1967 (8) TMI 115 - HC - VAT and Sales Tax

Summary

Issues:
1. Determination of whether transactions involving bus-bodies are sales of goods or works contracts.
2. Assessment of tax liability under the Madras General Sales Tax Act, 1939.
3. Interpretation of relevant provisions regarding additional tax on bus-bodies under section 3(2) of the Act.

Analysis:
1. The main issue before the court was to ascertain whether the transactions related to bus-bodies constituted sales of goods or works contracts. The contracts in question involved the supply of bus-bodies to the State Government under specific tender notices, offers, and acceptances. The department and the Tribunal considered these transactions as sales of goods, while the assessee argued that they should be treated as works contracts. The court examined the tender notice, offer, and acceptance in detail to determine the intention of the parties. Despite various arguments presented, the court concluded that the predominant intention was the purchase of completed bus-bodies as chattels by the Government, to be mounted on chassis supplied by them before delivery. The court emphasized that the property in the bus-bodies did not pass to the Government until the completion and delivery of the buses, supporting the view that the transactions were indeed sales of goods.

2. Regarding the tax liability under the Madras General Sales Tax Act, 1939, the court upheld the department's and Tribunal's decision that the transactions in question were subject to tax as sales of goods. The court compared the terms of the contract with a similar case previously interpreted by the Supreme Court and found similarities, leading to the conclusion that the transactions should be treated as sales of goods. The court rejected the assessee's arguments and affirmed the tax liability on the transactions involving bus-bodies.

3. In T.C. No. 51 of 1965, an additional tax was imposed on the turnover relating to bus-bodies based on section 3(2) of the Act. The department relied on specific items in the provision to levy the additional tax. However, the court determined that bus-bodies did not fall within the description of component parts or accessories of motor vehicles as outlined in the relevant item. The court noted that bus-bodies were not considered as such in the subsequent year, leading to the conclusion that the additional tax charged could not be sustained. As a result, T.C. No. 51 of 1965 was partly dismissed and partly allowed, while the other tax revision case was dismissed, with no order as to costs in either case.