In Ircon International Ltd. vs. The State of Bihar through Commissioner of State Tax, Bihar & Anr. (2026), Supreme Court has passed an order dated August 10, 2026, wherein, it stayed the operation of the impugned order, pending disposal of the Special Leave Petition. The matters are listed for September 11, 2026.
In Ircon International Ltd. vs. The State of Bihar through Commissioner of State Tax, Bihar & Anr. (2026), Patna High Court's 's Division Bench of Justices Rajeev Ranjan Prasad, Sourendra Pandey delivered a 73-page long judgement dated February 25, 2026. The judgement concluded: "....while we find that with the fabrication of structural steel, the distinct constituent, elements and structure are incorporated so as to make it a functional utility. Once the structural steel is transformed with the fabrication and installation/erection in terms of the works contract, it passes the final tests of marketability. The final test of marketability must be conducted keeping in view the nature of the works contract and the value attached with the same. 89. In ultimate analysis, we find no ground to interfere with the impugned order dated 09.01.2020 of the Assessing Officer (respondent no. 2) and the notice of demand dated 25.01.2020 (Annexure '7 series'). 90. These writ applications have no merit. These are dismissed accordingly, however, there will be no order as to cost." The judgement was authored by Justice Praasd.
Justice Prasad observed:"....we are of the considered opinion that the Assessing Officer-Respondent No. 2 has rightly held that the petitioner had got the assembly erection, launching, fabrication work through the sub-contractor for which the petitioner paid sum of Rs.172,15,39,774.61/-. It is recorded in the impugned order that the representative of the petitioner admitted that these expenses were incurred in course of conversion of structural steel into steel structure by fabrication work. Keeping in view the judgment of the Hon'ble Supreme Court in the case of Gannon Dunkerley and Co. (1993) 1 SCC 364 (supra), paragraph '47' quoted hereinabove, we take a view that the cost of transportation launching and installation at the site are the part of the cost of steel structure which have been transferred in course of execution of works contract, therefore, respondent no. 2 has not committed any error in taking a view that the claim of the petitioner for deduction of Rs. 1,72,15,39,774.61/- is liable to be rejected. 88. The contentions raised with regard to the twin tests of transformation and marketability are also getting satisfied from the materials on the record. To us, it appears that the fact that the petitioner has undertaken to do the complete works in the contract and i.e. in the case of the works contract for which the petitioner is paid would make it clear that the ultimate transfer of the property in goods occurred when the goods were incorporated in the works. In the case of Quippo Energy Ltd. (supra), the Hon'ble Supreme Court has considered the tests of transformation in the facts of the said case whether the imported gensets and power packs were two different commodities with distinct constituent elements, structure and functional utility." He referred to the judgments in Quippo Energy Ltd. vs. Commissioner of Central Excise Ahmadabad-II (2025) 152 GSTR 26 and Gannon Dunkerley and Co. & Ors. reported in (1993) 1 SCC 364.
The seven writ applications were listed together for hearing. At the outset, counsel for the petitioners as well as the State have jointly submitted that the three writ applications, i.e. CWJC No. 3600 of 2020, CWJC No. 11625 of 2019, and CWJC No. 1716 of 2023, are required to be heard together as they involved identical questions for adjudication. The counsels have pointed out the order dated February 17, 2023, wherein the joint submissions of the parties have been recorded by the then learned coordinate Bench. So far as the other four writ applications (CWJC No. 3800 of 2019, CWJC No. 13258 of 2019, CWJC No. 13286 of 2019 and CWJC No. 13854 of 2019) are concerned, they do not involve the same legal issues but were ordered to be listed next below the above three cases. It was submitted that the fate of those four writ applications should depend upon the result of the three writ applications. Therefore, the High Court considered the other four writ applications together.
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