO DEDUCT TAX U/S. 194C ON PAYMENTS MADE PURSUANT TO THE FIRST CONTRAC T THOUGH THE FIRST CONTRACT AND THE SECOND CONTRACT WERE NOTHING BUT O NE CONTRACT TOGETHER FOR A PARTICULAR PACKAGE OF WORK. IN RESPONSE THERE TO THE DEDUCTOR I.T.A. NOS. 68 101 & 69/V/2012 3 COMPANY SUBMITTED THAT THE SCOPE OF WORK UNDER THE FIRST CONTRACT IS SUPPLY PORTION OF PLANT AND MACHINERY EQUIPMENT AND THEREFORE THERE IS NO REQUIREMENT TO DEDUCT TAX AT SOURCE U/S. 194C. 2.3 ASSESSEE-COMPANY IN THIS REGARD RELIED ON C BDTS CIRCULAR NO. 681 DTD. 08.03.1994 AND ON THE DECISION OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF BDA LTD. VS. INCOME TAX OFFICER (TDS) 281 ITR 99 (BOM) AND DECISION OF HONBLE ITAT HYDERABAD B BENCH IN THE CASE OF POWER GRID CORPN. OF INDIA LTD. VS. ACIT 13 SOT 347. RELIANC E WAS ALSO PLACED ON THE FOLLOWING CASE-LAWS. A) PRINCIPAL OFFICER SOMANI IRON & STEEL (P) LTD. VS. ITO (2003 66 ITD 750 (LUCK). (B) APSRTC VS. DCIT 119 TAXMAN 73 (HYD.) (C) CIT VS. DABUR INDIA LT. (2005) 198 CT R (DELHI) 375. (D) CIT VS. DEPUTY CHIEF ACCOUNTS OFFICER MARKFED KHANNA BRANCH (2008) 173 TAXMAN 149 (PUN & HAR). (E) CIT VS. GIRNAR FOOD & BEVERAGES (P) LTD. (200 8) 306 ITR 23 (GUJ.) (F) HINDUSTAN LEVER LTD. (2008) 306 ITR 25 (GUJ). 2.4 ASSESSING OFFICER AFTER CAREFULLY CONSIDERING THE ARGUMENTS OF THE ASSESSEE HELD THAT THE BOARD CIRCULAR REFERRED TO B Y THE ASSESSEE-COMPANY IS NOT APPLICABLE TO THE FACTS OF THE CASE. HE FUR THER RELIED ON THE DECISION OF HONBLE MADRAS HIGH COURT IN THE CASE OF MANI MU THUSWAMY VS. PERSONAL ASSISTANCE TO THE COLLECTOR IN WRIT PETITI ON NO. 3681 OF 2008. THE HONBLE MADRAS HIGH COURT VIDE ITS JUDGMENT DTD. 15 .10.2009 HELD THAT SUPPLY OF EGGS TO GOVERNMENT OF TAMIL NADU AS PART OF MID-DAY MEALS SCHEME IS ALSO IN THE NATURE OF WORKS CONTRACT. TH E HONBLE MADRAS HIGH COURT IN ITS ORDER RELIED ON VARIOUS SUPREME COURT JUDGMENT INCLUDING THE CASE OF M/S. HINDUSTHAN AERONAUTICS LIMITED ASSOCI ATED CEMENT COMPANY LIMITED STATE OF TAMIL NADU VS. ANANDAM VI SWANATHAN HINDUSTHAN SHIPYARD LTD. VS. STATE OF AP AND KONE EL EVATORS (INDIA) LIMITED. FINALLY IT IS HELD BY THE HONBLE COURT THAT THE QUESTION OF WORKS CONTRACT OR SALE CONTRACT IS TO BE LOOKED INTO ON C ASE TO CASE BASIS. AO AFTER ELABORATELY QUOTING FROM THE DECISION OF HON BLE MADRAS HIGH COURT HELD THAT SAID JUDGMENT ANSWERS ALL PLAUSIBLE REASO NS THE ASSESSEE WOULD LIKE TO GIVE IN SUPPORT OF ITS STAND. IT IS FURTHE R OBSERVED BY THE ASSESSING OFFICER THAT THE HONBLE SUPREME COURT HELD THAT EA CH CONTRACT HAS TO BE SPECIFICALLY LOOKED INTO TO DECIDE WHETHER A PARTIC ULAR CONTRACT IS A CONTRACT FOR SALE OR FOR CONTRACT FOR WORK AND NO I NFLEXIBLE RULE OR MAGIC FORMULA CAN BE APPLIED AS A THUMB RULE. FOLLOWING T HE SPIRIT OF VARIOUS JUDGMENTS OF HONBLE SUPREME COURT ASSESSING OFFIC ER WENT ON TO EXAMINE THE ISSUE IN DETAIL. THE INVITATION OF BIDS INSTRUCTIONS TO BIDDERS AND OTHER RELEVANT DOCUMENTS WERE EXAMINED AND ASSE SSING OFFICER HELD I.T.A. NOS. 68 101 & 69/V/2012 4 THAT THE CONTRACT FOR SUPPLY AND ERECTION IS A COMP OSITE CONTRACT IN THE LIGHT OF THE FOLLOWING REASONS: 1) AGREEMENTS ENTERED WITH THE PARTIES ARE FOR A P ACKAGE OF A CERTAIN ITEM OF WORK COMMENCING FROM DESIGN & ENGIN EERING TO INSTALLATION & COMMISSIONING INTER-ALIA INVOLVING M ANUFACTURE PACKING FORWARDING TESTING MANDATORY SPARES ETC. 2) DESIGN AND ENGINEERING WHICH IS TO BE FINALIZED IN CONSULTATION WITH THE ASSESSEE COMPANY WITHIN A TIME SCHEDULE IS BY ITSELF A TECHNICAL SERVICE WHICH ATTRACTS DEDUCTION OF TAX A T SOURCE UNDER SECTION 194J. IN THE DETAILED TIME SCHEDULE FOR TH E PACKAGE WHICH SPECIFIED TIME FRAME FOR EACH SUB-ITEM OF THE PACKA GE SEPARATE TIME SCHEDULE HAS BEEN CLEARLY MENTIONED FOR ENGINE ERING PART OF THE PACKAGE. 3) THE PRICE BREAK UP OF THE TECHNICAL SERVICE LIKE ENGINEERING HAS NOT BEEN SEPARATELY MENTIONED BY THE CONTRACTOR AND IS SHOWN AS INCLUSIVE IN THE PRICE OF EX-MANUFACTURING WORKS OF EQUIPMENT. 4) THE OBLIGATION OF THE CONTRACTOR BEGINS FROM DES IGN & ENGINEERING AND ENDS WITH SUCCESSFUL COMMISSIONING OF THE PACKAGE AFTER CONDUCTING NECESSARY TESTS. 5) THOUGH THE ENTIRE CONTRACT HAS BEEN SPLIT INTO T WO PARTS VIZ. FIRST CONTRACT AND SECOND CONTRACT THE RESPONSIBILITY OF CONTRACTOR COVERS THE ENTIRE SCOPE OF WORK NARRATED IN BOTH TH E PARTS. 6) THE PRICE OF PACKAGE AGREED FOR THE ENTIRE SCOP E OF WORK COVERS BOTH PART AS IS EVIDENT FROM THE PRICE SCHEDULES E NCLOSED TO THE CONTRACT AGREEMENTS. 7) THE MINUTES OF THE MEETING HELD BETWEEN THE ASS ESSEE- COMPANY AND THE CONTRACTORS ON SEVERAL ISSUES LIKE COMMERCIAL TECHNICAL WORK SCHEDULE AND QUALITY ASSURANCE AND I NSPECTION OVER BOTH THE PARTS OF THE CONTRACT FURTHER SIGNIFYING T HE OBLIGATION OF THE CONTRACTOR FOR THE SCOPE OF WORK COVERED UNDER BOTH PARTS OF THE CONTRACT. 2.5 TO CONCLUDE IT IS HELD BY THE ASSESSING OFFIC ER THAT THE MAIN OBJECTIVE OF THE ASSESSEE-COMPANY IS TO GET A PARTICULAR PAC KAGE OF WORK FROM A CONTRACTOR STARTING FROM DESIGN AND ENGINEERING AN D ENDING WITH INSTALLATION AND COMMISSIONING. ALL INTER-ALIA JOB S LIKE PROCUREMENT MANUFACTURING ETC. ARE ALL INCLUSIVE IN THE PACKAG E. THUS IT IS HELD BY THE I.T.A. NOS. 68 101 & 69/V/2012 5 ASSESSING OFFICER THAT THE FIRST CONTRACT AND SECO ND CONTRACT TOGETHER CONSTITUTE A COMPOSITE CONTRACT ATTRACTING TAX DED UCTION AT SOURCE ON ALL THE SUMS PAID TO CONTRACTORS PURSUANT TO THE FIRST CONTRACT AGREEMENT. IT IS THUS HELD THAT THE ASSESSEE-COMPANY IS DEEMED T O BE AN ASSESSEE IN DEFAULT WITHIN THE MEANING OF SECTION 201 OF INCOM E-TAX ACT 1961. THE ASSESSING OFFICER NOTICED THAT THE CONTRACTORS HAVE DECLARED THE AMOUNT GIVEN BY THE ASSESSEE HEREIN DURING THE FINANCIAL Y EARS 2007-08 AND 2008-09 RELEVANT TO THE ASSESSMENT YEARS 2008-09 AND 2009-1 0 IN THEIR RESPECTIVE BOOKS OF ACCOUNT. ACCORDINGLY THE ASSESSING OFFICER DID NOT RAISE DEMAND U/S 201(1) OF THE ACT BUT ONLY CHARGED INTEREST U/S 201(1A) IN T HESE TWO YEARS. FOR THE FINANCIAL YEAR 2009-10 RELEVANT TO THE ASSESSMENT Y EAR 2010-11 THE ASSESSING OFFICER RAISED DEMAND U/S 201(1) OF THE ACT AND ALS O CHARGED INTEREST U/S 201(1A) OF THE ACT. 4. THE ASSESSEE CHALLENGED THE ORDERS PASSED BY THE ASSESSING OFFICER BY FILING APPEALS BEFORE LD CIT(A). THE FIRST APPELLATE AUTH ORITY AFTER GOING THROUGH THE TERMS AND CONDITIONS OF THE CONTRACT HELD THAT THE CONTRACT AWARDED BY THE ASSESSEE IS COMPOSITE CONTRACT ONLY EVEN THOUGH TW O SEPARATE CONTRACTS WERE ENTERED INTO BETWEEN THE PARTIES VIZ. (A) FOR SUP PLY OF EQUIPMENTS AND (B) FOR INSTALLATION. THE LD CIT(A) HELD THAT THE VARIOUS C LAUSES MENTIONED IN THE INSTRUCTION TO BIDDERS CLEARLY SHOW THAT THE CONT RACTS ENTERED INTO BY THE ASSESSEE HEREIN ARE INSEPARABLE. FURTHER THE LD CI T(A) HELD THAT THE DOMINANT INTENTION OF THE ASSESSEE IN GIVING THE CONTRACTS T O THE SUCCESSFUL BIDDERS IS FOR THE INSTALLATION AND COMMISSIONING OF COMPLETE FACI LITY AND NOT FOR SUPPLY OF MATERIALS. HE FURTHER HELD THAT THE PARTS OF MACHIN ERIES HOWEVER BIG OR SUBSTANTIAL IT MAY BE DO NOT CONSTITUTE ANY MEANIN GFUL FINISHED PRODUCTS FOR THE ASSESSEE UNLESS THEY ARE INSTALLED AND COMMISSIONED . ACCORDINGLY HE HELD THAT THE CONTRACT FOR SUPPLY OF MACHINERIES IS CLEARLY A ND INDISPUTABLY A CONTRACT FOR WORK AND LABOUR AND NOT A CONTRACT FOR SALE. AC CORDINGLY HE UPHELD THE DECISION OF THE ASSESSING OFFICER IN TREATING THE A SSESSEE AS AN ASSESSEE IN DEFAULT IN TERMS OF SEC. 201(1) OF THE ACT FOR FAIL URE TO DEDUCT TAX AT SOURCE U/S I.T.A. NOS. 68 101 & 69/V/2012 6 194C OF THE ACT ON THE PAYMENTS MADE TOWARDS THE CO NTRACT FOR SUPPLYING MACHINERIES. 5. AGGRIEVED BY THE ORDERS PASSED BY LD CIT(A) THE ASSESSEE HAS FILED THIS APPEAL BEFORE US. 6. WE HAVE HEARD THE RIVAL CONTENTIONS AND CARE FULLY PERUSED THE MATERIAL AVAILABLE ON RECORD. IT IS AN UNDISPUTED FACT THAT THE ASSESSEE HAS ENTERED INTO TWO SEPARATE CONTRACTS FOR PROCUREMENT AND INSTALLA TION OF PLANT AND EQUIPMENTS REQUIRED FOR COMMISSIONING 1000MW SSTPP STAGE-II. ACCORDING TO THE ASSESSEE THE FIRST CONTRACT IS ENTERED UP TO THE STAGE OF MA KING THE PLANT AND EQUIPMENT READY AT THE SITE OF THE MANUFACTURER AND THE SECON D CONTRACT IS ENTERED IN CONNECTION WITH THE TRANSPORTATION FROM MANUFACTURE RS PLACE INSTALLATION AND COMMISSIONING CONDUCTING PERFORMANCE AND GUARANTEE TESTS AND HANDING OVER OF ALL THE EQUIPMENTS. THE ASSESSEE HAS TREATED TH E SECOND CONTRACT AS CONTRACT OF WORK AND ACCORDINGLY DEDUCTED AT SOUR CE U/S 194C OF THE ACT. HOWEVER THE FIRST CONTRACT WAS TREATED BY THE ASSE SSEE AS A CONTRACT FOR SALE AND HENCE IT DID NOT DEDUCT TAX AT SOURCE U/S 194C OF THE ACT. 7. THE LD CIT(A) HAS CONCLUDED THAT BOTH THE CON TRACTS ARE COMPOSITE CONTRACTS AND FURTHER THEY ARE INSEPARABLE ONE. FU RTHER THE LD CIT(A) HAS HELD THAT THE ENTIRE CONTRACT CAN ONLY BE CONSIDERED AS A CONTRACT FOR WORK AND LABOUR. ACCORDINGLY THE LD CIT(A) HAS HELD THAT T HE ASSESSEE IS LIABLE TO DEDUCT TAX AT SOURCE ON THE FIRST CONTRACT ALSO. 8. FOR THE SAKE OF CONVENIENCE WE SHALL TERM T HE FIRST CONTRACT AS SUPPLY CONTRACT AND THE SECOND CONTRACT AS INSTALLATION CONTRACT. THE QUESTION THAT ESSENTIALLY ARISES FOR OUR CONSIDERATION IS WHETHER THE ASSESSEE IS LIABLE TO DEDUCT TAX ON THE AMOUNT COVERED BY SUPPLY CONTRACT OR N OT. THERE IS NO DISPUTE WITH THE PROPOSITION THAT THE ASSESSEE WOULD NOT BE LIAB LE TO DEDUCT TAX AT SOURCE IF THE