9911796707
TMI Blog1990 (1) TMI 293X X X X Extracts X X X X X X X X Extracts X X X X ..... The revision petitioner, Waves Electronics (P.) Ltd., is engaged in the manufacture and sale of electrical goods and it also undertakes contracts for designing, execution and installation of various electrical goods. For the assessment year 1979-80, the petitioner filed a return for Rs. 5,91,332.60 and it did not include in the return the amount of Rs. 1,35,411 which it received towards fabrication, supply and installation of M.V. switch boards for Kunnathara Textiles Ltd., Calicut. That work was executed in pursuance of an order placed by them on November 8, 1977. That amount is not included in the taxable turnover as it represents receipts from a works contract and not from sale of goods. The Sales Tax Officer rejected the contentions a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e categorically held that contracts where majority of the value is for the work done are works contracts, though incidentally some goods are sold in such works contracts, especially the material involved in the works contracts has necessarily to be sold to the customer. He places reliance upon the very decisions which are referred to by the Tribunal in its order. 4.. On behalf of the Revenue-respondent, the Government Pleader contends that this is a case where the switch boards are to be assembled as per the specifications and designs given by the party and the value of the skill involved in assembling and fabricating the switch boards is very limited. In the very contract it is clearly mentioned that most of the value is for the switch b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The specifications enclosed are given at page 23. A perusal of page 23 clearly indicates that the very drawings are to be prepared by the assessee. Preparation of drawing, designing, assembling, supply and erection has to be done by the assessee. The clause relating to inspection, testing and trial run clearly stipulates that the switch boards will be finally accepted only after supply, erection, commissioning and trial run to the satisfaction of the receiving party. As regards the clause relating to components, it clearly stipulates that the components should be of the best possible grade, and the list of components and the manufacturers' name should be given along with the control panels, drawings, etc. There are various other stipulation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al in support of its decision. 6.. The Tribunal looking at the table of rates given in the contract came to the conclusion that there are two contracts, and that the first contract is for the supply of switch boards and the second contract is for installation. It failed to give importance to the element of designing and fabrication. Referring to the decision in State of Madras v. Richardson Cruddas Ltd. [1968] 21 STC 245 (SC), it quoted a passage from Halsbury's Laws of England, Vol. 34, page 6. But it failed to apply the crucial test indicated in that passage. The crucial test indicated in that passage is: "The test is whether or not the work and labour bestowed end in anything that can properly become the subject of sale; neither the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... If we apply the test to the facts of this case, we find that the contract is a works contract. 8.. In the penultimate paragraph of the Tribunal's order, the Tribunal committed a factual mistake in thinking that the drawings were supplied by the customer. A perusal of the contract and the specifications clearly indicates that the drawings are to be made by the petitioner-assessee, who undertook the works contract. Only specifications were given by the customer and various standards were insisted upon for the work that is to be executed. 9.. Judging from whatever angle, we find that the contract is a works contract. The Tribunal is not justified in coming to the conclusion that the contract dated November 8, 1977, is a contract for sale ..... X X X X Extracts X X X X X X X X Extracts X X X X
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