Contract for bus body fabrication treated as sale, but bus bodies fall outside the spare-parts sales tax notification.

Contract classification for fabricated bus bodies depends on the parties' intention as disclosed by the agreement; where finished bodies are fabricated to specification and supplied on chassis provided by the purchaser, the arrangement is treated as a sale of goods, making the turnover taxable. A bus body is not a tyre, tube, or spare part in the commercial sense, and it is not covered by a sales tax notification limited to spare parts of motor vehicles. The enhanced levy under that notification was therefore unsustainable, and the assessment could not stand.

---

---

Issues: (i) Whether the contract for fabrication and supply of bus bodies was a contract of sale of goods or a contract of work and labour. (ii) Whether bus bodies were covered by the relevant notification issued under section 3-A of the U.P. Sales Tax Act.

Issue (i): Whether the contract for fabrication and supply of bus bodies was a contract of sale of goods or a contract of work and labour.

Analysis: The character of such a contract depends on the intention of the parties gathered from the terms of the agreement. The agreement treated the bus bodies as units to be fabricated to specification, supplied on the chassis provided by the purchaser, and delivered on completion. The arrangement was materially similar to the contracts considered in the Supreme Court decisions dealing with bus bodies, where supply of a finished chattel for consideration was held to be a sale notwithstanding that the bodies were fitted on chassis supplied by the other side.

Conclusion: The contract was one for the supply and sale of bus bodies, and the turnover arising from it was liable to tax.

Issue (ii): Whether bus bodies were covered by the relevant notification issued under section 3-A of the U.P. Sales Tax Act.

Analysis: The notification applied to motor tyres, tubes, and spare parts of motor vehicles. A bus body is neither a tyre nor a tube, and it cannot ordinarily be described as a spare part in the popular commercial sense. The earlier view regarding component parts did not assist because a component part is not the same as a spare part. The assessment based on the notification was therefore unsustainable.

Conclusion: Bus bodies were not covered by the notification, and the levy at the enhanced rate was invalid.

Final Conclusion: The assessment order could not be sustained, and the writ petition succeeded with quashing of the assessment.

Ratio Decidendi: In determining whether fabrication and supply of an article on another's chassis is sale or works contract, the decisive test is the intention disclosed by the contract; and a bus body is not a spare part of a motor vehicle for a sales tax notification limited to spare parts.

---