VOLTAS LTD. versus STATE OF GUJARAT
[2015] 5 S.C.R. 320, Supreme Court of India, 2015
Outcome: Appeal(s) allowed (Granted)
Segment: Ratio
A 
B 
[2015] 5 S.C.R. 320 
VOLTASLTD. 
v. 
STATE OF GUJARAT 
(Civil Appeal No. 2957 of 2007) 
APRIL 8, 2015 
[H. L. DATTU, CJI, ARUN MISHRA AND 
C 
AMITAVA ROY, JJ.] 
Gujarat Sa/es Tax Act, 1969 - s.55A - Notification 
dated 8. 10. 93 issued under- Entries 2 and 5- Composition 
rate of tax payable vis-a-vis Work Contract- For fabrication 
D and installation of air-conditioning plants - Whether falls 
under Entry 2 and thereby taxable@ 15% or falls under Entry 
5 and thereby taxable @ 5% -
Held: Assessee's works 
contract for fabrication and installation of water chilling plant 
would fall under Entry 5 and would be taxable @ 5% -
E Fabrication in terms of the work order in the instant case is 
distinctly independent, yet integral segment of the works 
contract contributing to the final physical form of the water 
chilling plant with the characteristics intended and hence, it 
cannot be construed to. be, synonymous to the installation 
F thereof- The legislative intendment of s. 55A is to maintain 
a direct correlation between the composition rates of tax and 
the description of the corresponding work contract. 
Interpretation of Statutes - Interpretation of taxing 
G statutes - Held: A taxing statute has to be interpreted from 
the plain and unambiguous expression used therein - There 
is no room for any intendment- Full effect must be given to 
every word used in the statute - No construction should be 
H provided so as to render a part of it otiose or redundant - In 
320
VOLTAS LTD. v. STATE OF GUJARAT 
321 
case of any doubt, the construction beneficial to the subject A 
is to be adopted. 
Evidence - Burden of Proof - Qua classification of 
goods to detennine chargeability- Held: The burden in such 
cases is on taxing authority. 
B 
Words and Phrases: 'Fabrication' and 'Manufacture' -
Meaning of, in the context of sales tax. 
Allowing the appeal, the Court 
HELD: 1. The competing entries requiring scrutiny 
c 
to ascertain the correct composition rate of tax payable 
vis-a-vis the works contract involved are engrafted in the 
Notification dated 8.10.1993 issued by the Government 0 
of Gujarat in exercise of powers conferred by Section 
55A of the Gujarat Sales Tax Act, 1969. A plain perusal 
thereof would attest that thereby, in the circumstances 
to be prescribed, a dealer can be left at his option to pay, 
in lieu of the amount of tax payable, a lump sum by way E 
of composition, at the rate or rates as may be fixed by 
the State Government, having regard to the incidence of 
tax on the nature of the goods involved, in the execution 
of total value of the works contract. Unmistakably, 
therefore, the State Government while fixing the F 
composition rate of tax has to be mindful of the nature 
of the works contract executed and by no means can be 
oblivious thereof. Further, a composition rate of tax is in 
lieu of the amount of levy otherwise payable by the dealer 
under the Act. The scheme of composition as envisaged G 
by Section 55A,
therefore, does not admit of any 
synonymity with that of exemption as contemplated in 
law. This pre-supposition of the High Court, as one of 
the contributing factors, in concluding that the works H
322 
SUPREME COURT REPORTS 
[2015] 5 S.C.R. 
A contract in question did fall within the framework of Entry 
No.2 of the Notification is apparently erroneous. [Para 
13] [335-E-H; 336-A-C] 
2. The work order in the present case, in clear 
B terms did enjoin that the design parameters pertaining 
to tonnage of refrigeration, final temperature of the water 
to be made available for the process of manufacturing 
pigments and the quantity of the chilled water essential 
therefore, were indispensable and were in addition to 
C the other specifications as offered by the appellant. The 
rigour of the insistence for the adherence to the design 
parameters, is patent also from the request of the 
customer requiring the appellant to provide it with the 
lay out detail, foundation drawing and other necessary 
D information essential for the erection of the water chilling 
plant. The exercise as a whole, as contemplated by the 
work order, thus was neither intended nor can be 
reduced to mere installation of the finally emerging 
E apparatus. The work order, noticeably did not refer to 
any readymade or instantly available devices, meeting 
the requirements of the customer, so much so to be only 
installed at its factory. Instead, the work order had been 
apparently tailor-made to the requirements, from which 
F no departure was intended or comprehended. It is in this 
perspective, that the word "fabrication" appearing in 
Entry No.5 of the Notification assumes a decisive 
significance.
