TMI Blog1966 (9) TMI 90X X X X Extracts X X X X X X X X Extracts X X X X ..... es tax under the Bombay Sales Tax Act (3 of 1953). Messrs Kailash Engineering Co. (hereinafter referred to as "the respondent") was an engineering concern having their workshop at Morvi on the meter gauge section of the Western Railway. They obtained a contract from the Western Railway Administration for construction of III class passenger coaches on certain conditions described as the conditions of tender. Under that contract which was reduced to writing and was described as an agreement, the respondent constructed three coaches and submitted a bill which was properly certified in accordance with the agreement by the Railway Administration on October 4, 1958. The net value of the work done by the respondent was certified at Rs. 1,22,035. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to a sale. Consequently, this appeal has been brought up by the State of Gujarat challenging the correctness of the decision of the High Court. The Tribunal, when dealing with the case, mentioned a few of the terms of the contract entered into between the respondent and the Western Railway Administration, and, though there was a provision in one of the clauses of the agreement that as soon as the plant and materials were brought on the site where the coaches were to be constructed, the ownership in them would vest in the Railway, the Tribunal held that the ownership in those materials never passed to the Railway because of the indication given by another clause which provided that on removal of contractor or on rescission of contract, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ials for building the coach bodies had to be obtained by the respondent and brought to the site of construction, but the provision that the ownership in those materials would vest in the Railway as soon as those materials were brought to the site clearly indicated that the respondent, in purchasing those materials, was acting more or less in the capacity of an agent for the Railway. While the materials were at site, the effect of vesting of their ownership in the Railway was that if they were destroyed or damaged, the risk had to be borne by the Railway, even though the Railway might have been entitled to reimburse itself, because those materials and goods were in the custody of the respondent on behalf of the Railway. In fact, under clause ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owever, appears that the facts and circumstances, on the basis of which the Court gave that opinion, do not find place in the case before us. Three main circumstances were relied upon in that case for hold- ing that the transaction amounted to a sale and not to a works contract. The first circumstance was that the bus bodies were, throughout the contract, spoken of as a unit or as a composite thing to be put on the chassis, and this composite body consisted not only of things actually fixed on the chassis but movable things like seat cushions, and other things which could be very easily detached. In the contract, with which we are concerned, the coach bodies are not separately described as units or, components to be supplied by the respon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e liability for the loss, if a fire took place and the bus bodies were destroyed or spoiled. In that case, there was a provision for insurance of the chassis, but there was no such provision regarding insurance of bus bodies, and the Court inferred that till delivery was made, the bus bodies remained the property of the appellant on whom the loss would fall. On the other hand, in the contract with which we are concerned, the terms envisaged the property in the unfinished bodies vesting in the Railway, and since those unfinished bodies were to be in charge of the respondent during construction, a special provision had to be made making the respondent responsible for the loss and throwing upon the respondent the liability to reimburse the Rai ..... X X X X Extracts X X X X X X X X Extracts X X X X
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