TMI Blog1969 (12) TMI 100X X X X Extracts X X X X X X X X Extracts X X X X ..... ayment was to be made to the petitioner after a certificate of fitness had been furnished from the transport department of the Government. In due course the petitioner executed the contract and received payment under it. The petitioner also deposited a certain amount by way of sales tax. When the proceedings for assessment under the U.P. Sales Tax Act for the assessment year 1967-68 commenced the petitioner claimed exemption from tax in respect of the payment received by it from the Deputy Director on the ground that the contract executed by it was a contract of work and labour not involving sale of any goods. This contention was not accepted by the Sales Tax Officer, who levied tax on the turnover representing the sale proceeds of the bus bodies at the rate of 10 per cent. treating the bus bodies to be taxable at a single point under a notification issued under section 3-A of the Act. The petitioner has challenged the assessment order in this writ petition on various grounds. The first ground upon which the assessment order has been challenged is that the contract under which the petitioner received the payment in dispute was a contract of work and labour and not a contract for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntract and came to the conclusion that the contact was one for the sale of goods. The main considerations which prevailed with the Supreme Court may be briefly summarised thus: (i) That the bus bodies were throughout the contract spoken of as a unit or as a composite thing to be put on the chassis and composite bodies consisted not only of things actually fixed on the chassis but movable things like seat cushions and other accessories though fixed but which could be very easily detached, for example, roof lamps, wind-screen wipers, luggage carrier, tool box, etc., (ii) that the property in the bus bodies did not pass to the Government till the chassis with the bus bodies fitted thereon had been delivered to the Government, and (iii) that the contract for the sale of bus bodies did not become a contract for work and labour merely because the bus bodies were to be fitted upon the chassis supplied by the Government. The second case of McKenzies Ltd.[1965] 16 S.T.C. 518. was also of the same nature and the Supreme Court merely followed its decision in Patnaik's case[1965] 16 S.T.C. 364. Now reverting to the facts of the present case, we find that there was a written contract be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctions. On a consideration of the terms and conditions of the contract, the Supreme Court came to the conclusion that the contract was a composite one not capable of being split into two separate contracts, one for the sale of windows and the other for the fixing of the windows to the buildings. In other words, the contract was held to be contract of work and labour. The cases of Patnaik Co.[1965] 16 S.T.C. 364. and McKenzies Ltd.[1965] 16 S.T.C. 518. were distinguished by the Supreme Court in the following words: "But in both these cases the court held on a consideration of the terms of the contract and the circumstances that the assessees had agreed to and did supply 'motor-bus bodies' and the contract, being one for sale of chattels, they were liable to pay sales tax." The learned counsel then placed reliance upon another case of the Supreme Court in State of Rajasthan and Others v. Shri Nenu RamCivil Appeal No. 1096 of 1967 decided on July 31, 1969. That was also a case involving a contract for supplying and fixing of wooden windows and doors together with frames in a police lines building. In this case the Supreme Court followed its decision in the case of State of Rajas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Sales Tax v. M/s. Noorullah Ghazanffurullah S.T.R. No. 268 of 1966 decided on February 10, 1969; reported at page 100 supra. Now turning to the second contention it would be pertinent to mention that the charging section is section 3 under which turnover of all commodities is taxable at the rate specified therein at all points of sale. That rate at the material time was 2 per cent. In exercise of the power conferred upon it under section 3-A of the Act, the State Government issued Notification No. ST-1738/X-1012-1963 dated 1st June, 1963, declaring the turnover of certain commodities mentioned therein to be taxable at a single point in the series of sales at the rate of 10 per cent. Item No. 10 of that notification relates to motor vehicles and their parts and reads as follows: "10. Motor vehicles including chassis of motor vehicles, motor tyres and tubes and spare parts of motor vehicles, not being such parts as are ordinarily also used for purposes other than as parts of motor vehicles." By a subsequent notification No. ST-2263/X-950(1)-64 dated 18th June, 1965, item No. 10 of the notification of 1st June, 1963, was amended to read as under: "10. Motor tyres and tubes a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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