Delhi High Court · 2010

d of the Corporation in this regard is also decisive, he urged. According to him, viewed in the context of the definition of taxable service as provided in section 65[105(zzzzj] read with the notification dated 29/2/2008, sa les tax is clearly payable in the face of the effective control of the cranes wi th the Corporation which denotes transfer of right of user thereof. The learned standing Counsel however agreed that the contract agreements in question are ind ivisible and that these do not admit of the concept of dominant intention theory but are within the purview of clause (d) of Article 366(29A). As the requisites of sale as contemplated in law are conspicuously present in the transactions in hand the State is competent to levy sales tax under the Act, he urged. Mr. Saik ia to buttress his submissions has placed reliance on the decisions of the Apex Court in Federation of Hotel and Restaurant Association of India etc. versus Uni on of India and others, (1989) 3 SCC 634 and in BSNL versus Union of India, (200 6) 3 SCC 1. 11. The learned Central Government Standing Counsel has argued that as the petitioners have been registered as service providers under section 69 of the Finance Act, 1994, in terms of the circular/letter DOF No. 334/1/2008/TRU d ated 29/2/2008, service tax is payable as no transfer of right to use of the cra nes in the contracts involved is deductible. He however contended that the petit ioners though liable to pay service tax on and from 1/7/2003 have not done so fo r which a proceeding has already been initiated.

12. The competing pleadings and the submissions have received the du e consideration of this Court. The legality and/or validity of the proposed dedu ction of tax under the Act would essentially be contingent on the interpretation of the contract agreements involved. The transactions evidenced thereby if exud e a transfer of the right by the petitioners to use the manned cranes only with no service element, those would tantamount to lease/sale under the enactment and would be exigible to tax thereunder under Article 366[29A(d)] of the Constituti on of India. 13. Whereas, the petitioners contend that the contract agreements te stify taxable service as defined in Section 65(105) (zzzz j) of the Finance Act, 1994 without transferring the right of possession and effective control of the cranes involved, the Revenue and the Corporation plead that an overall view ther eof would unambiguously proclaim a deemed sale as contemplated by the Act and th e above constitutional provision. The litmus test to unravel the conundrum is an indispensable analysis of the contract agreements engrafting the intention of t he parties thereto. Decisive significantly herein is the Revenue’s concurrence on the indivisibility of the contract agreements if ascertained to be an amalgam of sale and service segments. For the sake of brevity and certitude the contract agreement in 14. WP(C) No.5453/2009 would be referred to. As all the contract agreements share a common paradigm, the reference to any one would adequately depict the quintess ence thereof, sans any prejudice to the parties. Noticeably, the contracts are p ost 16.5.2008 with effect from which Clause (zzzz j) was inserted in Section 65( 105) by the Finance Act,2008 bringing within the purview of taxable service, the service provided or to be provided to any person by any other person in relat ion to supply of tangible goods including machinery, equipment and appliances fo r use without transferring the right of possession and effective control of su ch machinery equipment and appliances. The opening recital of the contract agre ements discloses that the same were for hiring of hydraulic cranes for carrying out the Corporation’s operations in conformity with the specifications as set-fo rth in the Scope of Works enumerated therein. The entrustment of the enterprise was in view of the assurance of the contractors of their necessary experience for carrying out such operations by offering the required service as per the Cor poration’s tender to that effect. A few clauses of the common contract agreement with the above preface need be extracted for ready reference and obvious insigh t into the contracting minds: (cid:28)1.3 SITE Shall mean the place in which the operations/ services are to be carrie d out or places approved by the ONGC for the purposes of the contract togethe r with any other places designated in the contract as forming part of the site. Section A (cid:28) (cid:28)1.13 WORKS/OPERATIONS Shall mean all work to be performed by the contractor as specified in th e Scope of Work under this contract. (cid:29) (cid:28) 1.15 MOBILISTION: Shall mean rendering the equipment fully manned and equipped as per contract and ready to begin work at site designated by ONGC after on hire survey and ONGS’s acceptance thereafter. The date and time of ONGC’s acceptance of onhire survey w ill be treated as the date and time of mobilization. (cid:29) (cid:28)1.25 CRANE Shall mean a Truck mounted/All Terrain hydraulic crane in good working condition with its certified lifting capacity of minimum 40 MT for Type II Crane and mini mum 20 MT for Type III Crane at an operating radius of 3 meters and meeting the other technical specifications given herein. It should comply with Motor Vehicl e Act as applicable and in possession of valid documents as applicable such as C ertificate of Registration, Fitness, Insurance, test Certificate, etc. (cid:29) (cid:28) 1.26 CREW Shall mean the staff required for operation of crane such as Drivers, Crane oper ations, Riggers, Slingers, Handymen, Khalasi etc. provided by the contractor. (cid:29) (cid:28) 1.29 WORKING DAY (cid:28)Working day (cid:29) normally starts at 07.00 hours, or the time given by the authorize d officer of the ONGC and shall normally extend for a period of 10(ten) hours in cluding any spill over time necessitated for the continuity of the operation. (cid:28) (cid:28)1.30 OPERATION ALTIME Shall mean the time spent by the crane at the site of work in actual operation i .e. loading, un-loading and movement required for positioning including waiting time on duty. (cid:29) (cid:28)1.31 OPERATIONAL CHARGES (cid:28)Operational Charges (cid:29) are the charges mentioned below: Operation Time charges per working day- Per day hire charges as per schedule of rates. Operational Time charges per working hour= Operational Time charges per working day/10 Hrs. (Pro-rata hourly rate). (cid:29) (cid:28)1.34 COMMENCEMENT OF CONTRACT PERIOD (cid:28)Commencement of Contract Period (cid:29) means the date on which the crane, fully equip ped with crew and in perfect working condition has been placed at the disposal o f NOGC at Sivasagar or any other appointed place in the Eastern Region of ONGC ( Refer clause 6 of this Contract agreement) (cid:28)3.0 DURATION OF