TMI Blog1963 (4) TMI 59X X X X Extracts X X X X X X X X Extracts X X X X ..... their customers. The material contents of the said bill were as follows: Rs. 1. Supplying and fixing the materials of light points complete with 1/18th CTS wire, brass clips, tapes and all approved accessories 2 Pts 32-00 2. Supplying and fixing 9" brass Swan type wall brackets with holders 1 pc 1-75 3. Supplying, fixing and wiring 40 Kw. 4 ft. tubes complete with Resmichoke, imported starters and Elore holders etc. 5pc 132-50 Total 166-25 At the hearing of the said application the respondent contended before the Deputy Commissioner of Sales Tax that the transaction evidenced by the bill was purely a works contract which was one and indivisible and did not involve any sale of goods. It was also contended on their behalf that the materials supplied in the execution of the contract were affixed to the building and thus became a part of the immovable property at the time when the property in the said material passed on to the customer. They urged that the contracts entered into by them were similar to the contracts of bu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hin the meaning of section 2(28) of the Bombay Sales Tax Act, 1959, in so far as the supply of materials contained in the said bill was concerned. Against the said decision of the Deputy Commissioner of Sales Tax, the respondents appealed to the Sales Tax Tribunal. The Tribunal, disagreed with the view taken by the Deputy Commissioner and held that the contract evidenced by the bill was wholly a works contract and did not involve a contract for the supply of material. The Tribunal took the view that the bill in question evidenced a single contract and there was therefore hardly any justification to treat it as consisting of two distinct and severable contracts: one for the supply of material and the other for work and labour. It also expressed its opinion that by the contract in question the parties did not intend that the goods should be supplied as on sale of chattel, but the property in the material supplied by the respondents to their customers only passed after the said material had been affixed to the building of the customer and it did not, therefore, pass as movable property. It accordingly, allowed the appeal and held that there was no sale involved in the transaction an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be supplied. It may also consist of two separate and divisible parts one for the supply of material and the other for the supply of work and labour, as for instance, when A goes to a shop and gets a coat prepared for him and pays for the cloth and the other material required for the coat and also for the stitching charges. In this case, so far as the supply of cloth is concerned for the making of the coat, it is a sale of goods; and so far as the stitching charges paid are concerned, they are paid for work and labour. Whether a contract, which involves both supply of material and supply of work and labour falls in any of the three categories mentioned must depend upon the facts of each case and the intention of the parties. In order to determine whether in a contract of this nature there is involved a contract for the sale of goods must depend, in our opinion, upon whether the parties to the contract have intended to sell the goods under the agreement between them and whether any property in chattels is to pass from the one to the other as chattels. The mere circumstances that a certain property in movables has ultimately passed from one party to the other in the execution of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... obs at his house. The material contained in the invoice is useless to the owner of the house as chattels. Nor has he intended to purchase them as chattels. He has intended that the materials specified should be utilised in the execution of the work which he has entrusted to the respondent and which the respondent has undertaken. According to Mr. Mehta, therefore, this is a case where the agreement between the parties relates to the execution of a certain work as distinguished from a contract for the sale or supply of goods. Mr. Mehta further argues that although eventually the property in the materials specified in the invoice will pass from the respondent to the customer, it will not pass as property in movables. It is only when the job is executed and the items specified in the invoice have been embedded and fixed to the house of the customer that the property in them will pass on to the customer. At the moment when the property in goods will pass, the goods will be no longer movables or chattel, but will have become attached or permanently fixed to the house of the customer and a part thereof. The case, therefore, is one where the property in the goods supplied will go as an acc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ink that the passages referred to by him help him in support of his submission that there can be no sale of goods involved in the contract undertaken by a contractor for the installation of electrical equipment. Now, the question which we have to decide is whether the contract in the present case is purely a works contract which does not involve any sale of goods under the Sale of Goods Act or whether it is a combination of two separate contracts-one for the sale or supply of goods for money consideration and the other for remuneration for work and labour. The circumstance that there is a single consolidated bill presented by the contractor to the employer for the entire work done is not determinative of the fact that it is a single indivisible contract, as observed by the Supreme Court in Gannon Dunkerley's case.