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TMI Blog1981 (9) TMI 250X X X X Extracts X X X X X X X X Extracts X X X X ..... the taxable turnover under the Tamil Nadu General Sales Tax Act. A reference to the terms of the contract between the parties, which has to be culled out from the correspondence between them, shows that the assessee undertook to design, manufacture and construct at the workspot of Satyanarayana Brothers, 8 Nos. of 20 tonnes capacity Goliath cranes and 6 Nos. of 7.5 tonnes capacity revolving cranes, for an overall consideration of Rs. 21,32,500. The responsibility of the assessee was to design and construct at the site of the customer the cranes described above. The time for completing the construction on the site was from 6 to 9 months. The payment of the consideration was one-third of the consideration by way of advance, another one-third within four months from the date of the order and the balance after the crane was made ready at the spot. The final bill made out by the assessee to Satyanarayana Brothers also refers to the subject-matter of the contract between the parties as to the designing, manufacture and construction at the site of the customer of the several cranes in question. The assessing authority, however, treated the transaction as a sale pure and simple. The Appell ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oard was not justified in reversing this order. The revision before us which is the other connected tax case, involves the consideration of as many as three transactions, which we will take up and consider one by one. The assessee entered into a contract with the Cochin Shipyard. The terms and conditions of the contract between the parties can be elicited from the purchase order of the Cochin Shipyard dated 25th September, 1972. In the very forefront of the purchase order, the Cochin Shipyard States as follows: "You offer to design, supply, erect and commission the following equipments at the rates noted against each and as per the 'terms and conditions stipulated in our conditions of contract.....................................................' is hereby accepted.". The details of the order, as set out in the same purchase order, referred to the design, manufacture, supply, erection and commissioning of 50 tonnes capacity, class II outdoor service E.D.T. cranes. The order form mentions the cost of the cranes, per unit, as well as the cost of erection and commissioning of the cranes at the site. There is also a provision for supply of tools along with the equipment. The or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of taking over of the equipment by the project authorities. The terms and conditions of the agreement, which we have briefly summarised above, leave no doubt in our minds that the contract under which the assessee undertook to place at the disposal of Lower Jhelum Hydel Project authorities, cranes of their manufacture, was not a contract for the sale of the equipment, but a contract of work and labour, involved in the erection of the crane at the workspot of the project. We also hold that although the charges for erection are separately mentioned, the subject-matter of the contract is an integrated transaction, the erection and commissioning of the crane being inseparable from the rest of the subject-matter of the contract. We are accordingly of the view that the receipts from this contract, cannot be treated as taxable turnover involved in the sale of goods. The last transaction, which requires our examination from the point of view of its assessability or exemption, as the case may be, from the provisions of the Central Sales Tax Act is a contract between the assessee and the Himachal Pradesh Government, which was entered into in connection with the provision of a crane in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fting beam, tools, etc., as per your A/T cited above." Although the terms of the contract cannot be unerringly gauged by the way the ultimate bill is made out, the fact that the bill has been made out by the assessees themselves in this particular form cannot be rejected as possessing no significance whatsoever. Restricted, as it is, to the design, manufacture and supply of the crane, the bill clearly shows that the assessees themselves made a clear-cut distinction between the supply of the crane, as such, and the rest of the charges, which they had recovered from the project authorities. On a consideration of the contract as well as the surrounding circumstances, we are satisfied that the receipts by the assessee from Baira Siul Project authorities of the sum of Rs. 10,85,236 must be held to be taxable as sales turnover in cranes. The three transactions, which we have referred to above, between the assessee on the one hand, and the Cochin Shipyard, Lower Jhelum Hydel Project authorities and Baira Siul Project authorities, respectively on the other, were considered by the Tribunal in the appeal. The Tribunal, in its order, has referred to the acceptance of tender which is the b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Sentinel Rolling Shutters Engineering Company P. Ltd. v. Commissioner of Sales Tax [1978] 42 STC 409 (SC). But there is a nearer case decided by the Supreme Court, which might almost be regarded as a direct decision on the subject, vide Ram Singh Sons Engineering Works. v. Commissioner of Sales Tax [1979] 43 STC 195 (SC). That was a case where an assessee, a firm carrying on business in the manufacturing and erection of cranes, entered into certain contracts with its customers and earned trading receipts therefrom. The question before the Supreme Court was, whether those receipts can be regarded as sales turnover, or on the contrary, receipts from works contracts. While addressing themselves to the particular terms of the contract, which related to fabrication and erection of three-motion electrical overhead travelling cranes, the learned judges with the opportunity to make certain observations of a somewhat general character. Those observations may be reproduced as being of general application in cases of this kind. "The fabrication and erection is one single indivisible process and a 3-motion electrical overhead travelling crane comes into existence only when the erecti ..... X X X X Extracts X X X X X X X X Extracts X X X X
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