THE CONTRACT This contract shall remain valid for a period of Three years from the actual dat e of mobilization (the date when the crane is deployed for ONGC duty) as per the rates given at Annexure-A. The date of commencement of contract for each crane for reckoning its period of contract shall be date on which the said crane unde r the contract is deployed for duty of the ONGC. (cid:29) (cid:28) 6.4 Assignment The contractor shall not, save with the previous consent in writing of the ONGC, sublet/sub-contract, transfer or assign the contract or any part thereof in any manner whatsoever. However, such consent shall not relieve the contractor from any obligation, duty or responsibility under the contract and contractor shall be fully responsible for the services hereunder and for the execution and perfor mance of the contract. (cid:29) (cid:28)7.1 ONGC shall pay to contractor for the services, to be provided by the contra ctor as per the Scope of Work as per the Schedule of rates attached as Annexure A. The rates payable shall be firm during the entire contract period. (cid:29) (cid:28)8.1 CLAIMS Contractor agrees to pay all claims, taxes and fees for equipment, labour, mater ials, services and supplies to be furnished by it hereunder and agrees to allow no lien or charge resulting from such claims to be fixed upon any property of ON GC. ONGC may, at its option, pay and discharge any liens or overdue charges for contractor’s equipment, labour, materials, services and supplies under this cont ract and may thereupon deduct the amount or amounts so paid from any sum due, or thereafter become due, to contractor hereunder. (cid:28) (cid:28) TAXES Contractor, unless specified otherwise in the contract , shall bear all tax liab ilities , duties ,Govt. levies etc. including Service tax, customs duty, Corpor ate and personnel taxes levied or imposed on the Contractor on account of payme nts received by it from the CORPORATION for the work done under this contract. It shall be the responsibility of the Contractor to submit to the concerned Ind ian authorities, the returns and all other concerned documents required for this purpose and to comply in all respects with the requirements of the laws in this regard, in time. (cid:28) (cid:28)9.0 PERFORMANCE The contractor shall undertake to perform all services under this contract with all responsible skill, diligence and care inn accordance with sound industry pr actice to the satisfaction of the ONGC and accept full responsibility for the s atisfactory quality of such services as performed by them. Any defect, deficien cies noticed in the contractor’s service will be promptly remedied by the contra ctor within 10 days upon the receipt of written notice from ONGC to improve thei r performance failing which ONGC may terminate the contract by giving the contra ctor 30(thirty) days written notice. (cid:29) (cid:28)10.0 PERFORMANCE BOND The contractor has submitted Security Deposit/Performance Bond vide BG No.191/09 dated 9/6/2009 for Rs.7,35,000.00 from Canara Bank, Sivsagar Branch, Hospital R oad, Sivasagar, valid upto 30/11/2012. The security deposit /performance guarantee is to secure satisfactory performanc e and execution /completion of all jobs by the contractor against the said con tract. The performance Bond/Bank Guarantee shall be kept valid for 60 days beyond the e xpiry period of the contract. In absence of above validity period of performance bond (back guarantee), payment of all dues to the contract upto the limit of SD shall be returned as part of the SD, which shall be refunded after receipt of r equisite bank guarantee. The security deposit is refundable only after successful completion of work/cont ract, without any interest thereon and after the adjustment of any dues of the O NGC, if so arises during the execution/currency of the contract. In the event contractor fails to honour any of the commitments entered into unde r this agreement or in the event of termination of the contract under provisions of Integrity Pact, and/or in respect of any amount due from the contractor to t he ONGC, the ONGC shall have unconditional option under the guarantee to invoke the above bank guarantee and claim the amount from the bank. The bank shall be o bliged to pay the amount to the ONGC on demand. (cid:28) 11.0 DISCIPLINE Contractor shall carry out operations hereunder with due diligence and in a safe and workman like manner according to good international oilfield practice. Cont ractor shall maintain strict discipline and good contract among its employees an d its sub-contractor’s employees and shall abide by and conform to all rules and regulations promulgated by the ONGC governing the operations. Should ONGC feel that the conduct or any of contractor/sub-contractor’s employees is detrimental to ONGC’s interest, the ONGC shall have the unqualified right to request for the removal of such employee either for incompetence, unreliability, misbehaviour, security reasons etc. while on or off the job. The contractor shall comply with any such request to remove such personnel at contractor’s expense unconditionall y. The contractor will be remove such personnel at contractor’s expense uncondit ionally. The contractor will be allowed a maximum of &. Working days to replace the person by competent qualified person at contractor’s cost. (cid:29) (cid:28)12.0 SAFETY AND LABOUR LAWS Contractor shall comply with the provision of all laws including Labour Laws, rules, regulations and notifications issued thereunder from time to time. All sa fety and labour laws enforced by statutory agencies and by ONGC shall be appli cable in the performance of this contract and contractor shall abide by these laws. Contractor shall take all measures necessary or proper to protect the personnel , work and facilities and shall observe all reasonable safety rules and instruc tions. No smoking shall be permitted out side the living quarters, and welding j obs will be carried out with full safety precautions. ONGC’s employee also shall comply with safety procedures/polity. The contractor shall report as soon as possible any evidence which may indicate or is likely to lead to an abnormal or dangerous situation and shall take all ne cessary emergency control steps to avoid such abnormal situations. (cid:29) (cid:28) 15.0 INSURANCE Contractor shall, at his own expense arrange appropriate insurance to cover all risks assumed by the contractor under this contract in respect of its personnel deputed under this contract as well as contractor’s equipment tools and any oth er belongings of the contractor or their personnel during the entire period of t heir engagement in connection with this contract. ONGC will have no liability on this account. (cid:28) (cid:28)16.1 INDEMNITY BY CONTRACTOR Unless otherwise specified elsewhere in this contract, contractor shall indemnif y