[Para 14) [336-D-H] 
G 
3. The legislative intendment entrenched in 
H 
Section 55A of the Act, to maintain a direct correlation 
between the composition rates of tax as the Notification 
would reveal and the description of the corresponding 
works contract is patent. The word "fabrication" had not
VOLTAS LTD. v. STATE OF GUJARAT 
323 
been applied in the works contract for installation of air-
A 
conditioners and A.C. coolers contained in Entry No.2 
of the Notification. The author of the said Notification, 
however, did consciously include the expression 
"fabrication" while describing the works contract 
enumerated in Entry S thereof. Having regard to the B 
inseparable interdependence between the description 
of a works contract and the corresponding composition 
rate of tax, none of the inherent components of the 
works to be executed, can either be ignored or C 
disregarded for identifying the correct composition rate 
of the levy under the Act. Any- other approach, could 
tantamount to doing violence not only to the legislative 
purpose conveyed by Section SSA, but also the 
language of its yield i.e. the Notification seeking to o 
promote the statutory end. Viewed in that context, mere 
omission of the expressions "air-conditioners" and "A.C. 
coolers" in Entry No.S, would not be of any definitive 
consequence. The words plant and machinery, applied 
in Entry S, are otherwise compendious enough to E 
include air-conditioners and A.C. coolers, if the works 
contract involved require fabrication as well as 
installation thereof. [Para 1 S] [337-A-F] 
4. The process of fabrication conceptually would F 
involve a lay out for the ultimate device to be installed, 
preceded by a design of the parameters prescribed, 
configuration of the resultant components, and
integration thereof to structure the ultimate mechanism 
or product. Installation thereof would be a subsequent G 
step to finally position the plant, to complete the works 
contract. As fabrication in terms of the work order in the 
instant case, is a distinctly independent yet integral 
segment of the works contract, contributing to the final H
324 
SUPREME COURT REPORTS 
[2015] 5 S.C.R. 
A physical form of the water chilling plant with the 
characteristics intended, it cannot be construed to be, 
synonymous to the installation thereof. [Para 18) [338-
A-C] 
B 
Aiyar's Advanced Law Lexicon (Vol.II}, 3rd Edition 
2005; The Oxford Dictionary- referred to. 
5. In the face of the design parameters insisted 
upon in the work order and consequential process of 
c fabrication involved to cater thereto, the works contract 
involved squarely falls within the ambit of Entry No.5 of 
the Notification. The margin of difference in rates of tax 
as prescribed by the Act compared to those mentioned 
in the Notification ipso facto does not detract from this 
D conclusion. This consideration per se cannot override 
the decisive characteristics of the works contract 
otherwise unequivocally spelt out by the work order. 
[Para 19) [338-G-H; 339-A] 
E 
6. "In a Taxing Act one has to look merely at what 
is clearly said. There is no room for any intendment. It is 
trite as well that in a case of reasonable doubt, the 
construction most beneficial to the subject is to be 
adopted. The underlying principle is that the meaning 
F and intention of a statute must be collected from the plain 
and unambiguous expression used therein rather than 
from any notion that may be entertained by a Court which 
may appear to be just and expedient. [Para 20) [339-C-E] 
G 
H 
Income Tax Officer, Tuticorin vs. T.S.Devinatha Nadar 
& Ors. (1968) 68 ITR
252; Commissioner of Income 
Tax-Ill vs. Calcutta Knitwears, Ludhiana (2014) 6 SCC 
444; Commissioner of Income Tax (Central)-/, New 
-Delhi vs. Vatika Township Pvt. Ltd. 2015 (1) SCC 1-
relied on.
VOLTAS LTD. v. STATE OF GUJARAT 
325 
Cape Brandy Syndicate v. Inland Revenue 
A 
Commnrs. (1921) 1 KB 64; Sussex Peerage case 
(1844) 11 C1 & Fin 85: 8 ER 1034(HL) - referred to. 
7. It is the cardinal principle of interpretation 
not to brush aside a word used in a statute or in a 
B 
Notification issued under a statute and that full 
effect must be given to the every word of an 
instrument. No construction to a legislation ought 
to be provided so as to render a part of it otiose or 
redundant. [Paras 22 and 23) [340-E-G]] 
C 
Maharashtra University of Health Sciences & Ors. vs. 
Satchikitsa Prasarak Manda/ & Ors. 2010 (3) 
SCR 91 = (2010)3 SCC 786; South Central Railway 
Employees Co-operative Credit Society Employees 
D 
Union, Secundrabad vs. The Registrar of Co-operative 
Societies & Ors. 1998 (1) SCR 85 = (1998) 2 SCC 580 
- relied on. 
8. Qua the issue of classification of goods to E 
determine the chargeability thereof and the rates of levy 
applicable, the burden of proof is on the taxing authority 
to demonstrate that a particular class of goods or item 
in question is taxable in the manner claimed by them and 
mere assertion in that regard is of no avail. [Para 21) 340-
F 
CJ 
U.0.1. & Ors. vs. Garware Ny/ones Ltd. etc. 1996 (5) 
Suppl. SCR 629 = (1996) 10 SCC 413; and HPL 
Chemicals Ltd. vs. Commissioner of Central Excise, 
G 
Chandigarh 2006 (1) Suppl. SCR 125 = (2006) 5 SCC 
208 - relied on. 
