Composite fabrication and erection contracts treated as works contracts, excluding the turnover from sales tax liability.

Composite and indivisible contracts for fabrication, supply, transport and erection of floor beams, trusses and purlins at a lump sum rate were treated as works contracts, not sales of goods. Because the quotations and invoices showed no separate price for materials, the work was customised to customer specifications and the fabricated articles had no practical marketability as separate chattels, the court applied the primary object and intention test and found no anterior sale of the materials. The disputed turnover was therefore excluded from taxable sales turnover, and the assessee succeeded.

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Issues: Whether the turnover relating to fabrication, supply, transport and erection of floor beams, trusses and purlins under lump sum contracts was liable to sales tax as a sale of goods or was exempt as a works contract.

Analysis: The quotations and invoices showed that the assessee undertook a single, composite and indivisible contract for fabrication, supply, transport and erection at site for a lump sum rate, without any separate price for the materials. The work was tailored to the customers' specifications and the articles had no practical marketability as separate chattels. Applying the test of the primary object of the transaction and the intention of the parties, the contract was held to be one of work and labour, not an anterior sale of the fabricated materials.

Conclusion: The disputed turnover could not be included in the taxable turnover as sale proceeds; it was attributable to works contract and the assessee succeeded on the issue.

Final Conclusion: The revision petitions were allowed and the turnover representing the fabrication and erection contracts was held not taxable as sales turnover.

Ratio Decidendi: Where a contract for fabrication and erection is composite and indivisible, and the material component is not separately sold but passes only on completion of the erection work, the transaction is a works contract and not a sale of goods.

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