and keep indemnified ONGC, its contractors (other than the contractor) and/or sub-contractors and its /their employees from all actions, proceedings suits, cl aims, demands, liabilities, damages, losses, costs, charges, expenses (including without limitation, wreck or debris, removal costs, where wreck or debris remov al is ordered by a competent authority) judgments and fines arising out of or in the course of or caused by the execution of work under the contract or other o bligations hereunder directly or indirectly associated herewith and/or arising from : (cid:29) (cid:28)17.4 TERMINATION FOR UNSATISFACTORY PERFORMANCE If the ONGC considers that the performance of the contractor is unsatisfactory o r, not upto the expected standard, the ONGC shall notify the contractor in writi ng and specify in detail the cause of such dissatisfaction. The ONGC shall have the option to terminate this Agreement by giving 30 days notice in writing to t he contractor, if, contractor fails to comply with the requisitions contained in the said written notice issued by the ONGC. (cid:28) (cid:28)31.0 INDEPENDENT ONTRACTOR STATUS (cid:28) The contractor shall act as an independent contractor performing the contract. T he Contract does not create any agency, partnership, joint ventures or joint rel ationship between the parties. Subject to all compliance with the contract the contractor shall be solely respo nsible for the manner in which works are performed. All employees, representativ es or sub-contractors engaged by the contractor in performing the contract shall be under the complete control of the contractor and shall not be deemed to be e mployees of the ONGC and nothing contained in the contract or in any sub-contrac t awarded by the contractor shall be construed to create any contractual relatio nship between any such employees or representative or Sub-contractor and the ONG C. Contractors shall be responsible for the acts, defaults or negligence of the contractor, his agencies, servant or workman. (cid:29) Section-B (cid:28)1. SCOPE OF WORK The services of the manned (Driver/Operator/Slinger/ Khalasi etc. as the case ma y be) crane (type of crane to be given) as per technical specifications given he rein or a vehicle/equipment or equivalent technical specifications and acceptabl e to ONGC along with the necessary accessories with valid permits/licenses, insu rance etc., sufficient fuel in well maintained condition and fulfilling other pr e-requisites should be available for performing the duties as advised by ONGC, a t the appointed time and place, throughout the contract period not by way of lea se or transfer of rights for use of the vehicle/equipment by the contractor to O NGC. The work under this contract shall include but not limited to dismantling /erection of Deep drilling rigs/work over rigs besides loading/unloading works o f heavy drilling/producing equipments, like tubulars, Bunk Houses, store houses of odd size and all connected rig materials from or into trailers/trucks/Railway s wagons besides any other materials handing job as may be assigned from time to time by the authorized representative of ONGC at various points/sites (slushy) /installations etc. The area of operation shall normally be in connection with t he activities of Assam asset of ONGC or anywhere as per requirement of ONGC in a nd around Sivasagar, Jorhat, Dibrugarh Districts Assam. (cid:29) (cid:29)2.3 LIFTING TICKLES The contractor shall have to provide necessary numbers of slings, hooks, dunnage material, other expedient for loading /unloading etc. to ensure prompt and effi cient operations in slushy and difficult oil field conditions by the crane, as p er the requirement of the operation to attain an optimum use of crane. He shall also maintain at all time the crane in perfect working condition for the rated c apacity and designed efficiency during the period of contract with following min imum nos. of slings/hooks/dunnage materials. (cid:28) (cid:28)3. PLACEMENT OF CRANE: 3.1. Contractor shall mobilize the offered crane(s) within 150 days of issue of Fax order/NOA/LOI. 3.2 .The crane shall be brought at the place to be nominated by ONGC at the comm encement date and taken back on the conclusion/termination of the contract or re jection/non-acceptance of the crane(s) entirely at contractor(s) cost and ONGC s hall bear no cost and will not be held responsible for such transportation. (cid:29) (cid:28)4. INSPECTION: 4.1 The crane offered by the contactor shall be inspected/documents verified for sale operations and meeting requirements as specified in this tender. The contr actor shall be obliged to provide to the ONGS’s representative advance intimatio n of not less than 15 days of readiness of the crane to carry out inspection at Sivasagar at suitable location. Inspection by ONGC is a contractual requirement and does not absolve the contractor for any defect/deficiency noticed in the cra ne after its arrival at site. The contractor shall be fully responsible for repl acement/rectification of any deficiency noticed during inspection. In case inspe ction team finds that crane needs major repairs or the performance of the crane is not satisfactory, ONGC reserves the right to cancel the LOI. It is therefore suggested that the bidder must ensure that offered cranes meets the technical sp ecification. (cid:28) (cid:28)4.3 The crane(s) along with their original documents including the certificate at clause 4.2 shall be presented /produced for the inspection at the nominated p lace before putting it into operation/service of ONGC. The operation/service of crane along with its/their documents shall require the approval of the competent inspection authority for its deployment. Once a particular crane(s) and its doc uments have been approved for the service of ONGC, the same shall not be changed during the period of the contract, except on being defective and another crane of similar specifications offered as replacement. An intimation of such change s hall be given to the authorized representative of ONGC for accepting such replac ement. Such replacement shall require valid inspection certificate from the cert ifying agencies at clause 4.2 above and accepted by ONGC. (cid:28) (cid:28)5. AWARD OF CONTRACT: 5.1 ONGC reserves the right to award whole or part of the work against this cont ract to any number of contractors at its sole discretion. 5.2 The Contractors will have to right to claim any particular share in total wo rk and ONGC shall have sole discretion for distribution of work amongst other co ntractors. 5.3 ONGC also reserves the right to award the contract for any or all the jobs u nder this contract to any other contractor(s) at any time during the currency of the contract without assigning any reason whatsoever. The contractor, shall not be entitled to any compensation whatsoever in such cases.