SUPPLY CONTRACT IS CONSIDERED AS A CONTRACT FO R SALE. ON THE CONTRARY IF THE I.T.A. NOS. 68 101 & 69/V/2012 7 VIEW OF THE LD CIT(A) THAT THE SUPPLY CONTRACT FALL S IN THE CATEGORY OF CONTRACT FOR WORKS IS FOUND TO BE CORRECT THEN THE ASSESSE E WOULD BE LIABLE TO DEDUCT TAX AT SOURCE U/S 194C OF THE ACT ON THE PAYMENTS MADE TOWARDS SUPPLY CONTRACT ALSO. 9. THE LD CIT(A) HAS DECIDED THIS ISSUE AGAINST THE ASSESSEE BY HOLDING THAT (A) THE ENTIRE CONTRACT IS INSEPARABLE EVEN THOUGH THE ASSESSEE HAS ENTERED INTO TWO DIFFERENT CONTRACTS; AND (B) THE CONTRACT IS ESSENTIALLY A CONTRACT FOR W ORK AND LABOUR AND NOT A CONTRACT FOR SALE. 10. IN ORDER TO HOLD THAT THE TWO DISTINCT CONTR ACTS ENTERED INTO BY THE ASSESSEE ARE ESSENTIALLY A COMPOSITE CONTRACT TH E LD CIT(A) HAS REFERRED TO THE VARIOUS CLAUSES OF INSTRUCTION TO THE BIDDERS ISSUED BY THE ASSESSEE. THE DISCUSSIONS MADE BY LD CIT(A) AND THE DECISION TAKE N BY HIM ARE EXTRACTED BELOW FOR THE SAKE OF CONVENIENCE:- 3.7 NTPC LIMITED INVITED BIDDERS FOR STEAM GENERA TOR PACKAGE FOR THE POWER PLANT AT VISAKHAPATNAM. THE ADVERTISEMENT F OR THE SAME IS AS UNDER:- NTPC INVITES SEALED BIDS FROM ELIGIBLE BIDDERS FOR SUPPLY AND INSTALLATION OF STEAM GENERATOR WITH ELECTROSTATIC PRECIPITATOR PAC KAGE CONSISTING OF TWO (2) STEAM GENERATING UNITS EACH HAVING RATES OUT PUT OF 1590 TPH COMPLETE WITH ALL ACCESSORIES AND AUXILIARIES INCLUDING PRESSURE PARTS INTEGRAL PIPING FITTINGS MILLING SYSTEM WITH RAW COAL FEEDERS PA FANS DRAF T SYSTEM INCLUDING ID&FD FANS REGENERATIVE AIR PRE-HEALERS (RAPH) & STEAM COIL AIR PRE-HEATER (SCAPH). FUEL OIL PRESSURIZING & FIRING SYSTEM DUC TING DAMPERS EXPANSION JOINTS THERMAL INSULATION AND CLADDING AUDILIARY PRDS AUXILIARY STEAM PIPING COMPLETE CONTROL AND INSTRUMENTATION SYSTEM ELEVAT ORS IN BOILER AREA AND PASSENGER ELEVATORS FOR ESP/VFD CONTROL ROOM ALL STEEL STRUCTURES FOR STEAM GENERATOR POWER CYCLE PIPING MILL REJECT HANDLING SYSTEM ELECTROSTATIC PRECIPITATOR H.P. CHEMICAL DOSING EQUIPMENT COOLI NG WATER SYSTEM FOR STEAM GENERATOR AND AUXILIARIES PLANT AND INSTRUMENT AIR COMPRESSORS PLANT PERFORMANCE ANALYSIS DIAGNOSIS AND OPTIMIZATION ( PADO) VIBRATION ISOLATION & SPRING SYSTEM ETC. FOR SIMHADRI SUPER THERMAL POWE R PROJECT STAGE-II (2X500MW) SITUATED AT SIMHADRI DIST. VISAKHAPATNAM STATE OF ANDHRA PRADESH INDIA AS PER PROVISIONS OF BIDDING DOCUMENTS NO.CS- 3530-101-2. I.T.A. NOS. 68 101 & 69/V/2012 8 NTPC INTENDS TO FINANCE THIS PACKAGE THROUGH EXTERN AL COMMERCIAL BORROWINGS AND OTHER SOURCES. 3.8 FROM THE ABOVE ADVERTISEMENT IT CAN BE SEEN T HAT BIDS ARE CALLED FOR SUPPLY & INSTALLATION TOGETHER AND NOT SEPARATELY. PERUSAL OF FOLLOWING SPECIFIC CLAUSES OF THE INSTRUCTIONS TO BIDDERS IS NECESSARY TO LOOK INTO THE INTENTION OF NTPC. 1.2 NTPC INTENDS TO MAKE FINANCING ARRANGEMENTS FO R THE SUBJECT PACKAGE BY MEANS TO BUYERS CREDIT FROM INTERNATION AL BANKS THROUGH THE EXPORT CREDIT AGENCIES OF THE COUNTRY CONCERNED TO THE EXTENT THE GOODS AND SERVICES COVERED IN THE PACKAGE ARE IMPORTED F ROM OECD COUNTRIES. FOR THE ABOVE PURPOSE THE EXPORT CREDIT AGENCIES REQUIRE CERTAIN PROCEDURAL FORMALITIES TO BE COMPLETED BY THE EQUI PMENT SUPPLIER OF THEIR COUNTRY. THE BIDDER SHALL IN CASE OF AWARD OF CON TRACT FACILITATE COMPLETION OF SUCH FORMALITIES AS MAY BE REQUIRED BY THE RESPECTIVE EXPORT CREDIT AGENCY TO ENABLE NTPC TO AVAIL BUYER S CREDIT FOR FUNDING ELIGIBLE GOODS AND SERVICES COVERED IN THE PACKAGE . THE AFORESAID OPTION OF FUNDING IS ALSO INTENDED TO BE AVAILED BY NTPC FOR SUPPLY OF GOODS AND SERVICES FROM OECD COUNTRIES BY THE SUB-VENDORS/SU B-CONTRACTORS OF THE BIDDER. THE BIDDER SHALL MAKE SIMILAR COMPLIANCE IN RESPECT OF ITS SUB- VENDORS/SUB-CONTACTORS TO THE EXTENT THE GOODS ARE IMPORTED FROM CONCERNED OECD COUNTRY. 2.1 FOR THE PURPOSES OF THESE BIDDING DOCUMENTS T HE WORD FACILITIES MEANS THE PLANT AND EQUIPMENT TO BE SUPPLIED AND I NSTALLED TOGETHER WITH THE SERVICES TO BE CARRIED OUT BY THE CONTRAC TOR UNDER THE CONTRACT. THE WORDS PLANT AND EQUIPMENT INSTALLATION SERV ICES ETC. SHALL BE CONSTRUED IN ACCORDANCE WITH THE RESPECTIVE DEFINI TIONS GIVEN TO THEM IN THE GENERAL CONDITIONS OF CONTRACT. 2.2 GOODS AND SERVICES TO THE SUPPLIED :- ALL COUNTRIES AND AREAS ARE THE ELIGIBLE SOURCE COUNTRIES FOR GOODS AND SERVICES TO BE SUPPLIED UNDER THIS CONTRACT AND ACCORDINGLY GOODS AND SERVICES TO BE S UPPLIED UNDER THIS CONTRACT MAY HAVE THEIR ORIGIN IN ANY COUNTRY AND A REA; 5.2 ENTERING INTO A SUPPLY AND INSTALLATION OF FACILITI ES :- THE BIDDER IS ADVISED TO VISIT AND EXAMINE THE SITE WHERE THE FAC ILITIES ARE TO BE INSTALLED AND ITS SURROUNDINGS AND OBTAIN FOR ITSEL F ON ITS OWN RESPONSIBILITY ALL INFORMATION THAT MAY BE NECESSA RY FOR PREPARING THE BID AND ENTERING INTO A CONTRACT FOR SUPPLY AND INSTALL ATION OF THE FACILITIES . THE COSTS OF THE VISITING THE SITE SHALL BE BORNE B Y THE BIDDER FULLY. 8.3 (C) ATTACHMENT 3 : BIDDERS QUALIFICATION (IV) HAS ADEQUATE DESIGN MANUFACTURING AND/OR FABR ICATION CAPABILITY AND CAPACITY AVAILABLE TO PERFORM THE WORK PROPERLY AND EXPEDITIOUSLY WITHIN THE TIME PERIOD SPECIFIED. THE EVIDENCE SHALL SPEC IFICALLY COVER WITH I.T.A. NOS. 68 101 & 69/V/2012 9 WRITTEN DETAILS THE INSTALLED MANUFACTURING AND/OR FABRICATION CAPACITIES AND PRESENT COMMITMENTS (EXCLUDING THOSE ANTICIPATE D UNDER THESE BIDDING DOCUMENTS). IF THE PRESENT COMMITMENTS ARE SUCH THAT THE INSTALLED CAPACITY RESULTS IN AN INADEQUACY OF MANU FACTURING AND/OR FABRICATION CAPACITIES TO MEET THE REQUIREMENTS APP ROPRIATE TO THE WORKS COVERED IN HIS BID THEN THE DETAILS OF THE REQUIRE MENTS APPROPRIATE TO THE WORKS COVERED IN HIS BID THEN THE DETAILS OF ALTER NATIVE ARRANGEMENTS TO BE ORGANIZED BY THE BIDDER AND/OR HIS COLLABORATOR/ ASSOCIATE FOR THIS PURPOSE AND WHICH SHALL MEET THE EMPLOYERS APPROVA L SHALL ALSO BE FURNISHED. (VI) HAS ESTABLISHED QUALITY ASSURANCE SYSTEMS AN D ORGANIZATION DESIGNED TO ACHIEVE HIGH LEVELS OF EQUIPMENT/SYSTEM RELIAB ILITY BOTH DURING HIS MANUFACTURING AND/OR FABRICATION AND FIELD INSTAL LATION ACTIVITIES. 10. BID PRICES 10.1 UNLESS OTHERWISE SPECIFIED IN THE TECHNICAL S PECIFICATIONS BIDDERS SHALL QUOTE FOR THE ENTIRE FACILITIES ON A SINGLE RESPON SIBILITY BASIS SUCH THAT THE TOTAL BID PRICE COVERS ALL THE CONTRACTORS OBLI GATIONS MENTIONED IN OR TO BE REASONABLY INFERRED FROM THE BIDDING DOCUMENT S IN RESPECT OF THE DESIGN MANUFACTURE INCLUDING PROCUREMENT AND SUBCO NTRACTING (IF ANY) DELIVERY CONSTRUCTION INSTALLATION COMMISSIONING COMPLETION OF THE FACILITIES AND CONDUCTANCE OF GUARANTEE TESTS FOR T HE FACILITIES INCLUDING SUPPLY OF MANDATORY SPARES (IF ANY). THIS INCLUDES ALL REQUIREMENTS UNDER THE CONTRACTORS RESPONSIBILITIES FOR TESTING PRE- COMMISSIONING AND COMMISSIONING OF THE FACILITIES CONDUCTING GUARANT EE TESTS AND WHERE SO REQUIRED BY THE BIDDING DOCUMENTS THE ACQUISITION OF ALL PERMITS APPROVALS AND LICENSES ETC. THE OPERATION MAINTEN ANCE AND TRAINING SERVICES AND SUCH OTHER ITEMS AND SERVICES AS MAY B E SPECIFIED IN THE BIDDING DOCUMENTS ALL IN ACCORDANCE WITH THE REQUI REMENTS OF THE GENERAL CONDITIONS OF CONTRACT AND TECHNICAL SPECIF ICATION S. 10.2 BIDDERS ARE REQUIRED TO QUOTE THE PRICE FOR T HE COMMERCIAL CONTRACTUAL AND TECHNICAL OBLIGATIONS OUTLINED IN THE BIDDING D OCUMENTS. IF A BIDDER WISHES TO MAKE A DEVIATION TO THE PROVISIONS OF THE BIDDING DOCUMENTS SUCH DEVIATION SHALL BE LISTED IN ATTACHMENT 6 OR I N ATTACHMENT 6A OF ITS BID AS APPLICABLE. THE BIDDER SHALL PROVIDE THE A DDITIONAL PRICE IF ANY FOR WITHDRAWAL OF THE DEVIATIONS PURSUANCE OF ITB SUB-CLAUSE 8.3(F). 10.4 IN THE SCHEDULES BIDDERS SHALL GIVE THE RE QUIRED DETAILS AND A BREAKDOWN OF THEIR PRICES AS FOLLOWS: (A) PLANT AND EQUIPMENT (INCLUDING TYPE TESTS) AND MANDATORY SPARES MANUFACTURES OR FABRICATED WITHIN THE EMPLOYERS CO UNTRY (SCHEDULE NO. 2) SHALL BE QUOTED ON EXW (EX-FACTORY EX-WORKS EX -WAREHOUSE OR OFF I.T.A. NOS. 68 101 & 69/V/2012 10 THE-SHELF AS APPLICABLE) BASIS AND SHALL BE INCLUS IVE OF ALL COSTS AS WELL AS DUTIES AND TAXES PAID OR PAYABLE ON COMPONENTS AND RAW MATERIALS INCORPORATED OR TO BE INCORPORATED IN THE FACILITIE S. HOWEVER SALES TAX (NOT THE SURCHARGE IN LIEU OF SALES TAX) LOCAL TAX INCLUDING ENTRY TAX/OCTROI (IF APPLICABLE) AND OTHER LEVIES IN RESP ECT OF DIRECT TRANSACTIONS BETWEEN THE EMPLOYER AND THE BIDDER SHALL NOT BE IN CLUDED IN THE EX- WORKS PRICE BUT SHALL BE QUOTED SEPARATELY IN SCHED ULE NO. 7. FURTHER TAXES AND OTHER LEVIES IF ANY ON TYPE TESTS ON EQU IPMENT WITH RESPECT TO DIRECT TRANSACTION SHALL BE QUOTED SEPARATELY. THE TAXES DUTIES AND LEVIES QUOTED BY THE BIDDER IN SCHEDULE NO. 7 SHAL L BE APPLICABLE IN THE EMPLOYERS COUNTRY AS OF SEVEN (7) DAYS PRIOR TO TH E LAST DATE FOR SUBMISSION OF BIDS. (D) INSTALLATION SERVICES SHALL BE QUOTED SEPARA TELY IN SCHEDULE NO. 4 AND SHALL INCLUDE RATES OR PRICES FOR ALL LABOUR CON TRACTORS EQUIPMENT TEMPORARY WORKS CONSUMABLES AND ALL MATTERS AND THINGS OF WHATSOEVER NATURE CHARGES FOR INSURANCE COVERS OTHER THAN I NLAND TRANSIT INSURANCE OPERATIONS AND MAINTENANCE SERVICES THE PROVISIO N OF OPERATIONS AND MAINTENANCE MANUALS TRAINING OF EMPLOYERS PERSO NNEL ETC. AND OTHER SERVICES AS IDENTIFIED IN THE BIDDING DOCUMENTS A ND NECESSARY FOR THE PROPER EXECUTION OF THE INSTALLATION SERVICES IN CLUDING ALL TAXES DUTIES LEVELS INCLUDING OF SERVICE TAX AND CHARGES PAYAB LE IN THE EMPLOYERS COUNTRY AS OF SEVEN (7) DAYS PRIOR TO THE DEADLI NE FOR SUBMISSION OF BIDS. 28. AWARD CRITERIA 28.4 THE MODE OF CONTRACTING WITH THE SUCCESSFUL B IDDER WILL BE AS PER STIPULATION OUTLINED IN GCC CLAUSES 3.6 AND BRIEF LY INDICATED BELOW: (I) FIRST CONTACT: FOR CIF (INDIAN PORT OF ENTRY) SUPPLY OF PLANT AND EQUIPMENT INCLUDING TYPE TEST CHARGES AND MANDATO RY SPARES TO BE SUPPLIED FROM ABROAD. (II) SECOND CONTRACT: FOR EX-WORKS (INDIA) SUPPLY OF DOMESTICALLY MANUFACTURED PLANT AND EQUIPMENT INCLUDING TYPE T EST CHARGES AND MANDATORY SPARES. (III) THIRD CONTRACT: FOR PROVIDING ALL SERVICES I.E. PORT HANDLING PORT CLEARANCE AND PORT CHARGES FOR THE IMPORTED GOODS FURTHER LOADING INLAND TRANSPORTATION FOR DELIVERY AT SITE INLAND TRANS IT INSURANCE UNLOADING STORAGE HANDLING AT SITE INSTALLATION INSURANC E COVERS OTHER THAN INLAND TRANSIT INSURANCE TESTING COMMISSIONING AND CON DUCTING GUARANTEE TESTS IN RESPECT OF AL THE EQUIPMENTS SUPPLIED UNDER TH E FIRST CONTRACT & THE SECOND CONTRACT AND ALL OTHER SERVICES AS SPECI FIED IN THE CONTRACT DOCUMENTS. I.T.A. NOS. 68 101 & 69/V/2012 11 ALL THE ABOVE CONTRACTS WILL CONTAIN A CROSS-FALL BREACH CLAUSE SPECIFYING THAT BREACH OF ONE CONTRACT WILL CONSTITUTE BREAC H OF THE OTHER CONTRACTS WHICH WILL CONFER A RIGHT ON THE EMPLOYER TO TERM INATE THE OTHER CONTRACTS ALSO AT THE RISK AND THE COST OF CONTRACTOR. 