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TMI Blog1969 (7) TMI 104X X X X Extracts X X X X X X X X Extracts X X X X ..... perty in the goods supplied in the execution of the contracts in question passed by accession to immovable property and not by sale as movable goods." 2.. The facts on the basis of which this reference has been made have been put by the Tribunal in its appellate order thus: "The appellant, Auddy & Co., is a Calcutta firm of contractors specialised in sanitary fittings. The Hindustan Steel Ltd. engaged this Calcutta firm for providing sanitary installation, internal drainage and internal water-supply in a number of its buildings. For the execution of this sort of work the appellant-firm purchased some materials from the Hindustan Steel Ltd. and the sale prices of those materials were included in its bills. The appellant-firm also supplied ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o provision therein for separate payment for materials used in the construction. The payment contracted is a lump sum one for the entire work done. Clause 7 of the contract clearly states that even intermediate payments would be regarded as payments by way of advance against final payment only and not as payments for work actually done and completed. Such payments shall not preclude the requiring of bad, unsound and imperfect or unskilful work to be removed and taken away and re-constructed or re-erected. Such payments would not be considered as an admission of the due performance of the contract or any part thereof. It is not necessary to go into the larger details of the various terms of the agreement as the concurrent findings of all the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t cannot be broken into component parts. In such a case there is no agreement of sale of materials as such and property in the materials does not pass as movables. The property to be sold must be the identical property in respect of which the agreement has been entered into. In a building contract the agreement between the parties is that the contractors should construct the building according to the specifications contained in the agreement. In consideration thereof they receive payment as provided therein. In such an agreement there is neither a contract to sell materials used in the construction, nor does the property pass therein as movables. The materials used in the construction of a house are imbedded on the land. Title to such mater ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in their Lordships observed thus: "To avoid misconception, it must be stated that the above conclusion has reference to works contracts, which are entire and indivisible, as the contracts of the respondents have been held by the learned judges of the courts below to be. The several forms which such kinds of contracts can assume are set out in Hudson on Building Contracts at page 165. It is possible that the parties might enter into distinct and separate contracts, one for the transfer of materials for money consideration, and the other for payment of remuneration for services and for work done. In such a case, there are really two agreements, though there is a single instrument embodying them, and the power of the State to separate the agr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ontract for service or for execution of work involves a taxable sale of goods must be decided on the facts and circumstances of the case. The burden in such a case lies upon the taxing authorities to show that there was a taxable sale, and that burden is not discharged by merely showing that property in goods which belonged to the party performing service or executing the contract stands transferred to the other party." (see paragraph 28) 7.. In a large number of later Supreme Court decisions agreements of a similar nature have always been construed to be works contracts. Arun Electrics, Bombay v. Commissioner of Sales Tax, Maharashtra[1966] 17 S.T.C. 576., related to a case of electric installation. Their Lordships held that the agreement ..... X X X X Extracts X X X X X X X X Extracts X X X X
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