Works contract classification turns on retention of property and risk, excluding sales treatment for granite metal supply contracts.

Contracts for removal and supply of granite metal were treated as works contracts rather than sales of goods because the contracts kept property in the material with the Corporation or Government throughout. No consideration was stipulated for transfer of title in the granite metal to the assessee, and the removed material was to be supplied only to the concerned public authority. On those terms, the passing of property and allocation of risk were decisive, and the transactions were not sales of goods. The tax appeal was allowed.

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Issues: Whether the contracts for removal and supply of granite metal constituted sales of goods or transactions of work and labour.

Analysis: The contracts provided that the property in the granite metal remained with the Corporation or the Government throughout. There was no stipulation for payment of any consideration for transfer of property in the metal to the assessee, and the material removed was to be supplied only to the concerned public authority. In construing the contracts, the passing of property and the position of risk were material, and on those terms the transactions were not sales of goods.

Conclusion: The transactions were works contracts and not sales of goods; the tax appeal was allowed.

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