Works contract versus sale: coach-body construction on railway underframes was treated as indivisible work, not a taxable sale.

A contract to build, erect and furnish coach bodies on railway underframes was treated as an entire and indivisible works contract, not a sale. The agreement showed that materials brought to site and the coach bodies in progress remained the Railway's property during construction, and the risk allocation clause supported that ownership structure. Because the contract did not contemplate delivery of ready-made goods as a sale of coach bodies, sales tax was not leviable on the transaction. The earlier bus-body authority relied on by the appellant was distinguished on its facts. The High Court's view was upheld and the State's challenge failed.

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Issues: Whether the contract for building, erecting and furnishing coach bodies on railway underframes was a works contract not amounting to a sale, or a transaction of sale liable to sales tax.

Analysis: The contract, read as a whole, described the respondent's obligation as construction and furnishing of coach bodies on underframes supplied by the Railway. The terms treated materials brought to site and the unfinished coach bodies as the Railway's property during the course of construction, and the risk allocation clause was consistent with that ownership arrangement. The contract did not contemplate delivery of ready-made coach bodies as goods for sale, but an entire and indivisible execution of work. The facts were distinguishable from the earlier bus-body case relied upon by the appellant, where the indicia pointed to a sale.

Conclusion: The transaction was a works contract and not a sale; no sales tax was payable on that footing.

Final Conclusion: The High Court's view was upheld and the State's challenge failed.

Ratio Decidendi: Where the contract is an entire and indivisible agreement for construction work, and the materials and work-in-progress are treated as the employer's property during execution, the transaction is a works contract and not a sale.

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