5.4 ONGC also reserves the right to get the work covered under the contract done departmentally or through some arrangement in part or in full at its sole discr etion. The contractor shall not be entitled to any compensation in such cases. (cid:28) (cid:28)6. OPERATIONAL NORMS/CONDITIONS: 6.1 The employees of the contractor and/or its sub-contractor if any, although w orking for and at the discretion of the ONGC shall be and remain the employees o f the contractor and such working arrangement shall in no way create or to be co nstructed to create an employer-employee relationship between such employees and ONGC. The contractor shall also undertake to replace any of their employee(s) w ho misbehave(s) with the employee(s) of ONGC or whose continuance may hamper the smooth operation under the contract.

6.2 The contractor shall do all acts and deeds as and when required and necessar y for rendering services against this contract whether expressly provided in the contract or not and whether directly related or incidental thereto. No extra ch arges shall be payable to the contractor for attending to all jobs and liaison w ork. 6.3 The crane is being hired for work in oil field conditions, which in addition to normal operations of oil fields include hazardous situation like blow out in wells. In such hazardous situation the crane shall have to work as per the dire ction of ONGC authorized representative and carry out the desired work within th e hazardous zone. Refusal to work under these situations shall not be acceptable and may lead to de-hiring of the crane.

6.4 The contractor shall render the services mentioned herein the contract and o ther auxiliary and/or incidental services as may be ordinarily required for oper ation of such contract by way of practices, customs or usage and/or as prescribe d by the law of the land. 6.8 The field operations/advance planning shall usually call for the presence of a representative of the contractor to be present for briefing at the appointed time and place in furtherance of the operations without loss of the available op erational time. 6.9 The denial or failure of the execution of the timely operations or delays du e to poor planning or failure to take timely actions or delays attributed by bad , inefficient operations of crane/prime mover including bogging down of the cran e(s) etc. shall be to the account of the contractor and shall not count towards the operational time and make the contractor liable for imposition of liquidated damages as per clause 16 of the contract. Such loss of operational time shall b e governed by the relevant clause. (cid:29) (cid:28)6.11 The cranes are required to be placed at the disposal of ONGC on daily rate basis. Normal working hours will start from 07.00 hrs for 10 hours duty everyda y within ‰ (half) hour as lunch break. However, these timings are subject to cha nge and the cranes could be asked for services beyond these working hours at the sole discretion of the ONGC.

6.12 The contractor is required to provide the crane for all days in a calendar month excepting for 4(four) days (Maintenance off days). The four days shall be called maintenance off days and will be used by the contractor for maintenance o f the crane. However ONGC reserves the right to engage the crane during the main tenance off days depending upon the exigencies of work. The contractor is allowe d to accumulate the off days (if not availed) up to a maximum of 15 days at any point of time during the enforcement of the contract. (cid:29) (cid:28)6.14 The contractor shall make his own arrangement at his cost for shelter, foo d, right stay & other requirements of their staff/representatives etc. at a conv enient place near the site of operation so that the crane is available for duty from 07.00 Hrs to 17.00 Hrs (or as directed by the authorized representative of ONGC). Similarly to and fro transport arrangement shall be made by the contracto r for all his staff /representative at his own cost and when required for the co ntinuity of the operations or for staff replacement needed in any particular fie ld/site or for any other purpose. The contractor shall maintain adequate transpo rt for such immediate assistance. 6.15 The contractor shall have proper and adequate arrangement for fuel, lubrica nts and other consumables etc. all the time to complete the job within the sched uled time. Without prejudice to any other rights that ONGC may have under the co ntract, the contractor shall be liable to pay the liquidated damages to ONGC in case the contractor fails to complete the work inn scheduled time and the assign ed manner. The scheduled time shall be computed based on standard norm of operat ions settled mutually. In case of any dispute the decision of the competent auth ority of ONGC shall, however, be final and binding on contractor. 6.16 All the works related to operation of cranes, repairs/maintenance, POL shal l be arranged by the contractor at his cost. In the event of failure of contract or to place the crane(s) at the disposal of ONGC for its works at the appointed time and place, ONGC shall be at liberty to make alternative arrangement at the risk and cost of the contractor and such arrangement shall continue till such ti me a proper substitute of the defective hired crane(s) is arranged or defect of the hired crane(s) is rectified, whichever is earlier, or limited to contract pe riod. The time for which the crane is not available for use at the disposal of O NGC due to any defect will be treated as NON-OPERATIONAL TIME. (cid:29) (cid:28) 6.18 All the operational staff (competent and mentally fit) viz.Driver/Crane o perator/Rigger Slingers/Khalasi/Handimen/ Cleaners etc. shall be provided by the contractor at his own cost along with the crane. The staff should be skilled /e xperience in the line for proper/safe operation of crane such as loading/unloadi ng/slinging dunnage placement etc. The experience of the crew should not be les s than 3 years. However, even if during currency of contract, if ONGC is not sat isfied with the performance of any of crew member, the contractor shall be requi red to replace the same. (cid:28) (cid:28)7.3 The contractor will be solely responsible for