16 January 2014

Construction of floating restaurant is works contract

Contract for construction of a restaurant that was supposed to be floating on the lake will amount to works contract and not outright sale of movable property, according to a recent ruling of Division Bench of the Kerala High Court.

The department had relied upon the Hindustan Shipyard Ltd. decision and contended that the contract is for outright sale. The court in this case observed that though it is named as floating restaurant it is not constructed somewhere else and brought to the lake in question but, after putting up a dredge, the entire two storied construction is put up on the dredge.

It was noted that the restaurant is stable and fixed to concrete poles and it would not move from the place where it floats. It was hence held that the restaurant was nothing short of a building except for the fact that instead of the building embedded to the earth, it floats on a platform and therefore it is called a floating restaurant. [Floatles India Pvt. Ltd. v. The Commercial Tax Officer – 2013-VIL-127-KER(DB)]


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