TMI Blog1962 (3) TMI 61X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Bombay Sales Tax Act of 1953 the applicant applied to the Collector for the determination of three questions: firstly, whether they were dealers within the meaning of that word as given in section 2(6) in relation to their activities as body-building contractors: secondly, whether the body-building contracts constituted sales and thirdly, whether the receipts from body-building contracts were liable to sales tax under the Act of 1953. All these three questions were answered by the Additional Collector of Sales Tax in the affirmative, Against the said decision, the applicant appealed to the Sales Tax Tribunal. The Tribunal took the view that the second of the three questions, being of a general nature, did not come within the scope of clause (b) of section 27 of the Act and should have been rejected by the Additional Collector of Sales Tax. The Tribunal accordingly set aside the answer given by the Additional Collector to that question. With regard to the other two questions, the Tribunal agreed with the decision of the Additional Collector of Sales Tax. At the instance of the applicant, it then referred the two questions, which we have already set out, under section 34 of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n to the Supreme Court case cited by him Mr. Donde has also referred to us the case of Anglo-Egyptian Navigation Co. v. Rennie Another[1874-5] L.R. 10 C.P. 271., and Carl Still G. m. b. H. and Another v. State of Bihar and Others[1961] 12 S.T.C. 449. Now the question whether the contract is a contract of sale as distinguished from a contract for work must depend upon the terms of the contract and the intention of the parties. As pointed out in Halsbury's Laws of England, 3rd Edn., Vol. 34, page 6, a contract of sale is a contract whose main object is the transfer of property in, and the delivery of the possession of, a chattel as a chattel to the buyer. Where the main object of work undertaken by the payee of the price is not the transfer of a chattel qua chattel, the contract is one for work and labour. The test is whether or not the work and labour bestowed end in anything that can properly become the subject of sale; neither the ownership of the materials, 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 circumstance of a particular case whether the contra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by their Lordships of the Supreme Court that a works contract would not be regarded as capable of being broken up into the component parts and treated as a sale with regard to the parts of it. Their Lordships observed: "The theory that a works contract can be broken up into its component parts and as regards one of them it can be said that there is a sale must fail both on the grounds that there is no agreement to sell materials as such and that property in them does not pass as movables, as under the law there cannot be an agreement relating to one kind of property and sale as regards another." For the sale of goods there must be an agreement between the parties for the sale of the very goods in which the property eventually passes. In a building contract the agreement between the parties is that the contractor should construct a building according to the specifications contained in the agreement and in consideration thereof receive a payment as provided therein. In such an agreement there is neither a contract to sell the materials used in the construction nor does the property pass there as movables. Their Lordships have further observed: "When the work to be executed is a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ually done by the defendants under the contract amounted to 4,118. The second instalment of 2,000 was subsequently paid, at the time of which payment the plaintiffs knew of the loss of the ship, but the defendants did not. The plaintiffs then claimed delivery of the boilers and other machinery completed under the contract but the defendants refused to deliver the same to them. The plaintiffs consequently brought an action for the detention of the same or to recover back 4,000 paid by them to the defendants. The question that arose for determination was as to whether the property in the manufactured articles had passed on to the plaintiffs so as to entitle them to detain the goods. It was held that it had not so passed, since the contract was an entire and indivisible contract for work to be done upon the plaintiffs' ship for a certain price and the property in the manufactured articles was not intended to pass until they were fixed on board the ship. In our opinion, this case does not lend any assistance to Mr. Donde. The contract in that case was in essence a works contract, which was one and indivisible and it could not, on the contract between the parties, be claimed that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arties and on proof of an intention to sell the materials as such. If the essential intention of the parties was to have the car repaired, the manufacture of a particular chattel can only be incidental to the repair and not one for the sale of the material. In the case of the repairs of the motor-car there is ordinarily no intention to buy separately the part which is necessary for the repairs. The said part is used by the repairer as incidental to the work undertaken by him, unless of course there is a specific contract for the purchase of the spare parts as distinct from the price of the purely repairing work. In the present case, however, the agreement between the parties was to sell and purchase the particular body which was required to be constructed under the contract between the parties, and fitted to the chassis supplied by the Government to the applicants. The two things, therefore, which were stated in the decision referred to above as as necessary to constitute sale of goods, were present in the case before us, viz., an agreement between the parties to sell and purchase and that agreement being with reference to the particular goods. In our opinion, therefore, this case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. The proposition stated by the learned author would undoubtedly apply to such class of cases, but we do not think that it can be argued on the basis of the said proposition that even in a case where an article is intended to be bought and sold and where it is first to be manufactured or prepared by the seller before it is delivered to the buyer, the contract has got to be considered to be a contract of work and not a contract of sale of goods. The mere circumstance that the chattel made is fitted on to another chattel belonging to the buyer under the terms of the contract will not of necessity make the contract one of work and not one of sale. It will depend upon whether the intention is to improve the chattel to which the chattel made is affixed as incidental to improvement as in the case of a contract for repairs of a motor-car or to make the sale of movables such as in the case of a contract to make and fit plastic covers to the seats of a motor-car. As we have already observed earlier whether a contract in a given case is one of work or of sale of goods must depend upon the facts and circumstances of each case. On the facts of the present case the Tribunal has found that what ..... X X X X Extracts X X X X X X X X Extracts X X X X
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