K A RAMACHAR Vs. STATE OF MADRAS

JUDGEMENT

(1.) IN this tax case, the turnover disputed by the assessee is a sum of Rs. 1, 63, 843.93. This turnover represent the cost of fabrication, supply and erection of trusses, purlins, etc., made by the assessee in the premises of customers. According to the assessee, the property in the goods fabricated and erected in the customers' places passed by accretion to immovable property and that there has been no outright sale of the goods as fabricated to the customers. The said amount represented 16 transactions of various types. But, it can be taken generally that in all these 16 cases, the assessee undertook to fabricate, supply and erect iron trusses, purlins, etc., at the premises of the customers. The facts, as found by the Tribunal, are that in most of the cases, the various parts of the trusses were fabricated in the assessee's factory, then transported to the workspots, assembled there and erected in accordance with the specification and requirement of the customers.

(2.) ACCORDING to the assessee, these transactions were not outright transactions of sale, but were only works contracts, and that a lump sum amount has been fixed as the value of the contract. The question is whether in the fabrication, supply and erection of the iron trusses, purlins, etc., in the customers' premises, any contract of sale of trusses, as such is involved. The Tribunal, relying on the decision of the Kerala High Court in Harrisons & Crosfield Ltd. v. State of Kerala which also treated the supply of steel trusses for a factory building at a specified price as a contract of sale of trusses held that the contracts entered into by the assessee were not works contracts but were sales of fabricated materials to the various customers. The question, is whether the view taken by the Tribunal is correct or not.We have perused some of the correspondence between the assessee and its customers.

(3.) SUCH a question came up before the Supreme Court in State of Rajasthan v. Man Industrial Corporation Ltd. In that case, pursuant to a notification of he executive engineer, the assessee submitted its tender for fabricating and fixing certain windows in accordance with the designs, specifications, drawings and instructions. The rate quoted by the assessee was based on the current price of the mild steel billets and the price was to be revised if there was a change in the control price of billets supplied to the respondent. The tender was accepted and the assessee carried out the contract for a consolidated sum of Rs. 23, 480. The question was whether the said sum represented the sale price of the windows fabricated, supplied and erected by the assessee, or whether it is the amount realised towards a works contract. The Supreme Court held that as the contract undertaken by the assessee was to prepare the window-leaves according to the specifications and to fix them to the building and as there were no two contracts, one for sale and another for service, the property in the goods passed from the assessee to the customer only after fixing of the window-leaves to the building as specified in the contract, and that there was no sale of the windows, as such, by the assessee to the customer.