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TMI Blog2004 (10) TMI 564X X X X Extracts X X X X X X X X Extracts X X X X ..... , commissioning and trial production undertaken by the dealer was a composite works contract but not a sale as chattel as a chattel?" 3.. In order to appreciate the question involved and referred few relevant facts need mention from the statement of case drawn by the Tribunal to this Court. 4.. The respondent is an assessee (dealer). They are engaged in the business of manufacture and sale of what is called "Pulverisers and separators ". In the financial year 1982-83, the assessee supplied three pulverisers to three different parties, namely (i) Harish Limpo Cement Products-Dalauda, for Rs. 30,600; (ii) Padmanibha Mineral Industries, Ramganj Mandi, Rajasthan, for Rs. 35,000 and (iii) Godavari Minerals and Chemicals, Andhra Pradesh, for Rs. 30,421. The composite price mentioned in the respective invoices included its erection and commissioning charges at the site of customer's plant/unit. 5. The question arose before the taxing authorities (assessing officer) about the taxability of these three transactions. According to assessee all the three transactions referred supra were of the nature of composite works contract and hence, did not amount to sale thereby not attracting any l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... supported the view taken by the Board and urged for answering the question against the Revenue and in favour of the assessee. 9.. Having heard learned counsel for the parties and having perused record of the case, we are inclined to answer the question against the Revenue and in favour of the assessee/dealer. In other words, we are inclined to uphold the reasoning/view taken by the Board as in our opinion it is in accord with the test laid down by the Supreme Court in decided cases. 10.. The question, as to whether particular contract is a contract of sale or a contract of work and labour, i.e., works contract is always considered to be a vexed one. Indeed, it is so observed by their Lordships of the Supreme Court in one of its classic decision rendered in the case of Sentinel Rolling Shutters & Engineering Company Pvt. Ltd. v. Commissioner of Sales Tax [1978] 42 STC 409. It is in this case, their Lordships examined the legal issue and laid down certain guidelines as to how and in what way, the issue of this nature should be examined by all courts in country. It is useful to quote in extenso the test laid down by the Supreme Court while deciding the nature of contract and its t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nor the value of the skill and labour as compared with the value of the materials is conclusive, although such matters may be taken into consideration in determining, in the circumstances of a particular case, whether the contract is in substance one for work and labour or one for the sale of a chattel.' The primary test is whether the contract is one whose main object is transfer of property in a chattel as a chattel to the buyer, though some work may be required to be done under the contract as ancillary or incidental to the sale or it is carrying out of work by bestowal of labour and service and materials are used in execution of such work. A clear case of the former category would be a contract for supply of air-conditioner where the contract may provide that the supplier will fix up the air-conditioner in the premises. Ordinarily a separate charge is provided in such contract for the work of fixing up but in a given case it may be included in the total price. Such a contract would plainly be a contract for sale because the work of fixing up the air-conditioner would be incidental to the sale. Then take a contract for constructing a building where considerable quantity of mate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... leaves were fixed to the building by bestowing labour and skill. It was, therefore, held to be a works contract. The same reasoning was applied by this Court in State of Rajasthan v. Nenu Ram [1970] 26 STC 268 (SC), for holding that a contract for supply and fixing or wooden doors and windows with sashes and frames and wooden chawkhats in the Police Lines building was a contract for work and labour. Let us, therefore, apply this test in order to determine what is the nature of the contract in the present case: is it a contact for sale or a contract for work and labour? " 11.. Indeed, it is this test which was applied by their Lordships in the facts of the case involved before them in Sentinel's case [1978] 42 STC 409 (SC), and it was accordingly, held by their Lordships that the contract in question that fell for consideration before them is a contract for work/labour, i.e., it is a works contract. As a matter of fact, the Board too in this case rightly applied this very test in finding out the true nature of contract of supply which is subjectmatter of this case and accordingly, returned a finding of fact in favour of assessee holding that the contracts in question are indivisib ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urt and High Court in support of their contentions. We have taken note of these decisions. In our opinion, it is not necessary to refer to any of them because the issue in question has to be decided on the basis of law laid down by the Supreme Court in the case of Sentinel's case [1978] 42 STC 409. That apart, all the decisions relied on by the learned counsel are already referred to and discussed by the Supreme Court in Sentinel's case [1978] 42 STC 409. It is also for this reason we do not consider it necessary to refer to each case. 16.. We are however inclined to accept the submission of learned counsel for the assessee when he contended that the question referred to this Court proceeds on the basis that factual findings are not assailed by the Revenue in so far as they relate to nature and composition of contracts in question. In other words, the Revenue has not made any attempt to question the correctness of the factual finding recorded by the Tribunal in favour of the assessee because no such question on that issue is referred to this Court. This Court, therefore, cannot examine de novo the nature of contract as such on facts/terms of contract but has to proceed on the ba ..... X X X X Extracts X X X X X X X X Extracts X X X X
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