Indivisible works contract: supply of granite chips for road repair was not a sale under sales tax law.

Supply of hard granite chips under a road repair agreement was held not to amount to a sale under section 2(g) of the Orissa Sales Tax Act because the chips were only an integral part of an indivisible repair contract. No separate agreement existed for the transfer of the chips as movables, so the transaction retained its character as works contract rather than a sale. The mere possibility that similar supply arrangements could be made under different contracts did not change the nature of the agreement. The issue was answered in the negative in favour of the assessee.

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Issues: Whether the supply of hard granite chips under the road repair agreement constituted a sale within the meaning of section 2(g) of the Orissa Sales Tax Act.

Analysis: The agreement was for repair of roads and the supply of granite chips formed only an integral part of that repair contract. There was no separate agreement for the sale of the chips as movables. The contract was therefore indivisible, and the mere possibility that similar work and supply could be undertaken under separate agreements with different parties did not alter the character of the present contract.

Conclusion: The supply of materials did not constitute a sale within the meaning of section 2(g) of the Orissa Sales Tax Act, and the question was answered in the negative in favour of the assessee.

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