Works contract versus sale of goods turns on contractual terms, with surrounding circumstances and local inspection helping resolve ambiguity.

Where a contract is ambiguous as to whether transferred goods retained their movable character or became part of a works arrangement, the contract terms remain primary, but surrounding circumstances may be examined to resolve that ambiguity. The continued movability of the goods after execution is not decisive, yet it is a relevant factor in determining whether the transaction is a sale of goods attracting sales tax or a pure works contract. Local inspection is therefore justified where the contract terms do not clearly determine the character of the goods at the time property passes.

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Issues: Whether the direction to ascertain by local inspection whether goods transferred in execution of the contract remained movable property after completion of the contract was justified in law.

Analysis: The decisive question was whether the transaction was a pure works contract or a contract of sale of goods, or a composite arrangement involving both supply and work. The nature of the contract had to be gathered from its terms, but where the contract left ambiguity on whether goods had become permanent fixtures or remained movable at the stage when property passed, surrounding circumstances could be examined to resolve that ambiguity. The fact that goods continued to be movables after execution was not decisive, but it was a relevant criterion in determining whether the transaction attracted sales tax as a sale of goods or remained a works contract. The direction for local inspection was therefore not an irrelevant inquiry; it was confined to contracts where the terms did not clearly show whether the goods had become immovable or remained movable.

Conclusion: The direction for local inspection was justified in law, and the question was answered in the affirmative against the dealer.

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