29. EMPLOYERS RIGHT TO ACCEPT ANY BID AND TO REJECT AN Y OR ALL BIDS : 29.1 THE EMPLOYER RESERVES THE RIGHT TO ACCEPT O R REJECT ANY BID AND TO ANNUL THE BIDDING PROCESS AND REJECT ALL BIDS AT ANY TIME PRIOR TO AWARD OF CONTRACT WITHOUT THEREBY INCURRING ANY LIABILITY TO THE AFFECTED BIDDER OR BIDDERS OR ANY OBLIGATION TO INFORM THE AFFECTED BIDDER OR BIDDERS OF THE GROUNDS FOR THE EMPLOYERS ACTION. 30. NOTIFICATION OF AWARD OF ENTIRE CONTRACT NOT ANY PART OF CONTRACT. 30.1 PRIOR TO THE EXPIRATION OF THE PERIOD OF BID VALIDITY THE EMPLOYER WILL NOTIFY THE SUCCESSFUL BIDDER IN WRITING BY REGISTE RED LETTER OR BY TELEX TO BE CONFIRMED IN WRITING BY REGISTERED LETTER THAT ITS BID HAS BEEN ACCEPTED. THE NOTIFICATION OF AWARD WILL CONSTITUT E THE FORMATION OF THE CONTRACT. 31. SIGNING THE CONTRACT AGREEMENT 31.1 AT THE SAME TIME AS THE EMPLOYER NOTIFIES T HE SUCCESSFUL BIDDER THAT ITS BID HAS BEEN ACCEPTED THE EMPLOYER WILL SEND TO THE BIDDER THE CONTRACT AGREEMENT PROVIDED IN THE BIDDING DOCUME NTS INCORPORATING ALL AGREEMENTS BETWEEN THE PARTIES. 31.2 WITHIN TWENTY-EIGHT (28) DAYS AFTER RECEIPT OF THE NOTIFICATION OF AWARD THE SUCCESSFUL BIDDER/ASSIGNEE OF FOREIGN BIDDER (I F APPLICABLE) SHALL SIGN AND DATE THE CONTRACT AGREEMENT AND RETURN IT TO TH E EMPLOYER. 32. PERFORMANCE SECURITY 32.1 WITHIN TWENTY-EIGHT (28) DAYS AFTER RECEIPT OF THE NOTIFICATION OF AWARD THE SUCCESSFUL BIDDER SHALL FURNISH PERFORMANCE SEC URITIES FOR TEN PERCENT (10%) OF CONTRACT PRICE FOR ALL THE CONTRACTS AND I N THE FORM PROVIDED IN THE SECTION FORMS AND PROCEDURES OF THE BIDDING DOCUMENTS. GENERAL CONDITIONS OF CONTRACT (GCC) PROJECT MANAGER MEANS THE PERSON APPOINTED BY THE EMPLOYER IN THE MANNER PROVIDED IN GCC SUB-CLAUSE 17.1 (PROJECT MAN AGER) HEREOF AND NAMED AS SUCH IN THE SCC TO PERFORM THE DUTIES DELE GATED BY THE EMPLOYER. I.T.A. NOS. 68 101 & 69/V/2012 12 FACILITIES MEANS THE PLANT AND EQUIPMENT TO BE SU PPLIED AND INSTALLED AS WELL AS ALL THE INSTALLATION SERVICES TO BE CARR IED OUT BY THE CONTRACTOR UNDER THE CONTRACT. COMPLETION MEANS THAT THE FACILITIES (OR A SPECIF IC PART THEREOF WHERE SPECIFIC PARTS ARE SPECIFIED IN THE SCC) HAVE BEEN COMPLETED OPERATIONALLY AND STRUCTURALLY AND PUT IN A LIGHT AND CLEAN COND ITION AND THAT ALL WORK IN RESPECT OF PRE-COMMISSIONING OF THE FACILITIES OR SUCH SPECIFIC PART THEREOF HAS BEEN COMPLETED AND COMMISSIONING HAS BEEN ATTA INED AS PER TECHNICAL SPECIFICATIONS. 3.6 CONSTRUCTION OF THE CONTRACT . 3.6.2 THE AWARD OF SEPARATE CONTRACTS SHALL NOT I N ANY WAY DILUTE THE RESPONSIBILITY OF THE CONTRACTOR FOR THE SUCCESSFUL COMPLETION OF THE FACILITIES AS PER CONTRACT DOCUMENTS AND A BREACH I N ONE CONTRACT SHALL AUTOMATICALLY BE CONSTRUED AS A BREACH OF THE OTHER CONTRACT(S) WHICH WILL CONFER A RIGHT ON THE EMPLOYER TO TERMINATE THE OTH ER CONTRACT(S) ALSO AT THE RISK AND THE COST OF THE CONTRACTOR. 3.7 ENTIRE AGREEMENT SUBJECT TO GCC SUB-CLAUSE 16.4 HEREOF THE CONTRACT CONSTITUTES THE ENTIRE AGREEMENT BETWEEN THE EMPLOYER AND CONTRACTO R WITH RESPECT TO THE SUBJECT MATTER OF CONTRACT AND SUPERSEDES ALL C OMMUNICATIONS NEGOTIATIONS AND AGREEMENTS (WHETHER WRITTEN OR ORA L) OF PARTIES WITH RESPECT THERETO MADE PRIOR TO THE DATE OF CONTRACT. SUBJECT MATTER OF CONTRACT 7. SCOPE OF FACILITIES : 7.1 UNLESS OTHERWISE EXPRESSLY LIMITED IN THE TE CHNICAL SPECIFICATIONS THE CONTRACTORS OBLIGATIONS COVER THE PROVISION OF ALL PLANT AND EQUIPMENT INCLUDING SPARES AND THE PERFORMANCE OF ALL SERVICE S REQUIRED FOR THE DESIGN THE MANUFACTURE (INCLUDING PROCUREMENT QUA LITY ASSURANCE CONSTRUCTION INSTALLATION ASSOCIATED CIVIL STRUC TURAL AND OTHER CONSTRUCTION WORKS PRE-COMMISSIONING AND DELIVERY ) OF THE PLANT AND EQUIPMENT AND THE INSTALLATION COMMISSIONING COMP LETION OF THE FACILITIES AND CARRYING OUT GUARANTEE TESTS FOR THE FACILITIES IN ACCORDANCE WITH THE PLANS PROCEDURES SPECIFICATIONS DRAWINGS CODES A ND ANY OTHER DOCUMENTS AS SPECIFIED IN THE TECHNICAL SPECIFICATI ONS. SUCH SPECIFICATIONS INCLUDE BUT ARE NOT LIMITED TO THE PROVISION OF SUPERVISION AND ENGINEERING SERVICES; THE SUPPLY OF LABOUR MAT ERIALS EQUIPMENT SPARE PARTS (AS SPECIFIED IN GCC SUB-CLAUSE 7.3 BEL OW) AND ACCESSORIES; CONTRACTORS EQUIPMENT; CONSTRUCTION UTILITIES AND SUPPLIES; TEMPORARY MATERIALS STRUCTURES AND FACILITIES; TRANSPORTATIO N (INCLUDING WITHOUT LIMITATION UNLOADING AND HAULING TO FROM AND AT T HE SITE) INSURANCE AND I.T.A. NOS. 68 101 & 69/V/2012 13 STORAGE EXCEPT FOR THOSE SUPPLIES WORKS AND SERVI CES THAT WILL BE PROVIDED OR PERFORMED BY THE EMPLOYER AS SET FORTH IN APPENDIX 6 (SCOPE OF WORKS AND SUPPLY BY THE EMPLOYER) TO THE CONTRAC T AGREEMENT. 9. CONTRACTORS RESPONSIBILITIES 9.1 THE CONTRACTOR SHALL DESIGN MANUFACTURE (INC LUDING ASSOCIATED PURCHASE AND/OR SUBCONTRACTING) INSTALL AND COMPLETE THE FA CILITIES AND CARRY OUT THE GUARANTEE TESTS WITH DUE CARE AND DILIGENCE IN ACCORDANCE WITH THE CONTRACT. 11. CONTRACT PRICE 11.1 THE CONTRACT PRICE SHALL BE AS SPECIFIED IN ARTICLE 2 (CONTRACT PRICE AND TERMS OF PAYMENT OF THE CONTRACT AGREEMENT). 11.2 THE CONTRACT PRICE SHALL BE ADJUSTED IN ACC ORDANCE WITH PROVISIONS OF APPENDIX-2 (PRICE ADJUSTMENT) TO THE CONTRACT AGREE MENT. 11.3 SUBJECT TO GCC SUB-CLAUSE 9.2 10.1 AND 35 (UNFORESEEN CONDITIONS) HEREOF THE CONTRACTOR SHALL BE DEEMED TO HAVE SATI SFIED ITSELF AS TO THE CORRECTNESS AND SUFFICIENCY OF THE CONTRACT PRICE WHICH SHALL EXCEPT AS OTHERWISE PROVIDED FOR IN THE CONTRACT COVER ALL I TS OBLIGATIONS UNDER THE CONTRACT. 12. TERM OF PAYMENT 12.2 NO PAYMENT MADE BY THE EMPLOYER HEREIN SHALL B E DEEMED TO CONSTITUTE ACCEPTANCE BY THE EMPLOYER OF THE FACILITIES OR ANY PART(S) THEREOF. 21.3 TRANSPORTATION 21.3.1 THE CONTRACTOR SHALL AT ITS OWN RISK AND EX PENSE TRANSPORT AL THE PLANT AND EQUIPMENT AND THE CONTRACTORS EQUIPMENT TO THE SITE BY THE MODE OF TRANSPORT THAT THE CONTRACTOR JUDGES MOST SUITABLE UNDER ALL THE CIRCUMSTANCES. 21.3.4 THE CONTRACTOR SHALL BE RESPONSIBLE FOR O BTAINING IF NECESSARY APPROVALS FROM THE AUTHORITIES FOR TRANSPORTATION O F THE PLANT AND EQUIPMENT AND THE CONTRACTORS EQUIPMENT TO THE SIT E. THE EMPLOYER SHALL USE ITS BEST ENDEAVORS IN A TIMELY AND EXPEDI TIOUS MANNER TO ASSIST THE CONTRACTOR IN OBTAINING SUCH APPROVALS IF REQU ESTED BY THE CONTRACTOR. THE CONTRACTOR SHALL INDEMNIFY AND HOL D HARMLESS THE EMPLOYER FROM AND AGAINST ANY CLAIM FOR DAMAGE TO R OADS BRIDGES OR ANY OTHER TRAFFIC FACILITIES THAT MAY BE CAUSED BY THE TRANSPORT OF THE PLANT AND EQUIPMENT AND THE CONTRACTORS EQUIPMENT TO THE SITE. I.T.A. NOS. 68 101 & 69/V/2012 14 21.4 CUSTOMS CLEARANCE THE CONTRACTOR SHALL AT ITS OWN EXPENSE HANDLE AL L IMPORTED PLANT AND EQUIPMENT INCLUDING SPARES AND CONTRACTORS EQUIPME NT AT THE POINT(S) OF IMPORT AND SHALL HANDLE ANY FORMALITIES FOR CUSTOMS CLEARANCE INCLUDING LIABILITY FOR PORT CHARGES ETC. IF ANY SUBJECT TO THE EMPLOYERS OBLIGATIONS UNDER GCC SUB-CLAUSE 14.2 PROVIDED THAT IF APPLICAB LE LAWS OR REGULATIONS REQUIRE ANY APPLICATION OR ACT TO BE MADE BY OR IN THE NAME OF THE EMPLOYER THE EMPLOYER SHALL TAKE ALL NECESSARY STE PS TO COMPLY WITH SUCH LAWS AND REGULATIONS. IN THE EVENT OF DELAYS IN CUSTOMS CLEARANCE DUE TO FAULT OF THE EMPLOYER THE CONTRACTOR SHALL BE ENTITLED TO AN EXTENSION IN THE TIME FOR COMPLETION PURSUANT TO G CC CLAUSE-40. 23.6 IF ANY PLANT AND EQUIPMENT OR ANY PART OF TH E FACILITIES FAILS TO PASS ANY TEST AND/OR INSPECTION THE CONTRACTOR SHALL EITHER RECTIFY OR REPLACE SUCH PLANT AND EQUIPMENT OR PART OF THE FACILITIES AND S HALL REPEAT THE TEST AND/OR INSPECTION UPON GIVING A NOTICE UNDER GCC SU B-CLAUSE 23.3. 31. RISK DISTRIBUTION TRANSFER OF OWNERSHIP 31.1 OWNERSHIP OF THE PLANT AND EQUIPMENT (INCLUDIN G SPARE PARTS) TO BE IMPORTED INTO THE COUNTRY WHERE THE SITE IS LOCATED SHALL BE TRANSFERRED TO THE EMPLOYER UPON LOADING ON TO THE MODE OF TRANSPO RT TO BE USED TO CONVEY THE PLANT AND EQUIPMENT (INCLUDING SPARE PAR TS) FROM THE COUNTRY OF ORIGIN TO THAT COUNTRY AND UPON ENDORSEMENT OF T HE DISPATCH DOCUMENTS IN FAVOUR OF THE EMPLOYER. 