1974 (10) TMI 84 - HC - VAT and Sales Tax

Summary

Issues:
1. Taxability of bus bodies built by assessees on chassis supplied by customers as sales of bus bodies under Central Sales Tax Act and Tamil Nadu General Sales Tax Act, 1959.

Analysis:
The judgment of the Madras High Court dealt with the issue of whether bus bodies built by assessees on chassis supplied by customers can be taxed as sales of bus bodies under the Central Sales Tax Act and the Tamil Nadu General Sales Tax Act, 1959. The court referred to a previous case, T.V. Sundram Iyengar and Sons v. State of Madras, where it was held that the transaction of building bus bodies on customer-supplied chassis constitutes a sale of goods. The court in the present case found that the property in the materials used to build the bus body passed to the customer only upon delivery of the completed bus body as a specific chattel fitted onto the chassis. The court emphasized that the transfer of property in the bus body amounted to a sale, regardless of separate pricing for components, as there was no separate contract for the purchase of materials worked into the chassis during body-building.

The court noted that the current cases were similar to the precedent case, except for the method of initiating the body-building work. While in the previous case, the work was undertaken based on a repair order, in the present cases, it was initiated through correspondence between the customer and the assessees. The correspondence involved the customer requesting the assessees to construct a bus body on the supplied chassis, with specifications provided by the customer and agreed upon costs. The court highlighted that the property in the materials worked into the chassis did not pass to the customer during the process of body-building, and there was no separate agreement for the sale of these materials. Consequently, the court concluded that the property in the bus body passed to the customer only upon delivery of the completed bus body, constituting a sale of the bus body by the assessees to the customer.

In line with the precedent set by T.V. Sundram Iyengar & Sons' case, affirmed by the Supreme Court, the Madras High Court dismissed the tax cases, upholding that the building of bus bodies on customer-supplied chassis constituted a sale of bus bodies by the assessees to the customers. The court ordered the dismissal of the petitions with costs and counsel fees awarded in each case.