and shall keep the ONGC indem nified against any consequence under laws (whether Central, State or Local) aris ing out of any accident caused by the crane(s) to equipment/property/personnel e ngaged in the said contract. The contractor will also be responsible for any cla im/compensation that may arise due to damages/injuries to any third party/partie s, death permanent or partial disability or damage to the property etc. caused b y his crane(s) and in addition contractor shall also be responsible to damages/d isability /death etc. to the ONGC employees/property. The contractor shall safeg uard his interest through comprehensive and adequate insurance at his cost to co ver such liability ONGC shall not pay any charges towards insurance premium. How ever, ONGC’s claim or any other claim cannot be linked up with the payment of su ch claim by any such insurance(s). (cid:28) (cid:28)7.5 In case of occurrence of any accident to the crane, due to which performanc e of the contract by the contractor and the operation of ONGC are affected, the contractor shall inform of such occurrence of accident, within 48 hours of such occurrence, along with adequate documentary proof to the satisfaction of ONGC. F ailure on the part of the contractors to inform the ONGC about the occurrence of the accident, within the prescribed period aforesaid shall make the contractor liable for payment of liquidated damages as per clause No.16 of the Contract Agr eement. However, if the contractor provides a substitute crane of the same speci fications, as the original, within a reasonable period of 7 days, from the date of occurrence of the accident, ONGC may at its option consider the case to waive the imposition of liquidated damages as per clause 16 of the Contract Agreement . (cid:29) (cid:28)7.9 The ONGC shall not be responsible for any claim/compensation that arises du e to damages/injury/pilferage to the contractor’s cranes /property /operator/dri ver/rigger-slinger/khalasi/labourers and staff under any circumstances while the crane were/are/is engaged for the ONGC duty by him. The contractor shall ensure that his crew should refrain from smoking or carry any inflammable substance at the instalatinos/rig-site/stores yards etc. while on duty with ONGC. The contra ctor shall also abide by and comply with all rules regarding safety and security measures while on duty with ONGC, as per the Mines Act/any other Act or statuto ry order or executive instructions from the competent authority as per direction s issued by the safety representative of the ONGC and also of its representative at the work site/installations. The contractor shall provide necessary safety k its and liveries as per the regulations to his employees. (cid:29) (cid:28) 7.14 In order to maintain necessary operational efficiency, the contractor sha ll maintain Jeep/Pickup van and any other light transport arrangement for transp ortation of fuel, crew, expedients, repair staff or any other assistance require d by the crane(s)/crew to meet the urgency of the connected operations. (cid:29) (cid:28) 9.2 The Rates in the Schedule are all inclusive, complete, composite and firm for the contract period. For work done under this contract the contractor shall be paid as under: - i. Per day hire charges for all days in a month except maintenance off days and period of non-availability (days/hours) of cranes in operation. ii. Normally, ONGC may allow one day per week to carry out repair/maintenanc e of the crane(s) (maximum up to 4 days in a month). Contractor may also avail s uch 4 maintenance off days at a time in any month, if due, to carry out repair a nd maintenance off the crane with the prior approval from ONGC without any day r ate payment and no LD will be levied on such maintenance days (4 days per month) . (cid:28) (cid:28)9.3 The above rates are inclusive of all expenses, which means every expenditur e necessary for the continuance of the services of the cranes throughout the con tract duration. Such expenses shall also include (but not restricted to) payment s to Regional Transport Authorities, Labour Authorities, any Government/semi-gov ernment, local and Municipal Authorities dues, taxes, levies, fees, connected wi th the service, repairs of Cranes, maintenance, HSD/Oil, Lubricants, Insurance, Local Services, all expenses of the Contractor’s establishments, Crane crew, lab ourers’ salaries, interest on capital, bonus etc. of the personnel employed for the operation/maintenance of the cranes and any other expenses in providing an acceptable and satisfactory level of service. It must be clearly understood th at ONGC shall not make any other payment except the agreed hire charges. 9.4 The ONGC shall not be liable to make any other payments except the agreed hi re charge (as mentioned in clause No.9.2). The rates shall also be inclusive of all incidental and contingent operations (and consequent expenses) although not specifically mentioned in terms and conditions but considered necessary or expe dient to the performance of the services in a satisfactory manner and up to desi red standard. 9.5 Contractor shall pay Income Tax, Sales Tax, Custom Duties and other Taxes, l evies etc. as applicable from time to time directly to the respective authoritie s. However ONGC shall make deduction from the bills as per the demand of the res pective authorities from remittance on behalf of the contractor. 9.7 ONGC shall not be liable to make any payment to the contractor, unless and u ntil the successful bidder gets himself registered under the AGST Act and submit s an authenticated copy of the certificate of registration and sales tax clearan ce certificate to ONGC within 15 days from the date of award of contract. (cid:28) 16. LIQUIDATED DAMAGES: 16.1 The failure of the contractor to provide the required service quantitativel y /qualitatively, timely and efficiently results into substantial losses to ONGC , which the Contractor is fully aware, ONGC cannot be fully compensated for such losses, the same being very heavy in terms of loss or production and the overhe ads being incurred by ONGC. However, to regulate the commercial relationship of the parties the financial losses have been quantified as hereunder.