[1958] 9 S.T.C. 353. But the point for determination, as observed by them in Carl Still G.m.b.H. v. State of Bihar[1961] 12 S.T.C. 449. , is "whether on its true construction, the contract in question is a combination of two distinct agreements, one to sell materials and the other to supply labour and services or whether it is only one agreement entire and indivisible fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e contract was in true nature to build a house. It was for the purposes of that contract, which was for the building of the house, that the contractor had to make, amongst other things, wooden frames for the house, and fix them in the house subject to the approbation of a surveyor, but it was never intended by the contract that the articles to be so fixed should become the property of the defendants until they were fixed to the freehold. The agreement in that case was for the building of a house and not for the purchase of any material. The material that was to be approved was not for the purchase of the material as such, but with a view that it should be used in the execution of the contract. The property in the material, no doubt, passed at the end of the contract from the builder to the owner of the house, but the property passed not in pursuance of an agreement for the sale of the specific property as chattels. In Clark v. Bulmer[1843] 11 M. W. 243., the plaintiff had entered into a contract with the defendant to build an engine of 100 horse power for the sum of 2,500 to be completed and fixed by the middle or end of December. Different parts of the engine were construc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t, and a dispute arose as regards the title to the machinery and articles which were in possession of the insolvents at the time of the bankruptcy but which had been made for the purposes of being fitted to the ships of the ship-builders. It was held that there had been no sale of the machinery and parts as such. The basis of the decision, it appears, was that a contract between the parties was for the execution of the engineering job, and the engines, boilers and machinery which were to be supplied by them in the execution of the job were not intended to be transferred to the ship-builders as on sale of chattel, but only as on being fixed to the ships in execution of the engineering contract undertaken by the Engineers. Now, in all these cases, which have been referred by Mr. Mehta, the conclusion that the contract was a works contract and did not involve a sale of goods, although goods were required to be supplied in the execution of the contract, was on the basis that the contract was not intended to result in a sale of chattels. The work and labour was bestowed in such a manner that the result would not be anything which could properly be said to be the subject of sale. In Tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o desired could have purchased the goods from one person and thereafter could have entrusted the work of fixing them to some other person and could have obtained the same results as he has done in the present case. If he had followed the latter procedure there could be no doubt whatsoever that there had been a purchase of electrical goods by him which were afterwards fixed by him in his house by employing a person who was competent to do the work. Does it make any difference if, instead of following this procedure, he has obtained the goods from the same person to whom he has also entrusted the work of fixing them? It appears that it would not, because at the end of the contract the property has eventually passed in the very goods which under the contract had been agreed to be purchased. The contract, in our opinion, was intended to result in the sale of the electrical goods, which were required by the customer for his house, although there was, in addition to the said sale, further work also required to be done by the supplier of the goods in fixing the same in the house of the customer. It is not a case where we can say that by reason of the work and labour bestowed or the manner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he contract under consideration did end, so far as the supply part of it is concerned, into a sale of chattels and the Deputy Commissioner of Sales Tax was therefore right in taking the view that it consisted of a composite and divisible contract, in part involving a sale of goods. Mr. Mehta has then argued that although we may take the view that there is involved in the present case a transfer of property from the respondent to the customer, having regard to the fact that the said passing of property only takes place at the end of the contract when the goods in which the property passes are no longer movables having been fixed to the walls or the ceilings of the petitioner's house, we cannot say that there is involved a sale of goods. We are afraid we cannot accept this contention. The mere circumstance that the electrical goods brought by the customer to his house have been affixed by him either to the wall or to the ceiling does not thereby make the electrical goods cease to be chattels and become part of the house. The light points or the brackets or the fluorescent tubes, which are the items in the present contract, though they may, in order to make them serviceable, have to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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