TMI Blog1984 (11) TMI 304X X X X Extracts X X X X X X X X Extracts X X X X ..... 960, the respondents were assessed by the Sales Tax Officer, Poona City III Division, on 27th July, 1976. Being aggrieved by the assessment order they filed an appeal to the Assistant Commissioner of Sales Tax, Poona. In appeal the assessment order was challenged on the ground, inter alia, that sales of Rs. 1,98,602 were not liable to be taxed as these sales were in the course of inter-State trade. This ground was taken because the said goods were purchased by the respondents from a dealer in Baroda and they were discharged directly from a place outside the State to the said Karkhana to whom the goods had been sold by the respondents. Before the Assistant Commissioner the respondents also made a fresh claim for exemption which was not set out in the memorandum of appeal. They claimed that sales of Rs. 6,47,000 were not liable to tax as they were sales in the course of import. These claims were negatived. 3.. The respondents thereupon went in second appeal before the Tribunal. They contended before the Tribunal for the first time that there was in fact no sale of machinery by the respondents to the said Karkhana. It was for the first time argued that the first agreement of 20th Ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es tax and other taxes but includes railworthy packing and/or single protective coat (of) painting as far as necessary. 8.. The first part of clause 5 of the contract is as follows: "5. ERECTION: (a) The sellers undertake to provide the purchasers with one Chief Erector and as many assistants as necessary to complete the erection of the plant before the end of December, 1960, and to supervise putting into commission and operation in accordance with guarantees. The Chief Erector will be made available to the purchasers-approximately two weeks before the first machinery and equipment arrives at the factory site. (b) The sellers undertake to hand over to the purchasers: (i) Within four months after signing this agreement a time-schedule for all the erection work which if adhered to, will enable the erection and putting into operation of the sugar factory by the 1st January, 1961. (ii) Within four months after signing this agreement a list of all tools and tackles needed for the erection of the machinery and equipment. (iii) Within four months after signing this agreement, a list showing the equipment of a small workshop required for the erection and running of the fact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed by the Industrial Advisor to the Government of India to the respondents, in which there is a reference to the respondents' quotation for the supply of a complete sugar plant. This is a letter addressed by a third party to the respondents some time prior to the entering into of the contract of 20th May, 1959. It is difficult to see how such correspondence with a third party can indicate the intention of the contracting parties. When the intention of the parties has crystallised in the form of a contract, the intention of the parties must be gathered from the terms of the contract. The terms of the contracts in the present case are quite clear and unambiguous. The contract of 20th May, 1959, is a contract for the sale of machinery and equipment for a total price of Rs. 84 lakhs. There is one clause in this contract, viz., clause 5, which deals with erection. But when one looks at the actual terms of this clause, this clause requires the respondents to provide one Chief Erector and as many assistants as necessary to complete the erection of the plant and to supervise the putting into commission and operation of the plant in accordance with guarantees. Apart from providing the serv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on work. It is true that both the contracts are entered into with the respondents. So that the respondents are both suppliers of machinery and equipment as well as erectors of this machinery and equipment. But two separate contracts have been entered into for these two types of obligations. The fact that the same party has incurred both these obligations cannot render two separate contracts, arrived at with an interval of one year, a single composite works contract. It is true that in the first agreement of sale, clause 5 provides for certain services to be rendered by the respondents. But a separate payment is provided for these services. These services relate to supply of personnel and furnishing various lists and schedules. The services are therefore quite distinct from the sale of machinery. This part is therefore, clearly divisible from the rest of the contract. 15.. In the case of Sentinel Rolling Shutters Engineering Company Pvt. Ltd. [1978] 42 STC 409 (SC), the Supreme Court pointed out that there are three types of such composite contracts for sale and work: (i) The contract may be for work to be done for remuneration and for supply of materials used in the execution ..... X X X X Extracts X X X X X X X X Extracts X X X X
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