Works contract for brick manufacture on site: incidental transfer of property did not make the arrangement a sale.

A contract for manufacture and supply of bricks was treated as a works contract, not a contract of sale, because the contractor operated on site under the project administration's control, used land and facilities supplied by it, and was restricted from selling the bricks to third parties or disposing of rejected materials independently. Although payment was linked to the quantity of bricks supplied, that pricing method did not alter the essential character of the arrangement. Any passing of property in the bricks was only incidental to the performance of work and labour, so the turnover was not liable to sales tax on the basis of a sale.

---

---

Issues: Whether the contract for manufacture and supply of bricks was a contract of sale liable to sales tax or a works contract for work and labour.

Analysis: The terms of the agreement showed that the contractor worked on the project site under the control of the project administration, used land supplied for excavation and kiln operations, could not sell the manufactured bricks to third parties, received coal and other facilities from the administration, and was subject to restrictions on removal of bricks and disposal of rejected materials. These features, taken as a whole, indicated that the arrangement was for execution of work and labour, even though payment was calculated with reference to the quantity of bricks supplied. The passing of property, if any, occurred only as an incident of the works contract and did not convert the transaction into a sale.

Conclusion: The contract was not a contract for sale of goods. It was a works contract, and the turnover was not liable to sales tax on that footing.

Ratio Decidendi: A transaction remains a works contract where the essential obligation is performance of work on site under the other party's control, and any transfer of property in the manufactured product is merely incidental to that contract rather than the result of a sale.

---