9. The Notification in the instant case being 
apparently statutory
in nature is akin to subordinate H
326 
SUPREME COURT REPORTS 
[2015] 5 S.C.R. 
A legislation, to actualize and advance the legislative intent 
engrafted in Section 55A. It not only owes its existence 
to the Act but would also be amenable to the cardinal 
principles of interpretation. [Para 23] [340-H; 341-A] 
B 
10. Any endeavour to drag the works contract 
involved within the framework of Entry No.2 would be 
repugnant to the basic principles of interpretation of 
statutes and of subordinate legislation like the statutory 
Notification under Section 55A of the Act. To exclude the 
C work of fabrication from the works contract as per the 
work order, would render it (works contract) truncated 
to a form, not intended by the customer. This would 
strike as well, at the root of the mandate of correlation of 
0 a works contract and the corresponding composition 
rate of tax as envisaged by Section 55A of the Act and 
the Notification issued thereunder. [Para 24] [341-B-C] 
11. Therefore, the appellant's works contract for 
fabrication and installation of water chilling plant would 
E fall under Entry 5 of the Schedule to the Notification dated 
18.10.1993 issued under Section 55A of the Act and 
would be taxable at the rate of 5% as prescribed thereby. 
[Para 26] [341-F] 
F 
G 
H 
Sanden Vikas (India) Ltd. V. Collector of Central Excise, 
New Delhi (2003) 4 SCC 699:2003 (2) SCR 608 - held 
inapplicable. 
Case Law Reference 
2003 (2) SCR 608 
(1968) 68 ITR 252 
(2014) 6 sec 444 
201s (1) sec 1 
(1921) 1 KB 64
held inapplicable 
relied on 
relied on 
relied on 
referred to . 
Para 10 
Para 20 
Para 20 
Para 20 
Para 20
VOLTAS LTD. v. STATE OF GUJARAT 
327 
(1844) 11 C1 & Fin 85: 
referred to 
Para 20 
8 ER 1034(HL) 
1996 (5) Suppl. SCR 629 
relied on 
Para 21 
2006 (1) Suppl. SCR 125 
relied on 
Para 21 
2010 (3) SCR 91 
relied on 
Para 22 
1998 (1) SCR 85 
relied on 
Para 22 
CIVILAPPELLATE JURISDICTION: Civil Appeal No. 
2957of2007 
From the Judgment and Order dated 04.09.2006 of the 
High Court of Gujarat atAhmedabad in Sales-Tax Reference 
No. 1 of 2004 with Special Civil Application No. 12508 of 2002 
Arvind P. Datar, Pratap Venugopal, Surekha Raman, 
Supriya Jain (for K. J. John & Co.), for the Appellant. 
Madhvi Diwan, Jesal, Puja Singh (for Hemantika Wahi), 
for the Respondent. 
The Judgment of the Court was delivered by 
AMITAVA ROY, J. 1. The oft encountered debate on 
the extent of tax liability based on the classification of the 
determinants of a levy in law seeks judicial scrutiny in tha 
attendant factual conspectus. The appellant being aggrieved 
A 
B 
c 
D 
E 
by the determination made by the High Court of Gujarat on the F 
issue common to a reference under Section 69 of the Sales 
Tax Act, 1969 (for short hereinafter referred as to as the "Act") 
being Sales Tax Reference No.1/2004 and its appeal, i.e. 
Special Civil Application No. 12508/2002, against it, seeks 
redress against the judgment and order dated 4.09.2006 to G 
that effect. 
2. We have heard the learned counsel for the parties. 
3. The indispensable skeletal facts introduce the H
328 
SUPREME COURT REPORTS 
[2015] 5 S.C.R. 
A appellant, Mis. Voltas Ltd. as a company incorporated under 
the Companies Act, 1956 engaged amongst others in the 
business of execution of jobs design, supply and installation 
of air-conditioning plants construed to be indivisible works 
contracts. It is a registered dealer under the Act. By a 
B communication dated 22.10.1993 of M/s. Anupam Colours and 
. Chemicals Industries, Bombay, an order was placed with it for 
water chilling plant at its factory at Vapi. The basic design 
parameters were enumerated in the work order as hereunder: 
C "1.Tonnage of Refrigeration 
D 
2. Final temperature or chilled 
water to be made available 
for our process. 
3.Quantity of chilled water 
liters( 5 to 6° C) required for our 
process in about 10 hours. 
