1972 (8) TMI 121 - HC - VAT and Sales Tax

Summary

Issues:
Interpretation of transactions involving fabrication, supply, and erection of trusses, purlins, etc., as works contracts or sales contracts.

Analysis:
The case involved a dispute over the nature of transactions where the assessee undertook to fabricate, supply, and erect iron trusses, purlins, etc., at customers' premises. The assessee argued that these were works contracts, not outright sales, with a lump sum amount fixed for the contract. The Tribunal, relying on a previous decision, held that these were sales of fabricated materials. The High Court analyzed the correspondence between the assessee and customers, noting that the invoices did not specify a separate amount for the trusses' cost. Drawing from precedents, the court considered the nature of such contracts, distinguishing between works contracts and sales contracts based on the passing of property. It referred to various cases, including one where the Supreme Court held that a contract for fabrication and fixing of windows did not involve a sale of goods. The court also cited cases where contracts for making doors, windows, and installing machinery were deemed indivisible works contracts. Ultimately, the High Court concluded that the transactions in question could not be dissected into separate sale and erection components, as the property in the trusses passed to the customer only upon erection, not before. The disputed turnover was adjusted, with a portion conceded as a sale of goods, leading to the tax case being allowed in part in favor of the assessee.

This judgment delves into the distinction between works contracts and sales contracts in the context of fabrication, supply, and erection of structures. It highlights the importance of analyzing the passing of property to determine the nature of the transaction. By examining previous decisions, the court establishes a framework for evaluating similar cases, emphasizing the indivisible nature of certain contracts involving both supply and installation components. The judgment provides clarity on how to interpret such transactions, ensuring a consistent approach in determining tax liability.