16.4 The crane(s) deployed is /are required to be available in operations for 10 hours per day (including half an hour lunch break) for all days in a month exce pt maintenance off days. 16.5 If on account of any reason due to the fault of the contractor e.g. non-ava ilability of crane/crew/fuel/defects of crane(s) etc. in case the available hour s of crane operation in a particular day are less than the hours mentioned in cl ause 16.4 above, then payment would be made on pro rata hourly rat basis as per clause No.1.31 of Section A of Annexure II for actual available hours of crane(s ) in operation. In addition, L.D for an amount equal to 1% of (per day hire char ges x 26/10) per hour will be recovered for the actual period of non-availabilit y of cranes for operation. (cid:28) 16.8 If the crane is not made available for more than one month at a time, ONGC reserves the right to terminate the default crane contract without further notic e and forfeit the performance guarantee. (cid:29) (cid:28)17. CONTRACTR’S SUPERVISION (cid:28) 17.1 The contractor shall be providing a competent and experience Project Inchar ge acceptable to ONGC who shall be duly authorized in writing to act for and bin d the contractor in matter relating to this contract. The Project Incharge shall receive and carry out directions and instructions with regard to SCOPE OF WORK from the ONGC (cid:29)s authorized representative. (cid:29) SCHEDULE OF RATES FOR HIRING OF TRUCK MOUNTED/ALL TERRAIN DIESEL HYDRAULIC CRANE S Contract No. HQ/CHMM/HYD CRANES-3/AA/2009-2012/ZN6JCO8006/DPA Name of the contractor: M/s D.P. Agarwala, A.T. Road, Milan Mandir Compex, Sivas agar(Assam). Type of Cranes Particulars Rs./day) Per day hire Charges of crane, with an assured payment for all days in a calend ar month except 4 days (maintenance days) with 10 hrs. Operation in a day (inclu per day h Type-III (20 MT) ding ‰ an hour lunch break ire charges No. of Cranes to be mobilized Rate per Crane ( Rs. 9,259.00 3 Rs 954.00 Service tax (10.3%) (Extra as applicable Total Rs.10,213.00

15. The clauses and covenants of the contract agreements as alluded hereinabove, testify hiring of Hydraulic Cranes of the petitioners by the Corpor ation to conduct its operation as per the specifications outlined in the scope o f work. The contractors are thereby required to provide manned and equipped Cra nes to be accepted on due inspection thereof by the Corporation. The operations essentially have to be carried out at the Corporation’s site(s) as it would be identified and selected by it. The Cranes are required to be placed at the disp osal of the Corporation on daily rate basis with the normal working hours from 0 700 hours for 10 hours everyday with half hour as lunch break. The contractors are required to provide the Cranes for all days in a calendar month accepting fo ur days earmarked as maintenance off days. The Corporation however, had reserve d to itself the right to engage the Cranes also during the maintenance off dates depending upon the exigencies of work.

16. The contract period commences from the date on which the Cranes fully equipped with crew and in perfect condition are placed at the disposal of the Corporation at Sivasagar or any other appointed place in the eastern region under it. Under the contract agreement, the contractors are to perform all serv ices thereunder with all reasonable skill, diligence and care in accordance with sound industry practice to the satisfaction of the Corporation and accept full responsibility for the qualities of such services. If any defect or deficiency is noticed by the Corporation it is required to be promptly remedied within the timeframe fixed by it (Corporation). To secure such satisfactory performance, t he contractors are to submit security deposit/performance bond for the amount an d duration from the bank as specified therein. In order to maintain necessary o perational efficiency, the contractors are obliged to maintain jeep/pickup van a nd any other light transport arrangement for transportation of fuel, crew, exped ients, repair staff or any other assistance required by the machines/crew to mee t the urgency of the connected operations. They need to carry out the operation s with due diligence and in a safe and workmen like manner maintaining disciplin e and good conduct amongst its employees and further abide by and conform to all rules and regulations promulgated by the Corporation governing such operations. If the conduct of any such employee is considered to be detrimental to the int erest of the Corporation, it has the right to request for his/her removal and th e contractors would have to comply with the same. The contractors at their expe nse are to arrange appropriate insurance to cover all risk under the contract in support of their personnel deputed by them as well as their equipment, tools an d belongings etc. during the period of their engagement under the contract. The Corporation under the agreement has excused itself of all liabilities on this c ount. The contractors are also required to indemnify and kept indemnified the C orporation, its other contractors and subcontractors as well as their employees from all actions, legal proceedings, claims, demands, liabilities, damages etc. arising out of or in course of the execution of the work under the contract or o ther obligations directly or indirectly associated therewith. To this effect, t he contractors are to safeguard their interest through comprehensive and adequat e insurance at their const to cover such liability and that the Corporation is n ot pay any charge towards the insurance premium. The Corporation also has safeguarded itself against any claim/co mpensation arising due to damages/injury/pilferage to the contractors’ Cranes/pr operty/operator/driver etc. under any circumstances while the machines would be engaged for it for the works. All safety measures to prevent such eventualities are also to be secured by the contractors. The services of the manned Cranes, under the contract agreements are to be available for performing the duties as a dvised by the Corporation at the appointed time and place throughout the period thereof and the works would include but not limited to dismantling/erection of d eep drilling/rigs/work over rigs besides loading/unloading works of heavy drilli ng production equipments etc. as may be assigned from time to time by the author ized representatives of the Corporation at the various points/sites/installation s/production. The stipulations, however provide that the cranes alongwith thei 17. r original documents once approved by the Corporation for its services would not be changed during the period of the contract except on being defective and othe r cranes of similar specifications are offered as replacement. All works relati ng to the operation of Cranes/repair/maintenance, have to be arranged by the con tractors at their own cost and in the event of their failure to place the Cranes at its disposal for its works at the appointed time and place, the Corporation would be at liberty to make alternative arrangements at their risk and cost till proper replacements are arranged by them. They are also required to provide ne cessary number of slings, hooks, dunnage material and other expedients for loadi ng/unloading etc. to ensure prompt and efficient operations in slushy and diffic ult oil field conditions by the Cranes to ensure optimum use thereof. They at a ll times would be required to maintain the Cranes in a perfect working condition for their rated capacity and the designed efficiency during the period of the c ontracts. 