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TMI Blog1977 (3) TMI 122X X X X Extracts X X X X X X X X Extracts X X X X ..... s a contractor dealing in fabrication of Vanguard rolling shutters and steel works. The assessee manufactures iron shutters according to specifications given by the parties and fixes the same at the premises of the customers. In the assessment year 1965-66, the assessee received an aggregate sum of Rs. 1,08,633.08 in the execution of such contracts. This amount was claimed by the assessee as not being liable to sales tax during the assessment year 1965-66 on the ground that the same represented the proceeds of works contract. The Sales Tax Officer rejected the plea of the assessee and the Assistant Commissioner (Judicial) on appeal also affirmed the order of the Sales Tax Officer. But the plea of the assessee appears to have found favour with the Judge (Revisions), Sales Tax, who decided that the amount was not exigible to sales tax, because the contracts in question were works contracts. Thereafter at the instance of the Commissioner, the revising authority made a reference to the High Court and referred the following question of law for its opinion: "Whether, under the circumstances of the case and under the terms of the contract, the supply of shutters and iron gates worth Rs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tute the rolling shutter as one unit, and taken separately they have no separate existence. It was further explained that the component parts do not constitute a rolling shutter unless they are affixed to and erected in the building in position and in the required manner. It was further alleged that the contract was not concluded merely by delivery of fabricated materials but was completed only after the same were taken to the site and finally erected and affixed to the site of the building. In order to fix them to the premises certain masonry work had to be done by the owner and that too according to the instructions of the contractor. It was also averred that in erection of the shutters some parts were permanently embedded into the walls and lintels and they become permanent fixtures which are not detachable. The allegations made in annexure C have not been controverted by the State either in this Court or before the High Court. Moreover, the Indian Standard Specification Book for Metal Rolling Shutters and Rolling Grills (sic) the particulars of the fittings of rolling shutters, whose authenticity has not been doubted by counsel for the parties, clearly shows that rolling shut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a works contract. It is well-settled that a works contract is a contact for construction of bridges, buildings, etc., and includes contracts which combine labour, skill and materials executed for a lump sum. The question as to under what circumstances a contract can be said to be a works contract is not free from difficulty and has to depend on the facts of each case. It is difficult to lay down any rule of universal application, but there are some well-recognised tests which are laid down by decided cases of this Court which afford guidelines for determining as to whether a contract in question is a works contract or a contract for supply of goods. One of the important tests is to find out whether the contract is primarily a contract for supply of materials at a price agreed to between the parties for the materials so supplied and the work or service rendered is incidental to the execution of the contract. If so, the contract is one for sale of materials and the sale proceeds would be exigible to sales tax. On the other hand, where the contract is primarily a contract for work and labour and materials are supplied in execution of such contract, there is no contract for sale of ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was not a works contract. We are, however, unable to agree with this contention, because, as discussed above, the materials were sent with various component parts which had to be taken at the site, fitted into one one another and then finally fixed into a frame so that the fixture became permanent and a part of the premises. The operation to be done at the site as required by the instructions in the Standard Book could not be said to be merely incidental to the contract but was a fundamental part of the contract itself. In our opinion, therefore, the decision in Man Industrial Corporation Ltd.'s case [1969] 24 S.T.C. 349 (S.C.)., fully covers the facts of the present case. It was further argued by Mr. Dikshit, the learned counsel appearing for the State, that it will appear from the terms of the contract that the price of the goods had to be paid in advance before delivery of the same to the customer which shows that the title to the shutters passed to the customer as soon as the shutters were packed and despatched to the site and the price paid and, therefore, the contract in the instant case could not be a works contract. It is not possible to accept this contention, because ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s bodies and fitted the same to the chassis provided by the customers and charged the price for building the body and fitting the same to the chassis. It was held by this Court that the contract was completed only when the complete bus with the body fitted to the chassis was delivered to the customer and, therefore, the supply of body being one single unit constituted a sale of goods. That case is clearly distinguishable from the facts and circumstances of the present case. In the first place, the supply of materials and completion of the contract was indisputably in respect of movable property; no immovable property was at all involved at any stage in the process of completion of the contract. The bus body built by the contractor was movable property manufactured by the contractor and had merely to be fitted to the chassis which was also movable property. Secondly, the bodies constructed and fitted to the chassis were easily detachable. In the instant case, the shutters were fabricated and fixed to an immovable property so as to become a permanent fixture and they were also not detachable. The High Court failed to have noticed these important features which distinguish the aforesa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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