11 TR 
5 to 6°C 
12,000 
liters" 
E Other specifications pertaining to the water chilling plant were 
advised to be in conformity with the assessee's offer, as 
referred to therein. The work order insisted on the requirement 
of chilled water to be used directly for its process of 
manufacturing pigments with the assertion that sufficient 
F precautions be taken to ensure that chilled water at 5 to 6 
degree centigrade is available for such process. The letter 
emphasized as well that the assessee would provide the 
customer with the lay-out details, foundation drawing and other 
necessary information required for the erection of the plant. 
G The essential segments of the works contracts
involved, as 
would be eventually relevant for the adjudicative exercise 
underway, were thus specified with distinct details in the work 
order. 
H
VOLTAS LTD. v. STATE OF GUJARAT 
329 
[AMITAVA ROY, J.] 
4. The Act which is a legislation to consolidate and A 
amend the law relating to the levy of tax on the sale or purchase 
of goods in the State of Gujarat has set out in Part-A of 
Schedule II-A thereof, the rates of the impost on the sale of 
goods involved in the execution of the works contracts, the 
relevant excerpt whereof is quoted as under: 
B 
I Si.NO.-T ~on 
ci00fk5 contract : Enb)t NJ. in 
I 
' 
Sched.de-
i 
I 
llAofthe 
f-- - J -
-
-
--
-
Pd 
1
1. 
i lrstalaion 
of 
ar-
01 
I condtiorers 
ard 
AC. 
't 
1
1 
coolers ard fer 
repci rs i 
I 
ti-erect. 
! 2. 
i Funiture 
ard 
flXti..res ! 104 
I partitiO'ls incll.dirg rontracts I · 
. 
I 
i 
i fer intericr cEcorciion ard ! 
; 
! repars trereci 
! 
I 3. 
Fcbricciion aid installatiC1l ; 120 
I
, 
of lifts or ele.tators or : 
escalators aid for repars 
I 
ti-erect 
, 
I 4. 
I Fooncction aid nstanatiO'l . 39 
I 
1 of part aid rra::hirery ard i 
I 
1 repars trereci 
; 
r 5---~-r Corstn.dion of bcx:liElS al i 128(5) 
I
i dlassis ci M>ter Vetiicles ' 
including trree v.trelers 
____ !_and_ft>r ~~rs ~f 
__ 
__ 
; 6. 
i Ship 
bl.ildng 
incll.dirg 186 
: construcliO'l 
ci 
bages, 
! Ferries Tugs Travv1ers or 
1 Drecgers and for repars : 
'trereci 
F~g.dcr 
rate citax 
18% 
8% 
8% 
8% 
4% 
4% 
5. Section 55-A of the Act dwells on the scheme of 
composition of tax whereunder a dealer as referred to therein 
c 
D 
E 
F 
G 
H
330 
SUPREME COURT REPORTS 
[201S] S S.C.R. 
A and in the circumstances and subject to such conditions as 
may be prescribed, is left with the option to pay in lieu of the 
amount of taX-leviable from him under Section 7 or 8 in respect 
of any period, a lump sum by way of composition at the rate/ 
rates, as may be fixed by the State Government by notification 
B in the Official Gazette, having regard to the incidence of tax on 
the nature of the goods involved in the execution of total value 
of the works contract. Apt it would be to quote Section SSA as 
well for ready reference: 
c 
D 
E 
F 
"SECTION SSA. COMPOSITION OF TAX. 
(1) The Commissioner may, in such circumstances and 
subject to such conditions as may be prescribed, permit 
every dealer referred to in sub-clause (f) of clause ( 10) 
of section 2 to pay at his option in lieu of the amount of 
iax (including additional tax) leviable from him under 
section 7, (or 8) in respect of any period, a lump sum by 
way of composition at the rate or rates as may be fixed 
by the State Government by Notification in the Official 
Gazette having regard to the incidence of tax on the nature 
of the goods involved in the execution of total value of the 
works contract. 
(2) The provisions of sections [13,S1 and SS] shall not 
apply to a dealer who opts for composition of tax under 
sub-section (1).]" 
Pursuant to this provision, and as empowered thereby, the 
Government of Gujarat vide the notification dated 18.10.1993 
G (for
short hereinafter referred to as the Notification) did fix the 
rate of composition payable by such dealer (s) in lieu of the 
amount of tax otherwise leviable un~er the Act and as 
contemplated in the said statutory provisiQn. As the stand-o~ 
H centers around the rate of composition so.fixed, essential jt
VOLTAS LTD. v. STATE OF GUJARAT 
331 
[AMITAVA ROY, J.] 
would be to set out the table of relevant entries to be A 
immediately adverted to: 
181".No.--j oE!SCfii:>tion ciY.Orks oontract -
[ Rate of . . i 
! 
I 
1 CoITlX>Sltion I 
; 1. 
i Works ccntract for civil werks like 
! 2% 
j constructiai of b.Jilclings, bricges or I 
I roads, ard fer repairs thereci 
i 
'Installation ofair-caidtionersand 
; 15% 
I AC. Coolers 
i 
I 2. 
