Composite works contract for lift installation was indivisible, so no separate taxable sale of goods could be isolated.

A contract for supply, erection and installation of lifts was treated as a composite, indivisible works contract on its true construction. The court examined the agreement as a whole, including the installation obligations, maintenance terms, all-inclusive pricing, and retention of title until final payment, and found that the parties intended a single integrated undertaking rather than separate sales and labour components. Because the goods were inseparable from the technical installation work, the transaction could not be split into a taxable sale of goods and a separate service element for sales tax purposes.

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Issues: Whether the contract for supply, erection and installation of two lifts was a composite but indivisible contract for work and labour, or a divisible contract with a separate sale of goods element liable to sales tax.

Analysis: The contract was construed from its terms and surrounding circumstances to ascertain the intention of the parties. The agreement described the undertaking as an elevator installation, provided for detailed erection and installation work, included maintenance obligations, fixed an all-inclusive price, and reserved title in the apparatus until final payment. The payment structure and retention-of-title clause supported the view that the machinery was to be supplied and installed as part of a single integrated undertaking, and not sold as chattels in a severable transaction. The nature of the work was technical and inseparable from the labour and services required for installation, so the mere use of pre-existing materials did not create a distinct taxable sale.

Conclusion: The contract was held to be a composite but indivisible works contract, and no separate sale of goods could be spelt out for sales tax purposes.

Ratio Decidendi: Where a contract for supply, erection and installation is, on its true construction, intended to be an indivisible works contract and the goods used are integrated with the execution of that work, the transaction is not severable into a taxable sale of goods and a separate contract for labour or services.

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