Severable lift-supply contract and tariff classification: pre-installation transfer was taxable as sale, but passenger lifts were not domestic appliances.

A contract for supplying and erecting passenger lifts was severable where the parties contemplated delivery of lift materials at site before installation and treated supply and erection as distinct stages; the pre-installation transfer of component parts was therefore a sale liable to tax. Passenger lifts were not "domestic electrical appliances" in entry 21 of Schedule I, since that expression was construed in its ordinary sense as covering household appliances and not lifts. The special tax classification was rejected, and only general tax applied to the taxable turnover attributable to the components supplied.

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Issues: (i) Whether the contract for supplying and erecting passenger lifts was an indivisible contract for work and installation or was severable so that the value of the lift components transferred before installation could be treated as a sale liable to sales tax. (ii) Whether passenger lifts fell within entry 21 of Schedule I to the Bombay Sales Tax Act, 1946 as "domestic electrical appliances" so as to attract special tax under section 6(1)(b), or whether only general tax under section 6(1)(a) was leviable.

Issue (i): Whether the contract for supplying and erecting passenger lifts was an indivisible contract for work and installation or was severable so that the value of the lift components transferred before installation could be treated as a sale liable to sales tax.

Analysis: The correspondence showed that the parties contemplated supply of lift materials at site, delivery of those materials before erection, and separate completion of installation. The pricing and payment terms treated delivery of materials and erection as distinct stages. The transaction was therefore not the same kind of entire and indivisible building contract considered in the earlier authorities. Under the law relating to delivery of goods, goods may be delivered in the manner agreed by the parties, and the transfer of the component parts of the lifts before their installation could properly be regarded as a sale of goods.

Conclusion: The contract was severable, and the value of the lift components transferred before installation was rightly treated as taxable sales turnover.

Issue (ii): Whether passenger lifts fell within entry 21 of Schedule I to the Bombay Sales Tax Act, 1946 as "domestic electrical appliances" so as to attract special tax under section 6(1)(b), or whether only general tax under section 6(1)(a) was leviable.

Analysis: The expression "domestic electrical appliances" was construed in its ordinary sense and was held not to naturally extend to passenger lifts. The surrounding context suggested that the entry was intended for household appliances of the kind ordinarily used in homes, not for lifts. The classification also supported treating lifts separately from electrical appliances. Accordingly, the special entry could not be applied to passenger lifts.

Conclusion: Passenger lifts did not fall within entry 21, and the case was governed by section 6(1)(a) rather than section 6(1)(b).

Final Conclusion: The assessment was sustained only to the extent of tax on the sale value of the lift components, while the special tax classification was set aside and substituted by liability to general tax on the taxable turnover attributable to the components supplied.

Ratio Decidendi: Where a contract for supply and erection shows a real separation between delivery of goods and installation, the transfer of the goods before installation is taxable as a sale, and a tariff entry for domestic electrical appliances will not be stretched to cover passenger lifts absent clear legislative language.

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