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In respect of the balance material the contract applied the following clause:

ITA No.301 to 304/PAT/2018 & ITA Nos.297 to 300/PAT/2018 During closure the unused/ left over materials would be taken back by the contractor at their cost on permission by NBPDCL.

The clauses in the letter of award clearly indicate that even in a contract for supply of equipment, it may be noticed that the equipment which are engineering goods are required to be manufactured strictly as per the specifications of the assessee and utilized for a specific requirement of the assessee. The equipments supplied were not standard goods and were not capable of any use to anyone else and thus had no commercial value. If the contract is for supply of goods or bought out goods/the finished product along with its operational manual is only given. That is not the case here as the scope of the contract includes design, engineering, manufacture, type testing, and training of power grid personnel and supply of, goods. Further, as per the conditions of the supply of contract, the contract price is inclusive of all customs duties, levies, excise duty, sales-tax and other duties payable on equipments, components, subassemblies and raw materials or any other items used and it is clearly mentioned that no separate claim on these duties will be entertained by the contractors. Clearly it is a composite package, which does consist of material also. But the entire package is inseparable and is accordingly to be considered as 'Rendering of one single service.' It is an executory contract and the agreements entered into between the assessee and the contractors were basically for carrying out work as per the specifications of the assessee. From various covenants of the contract and by reading the contracts as a whole, it is clear that the contract entered into by the NBPDCL with its contractors is not merely a supply contract but that of a works contract of composite in nature and any payments made under the contract are covered by provisions of section 194C of the Act.

From the evidences, it appears that nowhere at any time the so called purchased items came in the possession of the NBPDCL till the project was completed. So all along, the materials/ equipment remained under the custody of the contractor. The possession and real ownership of so called purchased items remained with contractors till the handing over of the project on completion by the contractor. Had the items been purchased by the department then

(i) there must have been delivery of the items to NBPDCL, and

(ii) it would have been received and kept under the custody of the department of NBPDCL, and

(i) the NBPDCL would have sent items at the construction sites from its godown as per requirement after obtaining ownership right over such items.

However, no evidences could be produced either during the course of survey or during the hearing by the assessee deductor which could establish that materials were ever delivered to NBPDCL As a matter of fact, the items were received by the contractor himself at the site of the construction. At no point of time the items came under the possession of the department of NBPDCL till the project was completed and handed ITA No.301 to 304/PAT/2018 & ITA Nos.297 to 300/PAT/2018 over by the contractor to NBPDCL on turnkey basis. In the context. Para 7 (vi) (b) of CBDT Circular No. 681 dated 08-03-1994 may kindly be referred. It says that "contract for sale" exists where the property/ title of the article is transferred. Thus, in view of the above it was not the purchase of materials by the NBPDCL but the delivery of items at construction site was nothing but the part of composite contract. But at the time of awarding contract to the vendor the assessee dictated the following terms and conditions:

It will be the responsibility of the contractor to lodge, peruse and settle all claims with the insurance company in case of any damage, loss theft, pilferage, fire etc. and NBPDCL will be kept informed about it. The contractor shall be responsible for the replacement of losses, damages etc. in the execution of the contract to any equipment/materials either supplied by them or received by them from NBPDCL irrespective of the time of receipt of amount on insurance claim. Any loss on this shall be to the contractor's account. The contractor shall be totally responsible with regard to maintenance of all insurance cover. (Kindly refer to Annexure- 2) Order for supply of equipment and erection, testing and commissioning are being placed on two separate contracts i.e. first contract for supply and second contract for erection and civil works. However, both these orders/contract shall contain interlinking breach clause specifying that breach of any one contract will constitute breach of the other contract. The supplier shall be fully responsible for the work to be executed under the 'second contracts' (i.e. contract of erection and civil works) and it is mentioned in express language that any breach under the "second contract" (i.e. contract of erection and civil works) shall automatically deemed as breach of this contract and any such breach of occurrence, giving the NBPDCL a right to terminate the "second contract" (i.e. contract of erection and civil works) and / or recover the damages that contract, shall give us right to terminate this contract as well. However, such breach or occurrence in the "second contract" shall not, automatically relieve the contractor from any of their obligations under this contract. It is agreed by the contractor that the equipment/ materials supplied by them under this contract, when erected tested and ITA No.301 to 304/PAT/2018 & ITA Nos.297 to 300/PAT/2018 commissioned under the "second contract" shall give satisfactory performance in accordance with the tender documents.