TMI Blog1963 (2) TMI 41X X X X Extracts X X X X X X X X Extracts X X X X ..... , reduced the taxable turnover to Rs. 62,100 making an allowance of a sum of Rs. 20,700 as the labour charges involved in constructing the bus bodies. The learned Judge (Revisions) found that the bodies of the buses were not transferred in a ready made form to the owner of the bus and the primary work of the assessee was to construct the body of the bus on the chassis. He held that the initial contract was not for the transfer of any ready-made bodies but only for the doing of the work of construction and that the mere fact that in executing the contract for the work of construction some materials were also to be used would not convert the nature of the initial contract for construction into a sale. Accordingly it was held by him that what was sold by the assessee to the customer was the material used in the execution of the work and the charges for the skill and labour for which the initial contract of work was made could (sic) be treated as a part of the sale. The contention on behalf of the tax authority that the assessee sold to the customer ready-made bus bodies and was liable to tax on the whole turnover of Rs. 82,800 as determined by the Sales Tax Officer was rejected. It is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat is, whether the contract in the latter circumstance would be a contract of sale as distinguished from contract for work and labour? In paragraph 3 at page 6 of volume 24 of the Halsbury's Laws of England (III Edition) the law on the point has been summarised as follows: "A contract of sale of goods must be distinguished from a contract of work and labour. The distinction is often a fine one. A contract of sale is a contract whose main object is the transfer of the property in, and the delivery of possession of, 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 circumstances of a particular case, whether the contract is in substance one for work and labour or one for the sale of a chattel." On the facts of the present case i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... supplies the cloth selected by the customer and then prepares a suit and delivers it to the customer. In its essence the contract is one for sale of a suit. However, a person who gives a suit length to a tailor and orders him to tailor a suit according to his measure and deliver the same to him, the contract is not one for sale of the suit but for work and labour to be bestowed upon the suit length supplied to the tailor. No hard and fast rule can be laid down as to in what circumstances the transaction amounts to a sale of goods or to a contract for work and labour. It will depend upon the facts and circumstances of each case. Reference may also be made to the case of Kanpur Journals Ltd. v. Commissioner, Sales Tax, U.P. [1956] 7 S.T.C. 661., decided by a Division Bench of this Court in which the distinction between a contract for sale and a contract for work has been clearly brought out and which supports the above conclusion. The learned counsel for the assessee has referred to the case of Kays Construction Co. v. Tha Judge (Appeals), Sales Tax, Allahabad [1956] 7 S.T.C. 661., which was a case decided by a learned Judge of this Court, as an authority for the proposition that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h materials, which were used in the bus body. In other words, the subject-matter of the sale was the bus body and it is difficult to hold, in the circumstances of the case, that what was intended was that the customer bought at first the materials used for building the body and then entered into a contract with the assessee for putting them together in the shape of a bus body and fixing the same on the chassis. The answer to the question referred to, therefore, is that in the circumstances of the case the entire cost of the ready-made bodies of the buses is liable to tax under the U.P. Sales Tax Act and not only the cost of materials used in the manufacture thereof. The cost of this reference are assessed at Rs. 100 which the assessee shall pay to the Commissioner, Sales Tax, U.P. Copies of this judgment shall be sent to the Judge (Revisions), Sales Tax, and the Commissioner of Sales Tax, U.P., under the signature of the Registrar and the seal of the Court as required under section 11(6) of the Sales Tax Act. DESAI, C.J.-I agree with the answer proposed by my brother Asthana. The essential element of a contract of sale is transfer of property in the goods to be sold to the cust ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e and, if the predominant element is of a performance of a contract of work, it is a contract of work. If a customer gives a piece of cloth to an assessee and asks him to make it into a suit, and the assessee by using his own thread and buttons prepares a suit, though he transfers his property in the thread and the buttons, it is a contract for work, because the labour and skill spent by him in the preparation far predominate over the value of the articles in which he transfers property. It may be said that though he uses the articles it is not primarily with the object of transferring his property in them to the customer; he uses them because otherwise he cannot perform the contract of work. The essential object behind his using them is the performance of the contract of work and not the transfer of property in them. Actually he does not directly transfer his property in them as such; the transfer indirectly takes place when he delivers the suit to the customer. Further, the articles are used in the performance of the contract of work before the transfer of property and there was no contract at all between the assessee and the customer about their sale (ordinarily there is no such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by an assessee to the customer it is clearly a sale unless the contract is splittable. If under a contract an article is to be prepared from the assessee's materials and it is to be fitted to something belonging to the purchaser it is immaterial if the assessee takes the article to the purchaser's premises and fixes it on the thing, or the purchaser takes the thing to the assessee's premises and the assessee fixes it on it and delivers the whole thing to the customer. If a customer takes the thing to the assessee's premises and asks him to fix the article, it makes no difference whether the assessee prepares the article first and then fixes it to the thing or starts preparing the article on the thing itself so that when the whole work is finished the result is the same as if the article had been prepared separately and then fixed on the thing. Since it makes no difference whether an article is a ready-made article or is prepared according to the customer's specifications, it should also make no difference whether the assessee prepares it separately from the thing and then fixes it on it or does the preparation and the fixation simultaneously in one operation. In the instant case ..... X X X X Extracts X X X X X X X X Extracts X X X X
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