1978 (2) TMI 198 - HC - VAT and Sales Tax

Summary

Issues:
Whether the contract for fabrication and supply of auditorium chairs constitutes a works contract for tax purposes.

Analysis:
The case involved an assessee who agreed to supply auditorium chairs to the Public Works Department. The assessing officer sought to tax the amount paid for the chairs, contending it should be included in the taxable turnover. The assessee argued that the contract was a works contract, not liable for taxation. The Supreme Court's decision in Vanguard Rolling Shutters & Steel Works v. Commissioner of Sales Tax was cited, emphasizing the distinction between a sale of goods and executing works. The assessee claimed the contract included fabrication, supply, and erection of chairs, making it a works contract. However, the court found no obligation in the contract terms to fix the chairs in the auditorium building, crucial for it to be considered a works contract. Despite the lack of evidence supporting the obligation to erect the chairs, the assessee failed to establish the nature of the contract as a composite one for sale and erection, leading to the dismissal of the revision petition. The court highlighted the absence of clauses or correspondence indicating the obligation to fix the chairs in the building, ultimately rejecting the assessee's argument for a works contract classification.

In conclusion, the court dismissed the revision petition, upholding that the contract for auditorium chairs was not a works contract. The lack of evidence supporting the obligation to erect the chairs in the building led to the rejection of the assessee's claim. The court emphasized the importance of contractual terms and surrounding circumstances in determining whether a contract constitutes a sale of goods or a works contract. Consequently, the turnover related to the chairs was deemed taxable, and the revision petition was dismissed with costs.