18. The contractors as the relevant clauses proclaim, would have ind ependence in their actions and subject to the compliance with the contract agree ments would be solely responsible for the manner in which the works are performe d. The contract agreements clarify that the same do not create any agency/partn ership/joint ventures or joint relationship between the parties. All employees/ representatives or subcontractors engaged by the contractors in performing the c ontract work would be under their complete control and would not be deemed to be employees of the Corporation and that nothing in the contract agreements or in any subcontract, if awarded by the contractors would be construed to create any contractual relationship between any such employee or representative of subcontr actors and the Corporation. The contract agreements, in clear terms stipulate t hat the employees of the contractors and/or their subcontractors, if any, althou gh working at the discretion of the Corporation would remain the employees of th e contractors and such working arrangement would not in any way create or be con strued to create an employer-employee relationship between them and the Corporat ion. The contract agreements render the contractors responsible for the acts, d efault or negligent of their agencies, servants or workmen. The contractors are required to make their own arrangements at their own cost for the shelter, food , night stay and other arrangements of their staff/representatives at a convenie nt place near the site of the operation so that the Cranes are available for dut y at the determined hours. All the operational staff would have to be provided by the contractors at their own cost. They have to ensure that the staff is ski lled/experienced in the line for the proper/safe operation of the Cranes as cont emplated. They are also required to provide competent and experience project i ncharge acceptable to the Corporation who would receive and carry out directions and instructions from it with regard to the scope of work.

19. The Corporation has reserved to it the right to award the whole or part of the work against the contract to any number of contractors at its sol e discretion and the contractors would thus have no right to claim any particula r share in total work and it would be the discretion of the Corporation for any distribution thereof amongst other contractors, even during the currency of the contract and that too without assigning any reason whatsoever. The righ t to get the work under the contract executed departmentally or through some arr angement in part or in full has also been retained by the Corporation. The cont ractors are not only required to comply with all relevant clauses ensuring inter alia all measures necessary to protect their personnel, the work and facilities but also absence all reasonable safety rules and instructions. They are obliged to bear all tax liabilities, duties, levys etc. including service tax, customs duty, et al. The corporation has reserved to itself its right to terminate the contract for unsatisfactory performance by giving thirty days notice in writing to the contractors. The liability for liquidated damages is also in the account of the contractors in the eventualities as mentioned in the contract agreements , in the event of their failure to provide required service qualitatively/quanti tatively, timely and efficiently. 20. For the execution of the work the contractors are to be paid per day hire charges of the Cranes with an assured payment for all days in a calend ar month except the four maintenance off days for 10 hours operation in a day. Operational time charges per working hour/10 hours i.e. at pro rata hourly rate is also contemplated. The relevant clauses clarify that the rates are inclusive of all expenses encompassing every expenditure necessary for the continuance of the services of the Cranes throughout the duration of the contract and that the Corporation would not be required to make any other payment. The schedule of r ates appended to the contract agreements clearly include service tax at the rate of 10.3 % included in the per day hire charge. In other words, the service tax forms an integral unit of the rate at which the contractors are to be paid the hire charges for the Cranes provided by them for executing the works of the Corp oration in accordance with the terms and conditions of the contract agreements. The significance of the words (cid:28)transfer of the right to use (cid:29) in 21. the context of the Assam Value Added Tax Act, 2003 lies in the quintessence of t he concept of (cid:28)lease (cid:29) and (cid:28)sale (cid:29) as defined in Section 2(27) and 2(43) thereof. These expressions in turn determine the exigibility or otherwise of the transac tion contemplated thereby under the said enactment. The definitions of these tw o expressions as provided by the Act for the limited purpose of this adjudicatio n are extracted hereinbelow- 2(27) (cid:28)lease (cid:29) means any agreement or arrangement whereby the right to use any go ods for any purpose is transferred from one person to another (whether or not fo r a specified period) for cash, deferred payment or other valuable consideration without the transfer of ownership of goods and includes a sublease but does not include any transfer on hire purchase or any system of payment by instalments. 