STATE OF MADRAS Vs. RICHARDSON AND CRUDDAS LIMITED

JUDGEMENT

(1.) The respondents carry on business as "engineers and contractors" and as dealers in iron and steel goods and refrigerating and cooling units etc. For the assessment year 1957-58 the assessing authority, Mdras, included in the taxable turnover of the respondents for assessment central sales tax the following two items received by the respondents which contended were not liable to be included : (i) Rs. 3,26,075.20 under a contract for the fabrication, supply and erection of steel structures with a co-operative society which was setting up a sugar factory in the State of Mysore; and (ii) Rs. 43,349. 05 for the fabrication and installation of "bottle coolers under orders from customers at different places.

(2.) The assessing authority rejected the claim of the respondents. In view of the assessing authority under the terms of the contract with co-operative society the respondents manufactured certain articles after to specifications and despatched them to Mysore State and thereafter the articles were installed by the employees of the respondents at the site of the factory of the society, and on that account the transaction was one primarily for sale of steel structures to the society, and the respondents had in addition thereto contracted to instal or erect the structures. The assessing authority in dealing with the second item held that the respondents had sold bottle cooling units to their customers and the contracts for sale of the units were not converted into works contracts merely because the respondents installed the units in the premises of the purchasers. In appeal the Appellate Assistant Commissioner of Commercial Taxes held that the first item was one for execution of work, and was not assessable to sales tax. He agreed with the assessing authority that the turnover from supply and installation of bottle cooling units was liable to sales tax. The Sales Tax Appellate tribunal, Madras, held that the turnover from the items was taxable.

(3.) The respondents moved the High court of Madras in revision and submitted that since the two items were received as consideration under works contracts, no sales tax was payable thereon. The High court upheld the plea raised by the respondents. With special leave, the State of Madras has appealed to this court.