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Issues: Whether the contract evidenced by the bill for supplying and fixing electrical fittings was a purely works contract or a composite contract involving a sale of goods, and whether the supply portion was taxable under the Bombay Sales Tax Act, 1959.
Analysis: The determining factor was the true nature of the contract and the intention of the parties. A transaction amounts to a sale only where there is an agreement to transfer title to goods for money consideration and property passes in the goods as chattels. Where a contract contains both supply of materials and labour, it may still be severable into distinct parts if the parties intended the goods to be supplied as goods and not merely as incidental materials consumed in executing the work. The single consolidated invoice was not decisive. On the facts, the customer wanted specified electrical goods to be supplied and fixed in his house, and the items retained their identity as goods notwithstanding the fixing. The supply element was therefore not merely incidental to labour but formed a separate and identifiable part of the arrangement.
Conclusion: The contract was not a purely indivisible works contract. It was a composite and divisible contract, and the supply of electrical goods constituted a sale taxable under the Bombay Sales Tax Act, 1959.
Final Conclusion: The reference was answered in favour of taxability of the supply component, and the transaction in question was held liable to sales tax to that extent.
Ratio Decidendi: In a mixed contract for supply and fixing of goods, the decisive test is whether the parties intended a transfer of the goods as chattels for price; if so, the supply component is a taxable sale even though the goods are fixed to immovable property in the course of execution.
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