news round up - Taxmann

206 Goods & Services Tax Cases - Reports [Vol. 1
road was through the middle and at pedestrian crossings with zebra
marking and also arrow indications on the road. The assessee claimed that
the work for construction of the road was done by the managing partners
of the firm and even though the aforesaid work of paint marking was
separately awarded to the assessee-firm, it constituted an integral part of
the road construction work. Therefore, the work executed by it, viz.,
supplying and applying hot white thermoplastic road marking paint,
marking of pedestrian crossing, zebra crossing, etc., with white and yellow
paints on road constituted civil works within the meaning of section 7(7)
entitling it for payment of tax at compounded rate of 2 per cent. The
assessing authority held that the road marking through thermoplastic
paint was a painting work done after construction of the road and an
independent contract, awarded to and executed by the assessee. The
assessing authority, therefore, disallowed the claim of the assessee that it
was entitled for payment of tax at compounded rate of 2 per cent.
On appeal, the first appellate authority upheld the action of the assessing
authority.
On second appeal, the Tribunal accepting the contention of the assessee
to the effect that marking with paint was a requirement for the National
Highway and so much so, the construction of the road could be said to be
complete only when markings were done on the road, held that the
assessee was entitled for payment of tax at compounded rate of 2 per cent.
On revision :
HELD
It is clear from the provisions of section 7(7) that payment of tax at
compounded rate of 2 per cent is provided only if the work awarded is a civil
work. Under the Explanation given below section 7(7), civil work includes
not only construction, but repair or maintenance of buildings, bridges and
roads, runways, dams, canals, wells, ponds, swimming pools and similar
works notified by the Government. It is to be noted that the Explanation
provides for exclusion of certain items from the scope of civil work which
includes painting. However, it is very clear from the Explanation that
exclusion of certain items of work are those carried out to the existing
structures. Therefore, the exclusion clause obviously does not cover construction
work, but only covers such work which falls within the description
of repair or maintenance. In other words, even though the items of
work like replacement of floor tiles, painting, polishing, etc., could be rightly
called maintenance work, those are excluded from the scope of civil work
by virtue of the specific provision contained in the Explanation. However,
flooring, painting, polishing, etc., forming a part of the construction
contract will still be regarded as civil work, if such work is an integral part
of the original contract awarded for construction. In other words, if a
contract is awarded for construction of the building where the work
involves laying of floor tiles, painting and polishing the building, then the
GOODS & SERVICES TAX CASES ❑ JANUARY 20 - FEBRUARY 4, 2010 ◆ 82
A
B
C
D
E
F
G