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TMI Blog1990 (11) TMI 363X X X X Extracts X X X X X X X X Extracts X X X X ..... ax by issuing "C" forms. The assessments were confirmed on appeal by the Assistant Commissioner of Taxes. The Assistant Commissioner also held that disposal of taxable materials bought by using "C" forms has to be considered as sale and tax levied thereon. The appeals were accordingly rejected. Further appeal was preferred before the Tripura Sales Tax Tribunal. The Tribunal considered the dispute from a different angle. It considered as to whether the contract in question was an indivisible works contract or a composite contract for work and sale of goods. On consideration of the terms of the contract, it came to a finding that it was a contract of sale and the job-work thereunder, namely, erection and installation was only incidental to the contract of sale. It did not decide the correctness of the stand taken by the Superintendent of Taxes and the Assistant Commissioner of Taxes that as the goods in question were purchased on payment of sales tax at concessional rate by issuing "C" forms under the Central Sales Tax Act, 1956 there was implied sale of such goods. The petitioner has challenged the aforesaid order of the Tribunal on the ground that the Tribunal was not justified i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uthority to levy any tax on the 'assumed sale' of the materials purchased by the petitioner and used in works contract. Such an assumption is not warranted in a taxing statute. If, according to the assessing officer, the goods purchased on the strength of 'C' form issued under the Central Sales Tax Act were not used for the purposes for which they were purchased, he could have taken any action against the dealer for such misuse as might be permissible under the said Act. There is a specific provision in section 10(b) of the Central Sales Tax Act to deal with such a situation. But that cannot be a ground for levying tax under the Tripura Sales Tax Act without there being a sale of such goods in the State of Tripura. In view of what is stated above, we are of the opinion that no tax can be levied under the Tripura Sales Tax Act in respect of materials used by the petitioner as a photographer in the works contract undertaken by him as there is no 'sale' of such materials in Tripura within the meaning of clause (g) of section 2 of the Act." The first question, therefore, is fully answered by the aforesaid decision. We now turn to the next question, namely, whether the contract ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... right to claim over the same. N N shall have to furnish manufacturers' certificate against the equipment as and when desired by TJML. ................ 5.00 Warranty: The N N agrees to furnish warranty for satisfactory supply and erection of the machines/equipments. Any defects due to improper fitting or workmanship shall be rectified to the satisfaction of the TJML engineer/ consultant and engineer of the suppliers of machines. Any breakages or damages of components/equipments during handling, erection shall be replaced or made good of at the earliest possible date." "N N", that is, Nandi Nandi in the aforesaid clauses refers to the petitioner and "TJML" is the abbreviation of Tripura Jute Mills Limited. From the nature of the works, the items of works and the terms and conditions of the contract, it is clear that the contract is for supply, delivery, erection and commissioning of lighting system (indoor and outdoor) along with sub-distribution board. Execution of this contract also involves use of some materials. The essence of the contract is erection and commissioning of the lighting system with sub-distribution board. It is to be erected and installed at the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is only by bestowing work and labour upon them, as for example, by affixing them to the building in case of window leaves or wooden doors and windows that they acquire commercial identity, would be prima facie indicative of a works contract. So also where certain materials are not merely supplied but fixed to an immovable property so as to become a permanent fixture and an accretion to the said property the contract prima facie would be a works contract These are some of the basic tests that are often applied by the courts to decide whether in a particular case the contract is a works contract or not. We may refer in this connection to the decision of the Supreme Court in State of Rajasthan v. Man Industrial Corporation Ltd. [1969] 24 STC 349. In that case the contract was to prepare window leaves according to specification and to fix them to the building. It was held by the Supreme Court that fixing the window leaves to the building was not incidental or subsidiary to the sale but an essential term of the contract, because the contract became complete only after the windows were fixed as stipulated in the contract. In Vanguard Rolling Shutters Steel Works v. Commissioner of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ur and not a contract for sale. It was observed (at page 202): "....................the fabrication and erection of a 3-motion electrical overhead travelling crane is a highly skilled and specialised job and the component parts have to be taken to the site and they are assembled and erected there and it is only when this process is complete then a 3-motion electrical overhead travelling crane comes into being. The process of assembly and erection requires a high degree of skill and it is not possible to say that the erection of a 3-motion electrical overhead travelling crane at the site is merely incidental to its manufacture and supply. The fabrication and erection is one single indivisible process and a 3-motion electrical overhead travelling crane comes into existence only when the erection is complete. The erection is thus a fundamental and integral part of the contract, because without it the 3-motion electrical overhead travelling crane does not come into being. The manufacturer would undoubtedly be the owner of the component parts when he fabricated them, but at no stage does he become the owner of the 3-motion electrical overhead travelling crane as a unit so as to transf ..... X X X X Extracts X X X X X X X X Extracts X X X X
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