Content Provider | Supreme Court of India |
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e-ISSN | 30484839 |
Language | English |
Access Restriction | NDLI |
Subject Keyword | Contract of sale and contract for work and labour |
Content Type | Text |
Resource Type | Law Judgement |
Jurisdiction | India |
Case Type | Appeal |
Court | Supreme Court of India |
Disposal Nature | Appeal Allowed |
Headnote | Contract of sale and contract for work and labour, distinction and test - Whether a contract for fabrication and erection of 3-motion electrical overhead (travelling cranes) is a contract of sale or contract for work and labour.The appellant assessee was a partnership firm carrying on business inter alia of manufacture and erection of cranes. During the assessment year 1965-66, the assessee entered into two contracts for supply and erection of 3-motion electrical overhead travelling cranes. The assessee carried out both the contracts and fabricated and erected 3-motion electrical overhead travelling cranes according to the contract specifications. A question arose in the assessment of the assessee to sales tax for the assessment year 1965-66 whether the amount of Rs. 1,34,500/- received by the assessee under the contract with M/s. Kamlapati Motilal Sugar Mills and the amount of Rs. 2,38,000/- received under the contract with M/s. Upper Doab Sugar Mills Ltd., formed part of the turnover of the assessee and was liable to sales tax. The Sales Tax Officer took the view that the contracts were essentially contracts of sale of ready made cranes and the erection of the cranes at the factory site was merely incidental to the sales and the amounts of Rs. 1,34,500/- and Rs. 2,38,000/- received under the contracts were, therefore taxable. This view was upheld by the Assistant Commissioner in appeal, but in revision the Additional Judge (Revisions) held that each of the two contracts was a works contract not involving any sale of goods and hence the amounts were not exigible to sales tax. On a reference to the High Court at the instance of the Commissioner of Sales Tax, the High Court took the view that each of the two contracts was for supply of 3-motion electrical overhead travelling cranes as a complete unit and "the predominant object was supply of crane as complete unit" and "the bestowing of labour and skill in the execution of the contract" appeared to have been incidental to the supply of the machine." The High Court observed that in its view parties "intended the property to pass in the subject matter of the contract, namely, the completed crane as movable property" and concluded that it was a contract of sale of goods and not a contract for work and labour. The High Court accordingly answered both the questions referred to it against the assessee and in favour of the Revenue. |
Judge | Honble Mr. Justice P.N. Bhagwati |
Neutral Citation | 1978 INSC 253 |
Petitioner | Ram Singh & Sons Eng. Works |
Respondent | Commissioner Of Sales Tax, U.p. |
SCR | [1979] 2 S.C.R. 621 |
Judgement Date | 1978-12-07 |
Case Number | 1314 |
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