Works contract classification bars sales tax where materials are integral to an indivisible installation contract.

A contract for designing, supplying and erecting electrical installations was treated as an indivisible works contract because the materials were supplied as part of a single arrangement for execution of the project. Item-wise pricing, instalment payments, and inclusion of purchaser-supplied materials in the contractor's bill did not establish a separate sale; the decisive test was whether there was a distinct contract for sale of the very goods in which property passed. On the facts, property in the materials passed only with completion and delivery of the whole installation, so the materials supplied under the contract were not exigible to sales tax.

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Issues: Whether the contract for supply and erection of electrical installations was an indivisible works contract, so that the value of materials supplied under it was not exigible to sales tax.

Analysis: The contract documents, read as a whole, showed that the supply of materials was not a separate and independent sale but formed part of a single arrangement for designing, supplying and erecting the power supply system and cabling work. The specification of item-wise prices, payment in instalments, and the inclusion of materials supplied by the purchaser itself in the contractor's bill were treated as consistent with a works contract and not as evidence of a standalone sale. The decisive test was whether there was a clear contract of sale of the very goods in which property passed, or whether the materials were merely incidental to the execution of the work. On the facts found, property in the materials passed only along with completion and delivery of the entire installation.

Conclusion: The contract was rightly construed as a works contract and the materials supplied under it were not liable to sales tax.

Ratio Decidendi: Where the supply of materials is integral to an indivisible contract for execution and erection of work, and there is no separate contract of sale of the materials as such, the transaction is not a taxable sale of goods.

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