Composite construction contracts may still attract sales tax where contract terms expressly transfer property in materials on site.

A composite coke oven construction contract may still involve taxable sales of goods where the agreement expressly provides that materials and plant brought on site become the owner's property immediately on arrival. That contractual transfer distinguished the case from authority treating passing of property as arising only by accretion. A lump-sum contract price does not by itself exclude the value of goods from sales tax scrutiny, and the tax authorities may examine accounts and other materials to determine whether a taxable sale occurred and to what extent. On that basis, the petitions for quashing the assessment proceedings were not made out.

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Issues: Whether the sales tax authorities could proceed to assess sales tax on the petitioners in respect of materials supplied and used in execution of the coke oven construction contract, and whether the proceedings were liable to be quashed under Article 226 of the Constitution of India.

Analysis: The contract was examined as a composite arrangement for constructing and installing a coke oven battery, but the decisive feature was that it contained an express stipulation that materials and plant brought on site under the German and Indian sections would immediately become the owner's property. That contractual term distinguished the case from the principle applied in the cited Supreme Court decision, where the passing of property was treated as arising by accretion and not by express transfer. The Court also noted that the price and value of goods could not be excluded merely because the contract was for a lump sum, and that the tax authorities were entitled to investigate the accounts and other materials to determine whether any taxable sale of goods had occurred and to what extent.

Conclusion: The petitioners did not make out a case for quashing the assessment proceedings, and the writ petitions were liable to be dismissed.

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