31.2 OWNERSHIP OF THE PLANT AND EQUIPMENT (INCLUDIN G SPARE PARTS) PROCURED IN THE COUNTRY WHERE THE SITE IS LOCATED SHALL BE TRAN SFERRED TO THE EMPLOYER WHEN THE PLANT AND EQUIPMENT (INCLUDING SPARE PARTS ) ARE LOADED ON TO THE MODE OF TRANSPORT TO BE USED TO CONVEY THE PLAN T AND EQUIPMENT (INCLUDING SPARE PARTS) FROM THE WORKS TO THE SITE AND UPON ENDORSEMENT OF THE DISPATCH DOCUMENTS IN FAVOUR OF THE EMPLOYER . 31.5 NOTWITHSTANDING THE TRANSFER OF OWNERSHIP OF T HE PLANT AND EQUIPMENT THE RESPONSIBILITY FOR CARE AND CUSTODY THEREOF TOG ETHER WITH THE RISK OF LOSS OR DAMAGE THERETO SHALL REMAIN WITH THE CONTRA CTOR PURSUANT TO GCC CLAUSE-32 (CARE OF FACILITIES) HEREOF UNTIL COMPLET ION OF THE FACILITIES OR THE PART THEREOF IN WHICH SUCH PLANT AND EQUIPMENT ARE INCORPORATED. 3.8 FROM THE PERUSAL OF ABOVE CLAUSES OF THE AGREE MENT IT CAN BE SEEN THAT THE INTENTION OF THE CONTRACT IS AND HAS ALWAY S BEEN COMPOSITE CONTRACT WITH SUPPLY OF MATERIAL FORMING ONLY A PAR T OF THE ENTIRE CONTRACT. AS ALREADY DISCUSSED THE ADVERTISEMENT IS FOR THE E NTIRE PACKAGE OF SUPPLY I.T.A. NOS. 68 101 & 69/V/2012 15 AND INSTALLATION AND NOT SEPARATELY FOR SUPPLY AND INSTALLATION. CLAUSE 1.2 ALSO SAYS THAT FINANCING ARRANGEMENT WILL BE MADE F OR THE ENTIRE PACKAGE. CLAUSE 2.1 CLEARLY STATES WHAT THE WORD FACILITIES FOR THE PURPOSES OF BIDDING DOCUMENTS MEANS AND IT STATES THAT FACILITI ES MEANS PLANT AND EQUIPMENT TO BE SUPPLIED AND INSTALLED TOGETHER WI TH SERVICES TO BE CARRIED OUT. CLAUSE 5.2 REITERATES THAT A SINGLE B ID MAY BE PREPARED FOR ENTERING INTO CONTRACT FOR SUPPLY AND INSTALLATION. CLAUSE 8.3 (C) WHICH SPEAKS OF BIDDERS QUALIFICATION REQUIRES THAT THE BIDDER SHOULD PROVIDE SATISFACTORY EVIDENCE OF HIS QUALIFICATION FOR BOTH SUPPLY AND INSTALLATION. SUB-CLAUSE (IV) OF THE SAID CLAUSE REQUIRES THAT TH E BIDDER SHOULD HAVE ADEQUATE FACILITIES OF DESIGN MANUFACTURE AND FABRI CATION WHEREAS SUB- CLAUSE (VI) REQUIRES THAT THE BIDDER SHOULD HAVE ES TABLISHED QUALITY ASSURANCE SYSTEMS TO ACHIEVE RELIABILITY IN BOTH MA NUFACTURING AND INSTALLATION. THESE CLAUSES THUS SHOW THAT THE CON TRACTOR SHOULD HAVE BOTH CAPABILITIES AS BOTH THE WORKS ARE INSEPARABLE . THERE IS NO INDICATION IN THE BID DOCUMENT THAT CONTRACTORS HAVING A SEPAR ATE MANUFACTURE OR INSTALLATION FACILITIES ONLY WILL BE ELIGIBLE FOR S EPARATE PACKAGES. CLAUSE 10.1 CLEARLY STATES THAT THE BIDDER SHALL QUOTE FOR THE ENTIRE FACILITIES ON A SINGLE RESPONSIBILITY BASIS SUCH THAT THE TOTAL B ID PRICE COVERS AL THE CONTRACTORS OBLIGATIONS. CLAUSE 10.2 ALSO CLARIFIE S THAT THE BIDDERS ARE REQUIRED TO QUOTE PRICE FOR COMMERCIAL CONTRACTUAL AND TECHNICAL OBLIGATIONS. HERE ALSO THERE IS NO INDICATION THAT CONTRACTOR CAN QUOTE ONLY FOR THE PART OF THE FACILITIES OR PART OF THE JOB. THUS THERE IS NO INTENTION TO CALL BIDS FOR SUPPLY AND/OR INSTALLATI ON SEPARATELY. CLAUSE 10.4(B) SAYS THAT CONTRACTOR CAN QUOTE SEPARATE RAT ES FOR PLANT AND EQUIPMENT AND MANDATORY SPARES. BU THE IMPORTANT P OINT TO BE NOTED HERE IS THAT THERE IS NO CLAUSE SAYING THAT THE EMP LOYER I.E. NTPC CAN GIVE THE CONTRACT OF ONLY ONE OF THE SCHEDULES I.E. SUPPLY TRANSPORTATION AND INSTALLATION SEPARATELY AND SEVERALLY. THOUGH T HE PRICES ARE QUOTED SEPARATELY THE CONTRACT IS A SINGLE CONTRACT AND TH ERE IS NO INTENTION TO SPLIT THE CONTRACT AND GIVE IT TO DIFFERENT PERSONS . CLAUSE 28 SPEAKS OF AWARD CRITERIA. CLAUSE 28.4 SAYS THAT THE AWARD SH ALL BE MADE INTO FIRST CONTRACT SECOND CONTRACT AND THIRD CONTRACT. HOWE VER IT IS SPECIFICALLY STATED THAT ALL THE ABOVE CONTRACTS WILL CONTAIN A CROSS-FALL BREACH CLAUSE SPECIFYING THAT BREACH OF ONE CONTRACT WILL CONSTIT UTE BREACH OF THE OTHER CONTRACTS WHICH WILL CONFER A RIGHT ON THE EMPLOYER TO TERMINATE THE OTHER CONTRACTS ALSO AT THE RISK AND THE COST OF THE CONT RACTOR. THIS IN MY OPINION IS THE MOST IMPORTANT CLAUSE REGARDING THE AWARD OF CONTRACT WHICH CLEARLY SHOWS THE INSEPARABILITY OF THE ENTIR E CONTRACT THOUGH IT MIGHT HAVE BEEN SPLIT INTO SUPPLY AND INSTALLATION CONTRACT SEPARATELY. THIS CLAUSE CLEARLY SHOWS THAT IF THERE IS ANY BREA CH OF CONTRACT FOR INSTALLATION OR TESTING THE ENTIRE CONTRACT INCLUDI NG SUPPLY S LIABLE TO BE TERMINATED. SUCH TERMINATION WOULD NOT BE POSSIBLE IF THE EMPLOYER HAS ENTERED INTO THREE SEPARATE CONTRACTS FOR SUPPLY AN D INSTALLATION WHEREIN I.T.A. NOS. 68 101 & 69/V/2012 16 THE RESPONSIBILITY OF EACH CONTRACT WILL END WITH P ERFORMANCE OF THAT CONTRACT ONLY. THIS SIMPLY MEANS THAT TILL THE FACI LITY IS FINALLY INSTALLED AND TESTED SUCCESSFULLY THE ENTIRE RESPONSIBILITY RESTS WITH THE CONTRACTOR. UNLESS THE FACILITY IS TOTALLY INSTALLED AND TESTED CONTRACTOR CANNOT CLAIM THAT FIRST PART OF THAT CONTRACT IS OVER AND ANY IN CAPABILITY TO INSTALL THE FACILITY WILL NOT EFFECT THE SUPPLY CONTRACT. THIS CLEARLY SHOWS THAT WHATEVER EQUIPMENT IS SUPPLIED TO NTPC IS NOT ON C HATTEL-QUA-CHATTEL BASIS. VIDE CLAUSE29 THE EMPLOYER RESERVES THE RIG HT TO ACCEPT OR REJECT ANY BID. EMPLOYER IS NOT INTERESTED IN ACCEPTING A P ART OF THE BID BUT ONLY THE ENTIRE BID. TO ILLUSTRATE THIS IF THREE BIDS A RE RECEIVED IN WHICH ONE BIDDER QUOTES LESS FOR SUPPLY OF MATERIAL AND THE O THER BIDDER QUOTES LESSER AMOUNT FOR INSTALLATION THE EMPLOYER IS NO T INTERESTED IN ACCEPTING SUPPLY PART OF BID FROM ONE CONTRACTOR AND INSTALLA TION PART OF BID FROM ANOTHER CONTRACTOR. THUS WHATEVER IS TO BE ACCEPTE D OR REJECTED IS THE ENTIRE BID AND NOT PART OF THE BID I.E. FIRST CONT RACT OR SECOND CONTRACT. THIS SHOWS THAT THE EMPLOYER IS TREATING THE ENTIRE BID AS A SINGLE CONTRACT THOUGH AN ARTIFICIAL DISTINCTION WITH REGARD TO SUP PLY AND INSTALLATION IS MADE. CLAUSE-3- SPEAKS OF NOTIFICATION OF AWARD WH ICH STATES THAT THE ENTIRE AWARD WILL CONSTITUTE FORMATION OF CONTRACT AND NOT PARTS OF THE BID. CLAUSE-31 ALSO CLEARLY STATES THAT THE EMPLOYER WIL L SEND TO THE BIDDER THE CONTRACT AGREEMENT INCORPORATING ALL AGREEMENTS BET WEEN THE PARTIES. HERE ALSO THERE IS NO INTENTION ABOUT SEPARATION OF THE CONTRACT. CLAUSE- 32 WHICH SPEAKS OF PERFORMANCE SECURITY STATES THAT SUCCESSFUL BIDDER SHALL FURNISH PERFORMANCE SECURITIES AT 10% OF ENTI RE CONTRACT PRICE FOR ALL THE CONTRACTS. 3.9 IT WOULD BE PERTINENT TO DISCUSS SOME OF THE GENERAL CONDITIONS OF CONTRACT (G.C.C.) WHICH ARE PART OF INSTRUCTIONS TO BIDDERS. HERE ALSO THE FACILITIES MEANS BOTH THE SUPPLY AND INSTALLATION SHOWING THAT THE CONTRACT IS GIVEN FOR THE ENTIRE FACILITIES. THE T ERM COMPLETION IS ALSO DEFINED WHICH MEANS THAT THE FACILITIES HAVE TO BE COMPLETED OPERATIONALLY AND STRUCTURALLY AS PER TECHNICAL SPECIFICATIONS. CLAUSE 3.6 OF G.C.C. SPEAKS OF CONSTRUCTION OF CONTRACT WHEREIN CLAUSE 3 .6.2 CLEARLY SAYS THE AWARD OF SEPARATE CONTRACTS SHALL NOT IN ANY WAY DI LUTE THE RESPONSIBILITY OF THE CONTRACTOR FOR SUCCESSFUL COMPLETION OF FACI LITIES AS PER THE CONTRACT DOCUMENTS AND A BREACH IN ONE CONTRACT SHALL AUTOMA TICALLY BE CONSTRUED AS A BREACH OF OTHER CONTRACT WHICH WILL CONFER A R IGHT ON THE EMPLOYER TO TERMINATE THE OTHER CONTRACTS ALSO. THIS ONCE AGAIN CLARIFIES THE INTENTION OF THE EMPLOYER TO SHOW THAT THE ENTIRE CONTRACT IS A SINGLE CONTRACT. CLAUSE 3.7 OF G.C.C. STATES THAT THE CONTRACT CONST ITUTES THE ENTIRE AGREEMENT AND SUPERSEDES ALL COMMUNICATIONS NEGOTI ATIONS AND AGREEMENT. CLAUSE-7 OF G.C.C. WHICH DEFINES SCOPE OF FACILITIES CLEARLY STATES IN NO UNCERTAIN TERMS THAT PERFORMANCE OF AL L SERVICES REQUIRED FOR DESIGN MANUFACTURING COMMISSIONING AND COMPLETION OF FACILITIES AND I.T.A. NOS. 68 101 & 69/V/2012 17 CARRYING OUT GUARANTEE TESTS IS PART OF THE CONTRAC T. CLAUSE-9 WHICH STIPULATES CONTRACTORS RESPONSIBILITY CLEARLY STAT ES THAT CONTRACTOR SHALL DESIGN MANUFACTURE INSTALLATION AND COMPLETE THE FACILITIES AND CARRY OUT GUARANTEE TESTS. CLAUSE-11 WHICH SPEAKS OF CONTRACT PRICE INDICATES THAT THE PRICE IS FOR THE TOTAL CONTRACT AND NOT FOR PAR T OF CONTRACT. CLAUSE 12.2 WHICH SPEAKS OF TERMS OF PAYMENT CLEARLY STATES THA T NO PAYMENT MADE BY THE EMPLOYER SHALL BE DEEMED TO CONSTITUTE ACCEPTAN CE BY THE EMPLOYER OF FACILITIES OR ANY PART THEREOF. THIS CLAUSE THU S SHOWS THAT SEPARATE PAYMENT MADE FOR SUPPLY OF ANY ITEMS SHALL BE SUBJE CT TO CONDITIONS OF THE CONTRACT INCLUDING BREACH OF CONTRACT. CLAUSE 21.3 WHICH SPEAKS OF TRANSPORTATION SAYS THAT THE CONTRACTOR SHALL AT IT S OWN RISK AND EXPENSE TRANSPORT ALL THE PLANT AND EQUIPMENT TO THE SITE. THE CONTRACTOR SHALL BE RESPONSIBLE FOR OBTAINING ALL THE CLEARANCES AS NEC ESSARY. REGARDING CUSTOMS CLEARANCE ALSO THE CLAUSE SAYS THAT THE CON TRACTOR SHALL HANDLE ALL THE MATERIAL RELATED ISSUES ON HIS OWN. CLAUSE 23. 