2(43) (cid:28)sale (cid:29) with all its grammatical variations and cognate expressions means every transfer of the property, in goods (other than by way of a mortgage, hypot hetication, charge or pledge) by one person to another for cash or for deferred payment or other valuable consideration and includes - & & & & & & & & & & & & & & & & & & & & & & & & & & & & & & & (iv) a transfer of the right to use any goods for any purpose(whether or not f or a specified period) for cash, deferred payment or other valuable consideratio n. & & & & & & & & & & & & & & & & & & & & & & & & & & & & & &.. 23A. Being confronted with the problem relating to the power of the State to lev y tax on the sale of goods, more particularly vis-à-vis composite contracts such as work contracts, hire purchase contracts and catering contracts keeping in vi ew of the decision of the Apex Court rendered in State of Madras v. Gannon Dunke rley & Co. AIR 1958 SC 560, the Law Commission to which the issue was referred for scrutiny suggested amongst others an enlarged definition of the expression (cid:28) sale (cid:29) to be inserted in Article 366 of the Constitution of India so as to includ e work contracts. The Constitution (Forty-sixth Amendment) Act, 1982 followed i ncorporating Clause (29-A) in Article 366 to define (cid:28)tax on the sale or purchase of goods (cid:29) as hereunder- (cid:28)(a) a tax on the transfer, otherwise than in pursuance of a contract, of proper ty in any goods for cash, deferred payment or other valuable consideration; (b) a tax on the transfer of property in goods (whether as goods or in some othe r form) involved in the execution of a works contract; (c) a tax on the delivery of goods on hire-purchase or any system of payment by instalments; (d) a tax on the transfer of the right to use any goods for any purpose (whether or not for a specified period) for cash, deferred payment or other valuable con sideration; (e) a tax on the supply of goods by any unincorporated association or body of pe rsons to a member thereof for cash, deferred payment or other valuable considera tion; (f) a tax on the supply, by way of or as part of any service or in any other man ner whatsoever, of goods, being food or any other article for human consumption or any drink (whether or not intoxicating), where such supply or service, is for cash, deferred payment or other valuable consideration, and such transfer, delivery or supply of any goods shall be deemed to be a sale of those goods by the person making the transfer, delivery or supply and a purch ase of those goods by the person to whom such transfer, delivery or supply is ma de; (cid:29) 23B. The Statement of Objects and Reasons for the Forty-sixth Amendment is, inte r alia, as follows: (cid:28)2. By a series of subsequent decisions, the Supreme Court has, on the basis of the decision in Gannon Dunkerley case held various other transactions which res emble, in substance, transactions by way of sales, to be not liable to sales tax . As a result of these decisions, a transaction, in order to be subject to the levy of sales tax under Entry 92-A of the Union List or Entry 54 of the State Li st, should have the following ingredients, namely, parties competent to contract , mutual assent and transfer of property in goods from one of the parties to the contract to the other party thereto for a price.

3. This position has resulted in scope for avoidance of tax in various ways. An example of this is the practice of inter-State consignment transfers i.e. trans fer of goods from head office or a principal in one State to a branch or agent i n another State or vice versa or transfer of goods on consignment account, to av oid the payment of sales tax on inter-State sales under the Central Sales Tax Ac t. While in the case of a works contract, if the contract treats the sale of ma terials separately from the cost of the labour, the sale of materials would be t axable but in the case of an indivisible works contract, it is not possible to l evy sales on the transfer of property in the goods involved in the execution of such contract as it has been held that there is no sale of the materials as such and the property in them does not pass as movables. (cid:29) A conjoint reading of the definitions of (cid:28)lease (cid:29), (cid:28)sale (cid:29) and (cid:28)ta 22. x on the sale or purchase of the goods (cid:29) therefore irrefutably testify that in th e instant case the transactions evidenced by the contract agreements, if demonst rate transfer of right to use the Cranes would be exigible to tax under the Act and not otherwise. 23. In BHARAT SANCHAR NIGAM LIMITED (Supra), the Apex Court dwelt up on the scope and purport of Article 366(29-A) to decipher the precise connotatio n of the constituent clauses thereof. The tussle for eligibility to levy the im post on sale or service as the case may be between the States and the Union rela ted to transactions involving Mobile Phone Services. Tracing the evolution of A rticle 366(29-A) of the Constitution of India, their Lordships on an indepth ana lysis of the six clauses thereof propounded that the same permitted specific com posite contracts vis-à-vis works contracts, Sub Clause (b), hire purchase contra cts, Sub clause(c) and catering contracts (Sub clause - f) to be divisible by a legal fiction where the sale element could be severed and subjected to sales tax . It was held that out of different kind of composite transactions only three s pecies thereof, namely- works contract, hire purchase contract and a catering co ntract were drawn within the fiction of a deemed sale. It was clarified that the first and second eventualities involved elements of service and sale at the sam e time and apart from these, no other service under this constitutional provisio n is permitted to be disintegrated or seucred. Their Lordships enunciated that in case of any composite contract other than those excepted by Article 366(29-A) , unless the transaction in truth represents two distinct and separate contracts and is discernible as such, the State would not possess the power to segregate the unit of sale from the one to render service and impose tax on the same. The ir Lordships, therefore, recognized the (cid:28)dominant nature test (cid:29) to determine any such contract and ascertain whether the transaction fell into one category or th e other to decipher the intention of the parties thereto. This test, however, t heir Lordships observed would not be applicable to the contracts covered by the six Sub clauses of Article 366(29-A). Referring to the earlier decision of the Apex Court in 20th Century Finance Corpn. Ltd. (Supra) it was held that the dete rmination therein could not be cited as a authority for the proposition that del ivery of the possession of goods was not a necessary concomitant for completing a transaction of sale for the purpos