Indivisible works contract: site-based tile laying and polishing could not be split into separate sale and labour charges.

Where the contractual bill, read as a whole, showed that the consumer paid for completion of integrated site work by area or running feet and that laying and polishing were included, the transaction could not be split into a sale of tiles and a separate labour contract. In the absence of reliable material to bifurcate the consideration, the supply, laying and polishing of mosaic tiles at the site was an indivisible works contract. It was therefore not taxable as a sale of goods for sales tax purposes, and the attempt to treat the instalment pattern as a 75:25 goods-labour split was unsustainable.

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Issues: Whether the supply, laying and polishing of mosaic tiles at the consumer's site constituted an indivisible works contract or a sale of goods liable to sales tax.

Analysis: The bill showed that the assessee charged for the work done at the site by reference to area or running feet, and that the consumer was concerned with completion of the work rather than the number of tiles used. The bill expressly stated that the charges were inclusive of laying and polishing, and the document had to be read as a whole. On that reading, there was no material to split the transaction into a sale of tiles and a separate labour contract. The decision treating the entire transaction as a sale was therefore unsustainable. In the connected batch, the same reasoning applied, and the mere instalment pattern in the bill did not justify treating 75 per cent of the amount as the price of tiles and 25 per cent as labour charges in the absence of supporting material.

Conclusion: The transaction was a works contract and not a sale, and it was not exigible to sales tax on that basis.

Final Conclusion: The assessee succeeded on the substantive tax issue, while the connected writ matter was disposed of with directions consistent with the ruling on the revision cases.

Ratio Decidendi: Where the contractual document, read as a whole, shows that the consumer pays for completion of an integrated site work and there is no reliable basis to bifurcate the price of goods and labour, the transaction is an indivisible works contract and not a taxable sale.

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