6 SAYS THAT IF ANY PLANT AND EQUIPMENT OR ANY PART OF FACILITIES FAILS TO PA SS ANY TEST CONTRACTOR SHALL REPLACE SUCH EQUIPMENT. THIS CLEARLY INDICAT ES THAT THE MATERIAL ALREADY SUPPLIED IS SUBJECT TO PROPER INSTALLATION AND THERE IS NO TRANSFER ON A CHATTEL-QUA-CHATTEL BASIS. CLAUSE-31 WHICH SPE AKS OF TRANSFER OF OWNERSHIP OF FACILITIES STATES THAT OWNERSHIP OF TH E PLANT AND EQUIPMENT SHALL BE TRANSFERRED TO THE EMPLOYER WHEN THE PLANT AND EQUIPMENT ARE E LOADED FROM THE WORK TO THE SITE AND UPON ENDORSEME NT OF THE DISPATCH DOCUMENTS IN FAVOUR OF THE EMPLOYER. HOWEVER CLAUS E-31.5 INTRODUCED A NON-OBSTANTE CLAUSE WHICH SAYS THAT NOTWITHSTANDING THE TRANSFER OF OWNERSHIP THE RESPONSIBILITY FOR CARE AND CUSTODY T OGETHER WITH RISK OR LOSS OF DAMAGE SHALL REMAIN WITH THE CONTRACTOR TILL COM PLETION OF FACILITIES OR PART THEREOF IN WHICH SUCH PLANT AND EQUIPMENT ARE INCORPORATED. THIS CLAUSE CLEARLY SAYS THAT THE SO CALLED TRANSFER OF OWNERSHIP IS ONLY ON PAPER AND THE CONTRACTOR IS RESPONSIBLE FOR THE EQU IPMENT TILL COMPLETE INSTALLATION. THIS CLAUSE ALSO GOES AGAINST THE AS SESSEES ARGUMENT THAT THE PLANT AND EQUIPMENT IS TRANSFERRED CHATTEL-QUA- CHATTEL AND HENCE SUPPLY IS A SEPARATE CONTRACT. WITH THESE DISCUSSIONS THE LD CIT(A) CONCLUDED THA T THERE IS NO INTENTION ON THE PART OF THE ASSESSEE TO DISSECT THE SUPPLY CONTRACT AND INSTALLATION CONTRACT THOUGH IT HAS ENTERED INTO TWO SEPARATE CONTRACTS. ACCORDINGLY THE LD CIT(A) HELD THAT THE TWO INDIVIDUAL CONTRACTS CANNOT BE CA PABLE OF BEING DEFINED AS A SPECIFIC SEPARATE CONTRACTS. ACCORDINGLY THE LD CI T(A) AFFIRMED THE VIEW OF THE ASSESSING OFFICER THAT BOTH THE CONTRACTS CONSTITUT E TWO COMPONENTS OF A COMPOSITE CONTRACT. I.T.A. NOS. 68 101 & 69/V/2012 18 11. FROM THE COPY OF NOTICE INVITING TENDERS WH ICH WAS EXTRACTED BY LD CIT(A) WE NOTICE THAT THE ASSESSEE HAS CALLED FOR BIDS FOR SUPPLY AND INSTALLATION OF STEAM GENERATOR WITH ELECTRICAL PRECIPITATOR PACKAGE CONSISTING OF TWO STEAM GENERATING UNITS EACH HAVING REQUIRED SPECIFICATIONS. THESE MACHINERIES WERE GOING TO BE USED IN THE SUPER THER MAL POWER PROJECT IMPLEMENTED BY THE ASSESSEE AT VISAKHAPATNAM. THUS WHAT WAS PROPOSED TO BE PURCHASED FOR WHICH GLOBAL BIDS WERE INVITED I S SPECIALIZED MACHINERY. NO DOUBT THE NOTICE INVITING BIDS AS WELL AS THE INS TRUCTIONS TO BIDDERS CLEARLY SHOW THAT THE ASSESSEE HAS VIEWED BOTH SUPPLY OF MA CHINERIES AND THEIR INSTALLATION AS FORMING PART OF SAME CONTRACT. HO WEVER FOR THE REASONS BEST KNOWN TO IT THE ASSESSEE HAS ENTERED INTO TWO SEPA RATE CONTRACTS ONE FOR SUPPLY OF MACHINERIES AND OTHER FOR THEIR INSTALLAT ION. THE REVENUE AUTHORITIES HAVE TAKEN THE VIEW THAT THE SPLITTING UP OF THE TO TAL WORK INTO TWO SEPARATE CONTRACTS IS ONLY ON PAPER TO SUIT THE CONVENIENCE OF THE ASSESSEE BUT THE ASSESSEE HAS INTENDED TO LOOK BOTH OF THEM AS A SIN GLE CONTRACT. A CAREFUL READING OF INSTRUCTIONS TO BIDDERS AND ALSO THE ANA LYSIS OF VARIOUS CLAUSES AS POINTED OUT BY LD CIT(A) CLEARLY SHOW THAT THE ASS ESSEE INTENDED TO VIEW BOTH SUPPLY CONTRACT AND INSTALLATION CONTRACT AS PART A ND PARCEL OF SAME CONTRACT ONLY. 12. EVEN IF BOTH THE CONTRACTS VIZ. SUPPLY CONTR ACT AND INSTALLATION CONTRACT IS CONSIDERED AS REPRESENTING TWO PARTS OF THE SAME CO NTRACT THE QUESTION THAT STILL REQUIRES EXAMINATION IS WHETHER THE SUPPLY CONTRAC T WOULD FALL IN THE CATEGORY OF CONTRACT OF SALE OR CONTRACT OF WORK. IN O UR VIEW EVEN IF BOTH THE CONTRACTS ARE CONSIDERED AS PARTS OF A COMPOSITE CO NTRACT IT WOULD NOT AUTOMATICALLY GIVE RISE TO THE PRESUMPTION/VIEW THA T THE SUPPLY CONTRACT SHOULD BE CONSIDERED AS A CONTRACT OF WORKS. THE LD CI T(A) HAS ALSO JUDICIALLY NOTICED THAT THERE IS THIN LINE DIFFERENTIATING A CONTRACT OF SALE FROM A CONTRACT OF WORK. THE COURTS HAVE MADE IT VERY CLEAR THAT THIS QUESTION HAS TO BE I.T.A. NOS. 68 101 & 69/V/2012 19 DECIDED ON CASE BY CASE BASIS ON DUE CONSIDERATION OF THE FACTS SURROUNDING IN EACH CASE. 13. IN THIS REGARD THE LD CIT(A) HAS REFERRED TO CERTAIN CASE LAW AND FOR THE SAKE OF CONVENIENCE WE EXTRACT BELOW THE RELEVANT OBSERVATIONS MADE BY HIM. 4.5 VARIOUS JUDICIAL AUTHORITIES HAVE HELD THAT THERE IS THIN LINE DIFFERENTIATING BETWEEN CONTRACTS FOR WORKS AND CO NTRACTS FOR SALE. AN AIR- CONDITIONER MANUFACTURER MAY UNDERTAKE A WORK CON TRACT FOR DESIGNING FITTING AND COMMISSIONING OF AIR CONDITIONING EQUI PMENT. THIS IS CONTRACT FOR WORK AND NOT CONTRACT OF SALE. PROPERTY IN AI R CONDITIONING EQUIPMENT PASSES AS AN INCIDENTAL TO THE WORKS CONTRACT. HE RE THERE IS NO SALE OF GOODS. IT IS A WORKS CONTRACT AND NOT LIABLE TO CST AS HELD IN THE CASE OF STATE OF MADRAS V. VOLTAS LTD. (1963) 14 STC 44 6 AND 861 (MAD HC) ALSO INDIRECTLY APPROVED IN BATLIBOI VS. STO (2000 ) 119 STC 583 (GUJ HC DB). LAYING OF PIPE LINE IS YET ANOTHER EXAMPLE O F WORKS CONTRACT WHERE PASSING OF PROPERTY IN THE PIPE IS INCIDENTAL TO W ORKS CONTRACT. IN VANGUARD ROLLING SHUTTERS VS. CST (1977) 39 STC 372 (SC) IT WAS OBSERVED THAT IT IS DIFFICULT TO LAY DOWN ANY RULE OF UNIVERSAL A PPLICATION TO DECIDE WHETHER A CONTRACT IS A WORKS CONTRACT OR C ONTRACT FOR SALE OF GOODS . IF THE CONTRACT IS PRIMARILY FOR SUPPLY OF MATERI ALS AT PRICES AGREED AND THE WORK OR SERVICE IS INCIDENTAL TO THE EXECU TION OF CONTRACT IT WILL BE CONTRACT FOR SALE. ON THE OTHER HAND WHERE CONTR ACT IS PRIMARILY A CONTRACT OF WORK AND LABOUR AND MATERIALS ARE SUPP LIED IN EXECUTION OF SUCH CONTRACT IT IS A WORKS CONTRACT. IN HINDUST AN AERONAUTICS LTD. VS. STATE OF ORISSA (1984) 55 STC 327 (SC) HAL IMPORT ED MATERIALS AND COMPONENTS ON BEHALF OF THE GOVERNMENT OF INDIA AN D MANUFACTURED AIRCRAFTS ON BEHALF OF GOVERNMENT OF INDIA. THE G OOD BELONGED TO GOVERNMENT OF INDIA BUT WERE ENTRUSTED TO HAL FOR MANUFACTURE OF AIRCRAFTS TO BE DELIVERED TO AIR FORCE. IT WAS HE LD THAT IT IS A WORKS CONTRACT. IT WAS OBSERVED THAT IN CONTRACT FOR WORK PERSON P RODUCING HAS NO PROPERTY IN THE THING PRODUCED AS A WHOLE EV EN IF PART OR EVEN WHOLE OF MATERIAL USED BY HIM MAY HAVE BEEN HIS PROPERTY . IN CONTRACT FOR SALE THE THING PRODUCED AS A WHOLE HAS INDIVIDUAL EXIST ENCE AS SOLE PROPERTY OF THE PARTY WHO PRODUCES IT SOME TIME BEFORE DELIVER Y AND THE PROPERTY THEREIN PASSES ONLY UNDER THE CONTRACT RELATING TH ERETO TO THE OTHER PARTY FOR A PRICE . IN STATE OF GUJARAT VS. KAILASH ENGINEERING CO. (1 967) 19 STC 13 (SC) = AIR 1976 SC 2108 IT WAS HELD THAT IF UN FINISHED GOODS ARE HELD AS PROPERTY OF BUYER IT IS A WORKS CONTRACT. I.T.A. NOS. 68 101 & 69/V/2012 20 4.6 TAKING CUE FROM THE ABOVE DECISIONS IF THE PR ESENT CASE IS EXAMINED IT CAN BE SEEN THAT AS A PART OF CONTRACT WHAT IS HANDED OVER TO NTPC B Y BHEL IS BASICALLY AN UNFINISHED PLANT/EQUIPMENT WHI CH UNLESS IS INSTALLED AND COMMISSIONED WILL BE OF NO USE TO THE EMPLOYER I.E. NTPC ON CHATTEL- QUA-CHATTEL BASIS AND HENCE THE CONTRACT CANNOT BE SAID TO BE A CONTRACT FOR SALE THOUGH SALE OF CERTAIN MATERIAL IS INVOLV ED AS PART OF THE ENTIRE CONTRACT. THE HONBLE SUPREME COURT IN THE CASE OF P.M. VENK ATACHALAM PILLAI VS. STATE OF MADRAS (1969) 23 STC 72 (MAD.) HELD THAT WHETHER THERE IS SALE OF GOODS OR THERE IS WORK TO BE DONE DEPEN DS UPON THE FACTS OF EACH CASE THE INTENTION OF THE PARTIES THE ESSEN CE OF THE CONTRACT. THE PRIMARY OBJECT OF THE TRANSACTION AND THE INTENTIO N OF THE PARTIES IS THE SOLE TEST . IN STATE OF TAMIL NADU VS. ANANDAM VISWANATHAN (1989) 1 SCC 613 = (1989) 73 STC 1 (SC) IT WAS OBSERVED TH AT NATURE OF CONTRACT CAN BE FOUND ONLY WHEN INTENTIONS OF PARTIES ARE F OUND OUT. THE FACT THAT IN THE EXECUTION OF WORKS CONTRACT SOME MATERIALS ARE USED AND THE PROPERTY IN THE GOODS SO USED PASSES TO OTHER PAR TY THE CONTRACTOR UNDERTAKING THE WORK WILL NOT NECESSARILY BE DEEME D ON THAT ACCOUNT TO SELL THE MATERIALS. PRIMARY DIFFERENCE BETWEEN A CONTRACT OF WORK OR SERVICE AND A CONTRACT FOR SALE IS THAT IN THE FOR MER THERE IS IN THE PERSON PERFORMING OR RENDERING SERVICE NO PROPERTY IN TH E THING PRODUCED AS A WHOLE NOTWITHSTANDING THAT A PART OR EVEN THE WHO LE OF THE MATERIAL USED BY HIM MAY HAVE BEEN HIS PROPERTY. WHERE THE FINI SHED PRODUCT SUPPLIED TO A PARTICULAR CUSTOMER IS NOT A COMMERCIAL COMMO DITY IN THE SENSE THAT IT CANNOT BE SOLD IN THE MARKET TO ANY OTHER PERSO N THE TRANSACTION IS ONLY A WORKS CONTRACT . 4.7 WHEN THE FACTS OF THE PRESENT CASE ARE EXAMIN ED IN THE LIGHT OF THE HONBLE COURT JUDGMENT CITED ABOVE IT BECOMES CLEAR THAT THE PLANT AND EQUIPMENT WHICH IS SUPPLIED TO BY BHEL CANNOT BE SO LD IN THE OPEN MARKET TO ANY OTHER PERSON AND IS NOT USEFUL TO OT HERS AS SUCH BECAUSE IT IS A CUSTOM MADE PRODUCT AND IT IS OF NO VALUE WIT HOUT COMPLETION OR INSTALLATION. THUS WHAT THE CONTRACT SPEAKS IS OF INSTALLATION A ND COMMISSIONING OF FACILITIES AND SUPPLY IS ONLY A P ART OF SUCH CONTRACT THOUGH IT IS A MAJOR PART OF SUCH CONTRACT. IN HIN DUSTAN SHIPYARD VS. STATE OF ANDHRA PRADESH 2000 AIR SCW 2582 AFTER REVIEWI NG ENTIRE CASE LAW FOLLOWING PRINCIPLES WERE INVOLVED (1) IT IS DIF FICULT TO LAY DOWN ANY INFLEXIBLE RULE (2) TRANSFER OF PROPERTY OF GOODS FOR A PRICE IS THE LINCHPIN OF DEFINITION OF SALE. MAIN OBJECT OF PARTIES HAS TO BE FOUND OUT. SUBSTANCE OF THE CONTRACT AND NOT FORM IS TO BE LO OKED INTO. (3) IF THE THING TO BE DELIVERED HAS INDIVIDUAL EXISTENCE BEF ORE THE DELIVERY AS SOLE PROPERTY OF THE PARTY WHO IS TO DELIVER IT IT IS A SALE. (4) IF BULK OF MATERIAL USED BELONGS TO THE MANUFACTURER WHO SELL S THE END PRODUCT IT IS STRONG POINTER THAT THE CONTRACT IS FOR SALE OF GO ODS AND NOT OF WORK AND LABOUR. HOWEVER THE TEST IS NOT DECISIVE. SIMIL ARLY THE HONBLE SUPREME I.T.A. NOS. 68 101 & 69/V/2012 21 COURT IN THE CASE OF STATE OF MADRAS VS. GANNON DU NKERLEY & CO. AIR 1958 SC 560 HAD HELD THAT NO TAX CAN BE LEVIED ON WORKS CONTRACT AS TAX CAN BE LEVIED ONLY ON SALE OF GOODS AS DEFINED I N SALE OF GOODS ACT. IN AN INDIVISIBLE WORKS CONTRACT THERE IS NO SALE OF GO ODS AS THERE COULD BE NO AGREEMENT TO SELL MATERIALS AS SUCH AND MOREOVER THE PROPERTY DOES NOT PASS AS