Sale of goods test for motor body contracts: finished bodies delivered on chassis were held taxable as sales transactions.

A contract requiring a manufacturer to fit and deliver completed motor bodies on chassis supplied by the customer was treated as a sale of goods rather than a mere works contract. The decisive test was whether the substance of the agreement was to transfer identified movable goods or only to perform work and labour. Because the finished bodies were the intended chattels to pass to the customer for a fixed price per body, the transaction was held liable to sales tax. Authorities on true works contracts, repairs and construction were distinguished as cases where materials were only incidental and not intended to pass as sold goods.

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Issues: Whether the contract for construction and supply of motor bodies was a contract of sale of goods, making the applicants dealers liable to sales tax under the Bombay Sales Tax Act, 1953.

Analysis: The decisive test was whether the substance of the contract showed an agreement to sell and purchase identified movable goods or merely a contract for work and labour. The contract required the applicants to manufacture, fit and deliver completed motor bodies on chassis supplied by the customer for a stated price per body. The completed bodies were the very articles intended to pass to the other party, and the work and labour undertaken ended in finished goods capable of being the subject of sale. The authorities relied on by the applicants were distinguished because they concerned true works contracts, repairs, or construction contracts in which materials were incidental and not intended to pass as chattels sold.

Conclusion: The contract was one for the sale of goods, and the applicants were dealers within the meaning of the Act; the transaction was liable to sales tax.

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