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TMI Blog1968 (2) TMI 113X X X X Extracts X X X X X X X X Extracts X X X X ..... appeal before the Tribunal was dismissed. The applicants then applied to the Sales Tax Tribunal for referring several questions formulated by them to this court, but the Tribunal, by its order dated 23rd September, 1964, referred only the following two questions to this court for decision: (1) Whether, having regard to the facts and circumstances of the case, the Tribunal was justified in law in coming to the conclusion that the contract in question essentially consisted of two contracts, one for supply of materials for money consideration, and the other for service and labour done? and (2) Whether the Tribunal was justified in coming to the conclusion that the Deputy Commissioner of Sales Tax was competent to determine the question under section 27 of the Bombay Sales Tax Act, 1953, on the application made under section 52 of the Bombay Sales Tax Act, 1959? It may be mentioned at the very outset that the second question set out above has not been pressed before us, and it is, therefore, unnecessary for us to answer the same. The first question referred to us embodies a question which is of frequent occurrence, viz., whether the contract in the present case, which admittedly in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... placed, the applicants would submit detailed plans for the approval of the said Ginning Co., and, in the event of any alteration or modification being made to the buildings and/or plant and/or plans between the date of the estimate and the execution of the work, the contract price would be adjusted accordingly. Even a cursory look at the specification and estimate of the work in question would show that the installation work was of an elaborate and technical nature, and had to be carried out, as is stated, at more than one place therein, by the skilled fitters of the applicants themselves. The pipes feeding the sprinkler apparatus were to be fixed to the ceilings, and the sprinkler heads spaced in accordance with the regulations of the Fire Offices Committee, and the pipes had to be graded in size according to standard practice and insurance requirements and screwed to a special taper tested to 700 lbs. per square inch. The cast iron fittings were made of a special mixture of metal and tapped with a taper thread so as to make a metal joint with the piping without the use of any jointing material other than ordinary steam cement. Controlling valves had also to be fitted, and it was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... atic alarm which is fitted, and controlling valves are also installed which include a stop valve to cut off the supply of water to the installation, after the fire has been extinguished. It is the contention of Mr. Rege for the applicants that this is one composite contract involving the supply of material as also the carrying out of work which, from its very nature, was never intended by the parties to be divisible. Mr. Banaji has, on the other hand, contended that, on a proper construction of the various terms of the specification and estimate through which he has taken us in detail, it is clear that, at several places, the materials have been mentioned separately from the work, that the contract in question is, therefore, a divisible contract, and that the part of it which relates to the sale of materials is liable to sales tax. Mr. Banaji has contended that the primary intention of the parties was the sale of standardised patented materials of which the applicants were the manufacturers, and he has stressed the fact that the work did not involve any fabrication of material for the particular use of the mills in question. In support of his contentions, Mr. Banaji has relied on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing at the time. Moreover, on any view of the matter, the supply of spare sprinklers would be in the nature of service rendered in advance by the applicants to the said Ginning Mills, and merely because 100 spare sprinklers were supplied, it cannot lead to the conclusion that the contract was intended to be divisible in regard to materials as distinguished from labour and work. Mr. Banaji has also relied upon the fact that there is no provision in the contract for maintenance by the applicants after installation, but, we are afraid, whilst the presence of a provision for maintenance or service after installation would tend to show that the contract which was under consideration was a works contract, the absence of it would not necessarily show that it was a contract of sale. Mr. Banaji has also relied on the fact that delivery of the materials was stated to be F.O.R. Bombay/Calcutta, and he has contended that that would show that property in the said goods passed to the said Ginning Co. the moment the goods were put on rail, either at Bombay or at Calcutta. Whilst that may be a legitimate inference to draw in regard to the passing of property when there is no express stipulation in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of the said transaction. Turning to authorities, the leading case on the subject is the case of the State of Madras v. Gannon Dunkerley & Co. (Madras) Ltd.[1958] 9 S.T.C. 353 at 381 et seq., which was a case of a building contract, but, in so far as the Supreme Court in the said case proceeded to some extent on the theory of accretion in regard to immovable property, and, in so far as the nature of a building contract is somewhat different from the contract in the present case, we do not think it necessary to discuss that case in detail. In our opinion, the present case falls more appropriately within another decision of the Supreme Court, and that is in the case of Carl Still v. State of Bihar[1961] 12 S.T.C. 449. in which the appellant entered into a contract with a company to set up a complete coke oven battery ready for production as well as by-products plants at Sindri in the State of Bihar, and to erect and construct the necessary buildings, plants and machineries. The sales tax authorities sought to impose sales tax on the appellant on the materials supplied in the execution of the said contract on the ground that such supply was a sale. The appellant filed a writ petitio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns, in which it is stated that a contract of sale is a contract whose main object is the transfer of the property in, and the delivery of the possession of, "a chattel as a chattel" to the buyer. The Supreme Court came to the conclusion that both the types of contracts before them in the said case were works contracts, the predominant idea underlying them being the bestowing of special skill and labour by the experienced engineers and mechanics of the respondents before them. Mr. Banaji has sought to distinguish the decision of the Supreme Court in Richardson & Cruddas case(2) on the ground that, in the said case, the material had actually to be fabricated by the said company, both in the case of steel structures, as well as in the case of bottle coolers which, according to Mr. Banaji, is not the case as far as the contract in the present case is concerned. In this connection, it may be mentioned that the word "fabrication" does not, as a matter of plain language, mean only the manufacture of the plant or machinery in question. In Webster's 3rd New International Dictionary, the meaning of the word "fabricate" as a verb is "to form by art and labour; manufacture, produce; to form in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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