Bus body construction on customer chassis treated as a sale where ownership passed only on delivery of the finished body.

Construction of bus bodies on customer-supplied chassis was treated as a sale where the assessees built the body to the customer's specifications for a fixed price and no separate contract existed for the sale of materials used in fabrication. The materials did not pass to the customer as and when incorporated into the body; instead, property in the completed bus body passed only on delivery of the finished body fitted on the chassis. On that basis, the Madras HC held that the transaction fell within the concept of sale and was liable to sales tax.

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Issues: Whether the construction of bus bodies on chassis supplied by customers amounted to a sale of goods liable to sales tax.

Analysis: The assessees undertook body-building on the customer's chassis for a specified price fixed according to the customer's specifications. There was no material to show that the property in the materials used in the body-building passed to the customer as and when they were incorporated, and there was no separate contract for the sale of those materials. On the facts, the property in the completed bus body passed only on delivery of the finished body fitted on the chassis, which brought the transaction within the concept of a sale.

Conclusion: The transaction amounted to a sale of bus body and was liable to tax.

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