9911796707
TMI Blog1975 (9) TMI 166X X X X Extracts X X X X X X X X Extracts X X X X ..... bour involved in fixing them at the premises. In the assessment year in dispute, namely, 1965-66, the assessee received a sum of Rs. 1,08,633.08 in the execution of such contracts. It was claimed before the Sales Tax Officer that the turnover in dispute was not liable to tax as it represented the proceeds of a contract of work and labour and not a contract of sale of goods. This contention was not accepted by the Sales Tax Officer nor by the Appellate Assistant Commissioner but found favour with the revising authority. The Commissioner, being aggrieved, asked for a reference to this court and the revising authority has submitted the statement of the case and the following question of law for our opinion: "Whether, under the circumstances ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mstances of a particular case, whether the contract is in substance one for work and labour or one for the sale of a chattel." In Commissioner of Sales Tax v. Haji Abdul Majid and Sons[1963] 14 S.T.C. 435., a Division Bench of this Court had to deal with the question as to whether a bus body constructed by a person out of his own material and fixed on the chassis supplied by the customer amounted to a contract of sale of bus body or a contract of work and labour. It was held that the contract was a contract of sale of bus body and not a contract of work and labour. The following observations have a direct bearing on the question before us: "If an article is sold it makes no difference whether the assessee prepared it in accordance with th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was concerned with a building contract which is one and indivisible. It was held that in the case of such a contract the property in materials used does not pass to the other party to the contract as movable property. It would so pass if that was the agreement between the parties. If there was no such agreement and the contract was only to construct a building, in that case, the materials used therein would become the property of the other party only on the theory of accretion, the theory of accretion being that whatever is embedded or affixed to immovable property becomes the property of the owner of the immovable property as and when it is embedded or fixed. If the contract is to construct a building, then the various materials, like bri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is cost according to our instructions. 5.. Prices are subject to change without notice and are exclusive of all taxes, duties and impositions, which may be charged as applicable. 6.. No responsibility lies for non-delivery or late despatch of goods due to any reason beyond our control. 7.. Only Agra courts will have jurisdiction." On the terms of the contract it is clear that the intention of the parties was that the assessee should manufacture iron shutters according to the specifications supplied by the purchaser and deliver them to the purchaser or his representative against payment of full price in cash or negotiate documents through a bank. Although the assessee had also undertaken to fix the iron shutters at the premises of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... supplied by a customer is a contract of sale and not a contract of work and labour because the property in the materials used in the construction of the bus body does not pass to the purchaser until the entire body is complete and delivery thereof is given to the purchaser. The Supreme Court has distinguished the cases of construction of railway coaches where the property in the material used in the construction vests in the railways and the contractor may be responsible merely for the safe custody of the material. In Commissioner of Sales Tax, U.P. v. Ram Singh and Sons Engineering Works[1975] 36 S.T.C. 10., a Division Bench of this Court has recently examined a similar question in detail. There the assessee carried on the business of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1,160 per tonne. The Supreme Court held that on the facts it was a works contract and not a contract for sale inasmuch as the property in the material used for the erection of steel works and doors, etc., passed actually when the erection was complete and not at any earlier stage. In other words, there was no contract of sale of material as such. The case of State of Rajasthan v. Nenuram [1970] 26 S.T.C. 268 (S.C.). is also a case of fixing of wooden windows and doors in a building. The Supreme Court, relying upon its earlier decision in the case of State of Rajasthan v. Man Industrial Corporation[1969] 24 S.T.C. 349 (S.C.). , held that the contract was a contract of work and labour and not a contract of sale. The case of Commissioner of ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
