M/S. LARSEN AND TOUBRO LIMITED vs THE STATE OF KARNATAKA

The Supreme Court referred the matter concerning the interpretation of 'works contract' under the Karnataka Sales Tax Act, 1957 to a larger bench, questioning the correctness of the two-Judge Bench decision in Raheja Development Corporation v. State of Karnataka (2005) 5 SCC 162. The Court noted that if the Development Agreement is not classified as a works contract, the Department's reliance on the Tripartite Agreement as a works contract may be flawed. The holding emphasizes the need for clarity in distinguishing between a works contract and a contract for sale, impacting tax implications.