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TMI Blog1970 (12) TMI 84X X X X Extracts X X X X X X X X Extracts X X X X ..... per cent. as was applicable to sales of general goods as provided under the charging section 5 of the Act at the relevant time, but at the rate of 7 per cent. as provided under item 7 of Schedule II of the Act, presumably on the basis that the bus and lorry bodies would come under component parts of motor vehicles. The case of the petitioner is that the transactions which he entered into for building bus and lorry bodies on the chassis supplied by the customers do not amount to sales and they are works contracts only and therefore they are not exigible to sales tax. The further contention of the petitioner is that even assuming that the transactions amount to sales, they are liable to tax only at 2 per cent. as provided in the charging section 5 of the Act as the bus and lorry bodies would come under general goods only and they cannot be said to be component parts of motor vehicles. All the Tribunals provided under the Act, namely, the Deputy Commercial Tax Officer, the primary assessing authority, on appeal the Assistant Commissioner of Commercial Taxes and on further appeal the Sales Tax Appellate Tribunal concurrently found against the petitioner on both the points. Sri W.V.V. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... consideration, and includes any transfer of materials for money consideration in the execution of a works contract provided that the contract for the transfer of such materials can be separated from the contract for the services and the work done, although the two contracts are embodied in a single document............." It is nobody's case that in the transactions we are considering, there was a contract for supply of materials separately apart from the contract for the services and the work done. Therefore, we can forget about this aspect of the definition of sale for the purpose of our present case. It is enough to remember that the term "sale " means every transfer of property in goods by one person to another in the course of trade or business for price. The term "works contract" is defined in section 2(t) of the Act as meaning "any agreement for carrying out for cash, or for deferred payment, or for other valuable consideration, the construction, fitting out, improvement or repair of any building, road, bridge or other immovable property or the fitting out, improvement or repair of any movable property." Therefore, the point for consideration is whether the transactions in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd the materials used are only ancillary. Also it may not always be possible on the basis of this criterion alone to decide whether a particular contract involves sale of goods or it is only a works contract. As mentioned in several decided cases, each contract has to be looked at on its own terms to decide the question having regard not merely to the particular terms expressed in the various parts of the agreement but the contract read as a whole. In the present case, the agreements are for the construction of bus or lorry bodies to be fitted on the chassis supplied by the customers and the price paid is so much per body. The bills were made on the basis of the bodies supplied. Without supplying the bodies loosely, the bodies might have been supplied after fitting the same to the chassis supplied by the customers. That by itself cannot make much difference. Even if the contracts involve also fitting of the bodies to the chassis, the contracts are essentially to supply bodies. It may also be true that they were not made ready beforehand and supplied as soon as the contracts were placed and they were made and supplied only after the agreements were entered into and according to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oduct which can become a proper subject of sale and when the work is complete the customer or purchaser takes delivery of possession of the bus body fixed to his chassis. In the circumstances the conclusion is inescapable that there takes place a transfer of the property in the bus body built by the assessee and it would be difficult to hold that the transaction so made is not a contract of sale of the bus body, but is a contract for work and labour. * * * If under a contract an article is to be prepared from the assessee's materials and it is to be fitted to something belonging to the purchaser it is immaterial if the assessee takes the article to the purchaser's premises and fixes it on the thing, or the purchaser takes the thing to the assessee's premises and the assessee fixes it on it and delivers the whole thing to the customer. If a customer takes the thing to the assessee's premises and asks him to fix the article, it makes no difference whether the assessee prepares the article first and then fixes it to the thing or starts preparing the article on the thing itself so that when the whole work is finished the result is the same as if the article has been prepared separate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... otice a decision of the Supreme Court in State of Rajasthan v. Man Industrial Corporation Ltd.[1969] 24 S.T.C. 349 (S.C.). In that case, the facts are: Pursuant to an invitation of the Executive Engineer, the respondent submitted its tender for fabricating and fixing certain windows in accordance with specifications, designs, drawings and instructions. The work was to be completed within six months from the date of its acceptance and the windows were to be fixed to the building. The rate quoted by the respondent was based on the current price of mild steel billets and the price was to be revised if there was a change in the controlled price of billets supplied to the respondent. The tender was accepted and the respondent carried out the contract. The question was whether the sum of Rs. 23,480 received under the contract could be included in the taxable turnover for the purpose of sales tax. The Supreme Court held that "the contract undertaken by the respondent was to prepare the window-leaves according to the specifications and to fix them to the building. There were not two contracts-one of sale and another of service. Fixing the windows to the building was also not incidental or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce or transmission. Therefore, without something being built on the chassis it cannot become a vehicle. Therefore, the chassis plus the body would form a vehicle. In the Chambers's Dictionary, the meaning of the word "component" is given as forming one of the elements or parts; one of the parts or elements of which anything is made up, or into which it may be resolved. In the same dictionary, the meaning of the word "part" is given as something less than the whole; a portion; that which along with others makes up, has made up, or may at some time make up, a whole; a constituent; a member or organ. Having regard to the meaning that can be given to the words "component" and "part", it appears clear that the body of a motor vehicle is certainly a part or a component of the motor vehicle. Though the bodies of motor vehicles do not find a place specifically in the description of goods given under item 7 of Schedule II of the Act, none the less they would come under that item as parts or components of motor vehicles. A similar view was taken by the Allahabad High Court in Commissioner of Sales Tax, U.P. v. Pritam Singh[1968] 22 S.T.C. 414. The Allahabad High Court held that the body moun ..... X X X X Extracts X X X X X X X X Extracts X X X X
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