' 
3. 
; FLmiture aid fixtures, Partitiais 
5% 
I 
including cortrcds for irterior 
decaation 
14. 
Fabrication ard installation of lifts er i 10% 
elevators or escalators 
I 
5. 
Eal::>rication ard installation of 12lait 15% 
and mochinerv 
I 6. 
Constrt.dion of bodes ai chassis 
3% 
I 
: of meter vetlicles includng three 
! wheelers 
J 7. 
Ship b.Jildi~, inclu::ling constrt.dion 
of oorges, ferries tugs, trawers or 
2% 
: drecbers 
a 
Works caitracts other than these 
112% 
mentiaied al::>ove 
I 
i 
i 
I 
I 
I 
I 
I 
I 
' 
I 
I 
I 
I 
I 
6. The recorded facts demonstrate that the appellant 
B 
c 
D 
E 
F 
being under the impression qua the works contract ordered 
vide letter dated 22.10.1983 of Mis. Anupam Colour and 
Chemicals that it would attract the rate of composition 
prescribed against Entry No.5 hereinabove i.e. fabrication and G 
installation of plant and machinery and not 15% against Entry 
No.2 i.e. installation of air-conditioners and AC coolers or 12% 
against Entry No.8 i.e. works contracts other than those 
mentioned, filed an
application before the Deputy 
Commissioner of Sales Tax (Legal), Gujarat under Section 62 H
332 
SUPREME COURT REPORTS 
[2015] 5 S.C.R. 
A of the Act and insisted that the works contract involved came 
within the purview of Entry No.5 attracting the composition rate 
of tax at 5% only. The said revenue authority by its order dated 
16.10.1996 however rejected the plea of the appellant and 
instead held that the works contract was covered by Entry No.2 
B as the assessee had to air-condition the plant to be erected 
by it. The margin of difference in the composition rates 
compared to the rates of tax for the identical works contract 
as catalogued in the Schedule to the Act did also weigh with 
C the revenue authority in arriving at this conclusion. 
7. The appellant-assessee being dissatisfied did appeal 
against this finding before the Gujarat Sales Tax Tribunal, 
Ahmedabad (for short hereinafter referred to as the "Tribunal") 
which was registered as Appeal No. 16/1996. In course of the 
o . regular assessment for the Assessment Year 1993-94, the 
concerned Sales Tax Officer, pursuant to the decision rendered 
by the Deputy Commissioner of Sales Tax on 16.10.1996, 
assessed the appellant by applying the composite rate of 15% 
for the works contract involved. 
E 
8. The appellant thus preferred an appeal against this 
assessment order before the Assistant Commissioner of Sales 
Tax, Ahmedabad and having failed before this forum did take 
the issue before the Tribunal in Second Appeal No.97/2001. 
F These two appeals were also dismissed by the Tribunal vide 
its
judgment and order dated 2.12.2002 whereafter the 
appellant invoked the writ jurisdiction of Gujarat High Court 
registered as Special Civil Application No. 12508/2002 which 
to reiterate, have been, by the impugned decision, disposed 
G of along with Sales Tax Reference No.1/2004 laid by the Tribunal 
before it under Section 69 of the Act referring the following 
question of law: 
"Whether on the facts and in the circumstances of the 
H 
case, the Tribunal was right in law in holding that the
VOLTAS LTD. v. STATE OF GUJARAT 
[AMITAVA ROY, J.] 
appellant's works contract for fabrication and installation 
of air-conditioning plants falls under Entry 2 and, 
therefore, taxable at the rate of 15% and not under Entry 
5 under which it is taxable at the rate ·of 5% of the 
Schedule to the notification dated 18.10.93 issued under 
Section 55A of the Gujarat Sales Act, 1969?" 
9. The High Court has answered the question referred 
in the affirmative thus sustaining the determination made by 
333 
A 
B 
the revenue authorities/fora and the learned Tribunal declaring 
that the appellant's works contract for fabrication and for C 
installation of air-conditioning plant did fall under Entry 2 of the 
Notification and was taxable at the composition rate of 15%. 
10. As the decision of the High Court assailed herein 
would disclose, in its view, the air-conditioning systems are D 
classified according to their construction and operating 
characteristics and that it would be incorrect to differentiate 
between a central air-conditioning system and a room air-
conditioner on the basis that the installation of air-conditioning 
plant requires preparation of plant whereas no such exercise E 
is to be undertaken in case of installation of window air-
conditioner etc. This is more so as the basic components 
applied in the manufacture of a air-conditioning plant, room 
air-conditioner or split air-conditioner are almost similar with 
F 
difference in size and are not drastically
different. The 
appellant's plea that in central air-conditioning system, 
fabrication has to be undertaken requiring preparation of plant 
etc. and that thus the central air-conditioning system has to be 
treated differently from a room air-conditioner or window air-
G 
conditioner etc. was not accepted because, according to the 
High Court, even in a room air-conditioner or window air-
conditioner or split air-conditioner or AC cooler, elevation and 
lay out of the area requiring conditioning, has to be taken into 
consideration. The appellant's contention that Entry 5 dealt with H
334 
SUPREME COURT REPORTS 
[2015] 5 S.C.R. 
