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Supreme Court on 'Works Contract': Analysis and Ramifications of 'Larsen & Toubro' Decision

Excise and Customs Reporter, Vol. 200 (November 2013)(pp. 1SF-18SF).

18 Pages Posted: 11 Nov 2013  

Tarun Jain

Supreme Court of India; London School of Economics & Political Science (LSE); National Law University Jodhpur (NLUJ)

Date Written: October 14, 2013

Abstract

In a recent decision of the Supreme Court in "Larsen & Toubro Ltd." has put to rest the dispute relating to the correctness of the "K. Raheja Development Corporation" and the distinction between a contract of sale and a works contract. This decision seeks to settle, after revisiting the tremulous legal position of the last five decades, the ever unending disputes on the classification of agreements between those of "contract of sale" and "works contract".

Repelling the challenge by the distraught buyers of flats and buildings, who suffer from the ever-expanding regime of fiscal legislations, the verdict is in favour of the State Governments vindicating their hitherto challenged exercise of power to levy sales tax/value added tax on sale of immovable property purporting to be sale of goods involved in construction of such property. This article examines the dispute addressed by the decision, the legal position emanating therefrom and its implications in sales tax/value added tax and other fiscal legislations.

Keywords: Works Contract, Sales Tax, Value Added Tax, Service Tax, India

JEL Classification: H21, H23, H25, H32, H39, H71, K34

Suggested Citation

Jain, Tarun, Supreme Court on 'Works Contract': Analysis and Ramifications of 'Larsen & Toubro' Decision (October 14, 2013). Excise and Customs Reporter, Vol. 200 (November 2013)(pp. 1SF-18SF).. Available at SSRN: https://ssrn.com/abstract=2339912

Tarun Jain (Contact Author)

Supreme Court of India ( email )

New Delhi
India

London School of Economics & Political Science (LSE)

London
United Kingdom

National Law University Jodhpur (NLUJ)

Jodhpur
India

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