TMI Blog1975 (1) TMI 73X X X X Extracts X X X X X X X X Extracts X X X X ..... . The price that the purchaser paid was for the crane, though in fixing the price regard was kept for the installation and erection charges. The turnover was liable to sales tax. This view was upheld in appeal. The assessee took the dispute to the revising authority. The revising authority considered the terms of the contract and the attending circumstances and held that the contract was an indivisible one, and there was no element of sale of goods in it. Consequently, the assessee was not liable to pay sales tax on this turnover. The revising authority went into the discrepancies pointed out in the assessee's books of account and held that the books of account were properly maintained and were liable to be accepted. Accepting the books of account and deleting the turnover in respect of the two transactions of supply of cranes, the assessable turnover of the assessee was determined at Rs. 7,41,422.29. At the instance of the Commissioner, Sales Tax, the revising authority has referred the following questions of law for the opinion of this court: "(1) Whether, in the facts and circumstances of the case, the turnover of Rs. 1,34,500 made by the assessee in respect of Kamlapati Motil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is no sale because though property passes it does not pass for a price. Whether a contract is of the first or the second class must depend upon the circumstances; if it is of the first, it is a composite contract for work and sale of goods; where it is of the second category, it is a contract for execution of work not involving sale of goods." In respect of a contract which involves labour and skill as well as supply of goods and the contract is indivisible and not splittable into twoone of sale and the other of work-then according to the Bench of this Court in Commissioner of Sales Tax v. Haji Abdul Majid Sons[1963] 14 S.T.C. 435., the contract must be held to fall in one class or the other according to the predominant intention of the parties to that contract. If the predominant element is that of sale, it must be held to be contract of sale, and if the predominant element is of performance of contract of work, it is a contract of work. It was observed in this case: "If an article is sold it makes no difference whether the assessee prepared it in accordance with the specifications given by the customer or had prepared it in anticipation of the order and exposed it for sale. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... instal machines or cranes. Out of a total turnover of about seven and a half lacs of rupees, there were only two transactions, which are to be considered by us, that involved erection of the cranes manufactured by the assessee. One transaction was with Kamlapati Motilal Sugar Mills, Motinagar. This was for supply of a three-motion electrical overhead travelling crane after erecting it on the spot. This crane was to be used for unloading sugarcane from motor trucks and railway wagons. The terms of the contract were: "With reference to the above and the personal discussions held with your Shri Ram Singh on 30th January, 1965, we have pleasure in placing our order for three-motion electrical overhead travelling crane for unloading sugarcane from motor truck and rail wagons. We confirm all the specifications given in your above-referred quotation with the following changes: 1.. Structural capacity will be suitable for safe-load of two unloading crabs, i.e., 10 tons. 2.. Span of the long gantry which is given 50' will be confirmed shortly. 3. Your supply will also include gantry of 35' x 50' to make the crane three-motions. 4.. We shall not be required to give any material ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... other necessary fittings. Step ladders will be provided from the crane bridge for easy access to the cabins. 4.. Wiring-Wiring with V.I.R. wire in steel conduit pipes will be provided between individual motors and controllers, current contactors and resistance in the cabin. For connection of current to the trolley, a set of bare copper conductors complete with insulators and strainers mounted on the bridge will be provided. A set of current contactors will be mounted on the trolley, containing renewable graphitic carbon contactors. Price: That for two complete cranes of the above-mentioned specifications with two crabs each including erection, the company will pay to the contractor at the rate of Rs. 1,19,000 per crane with two crabs each including erection complete in all respects with necessary equipment. Mode of Payment: 1.. 30% with the order. 2.. 20% after two months of the actual commencement of work. 3.. 25% after the completion of erection of columns and bridge. 4.. 15% after completion and giving satisfactory trials, 5.. 10% after one month's satisfactory work. That the contractor will execute the entire work, i.e., fabrication, erection and constructio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with all necessary equipment, like crane bridge, driver's cabin, electrical equipment for driver's cabin, wiring, etc., etc., the details of which were specified in the contract. The assessee had to bestow labour and skill of a specialised kind in fabricating and manufacturing the crane at its factory. It had also to undertake the cost of labour in erecting and fitting up the cranes at the spot after making the requisite constructions of columns and bridges. The purchaser did not concern itself with the kind of labour and skill the assessee would employ in fabricating or manufacturing or in installing the crane. All it wanted was the delivery of a ready-made crane in working order at the site within the specified time. The subject-matter of the contract was the crane as a complete unit. Since this complete unit was agreed to be sold after being put in working order, regard was had in settling the price to the cost of labour involved in installing it at the site. The predominant object was supply of crane as a complete unit. The bestowing of labour and skill in the execution of the contract appears to us to have been incidental to the supply of the machine. The title in the crane ..... X X X X Extracts X X X X X X X X Extracts X X X X
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