A all kinds of fabrication and installation of all kinds of plant and 
machinery and that there was no reason to exclude the 
installation of air-conditioning plant therefrom was negatived. 
The High Court was of the view that the composition scheme 
ought to be regarded as an exemption reprieve and thus 
B needed to be construed strictly. Reliance was placed on the 
decision of this Court in Sanden Vikas (India) Ltd. \/. Collector 
of Central Excise, New Delhi (2003) 4 SCC 699 which held 
with reference to a particular entry in an exemption notification 
C under the Central Excise Tariff Act, 1985 that the air-conditioner 
kit of a car did fall within the meaning of air-conditioners. It 
rejected the proposition that in common parlance air-
cond itioner, room air-conditioner, window air-conditioner, A. C. 
cooler, air-conditioning plant etc. were differently known and 
o thus installation of air-conditioning plant would fall within Entry 
No.5. 
11. Mr. Datar, the learned senior counsel for the 
appellant has assertively urged that having regard to the 
E inalienable and essential constituents of the works contract 
as per the work order, fabrication as well as the installation of 
the water chilling plant were distinctly different items of works 
and thus the appellant was taxable at the composition rate of 
5% against Entry No.5 of the Notification. Referring to the 
F work order dated 22.10.1993 in particular, the learned
senior 
counsel has maintained that the water chilling plant of the 
customer was to be configured in conformity with the design 
parameters referred to therein and not on readymade 
specifications on the election or discretion of the appellant-
G assessee. According to Mr. Datar the design parameters 
prescribed by the customer, to cater to its requirement amongst 
others of the temperature of the chilled water and the volume 
thereof to be used for its process of manufacturing pigment 
H did assuredly involve design and fabrication of the essential 
composition of the system which by no means could be
VOLTAS LTD. v. STATE OF GUJARAT 
335 
[AMITAVA ROY, J.] 
equated with the installation thereof simplicitor as the end A 
device. That the customer was persistently particular on the 
adherence to its prescribed design parameters as is apparent 
from the work order, demonstrates that the works contract, in 
any view of the matter, cannot be drawn within the contours of 
Entry2 of the Notification, he urged. 
B 
12. As against this, Ms. Madhvi Diwan, the learned 
counsel for the Revenue has argued that as the supply of the 
water chilling plant as per the works contract involved for all 
practicable purposes does not envisage any process of C 
fabrication, the appellant is liable to be taxed at the 
composition rate of 15% . .According to her, the basic and 
functional components of the water chilling plant being identical 
to that of an air-conditioning plant, the appellant's plea of D 
application of 5% composite rate prescribed against Entry 
No.5 of the Notification is wholly misplaced and thus no 
interference with the impugned judgment and order is called 
for. Reliance was placed on the decision of this Court ir. 
Sanden Vikas (India) supra. 
E 
13. The rival assertions have received our due 
consideration. The competing entries requiring scrutiny to 
ascertain the correct composition rate of tax payable vis-a-vis 
the works contract involved are engrafted admittedly in the F 
Notification issued by the Government of Gujarat in exercise 
of powers conferred by Section
55A of the Act. Logically thus, 
the interpretation necessitated by the rival orientations ought 
to be in furtherance of the underlying objective of the said 
provision. A plain perusal thereof would attest that thereby, in G 
the circumstances to be prescribed, a dealer can be left at his 
option to pay in lieu of the amount of tax payable, a lump sum 
by way of composition, at the rate or rates as may be fixed by 
the State Government having regard to the incidence of tax on 
the nature of the goods involved in the execution of total value H
336 
SUPREME COURT REPORTS 
[2015) 5 S.C.R. 
A of the works contract. Unmistakably, therefore, the State 
Government while fixing the composition rate of tax has to be 
mindful of the nature of the works contract executed and by no 
means can be oblivious thereof. Further, a composition rate 
of tax is in lieu of the amount of levy otherwise payable by the 
B dealer under the Act. The scheme of composition as 
envisaged by Section SSA therefore in our comprehension 
does not admit of any synonymity with that of exemption as 
contemplated in law. This pre-supposition of the High Court 
C as one of the contributing factors in concluding that the works 
contract in question did fall within the framework of Entry No.2 
of the Notification is apparently erroneous. 
14. As adverted to hereinabove, the work order in clear 
terms did enjoin that the design parameters pertaining to 
D tonnage of refrigeration, final temperature of the water to be 
made available for the process of manufacturing pigments and 
the· quantity of the chilled water essential therefor were 
indispensable and were in addition to the other specifications 
E as offered by the appellant. The rigour of the insistence for the 
adherence to the design parameters is patent also from the 
request of the customer requiring the appellant to provide it 
with the lay out detail, foundation drawing and other necessary 
information essential for the erection of the water chilling plant. 
