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TMI Blog1969 (2) TMI 130X X X X Extracts X X X X X X X X Extracts X X X X ..... ut the contract. The Sales Tax Officer, 'B' Circle, Jaipur City, included in the taxable turnover of the respondent Rs. 23,480 received under the contract. He held that the contract with the Executive Engineer was one of sale of goods and the respondent had with a view to promote sales of goods manufactured by it "voluntarily offered to fit" the goods and had made no separate charge for that service. The Deputy Commissioner, Excise and Taxation, in appeal held that from the acceptance of the tender, two contracts resulted: one for providing doors and windows and another for "fixing" those doors and windows in a specified building, and that the price of the goods supplied, but not the charge for service, was taxable. He accordingly remanded the case with a direction to assess tax on the price for sale of materials only. The Board of Revenue exercising revisional power confirmed the order passed by the Deputy Commissioner observing that the contract undertaken by the respondent was not a contract of service. The following question was referred by the Board of Revenue to the High Court of Rajasthan: "Whether on the proper interpretation of the contract between the applicant and th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed sections used in the fabrications will be made in the quotation. 6.. Sales tax or any other tax is applicable will be extra. 7.. Work will be completed in 6 months from the date of order." These were followed by specifications relating to the steel to be used in the fabrication, glazing, fittings and finish of the windows. The respondent offered to execute and complete the "work" mentioned in the written memorandum according to the specifications and conditions. In the view of the High Court the contract was for work, in the execution of which some movable property passed: it was not a contract for sale of windows and for rendering service in connection with the fixing of those windows. Counsel for the State of Rajasthan contends that the respondent carried on the business of fabricating and selling window and door leaves and sashes etc. and entered into a contract for "sale of windows", and to promote sale of its manufactured goods, undertook to fix the windows without demanding any charge for that service, and the High Court was in error in holding that the contract was one of service in the execution of which property in the materials supplied by the respondent passed. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... all the circumstances, we are of the view that the object of the respondent was to enter into a works contract. That clearly appears from the terms of the tender and its acceptance. The windows were to be fabricated according to the specifications with glass-plain or ground-as decided by the Engineer in Charge, and were to be "fixed" within six months from the date of its acceptance "to the building with rawl plugs in cut stone-works". The rate quoted by the respondent was based on the current price of mild steel billets, and the price was to be revised in the light of cost revision of the controlled price of steel supplied to the respondent. The contract undertaken by the respondent was to prepare the window-leaves according to the specifications and to fix them to the building. There were not two contracts-one of sale and another of service. "Fixing" the windows to the building was also not incidental or subsidiary to the sale, but was an essential term of the contract. The window-leaves did not pass to the Union of India under the terms of the contract as window-leaves. Only on the fixing of the windows as stipulated, the contract could be fully executed and the property in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e lights with accessories. The assessees charged their customers consolidated rates for the materials consumed and labour involved, in carrying out the contracts. The Sales Tax Officer charged to tax under the Bombay Sales Tax Act, 1959, the value of materials supplied in carrying out the contracts. It was held by the High Court of Bombay that the transaction of the assessees with their customers was not a pure works contract, but a combination of two distinct and separate contracts, one for the supply or the sale of goods for consideration, and the other for the supply of work and labour, and only that part of the contract, which consisted of supply of goods for consideration, was liable to tax under the Sales Tax Act. That case was brought in appeal to this court at the instance of the assessees. This court in Arun Electrics v. Commissioner of Sales Tax, Maharashtra State [1966] 17 S.T.C. 576 (S.C.)., discharged the answer recorded by the High Court, holding that the conclusions recorded by the Deputy Commissioner and the Tribunal were based on no evidence, and the High Court could not record, on the facts found, an answer to the question referred. The Deputy Commissioner had pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s the former passed the property in the goods to the defendants who passed it on to the War Office." We do not think that these observations furnish a universal test that whenever there is a contract to "fix" certain articles made by a manufacturer the contract must be deemed one for sale and not of service. The test in each case is whether the object of the party sought to be taxed is that the chattel as chattel passes to the other party and the services rendered in connection with the installation are under a separate contract or are incidental to the execution of the contract of sale. In the present case, the specifications of the windows were set out in the contract. The primary undertaking of the respondent was not merely to supply the windows but to "fix" the windows. This service is not rendered under a separate contract, nor is the service shown to be rendered customarily or normally as incidental to the sale by the person who supplies window-leaves. The "fixing" of windows in the manner stipulated required special technical skill. If the windows were not properly "fixed" the contract would not be complete, and the respondent could not claim the amount agreed to be paid t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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