MOVABLES. THE MATERIAL USED THEREIN BECOM ES PROPERTY OF THE OTHER PARTY ON THE THEORY OF ACCRETION AND AS SUC H NO SALES TAX CAN BE LEVIED ON SUCH MATERIAL. WHETHER A CONTRACT IS A CONTRACT FOR WORK OR NOT DEPENDS ON THE FACTS OF EACH CASE AND INTENTION OF THE PARTIES AND ESSENCE OF CONTRACT AS HELD BY THE HONBLE SUPREME COURT IN THE CASE OF CHANDRABHAN GOSAIN VS. STATE OF ORISSA. SIMILARLY IN SENTINEL ROLLING SHUTTERS & ENGG. CO. (P) LTD. VS. CST AIR 1978 SC 1 747 THERE WAS A CONTRACT FOR ERECTION AND INSTALLATION OF A ROLLIN G SHUTTER. THE SUPREME COURT HELD THAT SUCH ERECTION AND INSTALLATION CAN NOT BE SAID TO BE INCIDENTAL TO THE MANUFACTURE OF THE SHUTTER AND I TS SUPPLY. IT IS A FUNDAMENTAL AND INTEGRAL PART OF THE CONTRACT BECA USE WITHOUT IT THE ROLLING SHUTTER DOES NOT COME INTO BEING. THE ROL LER SHUTTER COMES INTO EXISTENCE AS UNIT WHEN THE COMPONENT PARTS ARE FIX ED IN POSITION ON THE PREMISES AND IT BECOMES THE PROPERTY OF THE CUSTOM ER AS SOON AS IT COMES INTO BEING. THERE IS NO TRANSFER OF PROPERTY IN T HE ROLLING SHUTTER BY THE MANUFACTURER TO THE CUSTOMER AS A CHATTEL. IT IS E SSENTIALLY A TRANSACTION FOR FABRICATING COMPONENT PARTS AND FIXING THEM ON THE PREMISES SO AS TO CONSTITUTE A ROLLING SHUTTER. THE CONTRACT IS TH US CLEARLY AND INDISPUTABLY A CONTRACT FOR WORK AND LABOUR AND NOT FOR SALE. SIMILARLY IN THE PRESENT CASE THE POWER PANT AND THE TURBINE WHICH IS USED IN THE POWER PLANT COMES INTO EXISTENCE AS A UNIT WHEN ALL THE COMPON ENT PARTS ARE FIXED IN POSITION ON THE PREMISES AND IT BECOMES PROPERTY O F NTPC AS SOON AS IT COMES INTO BEING. THERE IS NO TRANSFER OF PROPERT Y IN PARTS OF TURBINE BY MANUFACTURE TO THE CUSTOMER AS A CHATTEL. IT IS E SSENTIALLY A TRANSACTION FOR FABRICATING COMPONENT PARTS AND FIXING THEM ON THE PREMISES SO AS TO CONSTITUTE A TURBINE. THUS IN THE PRESENT CASE AL SO THE CONTRACT IS CLEARLY AND UNDISPUTEDLY A CONTRACT FOR WORK AND NOT FOR S ALE. THE DISTINCTION BETWEEN A WORKS CONTRACT AND A CONTRACT FOR SALE I S THUS WELL SETTLED. IN THE CASE OF A CONTRACT FOR SALE THE THING PRODUCE D AS A WHOLE HAS AN INDIVIDUAL EXISTENCE AS THE SOLE PROPERTY OF THE P ARTY WHO PRODUCED IT SOMETIME BEFORE THE DELIVERY AND THE PROPERTY THER EIN PASSES ONLY UNDER THE CONTRACT RELATING THERETO TO THE OTHER PARTY F OR A PRICE AS WAS HELD BY SUPREME COURT IN RAM SINGH & SONS ENGG. WORKS VS. C ST AIR 1979 SC 545; CASE AN IN THE CASE OF CST VS. PURSHOTTAM PRE MJI (1970) 26 STC 38 (SC) AND ALSO IN THE CASE OF STATE OF HIMACHAL PRA DESH VS. ASSOCIATED HOTELS OF INDIA LTD. AIR 1972 SC 1131. MERE PASSIN G OF THE PROPERTY IN AN ARTICLE OR COMMODITY DURING THE COURSE OF PERFORMA NCE OF A TRANSACTION DOES NOT RENDER THE TRANSACTION TO BE ONE OF SALE. EVEN IN A CONTRACT PURELY OF WORK OR SERVICE IT IS POSSIBLE THAT ART ICLES MAY HAVE TO BE USED I.T.A. NOS. 68 101 & 69/V/2012 22 BY THE PERSON EXECUTING THE WORK AND THE PROPERTY IN SUCH ARTICLES PASSES TO THE OTHER PARTY. THAT WOULD NOT CONVERT THE CO NTRACT INTO ONE OF SALE OF THOSE ARTICLES. SALE OF GOODS NORMALLY MEANS AN A GREEMENT BETWEEN THE PARTIES FOR THE SALE OF THE VERY GOODS IN WHICH EV ENTUALLY THE PROPERTY PASSES. 4.8 IF THE RATIOS OF ABOVE JUDGMENTS ARE APPLIED TO THE PRESENT CASE IT CAN BE SEEN THAT UNLESS AND UNTIL THE FACILITY IS ENTIRELY INSTALLED THE PARTS OF THAT FACILITY HOWEVER BIG OR SUBSTANTIAL THEY M AY BE DO NOT CONSTITUTE ANY MEANINGFUL FINISHED PRODUCTS FOR THEM TO BE PU T UNDER THE PURVIEW OF SALE OF GOODS. THUS THE CONTRACT IN THIS CASE HAS TO BE SEEN AS A CONTRACT FOR DESIGN SUPPLY INSTALLATION AND COMMISSIONING OF STEM GENERATOR AND IT CANNOT BE DIVIDED INTO ONLY SUPPLY OF MATERIAL THO UGH PARTS OF THE STEAM GENERATOR ARE SUBSTANTIALLY VALUABLE. 14. IN OUR VIEW THE CASE LAW PERTAINING TO DES IGNING AND FITTING OF AIR CONDITIONER AND LAYING OF PIPE LINES (PARAGRAPH 4.5 OF ORDER OF LD CIT(A)) AND ROLLING SHUTTERS (PARAGRAPH 4.7 OF HIS ORDER) ARE N OT APPLICABLE TO THE FACTS OF THE INSTANT CASE. THE SCOPE OF WORK IN SUPPLY CONT RACT (FIRST CONTRACT) IS STATED AS UNDER BY LD CIT(A) IN PARAGRAPH 2.1 OF HIS ORDER :- THE SCOPE OF WORK OF THE FIRST CONTRACT INCLUDES D ESIGN ENGINEERING MANUFACTURING SHOP FABRICATION ASSEMBLY INSPECTI ON AND TESTING AT SUPPLIERS WORKS TYPE TESTING PACKAGING FORWARDI NG TO SITE OF ALL EQUIPMENT/MATERIAL/SPECIAL TOOLS AND TACKLES AND MA NDATORY SPARES COVERED UNDER THE PACKAGE FOR A PRICE THAT IS NOTIF IED IN THE AWARD. IN THE CASE OF AIR CONDITIONING WORKS AND PIPE LINE WORKS REFERRED TO IN THE CASE LAW THOSE MACHINERIES WERE DIRECTLY INSTALLED AT T HE CUSTOMERS PLACE. SIMILAR IS THE POSITION IN THE CASE OF ROLLING SHUTTERS ALSO. WHERE AS IN THE INSTANT CASE THE MACHINERY MANUFACTURED BY THE SUPPLIER AS PER T HE DESIGN SPECIFIED BY THE ASSESSEE HEREIN IS ASSEMBLED AND TESTED AT THE SUPP LIERS WORK PLACE MEANING THEREBY THE FUNCTIONING OF THE ENTIRE MACHINERY IS TESTED AT THE PLACE OF THE SUPPLIER. FURTHER THESE MACHINERIES ARE SPECIALIZ ED MACHINERIES WHICH CONSIST OF HIGHLY TECHNICAL AND COMPLICATED SYSTEMS. HENCE I N OUR VIEW IT MAY NOT BE CORRECT TO EQUATE THEM WITH AIR CONDITIONERS ROLLI NG SHUTTERS AND PIPE LINE I.T.A. NOS. 68 101 & 69/V/2012 23 SYSTEMS. UNDER THIS SCENARIO IN OUR VIEW THE LD CIT(A) HAS MISDIRECTED HIMSELF IN MAKING FOLLOWING OBSERVATIONS IN PARAGRAPH 4.6 O F HIS ORDER. TAKING CUE FROM THE ABOVE DECISIONS IF THE PRESENT CASE IS EXAMINED IT CAN BE SEEN THAT AS A PART OF CONTRACT WHAT IS HAND ED OVER TO NTPC BY BHEL IS BASICALLY AN UNFINISHED PLANT/EQUIPMENT WHIC H UNLESS IS INSTALLED AND COMMISSIONED WILL BE OF NO USE TO THE EMPLOYER I.E. NTPC. IN THIS BACK GROUND IT CAN BE STATED THAT THE PLANT/EQUIPME NT DID NOT GET TRANSFER TO NTPC ON CHATTEL-QUA-CHATTTEL BASIS AND HENCE THE CONTRACT CANNOT BE SAID TO BE A CONTRACT FOR SALE THOUGH SALE OF CERTA IN MATERIAL IS INVOLVED AS PART OF THE ENTIRE CONTRACT. THE FALLACY IN THE OBSERVATIONS MADE BY LD CIT(A) C AN BE BETTER UNDERSTOOD WITH AN EXAMPLE. A WINDMILL WHICH IS KNOWN TO EVERYBOD Y MAY BE MACHINERY HAVING A SIMPLE MECHANISM. HOWEVER THE WINDMILL AS IT I S CANNOT BE TRANSPORTED AS IT IS FROM THE SUPPLIERS PLACE TO THE CUSTOMERS PLA CE JUST LIKE A DOMESTIC AIR CONDITIONER TELEVISION SET ETC. FOR THE SIMPLE RE ASON THAT THERE IS LACK OF TRANSPORT FACILITIES TO ACCOMMODATE SUCH A HUGE SIZ ED EQUIPMENT. ONE WIND BLADE ITSELF REQUIRES GIGANTIC SIZED TRUCK FOR TRAN SPORTATION. HENCE THE WIND MILL IS USUALLY DISMANTLED AT THE SUPPLIERS PLACE AND T HE VARIOUS PARTS OF THE SAME ARE TRANSPORTED SEPARATELY. THEREAFTER ALL THE PA RTS WILL BE ASSEMBLED AND INSTALLED AT THE WORK PLACE OF THE CUSTOMER. UPON SUCH INSTALLATION THE WIND MILL WILL BECOME OPERATIONAL. THIS IS THE SCENARIO WITH ALL HUGE SIZED MACHINERY. HENCE WE ARE UNABLE TO AGREE WITH THE VIEW EXPRESS ED BY THE LD CIT(A) THAT THE SUPPLIERS HAVE ONLY HANDED OVER UNFINISHED PLAN T/EQUIPMENT AS IT IS CONTRADICTORY TO THE EXPRESSED INTENTION OF THE PAR TIES AS PER THE SCOPE OF FIRST CONTRACT. 15. FURTHER IN PARAGRAPH 4.7 OF THE ORDER LD CI T(A) HAS MADE FOLLOWING OBSERVATIONS:- IT BECOMES CLEAR THAT THE PLANT AND EQUIPMENT WHI CH IS SUPPLIED TO BY BHEL CANNOT BE SOLD IN THE OPEN MARKET TO ANY OTHER PERSON AND IS NOT USEFUL TO OTHERS AS SUCH BECAUSE IT IS A CUSTOM MAD E PRODUCT AND IT IS OF NO VALUE WITHOUT COMPLETION OR INSTALLATION. THUS WHAT THE CONTRACT SPEAKS OF IS OF INSTALLATION AND COMMISSIONING OF F ACILITIES AND SUPPLY IS ONLY A PART OF SUCH CONTRACT THOUGH IT IS A MAJOR P ART OF SUCH CONTRACT.. I.T.A. NOS. 68 101 & 69/V/2012 24 SIMILARLY IN THE PRESENT CASE THE POWER PLANT AND T URBINE WHICH IS USED IN POWER PLANT COMES INTO EXISTENCE AS A UNIT WHEN ALL THE COMPONENT PARTS ARE FIXED IN POSITION ON THE PREMISES AND IT BECOME S PROPERTY OF NTPC AS SOON AS IT COMES INTO BEING. THERE IS NO TRANSFER OF PROPERTY IN PARTS OF TURBINE BY MANUFACTURER TO THE CUSTOMER AS A CHATTE L. IT IS ESSENTIALLY A TRANSACTION FOR FABRICATING COMPONENT PARTS AND FIX ING THEM ON THE PREMISES SO AS TO CONSTITUTE A TURBINE. THUS IN TH E PRESENT CASE ALSO THE CONTRACT IS CLEARLY AND UNDISPUTEDLY A CONTRACT FOR WORK AND NOT FOR SALE. THE OBSERVATIONS OF LD CIT(A) THAT THE STEAM GENERA TORS THAT WERE ORDERED BY THE ASSESSEE CAN NOT BE SOLD IN THE OPEN MARKET DO ES NOT APPEAR TO HAVE ANY BACKING EVEN IF IT IS ASSUMED THAT THE OBSERVATION S OF LD CIT(A) THAT IT IS A CUSTOM MADE PRODUCT. IT IS NOT THE CASE OF THE LD CIT(A) THAT THE ASSESSEE IS IMPLEMENTING THE THERMAL POWER PROJECT BY ADOPTING AN ALTOGETHER NEW AND UNIQUE TECHNOLOGY WHICH IS IMPLEMENTED FOR THE FIR ST TIME IN THE WORLD IN WHICH CASE THERE IS A POSSIBILITY TO SAY THAT THESE MACH INERIES DO NOT HAVE DEMAND IN THE OPEN MARKET. PROBABLY THE LD CIT(A) APPEARS T O HAVE BEEN GUIDED BY THE DECISION RENDERED IN THE CASE OF VOLTAS LTD (SUPRA) IN CONNECTION WITH THE CUSTOM MADE AIR CONDITIONING SYSTEM AND ACCORDINGLY TAKEN THE VIEW THAT THESE COMPLICATED AND SPECIALIZED MACHINERIES ARE AKIN TO CUSTOM MADE AND SIMPLE AIR CONDITIONING OR PIPE LINE SYSTEMS OR ROLLING SHUTTE RS. . 