F 
ThE~ exercise as a whole as
contemplated by the work order 
thus was neither intended nor can be reduced to mere 
installation of the finally emerging apparatus. The work order 
noticeably did not refer to any readymade or instantly available 
devices, meeting the requirements of the customer so much 
G so to be only installed at its factory. Instead, the work order 
had been apparently tailor-made to the requirements from 
which no departure was intended or comprehended. It is in 
this perspective that the word "fabrication" appearing in Entry 
H No.5 of the Notification assumes a decisive significance.
VOLTAS LTD. v. STATE OF GUJARAT 
337 
[AMITAVA ROY, J.] 
15. The legislative intendment entrenched in Section A 
55A of the Act to maintain a direct correlation between the 
composition rates of tax as the Notification would reveal and 
the description of the corresponding works contract is patent. 
Understandably, the word "fabrication" had not been applied 
in the works contract for installation of air-conditioners and A.C. B 
coolers contained in Entry No.2 of the Notification. The author 
of the said Notification, however, did consciously include the 
expression "fabrication" while describing the works contract 
enumerated in Entry 5 thereof. Having regard to the C 
inseparable interdependence between the description of a 
works contract and the corresponding composition rate of tax, 
none of the inherent components of the works to be executed 
can either be ignored or disregarded for identifying the correct 
composition rate of the levy under the Act. Any other approach D 
could tantamount to doing violence not only to the legislative 
purpose conveyed by Section 55A but also the language of its 
yield i.e. the Notification seeking to promote the statutory end. 
Viewed in that context, mere omission of the expressions "air-
conditioners" and "A.C. coolers" in Entry No.5 would not be of E 
any definitive consequence. The words plant and machinery 
applied in Entry 5 are otherwise compendious enough to 
include air-conditioners andA.C. coolers, ifthe works contract
involved require fabrication as well as installation thereof. 
F 
16. The word "fabrication" as defined in the Aiyan's 
Advanced Law Lexicon (Vol.II), 3'd Edition 2005 is "to 
manufacture". 
17. The Oxford Dictionary defines the word "fabrication" G 
to mean to construct or manufacture an industrial product. 
18. The word "manufacture" as per the Aiyan's 
Advanced Law Lexicon (Vol.I I) in its plainest form and shorn of 
other details is the process of transforming or fashioning of H
338 
SUPREME COURT REPORTS 
[2015] 5 S.C.R. 
A raw materials into a change of form for use. The process of 
fabrication therefore conceptually would involve a lay out for 
the ultimate device to be installed, preceded by a design of 
the parameters prescribed, configuration of the resultant 
components, and integration thereof to structure the ultimate 
B mechanism or product. Installation thereof would be a 
subsequent step to finally position the plant to complete the 
works contract. As fabrication in terms of the work order in the 
· instant case is a distinctly independent yet integral segment 
C of the works contract contributing to the final physical form of 
the water chilling plant with the characteristics intended, it 
cannot be construed to be, synonymous to the installation 
thereof. 
19. The High Court, as the impugned judgment would 
D exhibit, had confined itself wholly to the components of various 
air-conditioning devices available and the range of the use 
thereof and in our estimate had missed the significant aspect 
of "fabrication" integrally involved in the works contract to supply 
E the water chilling plant with the design parameters stipulated 
by the customer. The High Court did adopt a general approach 
vis-a-vis the air-conditioning devices commercially available 
in different forms dehors the singular factual aspects of the 
work order constituting the works contract. The High Court, 
F thus, in our view, by overlooking the component of
fabrication 
in the works contract opined that the same was within the 
purview of Entry No.2 and not Entry No.5. The description of 
the works contract, to reiterate, being of determinative bearing 
for ascertaining the composition rate of tax, we are of the 
G unhesitant opinion, in the face of the design parameters 
insisted upon in the work order and consequential process of 
fabrication involved to cater thereto, that the works contract 
involved squarely falls within the ambit of Entry No.5 of the 
H Notification. The margin of difference in rates of tax as 
prescribed by the Act compared to those mentioned in the
VOLTAS LTD. v. STATE OF GUJARAT 
339 
[AMITAVA ROY, J.) 
Notification ipso facto does not detract from this conclusion. A 
This consideration per se cannot override the decisive 
characteristics of the works contract otherwise unequivocally 
spelt out by the work order. 
20. The primary canon of interpretation of a taxing B 
statute hallowed by time is underlined by the classic statement 
of ROWLATI,J. in Cape Brandy Syndicate v. Inland Revenue 
Commnrs. (1921) 1 KB 64 at p. 71 as extracted hereunder: 
"In a Taxing Act one has to look merely at what is clearly 
c 
said. There is no room for any intendment. There is no 
equity about a tax. There is no presumption as to a tax. 
