Tailoring transactions and sales tax: customer-supplied materials are labour, while ready-made garments remain taxable sales.

Tailoring transactions were examined by reference to when property in goods passed and whether the activity amounted to a sale of goods under the Bengal Finance (Sales Tax) Act, 1941. Work done on materials supplied by the customer was treated as pure labour, not a sale, apart from incidental consumables such as buttons or thread. Ready-made garments sold outright were taxable sales. Where cloth was selected in the shop and garments were later made up, property passed only on completion and delivery, not on selection. To the extent the statute treated customer-supplied tailoring as sales, that inclusion was inconsistent with the ordinary meaning of sale of goods.

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Issues: Whether tailoring transactions undertaken by the assessee were liable to sales tax under the Bengal Finance (Sales Tax) Act, 1941, and whether the provision treating such transactions as sales was valid to that extent.

Analysis: The transactions were treated as falling into distinct categories. Where customers supplied their own materials for making garments, the work was pure labour and did not amount to a sale of goods, save for incidental items such as buttons or thread. Where a customer first purchased cloth and then got it made up, the position was materially the same if the customer's ownership had already passed. Where ready-made garments were sold, the transaction was an outright sale. Where the customer merely selected cloth from the shop and the garment was then made up and delivered, the property in the material did not pass on selection but only on completion and delivery of the garment. On the facts, the authorities had not properly examined the category where the customer supplied the materials himself, and to that limited extent the statutory inclusion of such transactions as sales could not stand against the ordinary meaning of sale of goods.

Conclusion: The assessment was upheld in so far as it related to taxable sale transactions, but it was set aside to the limited extent that the authorities had to examine and exclude any tailoring transactions where the customer supplied his own materials; that part was not liable to sales tax and the provision was ultra vires to that extent.

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