16. THE LD CIT(A) HAS ALSO JUDICIALLY NOTED DOW N THE DECISION RENDERED BY HONBLE SUPREME COURT IN THE CASE OF HINDUSTAN AERO NAUTICS LTD VS. STATE OF ORISSA (1984)(55 STC 327)(SC) IN PARAGRAPH 4.5 OF H IS ORDER. IN THE SAID CASE HAL IMPORTED MATERIALS AND COMPONENTS ON BEHALF OF GOVERNMENT OF INDIA AND MANUFACTURED AIR CRAFTS ON BEHALF OF THE GOVERNMENT OF INDIA. SINCE THE MATERIALS BELONGED TO GOVERNMENT OF INDIA SINCE THE STAGE OF IMPORT IT WAS HELD THAT THE CONTRACT ENTERED WITH HAL IS A WORKS CONTR ACT. THE RATIO OF THE SAID DECISION IS THAT IN CONTRACT OF WORK THE PERSON PR ODUCING HAS NO PROPERTY IN THE THING PRODUCED AS A WHOLE EVEN IF PART OR EVEN WHO LE OF MATERIAL USED BY HIM I.T.A. NOS. 68 101 & 69/V/2012 25 MAY HAVE BEEN HIS PROPERTY. IN CONTRACT OF SALE T HE THING PRODUCED AS A WHOLE HAS INDIVIDUAL EXISTENCE AS SOLE PROPERTY OF THE PA RTY WHO PRODUCES IT SOME TIME BEFORE DELIVERY AND THE PROPERTY THEREIN PASSES ONL Y UNDER THE CONTRACT RELATING THERETO TO THE OTHER PARTY FOR A PRICE. IN THE IN STANT CASE THE SUPPLIERS OF THE MACHINERIES CONTINUED TO BE OWNERS OF THE SAME TILL THEY ARE DISPATCHED TO THE ASSESSEE HEREIN. THIS POSITION IS VERY CLEAR ON RE ADING OF VARIOUS CLAUSES OF INSTRUCTIONS TO BIDDERS WHICH WE ARE GOING TO DISC USS IN THE ENSUING PARAGRAPHS. 17. A CAREFUL PERUSAL OF THE INSTRUCTION TO BI DDERS IN THE INSTANT CASE WOULD SHOW THAT THE ASSESSEE INTENDED THAT THE PROPERTY I N THE MACHINERY WOULD PASS ON TO HIM ON SHIPMENT OF THE SAME SUBJECT TO ENDOR SEMENT OF THE DISPATCH DOCUMENTS IN FAVOUR OF THE ASSESSEE. IT IS VERY MU CH CLEAR ON READING OF THE FOLLOWING CLAUSES. TRANSFER OF OWNERSHIP 31.1 OWNERSHIP OF THE PLANT AND EQUIPMENT (INCLUDIN G SPARE PARTS) TO BE IMPORTED INTO THE COUNTRY WHERE THE SITE IS LOCATED SHALL BE TRANSFERRED TO THE EMPLOYER UPON LOADING ON TO THE MODE OF TRANSPO RT TO BE USED TO CONVEY THE PLANT AND EQUIPMENT (INCLUDING SPARE PAR TS) FROM THE COUNTRY OF ORIGIN TO THAT COUNTRY AND UPON ENDORSEMENT OF T HE DISPATCH DOCUMENTS IN FAVOUR OF THE EMPLOYER. 31.2 OWNERSHIP OF THE PLANT AND EQUIPMENT (INCLUDIN G SPARE PARTS) PROCURED IN THE COUNTRY WHERE THE SITE IS LOCATED SHALL BE TRAN SFERRED TO THE EMPLOYER WHEN THE PLANT AND EQUIPMENT (INCLUDING SPARE PARTS ) ARE LOADED ON TO THE MODE OF TRANSPORT TO BE USED TO CONVEY THE PLAN T AND EQUIPMENT (INCLUDING SPARE PARTS) FROM THE WORKS TO THE SITE AND UPON ENDORSEMENT OF THE DISPATCH DOCUMENTS IN FAVOUR OF THE EMPLOYER . 31.5 NOTWITHSTANDING THE TRANSFER OF OWNERSHIP OF T HE PLANT AND EQUIPMENT THE RESPONSIBILITY FOR CARE AND CUSTODY THEREOF TOG ETHER WITH THE RISK OF LOSS OR DAMAGE THERETO SHALL REMAIN WITH THE CONTRA CTOR PURSUANT TO GCC CLAUSE-32 (CARE OF FACILITIES) HEREOF UNTIL COMPLET ION OF THE FACILITIES OR THE PART THEREOF IN WHICH SUCH PLANT AND EQUIPMENT ARE INCORPORATED. THESE CLAUSES CLEARLY SHOW THAT THE OWNERSHIP OF TH E MACHINERIES WERE INTENDED TO BE TRANSFERRED TO THE ASSESSEE HEREIN ON THEIR S HIPMENT ALONG WITH DISPATCH DOCUMENTS MEANING THEREBY THE IMPUGNED MACHINERIES HAVE INDIVIDUAL I.T.A. NOS. 68 101 & 69/V/2012 26 EXISTENCE AND THE PROPERTY THEREIN CONTINUE TO REMA IN WITH THE SUPPLIERS TILL THEY ARE DISPATCHED TO THE ASSESSEE HEREIN. WE HAVE ALR EADY NOTICED THAT THE SUPPLIERS HAVE TO INSPECT AND TEST THE EQUIPMENTS B EFORE DISPATCH TO THE CUSTOMER. HENCE WE ARE UNABLE TO AGREE WITH THE V IEW ENTERTAINED BY LD CIT(A) THAT THE CONTRACT ENTERED BY THE ASSESSEE IN VOLVES MERE FABRICATION OF PARTS OF MACHINERIES AND FURTHER THERE IS NO TRANSF ER OF PROPERTY THEREIN ON CHATTEL-QUA-CHATTEL BASIS AND HENCE THEY CANNOT BE CATEGORIZED AS A CONTRACT OF SALE. 18. THE RATIONALE BEHIND SPLITTING UP THE ENTIR E CONTRACT INTO SUPPLY CONTRACT AND INSTALLATION CONTRACT COULD BE VISUALIZED BY US AND WE ARE INCLINED TO EXPLAIN THE SAME. THE MACHINERIES PURCHASED BY THE ASSESSEE ARE SPECIALIZED AND COMPLICATED MACHINERIES INVOLVING HIGH DEGREE OF PR ECISION AND TECHNICAL EXPERTISE. HENCE IT IS INCONCEIVABLE THAT THE SUP PLIER WOULD BE IN A POSITION TO BRING THE PARTS THERE OF AND ASSEMBLE THEM AT THE S ITE OF THE ASSESSEE AS IN THE CASE OF ROLLING SHUTTERS/PIPE LINE/CUSTOM MADE AIR CONDITIONING SYSTEM. THE SUPPLIER HAS TO NECESSARILY TEST THE EFFICACY AND S AFETY OF ALL THE COMPONENTS AT HIS WORK PLACE AND ENSURE ITS SATISFACTORY FUNCTION ING BEFORE TRANSPORTING THE SAME TO THE ASSESSEES WORK PLACE. SINCE THESE MAC HINERIES ARE HUGE IN SIZE THEY CANNOT BE TRANSPORTED AS IT IS. HENCE THESE MACHINERIES HAVE TO BE NECESSARILY DISMANTLED FOR THE PURPOSE OF EASY TRAN SPORTATION. THERE AFTER ALL THE PARTS HAVE TO BE ASSEMBLED AT THE WORK PLACE OF THE ASSESSEE TO MAKE IT FUNCTIONAL. THUS THESE MACHINERIES WOULD BECOME F UNCTIONAL ONLY UPON THEIR SUCCESSFUL INSTALLATION. ACCORDINGLY IT APPEARS T HAT THE ASSESSEE HAS SPLIT THE TOTAL CONTRACT INTO TWO SEPARATE CONTRACTS VIZ. TH E FIRST CONTRACT FOR SUPPLY OF MACHINERY AND THE SECOND CONTRACT FOR ITS INSTALLAT ION. SINCE THE SECOND CONTRACT WOULD INVOLVE CARRYING OF WORK IN TERMS OF SEC. 1 94C OF THE ACT THE ASSESSEE HAS DEDUCTED TAX AT SOURCE ON THE PAYMENTS MADE UND ER SECOND CONTRACT. SINCE THE ASSESSEE HAS CONSIDERED THE FIRST CONTRACT AS M ERE CONTRACT OF SALE IT HAS NOT DEDUCTED TAX AT SOURCE. I.T.A. NOS. 68 101 & 69/V/2012 27 19. AT THIS STAGE WE FEEL IT APPOSITE TO DISCUS S ABOUT THE DECISION RENDERED BY THE HYDERABAD BENCH OF TRIBUNAL IN THE CASE OF POWE R GRID CORPORATION OF INDIA LTD VS. ACIT (2007)(108 ITD 340). IN THE SAID CASE THE ASSESSEE THEREIN WAS ENGAGED IN TRANSMISSION AND DISTRIBUTION OF ELECTRI CITY TO VARIOUS CONSTITUENTS ACROSS THE COUNTRY. IN CONNECTION WITH IMPLEMENTAT ION OF ITS EXPANSION PROJECTS THE ASSESSEE THEREIN AWARDED CONTRACTS TO VARIOUS P ARTIES TO CONSTRUCT/EXECUTE THE TRANSMISSION LINE/SUB-STATION. IT ALSO ENTERED INTO DIFFERENT TYPES OF CONTRACTS VIZ. PURE SUPPLY CONTRACTS PURE ERECTION CONTRACT S AND SUPPLY AND ERECTION CONTRACTS (BUT WITH SEPARATE AGREEMENTS IN RESPECT OF SUPPLY PORTION). THE ABOVE SAID ASSESSEE ALSO DID NOT DEDUCT TAX AT SOUR CE ON THE SUPPLY PORTION OF THE CONTRACT EVEN THOUGH IT COMPLIED WITH THE PROV ISIONS OF SEC. 194C IN RESPECT OF ERECTION PORTION OF THE CONTRACT. THE ISSUE WH ETHER THE SUPPLY PORTION OF THE CONTRACT CONSTITUTED CONTRACT OF SALE OR CONTRA CT OF WORK CAME TO THE CONSIDERATION OF HYDERABAD BENCH OF TRIBUNAL. THE HEAD NOTES OF THE SAID CASE AS REPORTED IN ITD READS AS UNDER:- TDS UNDER S. 194C WORKS CONTRACT VIS--VIS CONT RACT FOR SALE - IF EQUIPMENTS ARE MANUFACTURED AS PER THE DESIGN ENGI NEERING ETC. SUPPLIED BY THE SUPPLIER IT WOULD NOT RESULT IN A WORKS CON TRACT ESPECIALLY WHEN ALL THE MATERIALS BELONG TO THE SUPPLIER EVEN THOUGH I T PRODUCED A TAILOR MADE PRODUCT ERECTION PORTION BEING SUBSEQUENT TO PASSING OF TITLE BY EXECUTION OF SUPPLY PORTION IT CANNOT BE SAID THAT THE ERECTION PORTION CONTROLS THE SUPPLY PORTION EVEN THOUGH FULFILLMENT OF ERECTION CONTRACT IS A CONDITION PRECEDENT TO FULFILLMENT OF SUPPLY CONT RACT AS THE TITLE IN THE EQUIPMENTS MANUFACTURED AS PER THE DESIGN ENGINEER ING ETC. SUPPLIED BY ASSESSEE PASSED ON TO THE ASSESSEE BEFORE COMMENCEM ENT OF THE ERECTION CONTRACT AND ASSESSEE HAD ENTERED THE SAME IN ITS STOCK REGISTER BEFORE ISSUING THE SAME FOR ERECTION IT WAS A CONT RACT FOR SALE NOT ATTRACTING S. 194C ASSESSEE HAVING ALREADY DEDUCT ED TAX AT SOURCE QUA I.T.A. NOS. 68 101 & 69/V/2012 28 THE ERECTION PORTION PROVISIONS OF S. 194C SHALL N OT APPLY TO REMAINING SALE PORTION. IN THE INSTANT CASE ALSO ALL THE MATERIALS BELONGE D TO THE SUPPLIERS EVEN THOUGH THEY MANUFACTURED THE MACHINERIES AS PER THE DESIGN ENGINEERING ETC. APPROVED BY THE ASSESSEE. THE PROPERTY IN THE MACHINERIES P ASSED ON TO THE ASSESSEE ON EXECUTION OF SUPPLY PORTION. HENCE IT CANNOT BE S AID THAT THE INSTALLATION PORTION OF THE CONTRACT WOULD CONTROL THE SUPPLY PORTION. 20. HOWEVER LD CIT(A) HAS TAKEN THE VIEW THAT T HE DECISION RENDERED BY HYDERABAD BENCH IN THE CASE OF POWER GRID CORPORATI ON OF INDIA LTD IS NOT APPLICABLE TO THE FACTS OF THE INSTANT CASE. THE L D CIT(A) HAS OPINED THAT THE INSULATORS TRANSMISSION EQUIPMENTS THAT WERE SUPPL IED TO POWER GRID CORPORATION HAD INDIVIDUAL EXISTENCE AND HENCE PART OF CONTRACT WAS FOR SUPPLY OF EQUIPMENT. WE ARE UNABLE TO AGREE WITH THE VIEW OF THE LD CIT(A) ON THIS POINT. IN THE INSTANT CASE ALSO IN OUR VIEW IT CANNOT BE SAID THAT THE MACHINERIES OR PART OF MACHINERIES SUPPLIED BY THE SUPPLIERS DO NO T HAVE INDIVIDUAL EXISTENCE. FURTHER AS IN THE CASE OF POWER GRID CORPORATION C ASE THEY BECOME FUNCTIONAL ONLY UPON THEIR INSTALLATION. HENCE IT MAY NOT BE CORRECT TO PRESUME THAT THE MACHINERIES OR PART OF MACHINERIES DO NOT HAVE ANY VALUE UNLESS THEY ARE ASSEMBLED AND MADE FUNCTIONAL. 