Bus-body fabrication and mounting was treated as a sale of goods, while additional tax on bus-bodies failed.

A contract for manufacture and mounting of bus-bodies on chassis supplied by the buyer was construed as a sale of goods, not a works contract, because the contract as a whole showed an intention to supply completed bus-bodies and property passed only on delivery of the finished article. The mounting work did not change the character of the transaction. Bus-bodies were also held not to fall within the statutory expressions "motor vehicles", "component parts" or "accessories" for additional tax purposes, so the levy on turnover relating to bus-bodies could not be sustained. The tax revision was therefore only partly successful.

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Issues: (i) Whether the supply and mounting of bus-bodies on chassis supplied by the Government constituted sales of goods or works contracts; (ii) whether bus-bodies were liable to additional tax under the relevant item in section 3(2) of the Madras General Sales Tax Act, 1939.

Issue (i): Whether the supply and mounting of bus-bodies on chassis supplied by the Government constituted sales of goods or works contracts.

Analysis: The contract had to be construed as a whole to ascertain the true intention of the parties. The documents showed that the Government was purchasing completed bus-bodies made to order, with delivery to take place after the bodies were mounted on the chassis supplied by the Government. The terms did not require the property in the materials to pass progressively during construction, nor did they oblige the Government to accept unfinished work. The mounting of the bodies on the chassis was treated as part of the bargain for sale and did not alter the character of the transaction.

Conclusion: The transactions were sales of goods and not works contracts, and were liable to tax as sales.

Issue (ii): Whether bus-bodies were liable to additional tax under the relevant item in section 3(2) of the Madras General Sales Tax Act, 1939.

Analysis: The additional tax was sought to be supported by treating bus-bodies as motor vehicles, component parts, or accessories within the statutory item. Bus-bodies did not fall within those expressions. They were not component parts or accessories of motor vehicles in the relevant sense, and the later legislative treatment also indicated that bus-bodies were not intended to be covered under that item.

Conclusion: The additional tax on turnover relating to bus-bodies could not be sustained.

Final Conclusion: The tax revision was dismissed insofar as it challenged the classification of the transactions as sales, but relief was granted on the additional tax question, resulting in a mixed disposal.

Ratio Decidendi: A contract for manufacture and mounting of bus-bodies on chassis supplied by the buyer is a sale of goods when, read as a whole, its dominant intention is the supply of completed chattels and property in the goods passes only on delivery of the finished article.

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