UNITED MOSAICS Vs. STATE OF ANDHRA PRADESH

JUDGEMENT

(1.) These two tax revision cases are preferred by the assessee against the orders of the Sales Tax Appellate Tribunal in so far as the Tribunal held that the supply of mosaic tiles and their laying and polishing by the assessee at the site of the consumer amounts to a sale and not to a works contract. We shall briefly note the relevant facts T.R.C. No. 12 of 1979 pertains to the assessment year 1971-72, while T.R.C. No. 13 of 1979 pertains to the assessment year 1972-73. The assessee is M/s. United Mosaics, Trunk Road, Nellore, engaged in manufacture of mosaic tiles and in fixing and polishing of the same at the site specified by the consumer. It also undertakes in situ work. The assessee claimed exemption for its total turnover on the ground that all the transactions entered into by it are works contracts. This plea was accepted by the Commercial Tax Officer by his order dated 28th July, 1973 (1971-72), and 2nd March, 1974 (1972-73). These orders were however revised by the Deputy Commissioner in exercise of his power under section 20(2) of the Andhra Pradesh General Sales Tax Act. He was of the opinion that all the transactions entered into by the assessee amount only to sales and are not works contracts. Accordingly he held that all the transactions of the assessee are exigible to tax. The two appeals preferred by the assessee were heard and disposed of together by the Tribunal. In so far as the in situ work is concerned, the Tribunal held that it amounts to works contract. But in so far as the works relating to supply of tiles, their laying and polishing at the site specified by the consumer is concerned, the Tribunal held that they are sales and not works contracts.

(2.) For deciding this question, it is necessary to first ascertain the actual nature of the transaction. The only evidence on this question is the bill which is issued by the assessee. The bill, which is extracted in the order of the Tribunal, may be extracted :

(3.) A perusal of the bill clearly shows that the assessee was charging the consumer for the work done at the site per 100 sq. ft. or per running foot, as the case may be, irrespective of whether the work was done by using the tiles manufactured at the assessees factory or whether the work was carried out in situ. From this bill it is not possible to cull out two contracts, namely, one for the sale of tiles and the other for the work of laying and polishing. The consumer was not concerned with the number of tiles which the assessee used for covering the required area. The consumer was only concerned with the work done at the site and he paid according to measurements. The mere fact that the consumer was obliged to supply the water and electricity cannot detract from the above nature of work. No one carrying on the business of supplying, laying and polishing of mosaic tiles is expected to carry water with him nor to provide his own electricity required for polishing purposes. Moreover, the bill indeed expressly states that the charges are inclusive of laying and polishing. In such a case, in our opinion, the Tribunal erred in holding that it was only a sale of tiles and that laying and polishing was only incidental to such sale. There was no material before the Tribunal to arrive at such a finding. The Tribunal appears to have based its finding upon the conditions of sale printed at the foot of the bill, namely, that goods once sold shall not be taken back and that packing and forwarding charges as well as sales tax shall be extra. In our opinion, the bill has to be read as a whole instead of dilating upon one or two clauses. If so read, it is clear that it is not a case of a sale but of a works contract, namely, supplying, laying and polishing of mosaic tiles, and that it is one and indivisible contract. Merely because the bill contains clauses that goods once sold shall not be taken back or that packing charges, etc., shall be extra, it cannot be said that the said bill represents two contract, namely, one of sale and other a labour contract. Mr. Dasaratharama Reddi explains that the petitioner uses only one form of bill, whether it is mere sale of tiles or whether it is works contract or whether it is a bill for in situ work. Be that as it may, from the bill placed before us, it is clear that the assessee has undertaken a works contract and the transaction undertaken by him can be said to be complete only when the work is completed at the site.