21. THE HYDERABAD BENCH OF TRIBUNAL IN THE CAS E OF POWER GRID CORPORATION OF INDIA LTD (SUPRA) HAS FOLLOWED THE RATIO LAID DO WN BY HONBLE SUPREME COURT IN THE CASE OF STATE OF ANDHRA PRADESH VS. KONE ELEV ATORS (INDIA) LTD (2005)(140 STC 22). THE RELEVANT DISCUSSIONS MADE BY THE TRIB UNAL ARE EXTRACTED BELOW:- 5.4 THE HONBLE SUPREME COURT IN THE CASE OF KONE ELEVTORS (INDIA) LTD. (SUPRA) CONSIDERING THE CASE OF INSTALLATION OF LI FTS HELD THAT THE CONTRACT IS A CONTRACT FOR SALE. THE HONBLE APEX COURT WH ILE ENUMERATING THE TESTS TO BE CONSIDERED WHILE DECIDING THE NATURE O F CONTRACT EMPHASIZED THE FACT THAT THE INTENTION OF THE PARTIES IN THE CONTRACT WOULD TO A LARGE EXTENT DETERMINE THE ISSUE. THE HONBLE COURT LAI D DOWN THE FOLLOWING AS I.T.A. NOS. 68 101 & 69/V/2012 29 THE PROBABLE TESTS THAT SHOULD BE CONDUCTED BEFORE DETERMINING THE NATURE OF CONTRACT: (I) WHETHER IT WAS ONE FOR TRANSFER OF PROPERTY OR FOR WORK AND LABOUR; (II) HOW AND WHEN PROPERTY OF DEALER PASSED TO THE CUSTOMER I.E. WHETHER BY TRANSFER OR ACCESSION. THE HONBLE APEX COURT WHILE SAYING SO HAS FOLLOWE D THE PRINCIPLES LAID DOWN BY IT IN THE CASE OF HINDUSTAN SHIPYARD (1999 ) 115 STC 96 AND CLARIFIED THAT IT IS NOT THE BULK OF THE MATERIAL USED IN THE CONSTRUCTION ALONE BUT THE RELATIVE IMPORTANCE OF THE MATERIAL QUA THE WORK SKILL AND LABOUR OF THE PAYEE WHICH ALSO HAS TO BE SEEN BUT IT IS A RELEVANT PARAMETER. IN THE PRESENT CASE WHERE THE CONTRACT OF SUPPLY AND ERECTION IS GIVEN TO THE SAME PARTY THE VALUE OF THE ERECT ION CONTRACT AS CAN BE SEEN FROM THE ANNEXURE IS LESSER THAN THE VALUE OF THE SUPPLY CONTRACT. IT CANNOT THEREFORE CONTROL THE INTERPRETATION OF THE CONTRACT SPECIFICALLY WHEN THE PROPERTY IN THE GOODS HAVE PASSED EX-WORK S ON DELIVERY AND NOT ON THE THEORY OF ACCESSION. THE ASSESSEE TOOK POS SESSION OF THE GOODS AND THE TITLE PASSED ON TO IT AS A CHATTEL PRIOR T O COMMENCEMENT OF THE ERECTION PORTION OF THE CONTRACT. 5.5 FURTHER THE HONBLE SUPREME COURT WHILE CONSI DERING THE ISSUE OF INSTALLATION OF LIFT ON FACTS CAME TO THE CONCLU SION THAT IT IS ONE IN THE NATURE OF SALE. THE HONBLE COURT OBSERVED THAT S INCE THE OBLIGATION OF THE ASSESSEE THEREIN WAS ONLY TO SUPPLY AND INSTAL L THE LIFT MANUFACTURED AND BROUGHT TO SITE READY FOR INSTALLATION AS PER DRAWINGS HELD THAT THE CONTRACT WAS A SALE CONTRACT AND NOT A WORKS CO NTRACT. THE HONBLE COURT ALSO NOTICED THAT THE MAJOR COMPONENT OF THE END-PRODUCT IS MATERIAL CONSUMED IN PRODUCING THE LIFT DELIVERED. THE SKILL AND LABOUR EMPLOYED FOR CONVERTING MAIN COMPONENTS INTO THE E ND-PRODUCT WERE ONLY INCIDENTAL. THE LEARNED CIT(A) FAILED TO CONSIDER ANY OF THE ABOVE TESTS WHILE COMING TO THE ERRONEOUS CONCLUSION THAT THE CONTRACTS ENTERED INTO BY THE APPELLANT WERE WORKS CONTRACT. IF THE FACT S OF THE PRESENT CASE ARE TESTED BY APPLYING THE PRINCIPLES LAID DOWN BY THE JURISDICTIONAL HIGH COURT AND THE HONBLE SUPREME COURT THE OBVIOUS ANSWER THAT WOULD EMERGE IS THAT THIS IS A SUPPLY CONTRACT AND NOT WORKS CO NTRACT. THE NATURE OF A CONTRACT AS TO WHETHER IT IS CONTRACT FOR SALE O R WORKS CONTRACT WILL DEPEND ON THE TERMS OF THE CONTRACT AND ITS EXECUT ION. IN THE PRESENT CASE THE CONTRACTORS HAVE TO FABRICATE TOWERS AS PER TESTED QUALITY OF CONFORMITY WITH INTERNATIONAL STANDARD-(IS) : 2062 . FURTHER THE CONTRACTOR HAS BEEN GIVEN THE OPTION TO USE OTHER EQUIVALENT GRADE OF STRUCTURAL STEEL ANGLE SECTIONS AND PLATES CONFORMING TO LATEST INT ERNATIONAL STANDARDS. THE CONTRACTOR FABRICATES AND MANUFACTURES THE TOW ER WITH STEEL SECTIONS I.T.A. NOS. 68 101 & 69/V/2012 30 AS PER INTERNATIONAL STANDARDS. THE MATERIAL IS T HAT OF THE SUPPLIER AND NOT OF THE PURCHASER. THE SUPPLIER DOES NOT W ORK ON THE MATERIAL SUPPLIED BY THE PURCHASER. THERE IS NO ACCRETIO N OF MATERIAL TO THE PURCHASER PART BY PART UNIT BY UNIT. THE REST O F THE EQUIPMENT SUCH AS INSULATORS CONDUCTORS TRANSFORMERS CIRCUIT BREA KERS ETC. ARE STANDARD EQUIPMENTS. THE RELEVANT TECHNICAL SPECIFICATION IS SPECIFIED BY THE PURCHASER. THE TITLE IN THE GOODS PASSES AS A CH ATTEL ON DELIVERY THOUGH CERTAIN OBLIGATIONS ARE STILL NECESSARILY TO BE PE RFORMED BY THE SUPPLIER. THOUGH THE ASSESSEE CLAIMS THAT THE DESIGN SPECIFI CATION ARE NOT UNIQUE IN THE SENSE THAT THE SAME SPECIFICATIONS ARE USED BY MANY OTHER CONCERNS TO OUR MIND THIS IS NOT A RELEVANT TEST. THE ISS UE IS AS TO THE TIME AND SITUS OF PASSING OF THE PROPERTY AND AS TO WHETHER THE PROPERTY PASSES BRICK BY BRICK ON THE THEORY OF ACCRETION OR AS A CHATTEL QUA CHATTEL. THE MERE FACT THAT THE SUPPLIER HAS TO PERFORM MANY OB LIGATIONS CAST ON IT BY VIRTUE OF THE CONTRACT AFTER DELIVERY OF GOODS DOE S NOT CHANGE THE NATURE OF TRANSACTION. THE SUPPLY PORTION OF THE CONTR ACT ARE THE PREDOMINANT OBJECT AND INTENTION OF THE PARTIES. ERECTION IS R ELATIVELY MINOR PORTION AS COMPARED TO THE SUPPLY OF PORTION. IF THE ERECTIO N PORTION CANNOT BE TAKEN AS THE MAIN OBJECT OF THESE CONTRACTS TITLE IN GOODS WAS TRANSFERRED AS MOVABLES PRIOR TO ERECTION. IF EQUIPMENT ARE M ANUFACTURED AS PER THE DESIGN ENGINEERING ETC. SPECIFIED BY THE CUSTOM ER IT WOULD NOT RESULT IN A WORKS CONTRACT ESPECIALLY WHEN ALL THE MATERIAL BELONG TO THE SUPPLIER EVEN THOUGH IT PRODUCED A TAILOR-MADE PRODUCT. TH E ERECTION PORTION BEING SUBSEQUENT TO PASSING OF TITLE BY EXECUTION OF THE SUPPLY PORTION IT CANNOT BE SAID THAT THE ERECTION PORTION CONTROLS THE SUPPLY PORTION THOUGH THE FULFILLMENT OF THE CONDITIONS OF THE ER ECTION CONTRACT HAS A BEARING ON THE FULFILLMENT OF THE CONDITION OF SUP PLY PORTION OF THE CONTRACT AND THOUGH IN SOME CASES BOTH THE CONTRA CTS ARE IN THE SAME DOCUMENT. THE SCOPE AND OBJECT OF EACH PART OF TH E CONTRACT IS DIFFERENT. THOUGH THE SUPPLY PORTION AND ERECTION PORTION DOV ETAIL INTO EACH OTHER THE ERECTION PORTION DOES NOT CONTROL THE SUPPLY P ORTION AND THE SUPPLY CONTRACT DOES NOT BECOME A WORKS CONTRACT JUST BE CAUSE THERE IS AN OBLIGATION CAST ON THE SUPPLIER TO ERECT THE EQUIP MENT WHICH BY THAT TIME HAS BECOME THE PROPERTY OF THE PURCHASER. THE TIT LE IN THE GOODS IN RESPECT OF EQUIPMENT/MATERIAL TO BE SUPPLIED AS PE R THE TERMS OF CONTRACT IS TO BE TRANSFERRED EX-WORK ON DISPATCH AS MOVA BLE PROPERTY. THE CRITICAL TEST TO BE APPLIED IS AS TO WHEN THE TITL E IN THE GOODS IS TRANSFERRED. THUS AS THE TITLE IN THE GOODS WERE PASSED ON TO T HE ASSESSEE BEFORE THE COMMENCEMENT OF THE WORKS OR ERECTION CONTRACT AND AS ADMITTED BY THE ASSESSEE HAD TREATED THESE GOODS AS ITS PROPERTY AND ENTERED THE SAME AS SUCH IN ITS STOCK REGISTER BEFORE ISSUING THE S AME FOR ERECTION IT IS A CONTRACT OF SALE AND S. 194C HAS NO APPLICATION. O N ERECTION PORTION AS ADMITTED TDS IS MADE. I.T.A. NOS. 68 101 & 69/V/2012 31 22. IN THE CASE OF KONE ELEVATORS (INDIA) LTD (SU PRA) THE ASSESSEE THEREIN BROUGHT THE LIFT TO THE SITE IN KNOCKED-DOWN STATE AND THEN ASSEMBLED IT AT THE CUSTOMERS PLACE. THE HONBLE SUPREME COURT HELD T HAT THE TRANSACTION WAS A CONTRACT OF SALE AND NOT WORKS CONTRACT. IN TH E INSTANT CASE ALSO THE MACHINERIES WERE DISPATCHED BY THE SUPPLIERS TO THE ASSESSEE IN KNOCKED DOWN STATE AND UPON SUCH DISPATCH THE PROPERTY IN THE M ACHINERY PASSED ON TO THE ASSESSEE. 23. IN OUR VIEW THE RATIOS LAID DOWN BY THE HON BLE SUPREME COURT IN THE CASE OF KONE ELEVATORS (INDIA) LTD (SUPRA) AND BY THE HYD ERABAD BENCH OF TRIBUNAL IN THE CASE OF POWER GRID CORPORATION OF INDIA LTD (SU PRA) ARE APPLICABLE TO THE FACTS PREVAILING IN THE INSTANT CASES. FOLLOWING O BSERVATIONS MADE BY THE TRIBUNAL IN THE CASE OF POWER GRID CORPORATION OF I NDIA LTD PROVE THAT THE VIEW TAKEN BY LD CIT(A) IN THE INSTANT CASE IS NOT CORRE CT. THOUGH THE ASSESSEE CLAIMS THAT THE DESIGN SPECIFI CATION ARE NOT UNIQUE IN THE SENSE THAT THE SAME SPECIFICATIONS ARE USED BY MANY OTHER CONCERNS TO OUR MIND THIS IS NOT A RELEVANT TEST. THE ISSUE IS AS TO THE TIME AND SITUS OF PASSING OF THE PROPERTY AND AS TO WHETHER THE PROPERTY PASSES BRICK BY BRICK ON THE THEORY OF ACCRETION OR AS A CHATTEL QUA CHATTEL. THE FACTS PREVAILING IN THE CASE OF POWER GRID CORP ORATION OF INDIA LTD (SUPRA) HAVE BEEN NARRATED BY THE TRIBUNAL AS UNDER:- IN THE PRESENT CASE THE CONTRACTORS HAVE TO FABRIC ATE TOWERS AS PER TESTED QUALITY OF CONFORMITY WITH INTERNATIONAL STA NDARD-(IS) : 2062. FURTHER THE CONTRACTOR HAS BEEN GIVEN THE OPTION TO USE OTHER EQUIVALENT GRADE OF STRUCTURAL STEEL ANGLE SECTIONS AND PLATES CONFORMING TO LATEST INTERNATIONAL STANDARDS. THE CONTRACTOR FABRICATES AND MANUFACTURES THE TOWER WITH STEEL SECTIONS AS PER INTERNATIONAL STAN DARDS. THE MATERIAL IS THAT OF THE SUPPLIER AND NOT OF THE PURCHASER. THE SUPPLIER DOES NOT WORK ON THE MATERIAL SUPPLIED BY THE PURCHASER. THERE IS NO ACCRETION OF MATERIAL TO THE PURCHASER PART BY PART UNIT BY UNIT. THE REST OF THE EQUIPMENT SUCH AS INSULATORS CONDUCTORS TRANSFORM ERS CIRCUIT BREAKERS ETC. ARE STANDARD EQUIPMENTS. THE RELEVANT TECHNI CAL SPECIFICATION IS SPECIFIED BY THE PURCHASER. THE TITLE IN THE GOOD S PASSES AS A CHATTEL ON I.T.A. NOS. 68 101 & 69/V/2012 32 DELIVERY THOUGH CERTAIN OBLIGATIONS ARE STILL NECES SARILY TO BE PERFORMED BY THE SUPPLIER. IN THE INSTANT CASE ALSO PREVAILING FACTS ARE IDEN TICAL IN NATURE. 24. IN VIEW OF THE FOREGOING DISCUSSIONS WE DO NOT HAVE ANY HESITATION TO CONCLUDE THAT THE SUPPLY CONTRACT ENTERED INTO BY THE ASSESSEE IS IN THE NATURE OF CONTRACT OF SALE AND HENCE THE PROVISIONS OF S EC. 194C SHALL NOT APPLY TO IT. ACCORDINGLY WE SET ASIDE THE ORDERS PASSED BY LD C IT(A) IN ALL THE THREE YEARS AND DIRECT THE ASSESSING OFFICER TO DELETE THE RELE VANT DEMANDS RAISED IN THE HANDS OF THE ASSESSEE U/S 201(1) AND 201(1A) OF THE ACT IN ALL THE THREE YEARS. 25. IN THE RESULT ALL THE APPEALS FILED BY THE ASSESSEE ARE ALLOWED. PRONOUNCED ACCORDINGLY ON 22-07-2013. SD/- SD/- (D.MANMOHAN) (B.R.BASKARAN) VICE-PRESIDENT ACCOUNTANT MEMBER PLACE: VISAKHAPATNAM DATED: 22ND JULY 2013 GJ COPY TO: 1. NTPC SIMHADRI SUPER THERMAL POWER PROJECT (VSP) SIMHADR I VISAKHAPATNAM. 2. THE INCOME-TAX OFFICER WARD-6(2) VISAKHAPATNAM . 3. THE COMMISSIONER OF INCOME-TAX(APPEALS) VISAKHA PATNAM. 4. THE COMMISSIONER OF INCOME-TAX VISAKHAPATNAM. 5. D.R. I.T.A.T. COCHIN BENCH COCHIN. 6. GUARD FILE. BY ORDER (ASSISTANT REGISTRAR) I.T.A.T VISAKHAPATNAM