Nothing is to be read in, nothing is to be implied. One 
can only look fairly at the language used." 
D 
It is trite as well that in a case of reasonable doubt, the 
construction most beneficial to the subject is to be adopted. 
The underlying principle is that the meaning and intention of a 
statute must be collected from the plain and unambiguous 
expression used therein rather than from any notion that may E 
be entertained by a Court which may appear to be it just and 
expedient. Even prior in point of time, TINDAL, CJ in Sussex 
Peerage case (1844) 11 C1 & Fin 85: 8 ER 1034(HL) had 
propounded thus: 
"If the-words of the statute a re in themselves precise 
and unambiguous, then no more can be necessary than 
to expound those words in their natural and ordinary 
sense. The words themselves do alone
in such cases 
best declare the intent of the law-giver." 
F 
G 
These views have with time resonated in various judicial 
pronouncements with unambiguous approval of this Court as 
well amongst others in Income Tax Officer, Tuticorin vs. 
T.S.Devinatha Nadar & Ors. (1968)68 /TR 252 and very H
340 
SUPREME COURT REPORTS 
(2015] 5 S.C.R. 
A recently in Commissioner of Income Tax-Ill vs. Calcutta 
Knitwears, Ludhiana (2014) 6 SCC 444 and Commissioner 
of Income Tax (Central)-/, New Delhi vs. Vatika Township Pvt. 
Ltd. 2015 (1) SCC 1. A plethora of decisions in this regard, 
available though, we do not wish to burden the instant narration 
B therewith. 
21. Qua the issue of classification of goods to determine 
the chargeability thereof and the rates of levy applicable, it is 
no longer res-integra that the burden of proof is on the taxing 
C authority to demonstrate that a particular class of goods or 
item in question is taxable in the manner claimed by them and 
that mere assertion in that regard is of no avail as has been 
enunciated by this Court in U. 0.1. & Ors. vs. Garware Ny/ones 
0 Ltd.etc. (1996) 10 sec 413 and relied upon with approval in 
HPL Chemicals Ltd. vs. Commissioner of Central Excise, 
Chandigarh (2006) 5 SCC 208. 
22. Equally, fundamental is the principle of statutory 
interpretation that no construction to a legislation ought to be 
E provided so as to render a part of it otiose or redundant as 
held inter alia by this Court in Maharashtra University of Health 
Sciences & Ors. vs. Satchikitsa Prasarak Manda/ & Ors. 
(2010)3 sec 786. 
F 
23. That it is the cardinal principle of interpretation not 
to brush aside a word used in a statute or in a Notification 
issued under a statute and that full effect must be given to the 
every word of an
instrument had been underscored by this 
G Court in The South Central Railway Employees Co-operative 
Credit Society Employees Union, Secundrabad vs. The 
Registrar of Co-operative Societies & Ors. reported in ( 1998) 
2 SCC 580. The Notificafion in the instant case being 
apparently statutory in nature is akin to subordinate legislation 
H to actualize and advance the legislative intent engrafted in 
Section 55A. It not only owes its existence to the Act but would
VOLTAS LTD. v. STATE OF GUJARAT 
341 
[AMITAVA ROY, J.] 
also be amenable to the cardinal principles of interpretation A 
adverted to herein above. 
24. In the overall legal and factual perspectives as 
obtained herein, any endeavour to drag the works contract 
involved within the framework of Entry No.2 would be repugnant B 
to the basic principles of interpretation of statutes and 
subordinate legislations like the statutory Notification under 
Section 55A of the Act. To exclude the work of fabrication from 
the works contract as per the work order would render it (works 
contract) truncated to a form not intended by the customer. C 
This would strike as well at the root of the mandate of 
correlation of a works contract and the corresponding 
composition rate of tax as envisaged by Section 55A of the 
Act and the Notification issued thereunder. 
25. The decision of this Court in Sanden Vikas (India) 
Ltd.(supra) is of no avail to the revenue vis-a-vis the issue falling 
for scrutiny herein. 
D 
26. In the face of the determinations made herein E 
above, the inescapable conclusion is thatthe appellant's works 
contract for fabrication and installation of water chilling plant 
at the factory of Anupam Colours and Chemicals at Vapi would 
·fall under Entry 5 of the Schedule to the Notification dated 
18.10.1993 issued under Section 55A of the Act and would 
F 
be taxable at the rate of 5% as prescribed thereby. The 
impugned decision dated 4.9.2006 of the High Court of
Gujarat 
atAhmedabad in Sales Tax Reference No.1/2004 and Special 
Civil Appeal No.12508/2002 and other determinations as are G 
contrary to the views expressed herein are hereby set aside. 
27. The Civil Appeal is allowed. 
Kalpana K. Tripathy 
Appeal allowed. 
'H